WILHELMINA INTERNATIONAL, INC.
| (1) | Based on 129,440,752 shares of Common Stock outstanding as of the Record Date. With the exception of shares that may be acquired by employees pursuant to the Company’sour 401(k) retirement plan, a person is deemed to be the beneficial owner of Common Stock that can be acquired within 60 days after the Record Date upon the exercise of options. Each beneficial owner’s percentage ownership of Common Stock is determined by assuming that options that are held by such person, but not those held by any other person, and that are exercisable within 60 days ofafter the Record Date have been exercised. |
| (2) | The business address of Newcastle Partners, L.P. (“Newcastle”) is 200 Crescent Court, Suite 1400, Dallas, Texas 75201. |
| (3) | Represents securitiesConsists of shares of Common Stock held by Newcastle Partners, L.P. (“Newcastle”), as disclosed in Amendment No. 6 to a Statement of Changes in Beneficial Ownership on Form 4 originallySchedule 13D filed with the SEC on February 18, 2009 and amended on February 19, 2009.October 21, 2010. Newcastle Capital Management, L.P. (“NCM”), as the general partner of Newcastle, may be deemed to beneficially own the securities beneficially ownedshares held by Newcastle. Newcastle Capital Group, L.L.C. (“NCG”), as the general partner of NCM, which in turn is the general partner of Newcastle, may be deemed to beneficially own the securities beneficially ownedshares held by Newcastle. Mark E. Schwarz, as the managing member of NCG, the general partner of NCM, which in turn is the general partner of Newcastle, may also be deemed to beneficially own the securities beneficially ownedshares held by Newcastle. Each of NCM, NCG and Mr. Schwarz disclaims beneficial ownership of the securities beneficially ownedshares held by Newcastle except to the extent of their pecuniary interest therein.th erein. |
| (4) | The business address of Lorex Investments AG (“Lorex”) is c/o Mattig-Suter und Partner, Bahnhofstrasse 28, Schwyz, CH-6431, Switzerland. |
| (5) | Represents securitiesConsists of shares of Common Stock held by Lorex, as disclosed in an Initiala Statement of Changes in Beneficial Ownership of Securities on Form 34 filed with the SEC by Dieter Esch on March 5, 2009. DieterDecember 16, 2010. Mr. Esch is the sole shareholderstockholder of Lorex and Peter Marty is the sole officer and director of Lorex. DieterMr. Esch and PeterMr. Marty share voting and dispositive power over the shares of Common Stock held by Lorex. PeterMr. Marty has no pecuniary interest in the shares of Common Stock held by Lorex. |
| (6) | The business address of Krassner Family Investments Limited Partnership (“Krassner L.P.”) is 31 East Rivo Alto, Miami Beach, Florida 33139. |
| (7) | Represents securitiesConsists of shares of Common Stock held by Krassner L.P., as disclosed in an Initiala Statement of Changes in Beneficial Ownership of Securities on Form 34 filed with the SEC by Brad Krassner on March 5, 2009.December 16, 2010. Krassner Investments, Inc. (“Krassner Inc.”) is the general partner of Krassner L.P. and therefore has voting and dispositive power over these securities.shares. Krassner Inc. disclaims any pecuniary interest in the reported securitiesthese shares except to the extent of its ownership interest in Krassner L.P. (it owns a 1% interest in Krassner L.P.). BradMr. Krassner is the President, Director and sole stockholder of Krassner Inc. BradMr. Krassner, individually, and the Krassner Family Investment Trust (“Krassner Trust”) are the limited partners of Krassner L.P. BradMr. Krassner’s children and spouse are the beneficiaries of the Krassner Trust and his mother is a trustee of the Krassner Trust. Brad&# 160;Mr. Krassner and the Krassner Trust disclaim any pecuniary interest in the reported securitiesthese shares except to the extent of their ownership interest therein (Brad(Mr. Krassner owns an 83.5% limited partnership interest in Krassner L.P. and the Krassner Trust owns a 15.5% limited partnership interest in Krassner L.P.). By virtue of his position with Krassner L.P., Mr. Krassner has the sole power to vote and dispose of the shares of the Common Stock owned by Krassner L.P. |
| (8) | Consists of 100,000 shares of Common Stock issuable upon the exercise of options held by Mr.Mark Schwarz individually and 31,526,51734,064,466 shares of Common Stock beneficially ownedheld by Newcastle. Mr. Schwarz may be deemed to beneficially own the shares of Common Stock beneficially ownedheld by Newcastle by virtue of his power to vote and dispose of such shares. Mr. Schwarz disclaims beneficial ownership of the shares of Common Stock beneficially ownedheld by Newcastle except to the extent of his pecuniary interest therein. |
| (9) | Consists of shares of Common Stock issuable upon the exercise of options held by Mr.John Murray individually. Mr. Murray is the Chief Financial Officer of NCM. Mr. Murray disclaims beneficial ownership of the 31,526,51734,064,466 shares held by Newcastle. |
| (10) | Consists of 100,000 shares of Common Stock beneficially ownedheld by Newcastle. |
(10) | Mr. Stone is the Vice PresidentDieter Esch and General Counsel of NCM. Mr. Stone disclaims beneficial ownership of the 31,526,51729,482,553 shares of Common Stock beneficially ownedheld by Newcastle.Lorex. Mr. Esch is the sole stockholder of Lorex and Peter Marty is the sole officer and director of Lorex. Mr. Esch and Mr. Marty share voting and dispositive power over the shares held by Lorex. Mr. Marty has no pecuniary interest in the shares held by Lorex. |
| (11) | Consists of 100,000 shares of Common Stock issuable upon the exercise of options held by Brad Krassner and 30,599,757 shares of Common Stock held by Krassner L.P. Krassner Inc. is the general partner of Krassner L.P. and therefore has voting and dispositive power over these shares. Krassner Inc. disclaims any pecuniary interest in these shares except to the extent of its ownership interest in Krassner L.P. (it owns a 1% interest in Krassner L.P.). Mr. Risher individually.Krassner is the President, Director and sole stockholder of Krassner Inc. Mr. Krassner, individually, and the Krassner Trust are the limited partners of Krassner L.P. Mr. Krassner’s children are the beneficiaries of the Krassner Trust and his mother is a trustee of the Krassner Trust. Mr. Krassner and the Krassner Trust disclaim any pecuniary interest in these shares except to the extent of their ownership interest therein (Mr. Krassn er owns an 83.5% limited partnership interest in Krassner L.P. and the Krassner Trust owns a 15.5% limited partnership interest in Krassner L.P.). By virtue of his position with Krassner L.P., Mr. Krassner has the sole power to vote and dispose of the shares owned by Krassner L.P. |
| (12) | Consists of shares of Common Stock beneficially owned by Greenstone Capital Services (“GCS”). Mr. Fromm is a director and the Chief Executive Officer and President of GCS and as a result may be deemed to beneficially own the shares of Common Stock beneficially owned by GCS. Mr. Fromm disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein. Pursuant to an agreement between GCS and Penates Group, Inc. (“Penates”), 917,070 of the shares beneficially owned by GCS are in the process of being transferred to GCS from Penates. |
(13) | Consists of 32,911,62594,346,776 shares of Common Stock and 240,000150,000 shares of Common Stock issuable upon the exercise of options. |
ELECTION OF DIRECTORS
Seven directorsThere are seven nominees for election to be electedthe Board at the Annual Meeting to serve until the 2010next Annual Meeting of Stockholders and until their successors are duly elected and qualified.qualify. Three of the seven nominees currently serve as a director of the Company. Two incumbent members of the Board, John Murray and Evan Stone, are not standing for re-election at the Annual Meeting.
Our Restated Bylaws (the “Bylaws”) provide that the number of directors shall be fixed from time to time by the Board, but shall not be less than three. Each director is elected annually to serve until the next Annual Meeting of Stockholders and until his or her successor is duly elected and qualifies. Except where authority to vote for directors has been withheld, it is intended that the proxies received pursuant to this solicitation will be voted “FOR” the nominees named below. If for any reason any nominee does not stand for election, such proxies will be voted in favor of the remainder of the nominees and may be voted for substitute nominees in place of those who do not stand. The Company hasWe have no reason to expect that any of the nominees will not stand for election. 0;The election of directors will be determined by a plurality of the votes cast.
The Company’s Restated Bylaws (the “Bylaws”) provide that the number of directors shall be fixed from time to time by the Board, but shall not be less than three. Each of the seven nominees currently serves as a director.
DireNoctors, Nomineesminees for Election to the Board, Executive Officers and Certain Other Employees
Information regarding all the Company’s incumbent directors, director nominees and our executive officers, including their ages, current positions with the Company and business experience for the past five years (and, in some instances, for prior years), is set forth below. Data with respect to the number of shares of Common Stock beneficially owned by each of the nominees is set forth in the section of this Proxy Statement titled “Security Ownership of Certain Beneficial Owners and Management.” All such information has been furnished to the Companyus by the Company’s directors, nominees and our executive officers. Additionally, the experiences and skills that led to the conclusion that the nominees should serve as directors are discussed below.
| | | | PositionPositions with Company
| | |
| Mark E. Schwarz | | 4849 | | Chairman of the Board and Chief Executive Officer | | June 2004 |
Jonathan Bren | | 47 | | Director | | June 2005 |
James Risher | | 65 | | Director | | October 2004 |
| John Murray | | 3940 | | Director, Chief Financial Officer | | February 2009 and Director(1) |
| Evan Stone | | 3738 | | Director, General Counsel, Secretary and SecretaryDirector(1) |
| Horst-Dieter Esch | | February 2009 |
Derek Fromm | | 5166 | | Director |
| Brad Krassner | | February 200958 | | Director |
Dr. Hans-Joachim BohlkClinton Coleman | | 33 | | N/A |
| James Dvorak | | 41 | | N/A |
| Mark Pape | | 60 | | DirectorN/A |
| James Roddey | | February 200977 | | N/A |
(1) Messrs. Murray and Stone are not standing for re-election at the Annual Meeting.
Mark E. Schwarz
Mr. Schwarz has served as a director and Chairman of the Board of the Company since June 2004 and as itsour Chief Executive Officer since April 2009. Mr. Schwarz previously functionedserved as the Company’sour Interim Chief Executive Officer sincebeginning in October 2007 and was formally appointed itsour Interim Chief Executive Officer effective in July 2008. He is the Chairman, Chief Executive Officer and Portfolio Manager of NCM, a private investment management firm he founded in 1993, thatwhich is the General Partner of Newcastle, a private investment firm. Mr. Schwarz presently serveshas served as Executive Chairman of the Board of Hallmark Financial Services, Inc. (“Hallmark”), a specialty property and casualty insurer. He was elected Executive Chairman of Hallmark ininsurer, since August 2006. He served as Chief Executive Officer of Hallmark from January 2003 to August 2006 and as President of Hallmark from November 2003 to MarchAugust 2006. He currentlycurr ently serves as Chairman of the BoardsBoard of Bell Industries, Inc., a company primarily engaged in providing computer systems integration services (“Bell Industries”), and Pizza Inn, Inc., an operator and franchisor of pizza restaurants (“Pizza Inn”). He also serves on the board of directors of SL Industries, Inc., a power and as a directordata quality products manufacturer. He previously served on the boards of directors of Nashua Corporation, a manufacturer of specialty papers, labels and printing supplies SL Industries, Inc., a power and data quality products manufacturer (“SL Industries”Nashua Corporation”), andfrom 2001 to September 2009, MedQuist Inc., a provider of clinical documentation workflow solutions in support of electronic health records.records, from December 2007 to August 2009, WebFinancial Corporation, a holding company with subsidiaries operating in niche banking markets, from July 2001 to December 2008, and Vesta Insurance Group, Inc., a holding company for a group of insurance companies.
Jonathan BrenWith nearly 20 years of experience as an investment manager and a business executive, Mr. Schwarz brings significant leadership, financial expertise, operational skills and public company board of directors and executive experience to the Board. Through investments made by NCM and its affiliates, Mr. Schwarz has broad and substantial experience analyzing and advising public companies, including with respect to issues such as corporate governance, capital raising, capital allocation and general operational and business strategy, and has been closely involved in the operations of companies across a range of industries in both director and executive capacities. As our Chief Executive Officer, Mr. Schwarz is closely involved in all of our operations and activities.
John Murray
Mr. Murray has served as a director of the Company since June 2005. Mr. Bren serves as the Global Managing Partner of Bren Ventures L.L.C., an entity he formed in January 2005 to make strategic investments in early stage hedge fund managers. From July 1998 to December 2004, Mr. Bren was a partner of Hunt Financial Ventures, L.P., which made strategic investments in early stage and emerging hedge fund managers and also made direct investments into other hedge fund operations. He also served as President of HFV Investments Inc., a broker dealer affiliated with Hunt Financial Ventures, L.P. During the fifteen years prior to joining Hunt Financial Ventures, L.P., Mr. Bren worked for a series of asset management, investment banking and merchant banking organizations.
James A. Risher has served as a director of the Company since October 2004. Mr. Risher has been the Managing Partner of Lumina Group, LLC, a private company engaged in the business of consulting and investing in small and mid-size companies, since 1998. Mr. Risher has served as the Chief Executive Officer and President of Del Global Technologies Corporation (“Del Global”), a leader in medical imaging and power electronics, since September 2006. Mr. Risher was appointed Interim Chief Executive Officer of Del Global in August 2006. In addition, Mr. Risher has served as a director of Del Global since June 2004. From February 2001 to May 2002, Mr. Risher served as Chairman and Chief Executive Officer of BlueStar Battery Systems International, Inc., a Canadian public company that is an e-commerce distributor of electrical and electronic products to selected automotive aftermarket segments and targeted industrial markets. From 1986 to 1998, Mr. Risher served as a director, Chief Executive Officer and President of Exide Electronics Group, Inc. (“Exide”), a global leader in the uninterruptible power supply industry. He also served as Chairman of Exide from December 1997 to July 1998. Mr. Risher currently serves as a director of SL Industries.
John Murray has served as a director of the Company since February 2009 and as theour Chief Financial Officer of the Company since June 2004. Mr. Murray has served as the Chief Financial Officer of NCM since January 2003. From November 1995 until December 2002, Mr. Murray was a Certified Public Accountant engaged in his own private practice in Dallas, Texas. From October 1991 until November 1995, Mr. Murray served as an accountant with Ernst & Young, LLP. Mr. Murray has been a Certified Public Accountant since January 1992.
Mr. Murray has nearly 20 years of progressive financial, accounting and business experience and also brings business development experience to the Board. As a CPA with extensive experience in tax, accounting and auditing, Mr. Murray is intimately familiar with financial reporting for public and private companies. As Chief Financial Officer of NCM, Mr. Murray has structured, negotiated and monitored a number of the firm’s investments, and also has advised on accounting and financial matters with respect to its investments. As our Chief Financial Officer, Mr. Murray is closely involved in all of our activities.
Evan Stone
Mr. Stone has served as a director of the Company since February 2009, as our General Counsel of the Company since April 2009 and as itsour Secretary since July 2008. Mr. Stone hasis a principal of Lee & Stone, LLP, a law firm providing services to the investment community, founded in 2009. Mr. Stone served as Vice President and General Counsel of NCM sincefrom May 2006.2006 to July 2009. Prior to joining NCM, from June 2003 to April 2006 and from October 1997 to December 1999, he served as a mergers and acquisitions attorney at the law firm Skadden, Arps, Slate, Meagher & Flom LLP in New York. From January 2002 to SeptemberIn 2002, Mr. Stone served as Vice President, Corporate Development at Borland Software Inc., a provider of software application lifecycle products. From March 2000 to November 2001, Mr. Stone was a member of the investment banking department of Merrill Lynch &&am p; Co. Mr. Stone is currently a director of Applied Minerals Inc., a nanomaterials producer.
Mr. Stone brings a combination of skills to the Board, including legal, corporate governance and investment banking. Mr. Stone’s legal practice, at his own firm and at Skadden Arps, has focused primarily on mergers and acquisitions, private equity and investment management. As General Counsel for NCM, Mr. Stone structured, negotiated and monitored a number of the firm’s investments, and also advised on corporate governance, legal and operational matters with respect to its investments. As our General Counsel, Mr. Stone is closely involved in all of our activities.
Horst-Dieter Esch
Mr. Esch has served as a director since February 2010. Mr. Esch is a private investor and, since 2008, the Chairman of USA Team Handball, the national governing body for the Olympic sport of handball (“USA Team Handball”). From February 2009 through December 2009, Mr. Esch was a consultant to the Company. Mr. Esch was a principal owner and Chairman of Wilhelmina International Ltd. (“Wilhelmina Ltd.”) and its affiliated companies prior to their sale to the Company in February 2009.
With over 21 years in the model management and artist management businesses, Mr. Esch brings deep experience in the Company’s industry to the Board, together with strong leadership, business strategy and business development skills. Given Mr. Esch’s long time involvement in the modeling industry, Mr. Esch brings a valuable perspective and industry relationships to the Board. In addition, as a former principal owner, Chairman and an officer of the operating subsidiaries of the Company, Mr. Esch is strongly familiar with all aspects of their businesses.
Brad Krassner
Mr. Krassner has served as a director since February 2010. Mr. Krassner is a private investor and, since 2001, has been the Chief Executive Officer of Rich Media Worldwide, a software development company that markets a proprietary “Realvu” ad serving technology. Mr. Krassner is also President of USA Team Handball. Mr. Krassner was a principal owner of, and consultant to, Wilhelmina Ltd. and its affiliated companies prior to their sale to the Company in February 2009.
With over 25 years in the entertainment and artist management businesses (including model management), Mr. Krassner brings deep experience in the Company’s industry to the Board, together with strong leadership and business strategy skills. In addition, Mr. Krassner has significant transactional, operational and public company experience through the various businesses that he owned or has been affiliated with, including Magicworks Entertainment Incorporated, a promoter and merchandiser of theatrical shows and other live entertainment that Mr. Krassner ran as Chief Executive Officer and took public in 1996. As a former principal owner of the operating subsidiaries of the Company, Mr. Krassner is strongly familiar with all aspects of their businesses.
Clinton Coleman
Mr. Coleman has served as the Chief Executive Officer of Bell Industries since January 2010, and has been a director since January 2007. Mr. Coleman has served as a Vice President of NCM since July 2005. Mr. Coleman previously served as the Interim Chief Executive Officer of Bell Industries from July 2007 to January 2010 and the Interim Chief Financial Officer of Pizza Inn from July 2006 to January 2007. Prior to joining NCM, Mr. Coleman served as a portfolio analyst with Lockhart Capital Management, L.P., an investment partnership, from October 2003 to June 2005. From March 2002 to October 2003, Mr. Coleman served as an associate with Hunt Investment Group, L.P., a private investment group. Previously, Mr. Coleman was an as sociate director with the Mergers & Acquisitions Group of UBS. Mr. Coleman is also a director of Pizza Inn and several privately held companies. During the past five years, Mr. Coleman also served as a director of Nashua Corporation.
Mr. Coleman brings to the Board extensive experience in investment management and the management of publicly traded and privately held companies engaged in a wide range of industries, including in capacities as director, chief executive officer and chief financial officer. As an investment banker and investment professional, Mr. Coleman also has a strong background analyzing and advising public companies, as well as significant transactional experience.
Dr. Hans-Joachim BohlkJames Dvorak
Mr. Dvorak has served as a directorVice President of the CompanyNCM since February 2009. He isJanuary 2008. Mr. Dvorak served as a consultant and subsequently a Senior Investment Analyst with Falcon Fund Management, a Dallas-based investment firm, from September 2006 to December 2007, and as a Vice President with Fagan Capital, an attorneyinvestment firm located in private practiceIrving, Texas, from 1999 to June 2006. Previously Mr. Dvorak was with Koch Industries, a diversified energy, chemicals and materials provider, as Chief Financial Officer of a business unit and as a board member of a Koch affiliate. Mr. Dvorak has additional experience as a management consultant with Booz Allen & Hamilton in Frankfurt, Germany, where he has been practicing law since 1982. He is the sole shareholder of NORA Unternehmensberatung GmbH, a consulting company he founded in 1988.Chicago, Illinois.
Derek FrommMr. Dvorak brings nearly 20 years of experience as a business executive and professional investor. As a management consultant, Mr. Dvorak was involved in business strategy evaluation and development, new business development, acquisition due diligence, and reorganizations of Fortune 500 businesses. As a financial executive and investment professional, Mr. Dvorak has developed strong skills in business development, financial and operational analysis, capital structure issues, capital allocation, and strategy development and evaluation.
Mark Pape
Mr. Pape has served as a directorthe Chairman of the CompanyBoard of H2Options, Inc., a start-up water conservation design/installation firm, since February 2009. He is the principal of Greenstone Capital, a corporate advisory firm he founded in London in 1997September 2009, and in Scottsdale, Arizona in 2002 (“Greenstone Capital”). Mr. Fromm is a director andas the Chief Financial Officer of Oryon Technologies, LLC, a privately-held technology company, since October 2010. Mr. Pape served as a partner at Tatum LLC, an executive services firm, from August 2008 through November 2009. From November 2005 to December 2007, Mr. Pape served as Executive Vice President and Chief Financial Officer at Affirmative Insurance Holdings, Inc., a publicly-traded property and Presidentcasualty insurance company specializing in non-standard automobile insurance, and served on its board of GCS, a consultingdirectors and advisory company he co-founded in 1999, a director andaudit committee from July 2004 to November 2005. Mr. Pape served as the Chief ExecutiveFinancial Officer and President of Greenstone Capital Group,HomeVestors of America, Inc., a consulting and advisory company he founded in 2002 (“Greenstone Group”), and the director,franchi sor of home acquisition services, from September 2005 to November 2005, as President and Chief Executive Officer of Greenstone Capital,R.E. Technologies, Inc., a consultingprovider of software tools to the housing industry, from April 2002 to May 2005, and advisory company he founded in 2006 (“GCI”).as Senior Vice President and Chief Financial Officer of LoanCity.com, a start up e-commerce mortgage bank, from May 1999 to June 2001. Mr. Fromm is the controlling stockholder of each of Greenstone Group, GCS and GCI and is the sole proprietor of Greenstone Capital. Mr. Fromm has served as a registered representative with Penates, a broker-dealer, since May 2006. From 1987 to 1997, Mr. FrommPape was an investment banker at UBS Limited in London, prior to which he practiced law in New York. Mr. Fromm is a member of the New York State Bar Association.board of directors of Specialty Underwriters’ Alliance, Inc., a publicly-traded specialty property and casualty insurance company, from July 2009 through November 2009.
With strong experience as a business executive, Mr. Pape brings significant leadership, operational skills and public company board of directors and executive experience to the Board. In addition, Mr. Pape’s strong background in finance and financial services, including his significant transactional experience, bolsters the Company’s experience in these areas and will be particularly helpful to the Company as it grows.
James Roddey
Mr. Roddey has served as Principal of McCrory & McDowell LLC, a provider of financial, business and management consulting services, since September 2007. Mr. Roddey was a Partner at the Hawthorne Group, an investment and management company, from January 2004 to September 2007 (and previously from 1978 to 2000). Prior to the Hawthorne Group, from January 2000 to January 2004, Mr. Roddey served as the Chief Executive of Allegheny County, Pennsylvania. Mr. Roddey was a director of SEEC, Inc., a software provider for the insurance and financial services industry, from August 2005 to November 2008. Earlier in his career, Mr. Roddey served as President and a director of Turner Communications, Inc. and Rollins Communication, Inc. and, while associated with the Hawthorne Group, President and Chief Executive Officer of P ittsburgh Outdoor Advertising, Gateway Outdoor Advertising and International Sports Marketing, among other companies.
With over 40 years in the media and advertising industries (including at leading companies such as Turner Communications and Rollins Communication), Mr. Roddey brings to our Board deep experience in an industry closely tied to the Company’s business, as well as a number of relevant skills including leadership, finance and executive skills. Through investments made by the Hawthorne Group and various public company directorships Mr. Roddey has held during his career, Mr. Roddey also has significant experience analyzing and advising public companies. In addition, Mr. Roddey has specific experience in talent representation, through his former association with International Sports Marketing.
Biographical information regarding any other employees required to be included in this Proxy Statement is set forth below.
Sean Patterson, age 37,39, has served as the President of Wilhelmina International Ltd., a subsidiary of the Company (“Wilhelmina Ltd.”), since 2003.
ArraArngementsrangements Regarding Nomination for Election to the Board
The Company wasWe were required to nominate the following persons for election to the Board at the Company’s 2008our Annual Meeting of Stockholders held on February 5, 2009 (the “2009 Annual Meeting”) pursuant to anthe acquisition agreement (the “Acquisition Agreement”) consummated in February 2009entered into in connection with the Company’sour acquisition of Wilhelmina Ltd. and certain of its affiliates (the “Acquisition”):, which was consummated in February 2009: Mark E. Schwarz, Jonathan Bren, James Risher, one designee of DieterMr. Esch, one designee of BradMr. Krassner and two designees of Newcastle. Mr. Esch’s initial designee was Dr. Hans-Joachim Bohlk,Boehlk, Mr. Krassner’s initial designee was Derek Fromm, and Newcastle’s initial designees were John Murray and Evan Stone (collectively, the “Designees”).Stone. Each of Messrs. Schwarz, Bren, Risher, Fromm, Murray and Stone and Dr. BohlkBo ehlk were elected to the Board at the Company’s 20082009 Annual Meeting of Stockholders.Meeting.
Pursuant to a mutual support agreement entered into in connection with the Acquisition (the “Mutual Support Agreement”), Mr. Esch, Lorex, Mr. Krassner, Krassner L.P. (together with Mr. Esch, Lorex and Mr. Krassner, the “Control Sellers”) and Newcastle agreed, effective upon the closing of the Acquisition, that, among other things, each of the parties would (i)(a) use their commercially reasonable efforts to cause their representatives serving on the Board to vote to nominate and recommend the election of the Designeesdesignees and, in the event the Board will appoint directors without stockholder approval, to use their commercially reasonable efforts to cause their representatives on the Board to appoint the Designeesdesignees to the Board, (ii)(b) vote their shares of Common Stock to elect the Designeesdesignees at any meeting of the Company’sour stockholders or pursuant to any action by written consent in lieu of a meeting pursuant to which directors are to be elected to the Board, and (iii)(c) not to propose, and to vote their shares of Common Stock against, any amendment to the Company’sour Certificate of Incorporation or Bylaws, or the adoption of any other corporate measure, that frustrates or circumvents the provisions of the Mutual Support Agreement with respect to the election of the Designees. The parties also agreed that for a period of three years after the closing of the Acquisition, the parties will use their commercially reasonable efforts to cause their representatives on the Board to vote to maintain the size of the Board at no more than nine persons, unless otherwise agreed to by the Designees.designees. The obligations of the parties under the Mutual Support Agreement terminate upon the earlier of (i)(a) the written agreement of all of the parties or (ii)(b) the date on which two of the three groups of parties to the Mutual Support Agreement (Mr. Esch and his affiliates as one group, Mr. Krassner and his affiliates as another group, and Newcastle as another group) each owns less than 5% of the Common Stock outstanding.
On November 18, 2009 and November 19, 2009, respectively, Dr. Boehlk and Mr. Fromm resigned as directors of the Company. Messrs. Esch and Krassner later designated themselves as their respective designees pursuant to the Mutual Support Agreement. On February 4, 2010, the Board appointed Messrs. Esch and Krassner to serve as directors.
On October 18, 2010, Newcastle and the Control Sellers entered into an Amendment to the Mutual Support Agreement (the “MSA Amendment”) for the purpose of providing a procedure for the nomination, election and removal of independent members of the Board.
Pursuant to the MSA Amendment, the parties agreed (a) to cause their representatives serving on the Board to vote to nominate and recommend the election of (i) one individual (the “NP Independent Representative”) selected by Messrs. Esch and Krassner from a list of at least four Qualifying Unaffiliated Individuals (as defined below) pre-approved by Newcastle (two of whom are required to be Enhanced QUIs (as defined below)) and (ii) one individual (the “Seller Independent Representative” and together with the NP Independent Representative, the “Independent Designees”) selected by Newcastle from a list of at least four Qualifying Unaffiliated Individuals pre-approved by Messrs. Esch and Krassner (two of whom are required to be Enhanced QUIs) and, in the event the Board will appoint directors without stoc kholder approval, to cause their representatives on the Board to appoint applicable Independent Designee(s) to the Board (including to fill any vacancy caused by the death, incapacity, resignation or removal of an applicable Independent Designee), (b) to vote their shares of Common Stock to elect the Independent Designees at any meeting of the Company’s stockholders or pursuant to any action by written consent in lieu of meeting pursuant to which directors are to be elected to the Board, and (c) to vote against and not to propose the removal of either Independent Designee unless both parties vote for such removal.
For purposes of the MSA Amendment, (a) a “Qualifying Unaffiliated Individual” generally means an individual that (i) meets the director independence standards of The NASDAQ Stock Market LLC (“Nasdaq”), (ii) is not an affiliate of the parties or the Company or a holder of 5% or more of any class of equity interests in the parties or any of their affiliates (other than the Company) and (iii) has or maintains no Economic Relationship (as defined below) with any of the parties, the Company or any affiliate thereof, (b) an individual is generally considered to have an “Economic Relationship” with another person if such individual (or any affiliate thereof) receives (or has received in the prior five years) a material direct financial benefit from such other person (e.g., material salary or fees, material co ntractual payments under a commercial contract, equity or debt investment proceeds, etc.), (c) an “Enhanced QUI” generally means an individual that (i) meets the Qualifying Unaffiliated Individual standard and, in addition, (ii) is not a Close Long Time Personal Friend (as defined below) of the party pre-approving such individual; (d) a “Close Long Time Personal Friend” of a pre-approving party generally means an individual who has had Meaningful Social Contact (as defined below) on at least a monthly basis for at least ten months out of every year starting 1990 or earlier up to the present with Messrs. Krassner or Esch (if Messrs. Krassner and Esch are the pre-approving parties) or with Messrs. Schwarz, Murray or Stone (if Newcastle is the pre-approving party); and (e) “Meaningful Social Contact” generally means in-person, pre-arranged (between the relevant principals and the Close Long Time Personal Friend) social contact that is one-on-one or involves a group of no more than 10 people and which (i) focuses principally on non-professional and non-business related topics and (ii) occurs in a non-professional setting (e.g., residential setting, restaurant, etc.); provided that, without limitation, (A) any spontaneous contact (e.g., “running into” each other) in any location (whether or not occurring with frequency) and (B) contact occurring in larger group social setting or event not organized by a relevant principal or the Close Long Time Personal Friend or spouse of either or Close Long Time Personal Friend of both (e.g., a party at a third party’s home or club, a class, football game, concert, etc.) are expressly excluded as “Meaningful Social Contact.”
Pursuant to the MSA Amendment, the parties agreed to an annual selection process with respect to the Independent Designees. Under the MSA Amendment, a list of pre-approved nominees meeting the applicable standards is required to be delivered to the other party (a) with respect to the Annual Meeting, no later than the date that is one week from the date of execution of the MSA Amendment, (b) with respect to the 2011 Annual Meeting of Stockholders, no later than February 15, 2011 and (c) with respect to each Annual Meeting of Stockholders thereafter, no later than the date that is 75 calendar days prior to the mailing date of the proxy statement for the prior year’s annual meeting. The MSA Amendment also contains procedures for the re-nomination of Independent Designees who were previously appointed or elected t o the Board in lieu of the annual selection process. On December 9, 2010, the parties agreed by mutual consent to delay the selection date for the Independent Designees for the Annual Meeting to December 21, 2010.
Mark Pape (selected from a list pre-approved by Newcastle) and James Roddey (selected from a list pre-approved by Messrs. Esch and Krassner) were selected as the Independent Designees for the Annual Meeting.
In addition to the obligations set forth above, the parties also agreed under the MSA Amendment (a) to vote against and not to propose (i) any amendment to the Certificate of Incorporation or Bylaws or the adoption of any other corporate measure that (A) reduces or fixes the size of the Board below seven directors or increases or fixes the size of the Board in excess of seven directors or (B) provides that directors shall be elected other than on an annual basis and (b) not to seek to advise, encourage or influence (or form, join or in any way participate in any “group” or act in concert with) any other person with respect to the voting of any Company voting securities inconsistent with the foregoing. Pursuant to the MSA Amendment, the parties also agreed that, beginning with the Annual Meeting and so long as the M utual Support Agreement remains in effect, the parties will cause their representatives on the Board to vote to maintain the size of the Board at seven directors, unless otherwise agreed to by the respective Board designees of the parties.
Effective upon the date of the Annual Meeting, Newcastle has designated Messrs. Coleman and Dvorak as its designees pursuant to the Mutual Support Agreement (replacing Messrs. Murray and Stone).
Although the Company is not a party to the Mutual Support Agreement, the Board has unanimously approved the nomination of each of the Designeesdesignees thereunder for election to the Board at the Annual Meeting.
TransTractionsansactions with Related Persons
Transactions with Newcastle and its Affiliates
The Company’sOur corporate headquarters is currently located at 200 Crescent Court, Suite 1400, Dallas, Texas 75201, which is also an office of NCM. Pursuant to an oral agreement, the Companywe previously occupied a portion of NCM’s office space on a month-to-month basis at no charge, and received accounting and administrative services from employees of NCM at no charge. Effective October 1, 2006, the parties formalized this arrangement by executing a services agreement. Pursuant to the services agreement, the Company continueswe continue to occupy a portion of NCM’s office space on a month-to-month basis at $2,500 per month and incursincur additional fees to NCM for accounting and administrative services provided by employees of NCM. During the fiscal yearyears ended December 31, 2007, the Company2009 and 2008, we incurred fees (including the payments for the NCM office space) of approximately $30,000 under the services agreement. During the fiscal year ended December 31, 2008, the Company incurred fees (including the payments for the NCM office space) of approximately$56,000 and $102,000, respectively, under the services agreement.
On August 25, 2008, concurrently with the execution of the Acquisition Agreement, the Companywe entered into a purchase agreement with Newcastle for the purpose of obtaining financing to complete the Acquisition (the “Equity Financing Agreement”). Pursuant to the Equity Financing Agreement, upon the closing of the Acquisition, the Companywe sold to Newcastle $3,000,000 (12,145,749 shares) of Common Stock at $0.247 per share, or approximately (but slightly higher than) the per share price applicable to the Common Stock issuable under the Acquisition Agreement. In addition, under the Equity Financing Agreement, Newcastle committed to purchase, at the Company’sour election at any time or times prior to six months following the closing of the Acquisition, up to an additional $2,000,000 (8,097,166 shares) of Common Stock on the same terms. 0; This election right expired on August 13, 2009. The Equity Financing Agreement was approved by an independent special committee of the Board (the “Special Committee”) on August 18, 2008 and recommended to the full Board for approval. The Board approved the Equity Financing Agreement on the recommendation of the Special Committee on August 20, 2008.
Concurrently with the closing of the Equity Financing Agreement, and as a condition thereto, the parties entered into a registration rights agreement, pursuant to which Newcastle was granted certain demand and piggyback registration rights with respect to the Common Stock it holds, including the Common Stock issuable under the Equity Financing Agreement.
Mr. Schwarz, our Chief Executive Officer and Chairman of the Board, is the Chairman, Chief Executive Officer and Portfolio Manager of NCM, which is the General Partner of Newcastle. Mr. Murray, our Chief Financial Officer and a director, is the Chief Financial Officer of NCM. Mr. Stone, our General Counsel and a director, is a former Vice President and General Counsel of NCM.
Transactions with Messrs. Esch and Krassner
Dr. Hans-Joachim Bohlk and Derek Fromm were initially nominated for election to the Board as designees of Messrs. Esch and Krassner, respectively, pursuant to the Acquisition Agreement, and are designees of Messrs. Esch and Krassner under the Mutual Support Agreement. Under the Acquisition Agreement, Mr. Esch, Lorex, Mr. Krassner and Krassner L.P. (the “Control Sellers”) received $14,521,967 in addition to a cash payment,(including $6,000,000 received by Krassner L.P. in repayment of an outstanding note held by Krassner L.P.) and $7,609,336 (63,411,131 shares) of Common Stock upon the consummation of the Acquisition (based on the closing price of the shares on such date). The purchase price iswas subject to certain post-closing adjustments, which maywere to be effected against 19,229,74618,811,687 shares (the “Restricted Shares”) of Common Stock issued to the Control Sellers that arewere held in escrow pursuant to the Acquisition Agreement in respect of the “core” business price adjustment, and may be repurchased byadjustment. The Control Sellers also had the Company for a nominal amount,right to receive earn out payments, subject to certain earnoutsoffsets, based on the operating results of Wilhelmina Artist Management, LLC (“WAM”) and offsets. Additionally,Wilhelmina Miami, Inc. (“Wilhelmina Miami”), our wholly owned subsidiaries, for the three year period beginning January 1, 2009.
On October 18, 2010, Newcastle and the Control Sellers entered into a Global Settlement Agreement (the “Settlement Agreement”) which provided that (a) all of the Restricted Shares were released to the Control Sellers, (b) all the Company’s future earn-out obligations relating to WAM were cancelled and (c) (i) approximately 39% (representing the amount that would otherwise be paid to Krassner L.P.) of the first $2 million of the Company’s earn-out obligations relating to the operating results of Wilhelmina Miami (the “Miami Earnout”) was cancelled and (ii) approximately 69% (representing the amounts that would otherwise be paid in the aggregate to Krassner L.P. received $6,000,000and Lorex) of any such Miami Earnout obligation over $2 million was cancelled. With respect to any portion of the Miami Earnout that may become payable, the Company further agreed not to assert any setoff thereto in repaymentrespect of an outstanding note held(a) any negative closing net asset adjustment determined under the Acquisition Agreement or (b) any divisional loss in respect of WAM. The Miami Earnout is based on the three year average of audited Wilhelmina Miami EBITDA beginning January 1, 2009 multiplied by Krassner L.P.7.5, payable in cash or stock (at the Control Seller’s election). The Settlement Agreement also provided for the dismissal of then pending litigation between the Company and the Control Sellers regarding the Restricted Shares and the withdrawal of indemnification claims under the Acquisition Agreement (as further described under Involvement in Certain Legal Proceedings) and the entering into of the MSA Amendment (as described under Arrangements Regarding Nomination for Election to the Board). The Company als o agreed to reimburse certain documented legal fees (not to exceed $300,000) of the Control Sellers.
The Control Sellers are also parties to a registration rights agreement entered into in connection with the Acquisition Agreement, pursuant to which the Control Sellers, among others, obtained certain demand and piggyback registration rights with respect to the Common Stock issued to them under the Acquisition Agreement.
Transactions with Derek Fromm
GCS,On February 13, 2009, in order to facilitate the closing of which Derek Fromm is the Chief Executive Officer and President and which is controlled by Mr. Fromm, was party to anAcquisition Agreement, we entered into that certain letter agreement with Krassner L.P.Mr. Esch (the “Esch Letter Agreement”), pursuant to which GCS provided consulting and advisory servicesMr. Esch agreed that $1,750,000 of the cash proceeds to Krassner L.P. in connection withbe paid to him at the closing of the Acquisition and unrelated matters (the “GCS Agreement”).Agreement would instead be held in escrow. Under the terms of the GCSEsch Letter Agreement, all or a portion of such amount held in escrow was required to be used to satisfy the indebtedness of Wilhelmina Ltd. to Signature Bank in connection with its credit facility with Signature Bank (the “Credit Facility”) upon the closingoccurrence of specified events including, but not limited to, written notification by Signature Bank to Wilhelmina Ltd. of the Acquisition, GCS received from Krassner L.P. a totaltermination or acceleration of $100,000the Credit Facility. Any am ount remaining was required to be released to Mr. Esch upon the replacement or extension of Common Stock, based on an agreed book value per share of Common Stock of $0.247 (subjectthe Credit Facility, subject to an adjustment identical to the purchase price adjustmentcertain requirements set forth in the Acquisition Agreement)Esch Letter Agreement. The Esch Letter Agreement also provided that in the event any portion of the proceeds is paid from escrow to Signature Bank, we will promptly issue to Mr. Esch, in replacement thereof, a promissory note in the principal amount of the amount paid to Signature Bank.
On December 30, 2009, Signature Bank delivered a demand letter (the “Demand Letter”) to us and Wilhelmina Ltd., or 418,038 shares. Atrequesting the directionimmediate payment of Krassner L.P.,all outstanding principal and accrued interest in the aggregate amount of approximately $2,019,000 under the Credit Facility. The delivery of the Demand Letter requesting mandatory repayment of principal under the Credit Facility triggered a “Bank Payoff Event” under the Esch Letter Agreement. Accordingly, pursuant to the terms of the Esch Letter Agreement, the aggregate amount of $1,750,000 that was held in escrow was released and paid to Signature Bank (the “Escrow Payoff”) and the Company issued such sharesto Mr. Esch a promissory note in the principal amount of Common Stock directly to GCS$1,750,000 (the “Esch Note”). Interest is payable in lieu of issuing such shares to Krassner L.P. as partarrears on a monthly basis. For the calendar year 2009, interest on the outstanding principal balance of the considerationEsch Note accrued at the “Weighted Average Loan Document Rate” (as defined below), which equaled approximately 3.83%. The “Weighted Average Loan Document Rate” was calculated using a weighted average formula based on the rates applicable to be received by Krassner L.P. in connection with the Acquisition.
Pursuantprincipal amounts outstanding for each of the two components of the Credit Facility - revolver ($2,000,000 principal outstanding at December 30, 2009 at a rate of prime plus 0.5%) and term loan ($26,000 principal outstanding at December 30, 2009 at a rate of 6.65%) - prior to a separate engagement agreement by and among Wilhelmina Ltd.,release of the Control Sellers and Penates (the “Engagement Agreement”), Penatesescrow. Principal under the Esch Note was to be repaid in quarterly installments of $250,000 until the Esch Note is paid a commission upon the closingin full, with outstanding principal balance of the Acquisition equal to the higher of $450,000 or 1.5% of the transaction value, payable in cash and shares of Common Stock (based on an agreed book value per share of Common Stock of $0.247, subject to an adjustment identical to the purchase price adjustment set forth in the Acquisition Agreement) in the same proportion as received by the Control Sellers. Pursuant to a separate agreement between Penates and Mr. Fromm, a representative of Penates, Mr. Fromm was to receive 97.5% of such commission payable to Penates, or 917,070 shares of Common Stock and $219,375. Pursuant to further agreement between Mr. Fromm and GCS, such shares and cash were to be madeEsch Note, together with all accrued, but unpaid interest thereon, due and payable on December 31, 2010.
In the event that the Company closes a new revolving bank or debt facility, which provides the Company with committed working capital financing, the Company is required to GCS and, as a result,pay down the 917,070 shares initially payable to Penates are currentlyEsch Note in the processamount of being transferredthe funds that we are initially permitted to draw under such new facility. The Esch Note is unsecured and is pre-payable by Penates directlythe Company at any time without penalty or premium.
Through December 24, 2010, the amount of principal and interest paid to GCS.Mr. Esch under the Esch Note was $750,000 and $52,071, respectively.
On December 7, 2010, the Company and Mr. Esch entered into an Amendment to the Esch Note (the “Note Amendment”). Under the Note Amendment, (a) the maturity date of the Esch Note was extended to June 30, 2011 (from December 31, 2010), (b) commencing January 1, 2011, the interest rate on outstanding principal under the Esch Note will be increased to 9.0% per annum (from a weighted average rate approximating 3.83% as of the date hereof) and (c) installment payments of remaining principal under the Esch Note will be paid as follows: (i) $400,000 on December 31, 2010; (ii) $400,000 on March 31, 2011; and (iii) $200,000 on June 30, 2011.
In addition,September 2009, we entered into a consulting agreement with Mr. Esch pursuant to the Engagement Agreement, a fee is to be paid by the Control Sellers to Penates calculatedwhich Mr. Esch would serve as a percentageconsultant for $150,000 per annum, which agreement was terminated in December 2009. Mr. Esch received a total of any earned deferred consideration paid for Wilhelmina Artist Management LLC and Wilhelmina-Miami, Inc., subsidiaries of Wilhelmina Ltd., as and when such earnout is paid$37,500 in consulting fees under the terms of the Acquisition Agreement. The exact amount of such fee is currently unknown, but is estimated to be (i) 10% of any earnout payments due to the selling parties by the Company under the Acquisition Agreement in excess of $30,000,000 but less than $40,000,000, plus (ii) 5% of any earnout payments between $40,000,000 and $50,000,000, plus (iii) 2.5% of any earnout payment in excess of $50,000,000 (the “Supplemental Payment”). The Supplemental Payment is also to be shared and paid ratably by each of the selling parties under the Acquisition Agreement.this arrangement.
GCS hasMr. Esch also received consulting and advisory fees from Wilhelmina Ltd. and its affiliates in an amountprovides a personal guarantee of $125,000, plus reimbursement of directly-related expenses, in relation to work performed during 2008 for such companies. Receipt of these fees was not contingent upon the closing of the Acquisition.our corporate American Express card.
Review, Approval or Ratification of Transactions with Related Persons
The Board reviews all relationships and transactions in which the Company and its directors and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. The Board is primarily responsible for the development and implementation of processes and controls to obtain information from the directors and executive officers with respect to related person transactions and for then determining, based on the facts and circumstances, whether the Company or a related person has a direct or indirect material interest in the transaction. As required under SEC rules, transactions that are determined to be directly or indirectly material to the Company or a related person are disclosed in the Company’sour Annual Reports on Form 10-K and our proxy statements in connection with action to be takenstatement s with respect to the election of directors. In addition, the Audit Committee reviews and approves or ratifies any related person transaction that is required to be disclosed. In the course of its review and approval or ratification of a related party transaction to be disclosed, the Audit Committee considers: (i)(a) the nature of the related person’s interest in the transaction, (ii)(b) the material terms of the transaction, including, without limitation, the amount and type of transaction, (iii)(c) the importance of the transaction to the related person, (iv)(d) the importance of the transaction to the Company, (v)(e) whether the transaction would impair the judgment of a director or executive officer to act in the best interest of the Company and (vi)(f) any other matters the Audit Committee deems appropriate.
Any member of the Board who is a related person with respect to a transaction under review may not participate in the deliberations or vote respecting approval or ratification of the transaction, provided, however, that such director may be counted in determining the presence of a quorum at a meeting of the Board or committee that considers the transaction.
Involvement in Certain Legal Proceedings On December 23, 2009, the Company was served with a lawsuit filed by Mr. Esch, Lorex, Mr. Krassner and Krassner L.P. in the U.S. District Court, Southern District of New York, relating to a purchase price adjustment being sought by the Company in connection with the Acquisition. The Company had previously notified the Control Sellers of a required $6,193,400 post-closing downward adjustment to the purchase price in connection with the Acquisition. The Company notified the Control Sellers that based on the amount of the purchase price adjustment, each of Messrs. Esch and Krassner were required to pay (or cause Lorex and Krassner L.P. to pay) to the Company $2,250,000 in cash (or $4,500,000 in the aggregate) and if either Messrs. Esch or Krassner failed to timely make (or cause Lorex or Krassner L.P. to timely make) t he required cash payment, the Company had the right under the Acquisition Agreement to promptly repurchase for $.0001 per share 50% of such number of Restricted Shares determined based on a specified formula (or a total of 100% of such number of shares in the event both Messrs. Esch and Krassner fail to timely make the cash payments). The Company believed that, based on its purchase price adjustment calculation, it would have the right to repurchase 18,811,687 Restricted Shares (all such shares held in escrow for purposes of the adjustment) in the event the Control Sellers failed to make the required cash payments. The Control Sellers responded that they did not believe the Company gave timely notice of its calculations of the purchase price adjustment in accordance with the provisions of the Acquisition Agreement and that they disagreed with certain of the Company’s calculations. The Control Sellers filed the lawsuit seeking a declaration that as a result of its alleged failure to comply with the notice deadline in the Acquisition Agreement, the Company was barred from seeking any such purchase price adjustment. The lawsuit also sought to enjoin the Company from repurchasing the Restricted Shares and the escrow agent from effecting any such repurchase by the Company.
InvolvementOn February 12, 2010, the Company responded that its notice was timely. The Company also filed a counterclaim with the Court requesting a declaration that (a) the purchase price adjustment determination of RSM McGladrey, who had been retained in Certain Legal Proceedingsaccordance with the terms of the Acquisition Agreement to make a final determination based on the calculations and supporting documentation submitted by the respective parties, was final and binding on the parties and (b) the Company was entitled to repurchase the Restricted Shares consistent with such determination and in accordance with the Acquisition Agreement. The Company also sought an order directing the escrow agent to release the Restricted Shares to the Company for repurchase.
On February 2, 2010, the Company asserted a claim against the Control Sellers in the amount of approximately $1.6 million under the indemnification provisions of the Acquisition Agreement related to certain representations, warranties and covenants thereunder. On April 14, 2010, the Control Sellers rejected the indemnification claims asserted by the Company. On April 13, 2010, the Control Sellers also asserted a claim against the Company of approximately $1.4 million under the indemnification provisions of the Acquisition Agreement related to certain representations and warranties thereunder.
On October 18, 2010, pursuant to the Settlement Agreement, the parties agreed to dismiss the litigation then pending in the U.S. District Court, Southern District of New York, concerning the Restricted Shares. The parties also agreed to customary mutual releases and agreed to withdraw their respective indemnification claims under the Acquisition Agreement, except that the Company preserved indemnification rights with respect to certain specified matters.
As of the date of this Proxy Statement, except as set forth above, there is no material proceeding to which any of our directors, executive officers or affiliates, any owner of record or beneficially of more than five percent of any class of our voting securities, or any associate of any such director, officer, affiliate or security holder, is a party or has a material interest adverse to us or any of our subsidiaries. None of the events described in Item 401(f) of Regulation S-K have occurred during the past fiveten years and are material to an evaluation of the ability or integrity of any director, nominee or executive officer.
Family Relationships Between Directors and Executive Officers
There are no family relationships among the Company’s incumbent directors, director nominees or executive officers.
SectionSection 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the Company’sour directors, executive officers and persons who own more than 10% of a registered class of the Company’sour equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of theour Common Stock and other equity securities of the Company.securities. Such persons are required by SEC regulations to furnish the Companyus with copies of all Section 16(a) reports they file.
Based solely on a review of the copies of the Section 16(a) reports furnished to the Companyus and written representations that no other reports were required during the fiscal year ended December 31, 2008, the Company believes2009, we believe that itsour directors, executive officers and greater than 10% stockholders complied with all applicable Section 16(a) filing requirements during fiscal 2008.2009, except as set forth below.
On March 5, 2009, Mr. Esch, Peter Marty and Lorex jointly filed an Initial Statement of Beneficial Ownership of Securities on Form 3 in connection with their beneficial ownership of 10% or more of our Common Stock outstanding (30,882,553 shares) on February 17, 2009.
On March 5, 2009, Mr. Krassner, Krassner L.P. and Krassner Inc. jointly filed an Initial Statement of Beneficial Ownership of Securities on Form 3 in connection with their beneficial ownership of 10% or more of our Common Stock outstanding (30,464,515 shares) on February 17, 2009.
On May 27, 2009, Newcastle filed a Statement of Changes in Beneficial Ownership on Form 4 in connection with its purchase of 1,700,749 shares of Common Stock on May 22, 2009, and Newcastle, NCM, NCG, and Messrs. Schwarz, Murray and Stone jointly filed a Statement of Changes in Beneficial Ownership on Form 4 in connection with the same purchase.
On June 3, 2009, Mr. Krassner, Krassner L.P. and Krassner Inc. jointly filed a Statement of Changes in Beneficial Ownership on Form 4 in connection with the following purchases of Common Stock: (i) 1,000 shares on March 13, 2009; (ii) 10,000 shares on May 4, 2009; (iii) 100,000 shares on May 21, 2009; and (iv) 5,000 shares on June 1, 2009.
On June 12, 2009, Mr. Krassner, Krassner L.P. and Krassner Inc. jointly filed a Statement of Changes in Beneficial Ownership on Form 4 in connection with the following purchases of Common Stock: (i) 6,100 shares on June 2, 2009; (ii) 3,142 shares on June 4, 2009.
On June 26, 2009, Mr. Krassner, Krassner L.P. and Krassner Inc. jointly filed a Statement of Changes in Beneficial Ownership on Form 4 in connection with the purchase of 10,000 shares of Common Stock on June 17, 2009.
A plurality of the votes cast at the Annual Meeting is required for the election of each of the nominees.
THE BOARD RECOMMENDS A VOTE “FOR”
THE ELECTION OF EACH OF THE NOMINEES.
ADOPTION AND APPROVAL OF THE 2009 INCENTIVE STOCK PLAN
On April 30, 2009, the Board unanimously approved, and is now proposing for stockholder approval and adoption, the 2009 Incentive Stock Plan, a copy of which is attached hereto as Annex A. The 2009 Incentive Stock Plan is intended as an incentive to retain and to attract new directors, officers, consultants, advisors and employees, as well as to encourage a sense of proprietorship and stimulate the active interest of such persons in the development and financial success of the Company and its subsidiaries.
As of the date of this Proxy Statement, no options to purchase shares of Common Stock or other rights have been granted to any person under the 2009 Incentive Stock Plan. The benefits and amounts to be derived under the 2009 Incentive Stock Plan are not determinable.
Description of the 2009 Incentive Stock PlanThe following is a brief summary of the 2009 Incentive Stock Plan, which is qualified in its entirety by reference to the text of the 2009 Incentive Stock Plan, which is attached hereto as Annex A.
Purpose
The purpose of the 2009 Incentive Stock Plan is to provide incentive to retain and to attract new directors, officers, consultants, advisors and employees who are primarily responsible for the management and growth of the Company.
The Company intends that the 2009 Incentive Stock Plan meet the requirements of Rule 16b-3 (“Rule 16b-3”) promulgated under the Exchange Act and that transactions of the type specified in subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of the Company pursuant to the 2009 Incentive Stock Plan will be exempt from the operation of Section 16(b) of the Exchange Act. Further, the 2009 Incentive Stock Plan may satisfy the performance-based compensation exception to the limitation on the Company’s tax deductions imposed by Section 162(m) of the United States Internal Revenue Code of 1986, as amended (the “Code”), with respect to those options for which qualification for such exception is intended.
Administration
The 2009 Incentive Stock Plan is to be administered by a committee consisting of two or more directors appointed by the Board (the “Plan Committee”), which may be the Compensation Committee. The Plan Committee will be comprised solely of “non-employee directors” within the meaning of Rule 16b-3 and “outside directors” within the meaning of Section 162(m) of the Code, which individuals will serve at the pleasure of the Board. In the event that for any reason the Plan Committee is unable to act or if the Plan Committee at the time of any grant, award or other acquisition under the 2009 Incentive Stock Plan does not consist of two or more “non-employee directors,” or if there is no such Plan Committee, then the 2009 Incentive Stock Plan will be administered by the Board, provided that grants to the Company’s Chief Executive Officer or to any of the Company’s other four most highly compensated officers that are intended to qualify as performance-based compensation under Section 162(m) of the Code may only be granted by a properly constituted Plan Committee.
Subject to the other provisions of the 2009 Incentive Stock Plan, the Plan Committee will have full power and authority to do the following: (i) to designate recipients of options (“Options”), stock appreciation rights (“Stock Appreciation Rights”), restricted stock (“Restricted Stock”) and other equity incentives or stock or stock based awards (“Equity Incentives,” and together with Options, Stock Appreciation Rights and Restricted Stock, “Rights”); (ii) to determine the terms and conditions of each Right granted (which need not be identical); (iii) to interpret the 2009 Incentive Stock Plan and all Rights granted thereunder; and (iv) to make all other determinations necessary or advisable for the administration of the 2009 Incentive Stock Plan.
Eligibility
The persons eligible for participation in the 2009 Incentive Stock Plan as recipients of Rights include directors, officers and employees of, and consultants and advisors to, the Company or any subsidiary; provided that incentive stock options may only be granted to employees of the Company and its subsidiaries. In selecting participants, and determining the number of shares covered by each Right, the Plan Committee may consider any factors that it deems relevant.
Shares Subject to the 2009 Incentive Stock Plan
A total of 6,000,000 shares of Common Stock may be issued or subject to Rights issued pursuant to the 2009 Incentive Stock Plan, except the maximum number of shares that may be issued or subject to Rights issued pursuant to the 2009 Incentive Stock Plan to any individual in any calendar year may not exceed 1,000,000. Should any Right expire or be canceled prior to its exercise or vesting in full or should the number of shares of Common Stock to be delivered upon the exercise or vesting in full of a Right be reduced for any reason, the shares of Common Stock theretofore subject to such Right may be subject to future Rights under the Plan, unless such reissuance is inconsistent with the provisions of Section 162(m) of the Code.
In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split or similar type of corporate restructuring affecting the shares of Common Stock, the Plan Committee will make an appropriate and equitable adjustment in the number and kind of shares reserved for issuance under the 2009 Incentive Stock Plan and in the number and exercise price of shares subject to outstanding Options granted under the 2009 Incentive Stock Plan, to the end that after such event each optionee’s proportionate interest will be maintained as immediately before the occurrence of such event. The Plan Committee will, to the extent feasible, make such other adjustments as may be required under the tax laws so that any incentive stock options previously granted will not be deemed modified within the meaning of Section 424(h) of the Code. Appropriate adjustments will also be made in the case of outstanding Stock Appreciation Rights and Restricted Stock granted under the 2009 Incentive Stock Plan.
Options
An Option granted under the 2009 Incentive Stock Plan is designated at the time of grant as either an incentive stock option (an “ISO”) or as a non-qualified stock option (a “NQSO”). Upon the grant of an Option to purchase shares of Common Stock, the Plan Committee will fix the number of shares of Common Stock that the optionee may purchase upon exercise of such Option and the price at which the shares may be purchased. Such price may not be less than 100% of the fair market value of such share of Common Stock on the date the Option is granted; provided, however, that with respect to an optionee who, at the time an ISO is granted, owns more than 10% of the total combined voting power of all classes of stock of the Company or of any subsidiary, the purchase price per share under an ISO must be at least 110% of the fair market value per share of Common Stock on the date of grant. The term of each Option will also be fixed by the Plan Committee, except no Option may be exercisable more than ten years after the grant date, and in the case of an ISO granted to an optionee who, at the time of the grant, owns more than 10% of the total combined voting power of all classes of stock of the Company or of any subsidiary, the ISO may not be exercisable more than five years after the grant date.
Stock Appreciation Rights
Stock Appreciation Rights may be granted with an exercise price that is not less than 100% of the fair market value of a share of Common Stock on the grant date and will be exercisable at such time or times and subject to such terms and conditions as determined by the Plan Committee. Unless otherwise provided, Stock Appreciation Rights will become immediately exercisable and remain exercisable until expiration, cancellation or termination of the award. Such rights may be exercised in whole or in part by giving written notice to the Company.
Restricted Stock
Restricted Stock may be granted under the 2009 Incentive Stock Plan aside from, or in association with, any other award and will be subject to certain conditions and contain such additional terms and conditions, not inconsistent with the terms of the 2009 Incentive Stock Plan, as the Plan Committee deems desirable. A grantee will have no rights to an award of Restricted Stock unless and until such grantee accepts the award within the period prescribed by the Plan Committee and, if the Plan Committee deems desirable, makes payment to the Company in cash, or by check or such other instrument as may be acceptable to the Plan Committee. Shares of Restricted Stock are forfeitable until the terms of the Restricted Stock grant have been satisfied.
A recipient of Restricted Stock will not have taxable income upon grant, but will have ordinary income at the time of vesting equal to the fair market value on the vesting date of the shares (or cash) received minus any amount paid for the shares. A recipient of Restricted Stock may instead, however, elect to be taxed at the time of grant. The Company will generally be entitled to a corresponding tax deduction, but such deduction could be subject to limitation under Section 162(m) of the Code.
Other Equity Incentives or Stock Based Awards
Subject to the provisions of the 2009 Incentive Stock Plan, the Plan Committee may grant Equity Incentives (including the grant of unrestricted shares) to such key persons, in such amounts and subject to such terms and conditions, as the Plan Committee in its discretion determines. Such awards may entail the transfer of actual shares of Common Stock to 2009 Incentive Stock Plan participants, or payment in cash or otherwise of amounts based on the value of shares of Common Stock.
Term of the Rights
The Plan Committee, in its sole discretion, will fix the term of each Right, subject to certain limitations set forth in the 2009 Incentive Stock Plan. The 2009 Incentive Stock Plan provides for the earlier expiration of Rights in the event of certain terminations of employment of the holder.
Restrictions on Transferability
Options and Stock Appreciation Rights granted hereunder are not transferable and may be exercised solely by the optionee or grantee during his lifetime or after his death by the person or persons entitled thereto under his will or the laws of descent and distribution. The Plan Committee, in its sole discretion, may permit a transfer of a NQSO to (i) a trust for the benefit of the optionee or (ii) a member of the optionee’s immediate family (or a trust for his or her benefit). Any attempt to transfer, assign, pledge or otherwise dispose of, or to subject to execution, attachment or similar process, any Option or Stock Appreciation Right contrary to the provisions hereof will be void and ineffective and will give no right to the purported transferee. Shares of Restricted Stock may become transferable if the Plan Committee specifies a date on which the transfer restrictions lapse.
Termination
No Right may be granted pursuant to the 2009 Incentive Stock Plan following April 30, 2019.
Amendments
The Board may at any time amend, suspend or terminate the 2009 Incentive Stock Plan, except that no amendment may be made that would impair the rights of any optionee or grantee under any Right previously granted without the optionee’s or grantee’s consent, and except that no amendment may be made which, without the approval of the Company’s stockholders, would do any of the following: (i) materially increase the number of shares that may be issued under the 2009 Incentive Stock Plan, except as permitted under the 2009 Incentive Stock Plan; (ii) materially increase the benefits accruing to the optionees or grantees under the 2009 Incentive Stock Plan; (iii) materially modify the requirements as to eligibility for participation in the 2009 Incentive Stock Plan; (iv) decrease the exercise price of an ISO to less than 100% of the fair market value on the grant date or the exercise price of a NQSO to less than 100% of the fair market value on the grant date; or (v) extend the term of any Option beyond that permitted in the 2009 Incentive Stock Plan.
U.S. Federal Income Tax ConsequencesIncentive Stock Options
Options that are granted under the 2009 Incentive Stock Plan and that are intended to qualify as ISOs must comply with the requirements of Section 422 of the Code. An Option holder is not taxed upon the grant or exercise of an ISO; however, the difference between the fair market value of the shares on the exercise date will be an item of adjustment for purposes of the alternative minimum tax. If an Option holder holds the shares acquired upon the exercise of an ISO for at least two years following the date of the grant of the Option and at least one year following the exercise of the Option, the Option holder’s gain, if any, upon a subsequent disposition of such shares will be treated as long-term capital gain for federal income tax purposes. The measure of the gain is the difference between the proceeds received on disposition and the Option holder’s basis in the shares (which generally would equal the exercise price). If the Option holder disposes of shares acquired pursuant to exercise of an ISO before satisfying the one and two year holding periods described above, the Option holder may recognize both ordinary income and capital gain in the year of disposition. The amount of the ordinary income will be the lesser of (i) the amount realized on disposition less the Option holder’s adjusted basis in the shares (generally the Option exercise price); or (ii) the difference between the fair market value of the shares on the exercise date and the Option price. The balance of the consideration received on such disposition will be long-term capital gain if the shares had been held for at least one year following exercise of the ISO.
The Company is not entitled to an income tax deduction on the grant or the exercise of an ISO or on the Option holder’s disposition of the shares after satisfying the holding period requirement described above. If the holding periods are not satisfied, the Company will generally be entitled to an income tax deduction in the year the Option holder disposes of the shares, in an amount equal to the ordinary income recognized by the Option holder.
Nonqualified Stock Options
In the case of a NQSO, an Option holder is not taxed on the grant of such Option. Upon exercise, however, the participant recognizes ordinary income equal to the difference between the Option price and the fair market value of the shares on the date of the exercise. The Company is generally entitled to an income tax deduction in the year of exercise in the amount of the ordinary income recognized by the Option holder. Any gain on subsequent disposition of the shares is long-term capital gain if the shares are held for at least one year following the exercise. The Company does not receive an income tax deduction for this gain.
Restricted Stock
A recipient of Restricted Stock will not have taxable income upon grant, but will have ordinary income at the time of vesting equal to the fair market value on the vesting date of the shares (or cash) received minus any amount paid for the shares. A recipient of Restricted Stock may instead, however, elect to be taxed at the time of grant.
Stock Appreciation Rights
No taxable income will be recognized by an Option holder upon receipt of a Stock Appreciation Right and the Company will not be entitled to a tax deduction upon the grant of such right.
Upon the exercise of a Stock Appreciation Right, the holder will include in taxable income, for federal income tax purposes, the fair market value of the cash and other property received with respect to the Stock Appreciation Right and the Company will generally be entitled to a corresponding tax deduction.
Equity Compensation Plan InformationThe Company previously adopted the 1996 Employee Comprehensive Stock Plan (“Comprehensive Plan”) and the 1996 Non-Employee Director Plan (“Director Plan”) under which officers and employees, and non-employee directors, respectively, of the Company and its affiliates were eligible to receive stock option grants. Employees of the Company were also eligible to receive restricted stock grants under the Comprehensive Plan. The Company previously reserved 14,500,000 and 1,300,000 shares of Common Stock for issuance pursuant to the Comprehensive Plan and the Director Plan, respectively. The Comprehensive Plan and the Director Plan expired on July 10, 2006. The expiration of the plans preclude the Company from granting new options under each plan, but do not affect outstanding option grants, which shall expire in accordance with their terms.
The following table summarizes the equity compensation plans under which the Common Stock may be issued as of December 31, 2008:
| | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | Weighted average exercise price of outstanding options, warrants and rights (b) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
| Equity compensation plans approved by security holders | | | 240,000 | | | $ | 0.27 | | | | 0 | |
| Equity compensation plans not approved by security holders | | | 0 | | | | n/a | | | | n/a | |
| Total | | | 240,000 | | | $ | 0.27 | | | | 0 | |
The approval and adoption of the 2009 Incentive Stock Plan requires the affirmative vote of a majority of the votes cast on the proposal and represented at the Annual Meeting.
THE BOARD RECOMMENDS A VOTE “FOR”
THE APPROVAL AND ADOPTION OF THE 2009 INCENTIVE STOCK PLAN.
MeeDitingsrector IndependenceThe Board has determined that none of our current directors is independent under Nasdaq’s listing standards. However, the Board has determined that each of Mark Pape and James Roddey, each a director nominee, is independent under Nasdaq’s listing standards, and our former directors, Messrs. Bren, Fromm and Risher and Dr. Boehlk, were independent under Nasdaq’s listing standards at the time they served on the Board. As of the date of the Proxy Statement, the Board has not made a determination regarding independence with respect to Messrs. Coleman and Dvorak, each a director nominee.
Meetings and Committees of the Board of Directors
The business of the Company is managed under the direction of the Board. The Board met fourseven times during 2008.2009. Each of the directors of the Company attended at least 75% of the aggregate of (a) the total number of meetings of the Board (held during the period for which he has been a director) and (b) the total number of meetings of all committees of the Board on which he served (during the periods that he served) held during 2008.. Three of the Company’s incumbent directors were present at the Company’s prior Annual Meeting of Stockholders, although only Mr. Schwarz was a director at the time. Each director is expected to make reasonable efforts to attend meetings of the Board, meetings of the committees of which he is a member and the annual meetings of stockholders. Three of the Company’s incumbent directors were present at the 2008 Annual Meeting of Stockholders, although only Mr. Schwarz was a director at the time.
The Board currently has an Audit Committee and a Compensation Committee,audit committee (the “Audit Committee”), but does not have a Nominating Committee. It is the intention of the Board to establish a Nominating Committee consisting solely of independent directors. The two committees of the Board and their principal duties are described below.
Audit Committee
separately-designated compensation committee or nominating committee. The Audit Committee is currently comprised of James Risher, Jonathan Bren and Derek Fromm, none of whom is an employee ofmet four times during the Company or any of its subsidiaries. Mr. Fromm is the Chairman of the fiscal year ended December 31, 2009.
Audit Committee. Committee
The Audit Committee, among other things, meets with the Company’sour independent registered public accounting firm and management representatives, recommends to the Board appointment of an independent registered public accounting firm, approves the scope of audits and other services to be performed by the independent registered public accounting firm, considers whether the performance of any professional services by the independent registered public accounting firm other than services provided in connection with the audit function could impair the independence of the independent registered public accounting firm, and reviews the results of audits and the accounting principles applied in financial reporting and financial and operational controls. The independent registered public accounting firm has unrestricted access to the Audit CommitteeCommitte e and vice versa.
The incumbent Audit Committee is comprised of Mark Schwarz (Chairman) and Evan Stone, each of whom is an employee of the Company and neither of whom is independent under the listing standards of Nasdaq with respect to board of directors and audit committee membership. None of the Company’s current directors are independent according to Nasdaq’s listing standards with respect to board of directors and audit committee membership, and therefore the Board could not appoint solely independent directors to the Audit Committee. The Board has determined that each of Messrs. Risher and FrommMr. Schwarz qualifies as an “audit committee financial expert,” as defined under the Exchange Act. The Audit Committee, which consisted solely of James Risher during the fiscal year ended December 31, 2008, met four times during such fiscal year. Each of Messrs. Risher, Bren and Fromm is an independent director, as independence for Audit Committee members is defined in the listing standards of The NASDAQ Stock Market LLC (“Nasdaq”). The Board has adopted a written Charter of the Audit Committee, which is available at www.wilhelmina.com/investorrelations.cfm.investor_relations.cfm.
Full Board Serving Function of Compensation Committeeand Nominating Committees
The Compensation Committee is comprisedCompany’s full Board currently serves the function of Jonathan Bren, Dr. Hans-Joachim Bohlk and James Risher, none of whom is an employee of the Company or any of its subsidiaries. Mr. Risher is the Chairman of the Compensation Committee. Messrs. Bren and Risher and Dr. Bohlk are independent directors, as independence is defined in Nasdaq listing standards. The Compensation Committee has primary authority to determine and make recommendations to the Board ona compensation committee. Such functions include determining policies and procedures relating to compensation and employee stock and other benefit plans of key executives and approval of individual salary adjustments and stock awards. Compensation is determined pursuant to discussions and analysis by the Board based on certain factors whichthat may include a review of the individual’s performance, the scope of responsibility for the applicable position, the experience level necessary for the applicable position, certain peer group compensation levels and the performance of the Company. The Board believes it is appropriate for the Company not to have a compensation committee at this time because of the Company’s small size and because n one of the Company’s current directors are independent according to Nasdaq’s listing standards, and as a result the Board is not capable of establishing a compensation committee consisting solely of independent directors. The Board will consider re-establishing a compensation committee in the future.
The Compensation Committee, which consistedCompany’s full Board currently serves the function of a nominating committee. The Board believes it is appropriate for the Company not to have a nominating committee at this time because none of the current directors are independent according to Nasdaq’s listing standards and as a result the Board is not capable of establishing a nominating committee consisting solely of Jonathan Bren duringindependent directors. Additionally, pursuant to the fiscal year ended December 31, 2008, did not meet duringMutual Support Agreement, as amended (as further described under the section of this Proxy Statement titled, Proposal No. 1 - Election of Directors; Arrangements Regarding Nomination for Election to the Board), stockholders holding approximately 72% of our outstanding shares have agreed (a) to maintain the size of the Board a t seven directors and (b) to cause their representatives on the Board to vote to nominate (i) a total of five nominees directly designated by such fiscal year.holders and (ii) the remaining two nominees as determined through an annual selection process pursuant to which one side selects a nominee from a list of independent candidates pre-approved by the other side. Consequently, as a practical matter, the nomination of directors to the Board will be controlled by certain of our stockholders for the foreseeable future. The Compensation Committee does not haveBoard will consider establishing a charter.nominating committee in the future.
NomDirination of Directorsector Nomination Process
The Board does not have a Nominating Committee. The Company’s independent directors, Messrs. Bren, Fromm and Risher and Dr. Bohlk, currently serve the function of a Nominating Committee and the Board may formalize their designation as such in the future. Each of the independent directorscurrent members of the Board, that serve the function of a Nominating Committee meet the criteria for being independent, as independence is defined in Nasdaq listing standards.
While the Company does not currently have a charter governing the nomination of directors or policies with regard to consideration of director candidates recommended by the Company’s stockholders, the Board’s intention is to adopt a charter outlining the qualifications for director candidates, as well as policies with regard to consideration of director candidates by the stockholders of the Company. Provided that director candidates meet the delineated qualifications and the nominations are submitted timely pursuantparties to the Bylaws, the Board does not anticipate that the Company’s independent directors will differentiate evaluating nominees based on the sourceMutual Support Agreement, as amended, or control persons of their nomination.
The independent directors of the Boardsuch parties, identify prospective candidates to serve as directors, by reviewingreview candidates’ credentials and qualifications, and interviewinginterview prospective candidates, before submitting their respective namesin accordance with the terms of the Mutual Support Agreement, as amended. Subject to the Board. The independent directorsterms of the Mutual Support Agreement, as amended, the members of the Board consider and discuss with the parties to the Mutual Support Agreement, as amended, other stockholder recommendations for director nominees that are properly received by the Company. Recommendations for director nominees may come from a wide variety of sources, including members of the Company’s Board, business contacts, community leaders, other third-party sources and members of management. The independent directors of the Board also consider stockholders’ recommendations for director nominees that are properly received by the Company.
The Board believes that all of its directors should have the highest personal integrity and have a record of exceptional ability and judgment. The Board also believes that its directors should ideally reflect a mix of experience and other qualifications. There is no firm requirement of minimum qualifications or skills that candidates must possess. The independent directors of the Board evaluate director candidates based on a number of qualifications, including their independence, judgment, leadership ability, expertise in the industry, experience developing and analyzing business strategies, financial literacy, risk management skills, and, for incumbent directors, his or her past performance.
The independent directors of the Boardwil l initially evaluate aany such prospective nominee on the basis of his or her resume and other background information that has been made available to the Board. An independentBoard and follow up with the prospective nominee. Except with respect to nominations in accordance with the Mutual Support Agreement, as amended, the Board does not anticipate that the Company will differentiate evaluating nominees based on the source of their nomination.
The Board seeks to attract director nominees of personal integrity whose diversity of business background and experience will represent the interests of all stockholders. There is no firm requirement of minimum qualifications or skills that candidates must possess. Director candidates are evaluated based on a number of qualifications, including their judgment, leadership ability, expertise in the industry, experience developing and analyzing business strategies, financial literacy and risk management skills.
Board Leadership Structure Our governing documents provide the Board with flexibility to determine the appropriate leadership structure for the Board and the Company, including but not limited to whether it is appropriate to separate the roles of Chairman of the Board will contact for further review and interview those candidates whoChief Executive Officer. In making these determinations, the independent directorsBoard considers numerous factors, including the specific needs and strategic direction of the Company and the size and membership of the Board believe are qualified, who may fulfill a specificat the time.
The Board need and who would otherwise best make a contribution tois led by the Board. If, after further discussions with the candidate, and other review and consideration as necessary, the independent directorsChairman of the Board, believeMr. Schwarz, who also serves as our Chief Executive Officer. The Board does not have a lead independent director. The Board believes that they have identified a qualified candidate, they will consider nominatingMr. Schwarz is best suited to serve as Chairman of the candidate for electionBoard due to his knowledge and experience as a director.
For a description of arrangementsour Chief Executive Officer and his relevant experience analyzing and advising public companies, including with respect to issues such as corporate governance, capital raising, capital allocation and general operational and business strategy. A majority of the nominationBoard also believes that combining the positions of directors, seeChairman of the section ofBoard and Chief Executive Officer is the most effective leadership structure for the Company at this Proxy Statement titled “Arrangements Regarding Nomination for Electiontime, due to the small size of our management team and because the combined position enhances Mr. Sch warz’s ability to provide insight and direction on strategic initiatives to both management and the Board.”
CodeBoard Role in Risk OversightSenior management is responsible for assessing and managing the Company’s various exposures to risk on a day-to-day basis, including the creation of appropriate risk management programs and policies. The Board is responsible for overseeing management in the execution of its responsibilities and for assessing the Company’s approach to risk management. The Board exercises these responsibilities periodically as part of its meetings, at which the Board regularly discusses areas of material risk to the Company (including operational, financial, legal and regulatory, and strategic and reputational risks), and at meetings of the Audit Committee. In addition, an overall review of risk is inherent in the Board’s consideration of the Company’s long-term strategies and in the transactions and other matters presented to the Board, including capital expenditures, acquisitions and divestitures, and financial matters.
Code of Conduct and Ethics
Effective April 15, 2009, the Board adopted a revised Code of Business Conduct and Ethics (the “Code of Ethics”) that amended and restated the Company’s former code of ethics. The Code of Ethics sets forth legal and ethical standards of conduct for directors, officers and employees of the Company and includes provisions specifically designed to help and guide the Company’s directors, officers and employees to: (i) avoid violations of laws, rules and regulations and promote disclosure to the Company of any such violations that become known; (ii) refrain from engaging in any activity or having a personal interest that presents a “conflict of interest” and promote disclosure to the Company of any such “conflicts of interest”; (iii) avoid violations of insider trading laws; (iv) maintain the confidentiality of confidential information entrusted to them in connection with their position with, or service to, the Company; (v) endeavor to deal honestly, ethically and fairly with the Company’s suppliers, customers, competitors and employees; (vi) protect the Company’s assets and refrain from using the Company’s assets and services for personal benefit; (vii) comply with applicable law and the Company’s policy regarding gifts, gratuities, favors and business entertainment expenses; (viii) accurately report all business transactions and accurately maintain the Company’s books, records and accounts in accordance with applicable regulations and standards; (ix) disclose concerns regarding questionable accounting or auditing matters or complaints regarding accounting, internal accounting controls or auditing matters; (x) avoid making any direct or indirect materially false or misleading statements to an accountant in connection with any audit, review or examination of the Company’s financial statements and avoid any direct or indirect action to coerce, manipulate, mislead or fraudulently influence any independent public or certified public accountant engaged in the performance of an audit or review of the Company’s financial statements; and (xi) comply with reporting and compliance procedures under the Code of Ethics. The Code of Ethics also sets forth procedures to obtain waivers of the Code of Ethics, as well as to amend and disseminate the Code of Ethics.
The Code of Ethics was filed as Exhibit 14.1 to a Current Report on Form 8-K filed with the SEC on April 21, 2009.. The Code of Ethics is available at www.wilhelmina.com/investorrelations.cfm.
StocStockholder Communications with the Board
The Board has established a process for stockholders to send communications to the Board. Stockholders may communicate with the Board generally or a specific director at any time by writing to the Company at 200 Crescent Court, Suite 1400, Dallas, Texas 75201, Attn: Corporate Secretary. The Corporate Secretary reviews all messages received, and forwards any message that reasonably appears to be a communication from a stockholder about a matter of stockholder interest that is intended for communication to the Board. Communications are sent as soon as practicable to the director to whom they are addressed, or if addressed to the Board generally, to the Chairman of the Board. Because other appropriate avenues of communication exist for matters that are not of stockholder interest, such as general business complaints or employee grievances, communications that do not relate to matters of stockholder interest are not forwarded to the Board. The Corporate Secretary has the right, but not the obligation, to forward such other communications to appropriate channels within the Company.
Annually, as well as in connection with the election or appointment of a new director to the Board, the Board considers the business and charitable relationships between it and each non-employee director to determine compliance with Nasdaq listing standards for independent directors. Based on that review, the Board has determined that Messrs. Bren, Fromm and Risher and Dr. Bohlk are independent, as independence is defined in Nasdaq listing standards.
The Board considered all of the matters discussed under the section of this Proxy Statement titled “Transactions with Related Persons” in determining that Messrs. Bren, Fromm and Risher and Dr. Bohlk are in compliance with Nasdaq listing standards for independent directors.
EXEEXECCUTIVEUTIVE COMPENSATION
SummSuarymmary Compensation Table
The following Summary Compensation Table shows the cash and non-cashtable sets forth information with respect to compensation awarded to or earned by the Company’s executive officersour Chief Executive Officer, our Chief Financial Officer and General Counsel for each of the last two fiscal years. Other than the individuals named below (theWe refer to these executive officers as our “Named Executive Officers”), the Company did not have any other executive officers during fiscal 2008.Officers.”
Name and | | | | | | | All Other | | | | | | | All Other | |
| | | | | | | | | | | | | | | | | | | |
| Mark E. Schwarz | | 2008 | | | - | | | | 28,000 | (2) | | | 28,000 | | 2009 | 87,500 | | 7,000(2) | | 94,500 | |
Chief Executive Officer (1) | | 2007 | | | - | | | | 28,000 | (2) | | | 28,000 | | 2008 | - | | 28,000(2) | | 28,000 | |
| | | | | | | | | | | | | | | | | | | | | | |
| John Murray | | 2008 | | | - | | | | - | | | | - | | 2009 | 102,083 | | - | | 102,083 | |
| Chief Financial Officer | | 2007 | | | - | | | | - | | | | - | | 2008 | - | | - | | - | |
| | | | | | | | | | | | | | | | | | | | | | |
| Evan Stone | | 2009 | 72,916 | | - | | 72,916 | |
General Counsel and Secretary (3) | | | | | | | | |
| | | | | | | | | |
| (1) | Mr. Schwarz has served as the Company’s Chief Executive Officer since April 2009. Mr. Schwarz previously functioned as the Company’s Interim Chief Executive Officer since October 2007 and was formally appointed its Interim Chief Executive Officer effective in July 2008. |
| (2) | Represents director fees paid to Mr. Schwarz in such capacity. For the years indicated,fiscal 2008, Mr. Schwarz received nodid not receive any compensation in his capacity as an employee of the Company. |
| (3) | Mr. Stone has served as our General Counsel since April 2009 and as our Secretary since July 2008. Mr. Stone was first deemed to be an executive officer in April 2009. |
EmplEmoymentployment Agreements and Arrangements
Messrs. Schwarz, Murray and MurrayStone are employed at will and do not have employment, severance or change in control agreements with the Company. Pursuant to compensation arrangements adopted by the Company in April 2009, Messrs. Schwarz and Murray will receive annual salary compensation of $150,000 and $175,000, respectively, in 2009. Messrs. Schwarz and Murray, who were the only executive officers of the Company during the fiscal year ended December 31, 2008, havedid not receivedreceive salary compensation for their day-to-day services to the Company prior to 2009.
On August 11, 2004, Craig Davis, allegedly a stockholder of the Company, filed a lawsuit in the Chancery Court of New Castle County, Delaware (the “Lawsuit”“Davis Lawsuit”). The Davis Lawsuit asserted direct claims, and also derivative claims on the Company’s behalf, against five then former and three then current directors of the Company. On April 13, 2006, the Company announced that it reached an agreement with all of the parties to the Davis Lawsuit to settle all claims relating thereto (the “Settlement”“Davis Settlement”). On June 23, 2006, the Chancery Court approved the Davis Settlement, and on July 25, 2006, the Davis Settlement became final and non-appealable. As part of the Davis Settlement, the Company agreed to certain limitations on cash compensation to its employees who arear e employees of Newcastle until such time as the Company acquired a revenue generating business. Such restriction is no longer applicable.
Potentialential Payments Upon Termination or Change in Control
The Company has no plans or other arrangements in respect of remuneration received or that may be received by its executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement or change in control) or other events following a change in control.
Outstanding Equity Awards at Fiscal Year-End Table
The following table shows the unexercised stock optionssets forth certain information regarding equity awards held at the end of fiscal 2008 by the Named Executive Officers.Officers as of December 31, 2009.
| | | Option Awards | |
| | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | | | | | |
| | | | | | | | | | | | | |
| Mark E. Schwarz | | | 100,000 | | | | 0 | | | | 0.28 | | | 6/21/11 | |
| | | | | | | | | | | | | | | | |
| John Murray | | | 50,000 | | | | 0 | | | | 0.28 | | | 6/18/14 | |
| | | | | | | | | | | | | | | | | |
| Evan Stone | | | - | | | | - | | | | - | | | | - | |
| | | Option Awards |
| | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | | |
| | | | | | | | | | | |
| Mark E. Schwarz | | | 100,000 | | | | 0 | | | | 0.28 | | 6/21/11 |
| | | | | | | | | | | | | | |
| John Murray | | | 50,000 | | | | 0 | | | | 0.28 | | 6/18/14 |
| | | | | | | | | | | | | | |
A totalFor the fiscal year ended December 31, 2009, each of 1,300,000 shares of Common Stock are subject to the Director Plan. In November 2002, the Board revised the Director Plan to reflect the following (effective with the Board meetings held in 2003): eachour non-employee director of the Company will bedirectors was entitled to annual compensation consisting of $28,000 in fees, or stock options to purchase 100,000 shares of Common Stock. As an alternative,Stock, or a combination of cash and options. Mr. Schwarz was also entitled to director compensation in 2009, at the same rate as the non-employee directors, while he was acting as our Interim Chief Executive Officer without pay. Mr. Schwarz ceased being entitled to director compensation when he was appointed our Chief Executive Officer in April 2009. Each of our directors elected to receive their annual compensation for 2009 all in cash.
The following table sets forth information with respect to compensation earned by or awarded to each non-employee director may elect a combination of stock and options. The Director Plan has since expired.
The Company anticipates that future equity compensation, if any, to Non-Employee Directors will be made underwho served on the 2009 Incentive Stock Plan.
ForBoard during the fiscal year ended December 31, 2008, each of Messrs. Schwarz, Risher and Bren and Steven Pully (a former director) received their annual compensation all in cash. Compensation for services performed during fiscal 2008 is shown in the table below.2009.
| | Fees Earned or | | | All Other | | | | |
Jonathan Bren (1) | | | 28,000 | | | | - | | | | 28,000 | |
James Risher (1) | | | 28,000 | | | | - | | | | 28,000 | |
Derek Fromm (2) (3) | | | 21,000 | | | | - | | | | 21,000 | |
Dr. Hans-Joachim Boehlk (2) (3) | | | 21,000 | | | | - | | | | 21,000 | |
Brad Krassner (4) | | | - | | | | - | | | | - | |
Horst-Dieter Esch (4) | | | - | | | | 37,500 | (5) | | | - | |
Steven Pully (6) | | | - | | | | - | | | | - | |
| | Fees Earned or Paid in Cash ($) | | | | |
| Mark E. Schwarz | | | 28,000 | | | | 28,000 | |
Steven Pully (1) | | | 28,000 | | | | 28,000 | |
| Jonathan Bren | | | 28,000 | | | | 28,000 | |
| James Risher | | | 28,000 | | | | 28,000 | |
John Murray (2) | | | - | | | | - | |
Evan Stone (2) | | | - | | | | - | |
Derek Fromm (2) | | | - | | | | - | |
Dr. Hans-Joachim Bohlk (2) | | | - | | | | - | |
| (1) | Mr. Pully servedServed as a director until February 2009.January 2010. |
| (2) | Messrs. Murray, Stone and Fromm and Dr. Bohlk were electedElected to the Board in February 2009. |
| (3) | Resigned from the Board in November 2009. |
| (4) | Appointed to the Board in February 2010. |
| (5) | Consists of fees paid to Mr. Esch pursuant to a consulting agreement with the Company entered into in September 2009, which agreement was terminated in December 2009. Mr. Esch was not serving as a director during the term of this consulting agreement. |
| (6) | Served as director until February 2009. |
AUAUDDITIT COMMITTEE REPORT
The Audit Committee is currently comprised of JamesMark Schwarz and Evan Stone. From January 1, 2009 through April 15, 2009, the audit committee was composed solely of Mr. Risher. From April 15, 2009 through November 19, 2009, Messrs. Risher, JonathanFromm and Bren and Derek Fromm.were the members of the Audit Committee. Throughout the remainder of the fiscal year ended December 31, 20082009, Messrs. Risher and up toBren were the appointmentmembers of the Audit Committee. Messrs. BrenSchwarz and Fromm toStone became the sole members of the Audit Committee on April 15, 2009, Mr. Risher was the sole memberFebruary 2, 2010. Messrs. Schwarz and Stone are employees of the Audit Committee. AllCompany and neither is independent under the listing standards of the actionsNasdaq with respect to board of the Audit Committee discussed below were taken by the Audit Committee when it was comprised solely of Mr. Risher.directors and audit committee membership.
The Audit Committee reviewed and discussed the Company’s auditedconsolidated financial statements for the fiscal year ended December 31, 20082009 with both management of the Company. The Audit Committee discussed withand Burton McCumber & Cortez, L.L.P. (“Burton McCumber”), the Company’s independent registered public accounting firmfirm. In its discussion, management has represented to the Audit Committee that the Company’s consolidated financial statements for the fiscal year ended December 31, 2008,2009 were prepared in accordance with generally accepted accounting principles.
The Audit Committee meets with the Company’s independent registered public accounting firm to discuss the results of their examinations, their evaluations of the Company’s internal controls and the overall quality of the Company’s financial reporting. The Audit Committee has discussed with the Company’s independent registered public accounting firm the matters required to be discussed by the statement on AuditAuditing Standards No. 61, as amended, as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T.
The Audit Committee alsohas received the written disclosures and the letter from Burton McCumberthe Company’s independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has considered and discussed with Burton McCumber itssuch firm’s independence.
Based on the Audit Committee’s review of the audited financial statements and the various discussions referred tonoted above, the Audit Committee recommended to the Board that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, which was filed with the SEC on April 15, 2009.
This report is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C promulgated under the Exchange Act or to the liabilities of Section 18 of the Exchange Act, and this report shall not be deemed incorporated by reference into any prior or subsequent filing by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference to such filing.
| | AUDIT COMMITTEE |
| | |
| | Derek FrommMark Schwarz (Chairman) |
| | Jonathan Bren |
| James RisherEvan Stone |
INDEINPENDENTDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM DISCLOSURE
Burton McCumber served as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 20082009 and December 31, 2007.2008. The Company does not expect a representative of Burton McCumber to be present at the Annual Meeting.
The Company is still in the process of selecting an independent registered public accounting firm to serve duringaudit the Company’s financial statements for the fiscal year ending December 31, 20092010, as the Company is seekingintends to seek the input of the Audit Committee, which was recently reconstituted on April 15, 2009.newly constituted Board (including the four nominees not currently serving as directors, assuming they are elected) following the Annual Meeting.
FeeFeses Billed During Fiscal 20082009 and 20072008
Aggregate fees for professional services rendered to the Company by Burton McCumber for the fiscal years ending December 31, 2008 and December 31, 2007 were as follows:
| | | | | | | |
| Audit Fees | | $ | 113,602 | | | $ | 95,217 | |
| Audit-Related Fees | | | - | | | | - | |
| Tax Fees | | | - | | | | - | |
| All Other Fees | | | - | | | | - | |
| Total | | $ | 113,602 | | | $ | 95,217 | |
Audit Fees
The aggregate audit fees billed for the fiscal years ended December 31, 2009 and 2008 by Burton McCumber for professionaltotaled $275,808 and $113,602, respectively. Audit fees include services required for the audit ofrelating to auditing the Company’s annual financial statements and reviewing the Company’s financial statements included in the Company’s Annual Reportquarterly reports on Form 10-K and the review of the interim financial statements included in the Company’s Quarterly Reports on Form 10-Q were $113,602 and $95,217 for fiscal years 2008 and 2007, respectively.10-Q.
Audit-Related Fees
The CompanyWe did not engage or pay Burton McCumber for assurance and related services related to the performance of the audit of the Company’s annual financial statements or the review of the interim financial statements included in the Company’s Quarterly Reports on Form 10-Q for fiscal years 20082009 and 2007.2008.
Tax Fees
The CompanyWe did not engage or pay Burton McCumber for professional services relating to tax compliance, tax advice or tax planning in fiscal years 20082009 and 2007.2008.
All Other Fees
Other than the services described above, the Companywe did not engage or pay Burton McCumber for services in fiscal years 20082009 and 2007.
Pre-PrApprovale-Approval Policies and Procedures
All audit and non-audit services to be performed by the Company’sour independent registered public accounting firm must be approved in advance by the Audit Committee. Consistent with applicable law, limited amounts of services, other than audit, review or attest services, may be approved by one or more members of the Audit Committee pursuant to authority delegated by the Audit Committee, provided each such approved service is reported to the full Audit Committee at its next meeting.
All of the engagements and fees for the Company’s fiscal years ended December 31, 20082009 and December 31, 20072008 were pre-approved by the Audit Committee. In connection with the audit of the Company’sour financial statements for the fiscal year ended December 31, 2008,2009, Burton McCumber only used full-time, permanent employees.
The Audit Committee has considered whether the provision by Burton McCumber of the services covered by the fees other than the audit fees is compatible with maintaining Burton McCumber’s independence and believes that it is compatible.
STSTOOCKHOLDERCKHOLDER PROPOSALS
Requirements for Stockholder Proposals to be Considered for Inclusion in the Company’sour Proxy Materials
Stockholder proposals submitted pursuant to Rule 14a-8 of the Exchange Act (“Rule 14a-8”), and intended to be presented at the Company’s 2010considered for inclusion in our proxy statement and form of proxy relating to our next Annual Meeting of Stockholders must be received by the Company at 200 Crescent Court, Suite 1400, Dallas, Texas 75201, Attn: Corporate Secretary, no later than January 7, 2010August 30, 2011. We have not yet determined when we will hold our next Annual Meeting of Stockholders. If we determine to be considered for inclusion inhold such meeting more than 30 days from the Company’s proxy materials for that meeting.first anniversary of the date of the Annual Meeting, we will publicly announce such date to stockholders as soon as reasonably practicable.
Requirements for Stockholder Proposals Outside the Scope of Rule 14a-8
A stockholder may present a proposal for consideration at the 2010next Annual Meeting of Stockholders by providing written notice in a timely manner to the Secretary of the Company setting forth the following information: (a) the name and address of the stockholder who intends to make the proposal and the text of the proposal to be introduced; (b) the class and number of shares of stock held of record, owned beneficially and represented by proxy by such stockholder as of the record date for the meeting (if such date shall then have been made publicly available) and as of the date of such notice; and (c) a representation that the stockholder intends to appear in person or by proxy at the meeting to introduce the proposal or proposals specified in the notice. To be timely, notice must be received by the Company’s Secretary of the Company not less than (a) in the case of an annual meeting, 120 days in advance of the date of the Company’s proxy materials forstatement was released to stockholders in connection with the previous year’s annual meeting; or (b) in the case of a special meeting, the close of business on the seventh day following the day on which notice of such meeting is first given to stockholders. No business shall be conducted at a meeting except business brought before the meeting in accordance with the procedures set forth above. The Chairperson of the meeting may refuse to acknowledge the introduction of any stockholder proposal not made in compliance with the foregoing procedure.
Requirements for Stockholder Nominations of Directors
The advance notification procedures that stockholders must follow in order to nominate directors (the “Nomination Procedure”), set forth in Section 8.3 of the Certificate of Incorporation and Section 3.16 of the Bylaws, provide that only persons who are nominated by or at the direction of the Board, or by a stockholder who has given timely prior written notice to the Secretary of the Company prior to the meeting at which directors are to be elected, will be eligible for election to the Board. To be timely, notice must be received by the Company no later than (a) in the case of an annual meeting, 90 days prior to the annual meeting, or (b) in the case of a special meeting, the close of business on the seventh day following the day on which notice of such meeting is first given to stockholders.
Under the Nomination Procedure, notice to the Company from a stockholder who proposes to nominate a person or persons at a meeting for election as a director must contain certain information, including the following: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the Company entitled to vote at each meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or person (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other informationinformatio n regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC, had the nominee been nominated or intended to be nominated, by the board of directors; and (e) the consent of each nominee to serve as a director of the Company if so elected. The Chairperson of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure.
This solicitation of proxies is being made on behalf of the Board and the cost of preparing, assembling and mailing this Proxy Statement is being paid by the Company. In addition to solicitation by mail, Company directors, officers and employees (none of whom will receive any compensation therefor in addition to their regular compensation) may solicit proxies by telephone or other means of communication. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries that hold the voting securities of record for the forwarding of solicitation materials to the beneficial owners thereof. The Company will reimburse such brokers, custodians, nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them in connection therewith.
The 20082009 Annual Report is being sent with this Proxy Statement to each stockholder. The 20082009 Annual Report is also available at www.wilhelmina.com/investorrelations.cfm.investor_relations.cfm. The 20082009 Annual Report, however, is not to be regarded as part of the proxy soliciting material.
WILHELMINA INTERNATIONAL, INC.
2009 INCENTIVE STOCK PLAN
1.Purpose of the Plan.
This 2009 Incentive Stock Plan (the “Plan”) is intended as an incentive, to retain in the employ of and as directors, officers, consultants, advisors and employees to Wilhelmina International, Inc., a Delaware corporation (the “Company”) and any Subsidiary of the Company, within the meaning of Section 424(f) of the United States Internal Revenue Code of 1986, as amended (the “Code”), persons of training, experience and ability, to attract new directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage the sense of proprietorship and to stimulate the active interest of such persons in the development and financial success of the Company and its Subsidiaries.
Certain options granted pursuant to the Plan may constitute incentive stock options within the meaning of Section 422 of the Code (the “Incentive Options”) while certain other options granted pursuant to the Plan may be nonqualified stock options (the “Nonqualified Options”). Incentive Options and Nonqualified Options are hereinafter referred to collectively as “Options.”
The Company intends that the Plan meet the requirements of Rule 16b-3 (“Rule 16b-3”) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and that transactions of the type specified in subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of the Company pursuant to the Plan will be exempt from the operation of Section 16(b) of the Exchange Act. Further, the Plan may satisfy the performance-based compensation exception to the limitation on the Company’s tax deductions imposed by Section 162(m) of the Code with respect to those Options for which qualification for such exception is intended. In all cases, the terms, provisions, conditions and limitations of the Plan shall be construed and interpreted consistent with the Company’s intent as stated in this Section 1.
2.Administration of the Plan.
The Board of Directors of the Company (the “Board”) shall appoint and maintain as administrator of the Plan a Committee (the “Committee”), which may be the Compensation Committee of the Board, consisting of two or more directors who are “Non-Employee Directors” (as such term is defined in Rule 16b-3) and “Outside Directors” (as such term is defined in Section 162(m) of the Code), which shall serve at the pleasure of the Board. The Committee, subject to Sections 3, 4 and 5 hereof, shall have full power and authority to designate recipients of Options, stock appreciation rights (“Stock Appreciation Rights”), restricted stock (“Restricted Stock”) and other equity incentives or stock or stock based awards (“Equity Incentives”) and to determine the terms and conditions of respective Option, Stock Appreciation Rights, Restricted Stock and Equity Incentives agreements (which need not be identical) and to interpret the provisions and supervise the administration of the Plan. The Committee shall have the authority, without limitation, to designate which Options granted under the Plan shall be Incentive Options and which shall be Nonqualified Options. To the extent any Option does not qualify as an Incentive Option, it shall constitute a separate Nonqualified Option.
Subject to the provisions of the Plan, the Committee shall interpret the Plan and all Options, Stock Appreciation Rights, Restricted Stock and Equity Incentives granted under the Plan, shall make such rules as it deems necessary for the proper administration of the Plan, shall make all other determinations necessary or advisable for the administration of the Plan and shall correct any defects or supply any omission or reconcile any inconsistency in the Plan or in any Options, Stock Appreciation Rights, Restricted Stock or Equity Incentives granted under the Plan in the manner and to the extent that the Committee deems desirable to carry into effect the Plan or any Options, Stock Appreciation Rights, Restricted Stock or Equity Incentives. The act or determination of a majority of the Committee shall be the act or determination of the Committee and any decision reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made by a majority at a meeting duly held. Subject to the provisions of the Plan, any action taken or determination made by the Committee pursuant to this and the other Sections of the Plan shall be conclusive on all parties.
In the event that for any reason the Committee is unable to act or if the Committee at the time of any grant, award or other acquisition under the Plan does not consist of two or more Non-Employee Directors, or if there shall be no such Committee, then the Plan shall be administered by the Board, and references herein to the Committee (except in the proviso to this sentence) shall be deemed to be references to the Board, and any such grant, award or other acquisition may be approved or ratified in any other manner contemplated by subparagraph (d) of Rule 16b-3; provided, however, that grants to the Company’s Chief Executive Officer or to any of the Company’s other four most highly compensated officers that are intended to qualify as performance-based compensation under Section 162(m) of the Code may only be granted by the Committee.
3.Designation of Optionees and Grantees.
The persons eligible for participation in the Plan as recipients of Options (the “Optionees”), Stock Appreciation Rights, Restricted Stock or Equity Incentives (respectively, the “Grantees”) shall include directors, officers and employees of, and consultants and advisors to, the Company or any Subsidiary; provided that Incentive Options may only be granted to employees of the Company and the Subsidiaries. In selecting Optionees and Grantees, and in determining the number of shares to be covered by each Option, Stock Appreciation Right, Restricted Stock or Equity Incentive granted to Optionees or Grantees, the Committee may consider any factors it deems relevant, including without limitation, the office or position held by the Optionee or Grantee or the Optionee or Grantee’s relationship to the Company, the Optionee or Grantee’s degree of responsibility for and contribution to the growth and success of the Company or any Subsidiary, the Optionee or Grantee’s length of service, promotions and potential. An Optionee or Grantee who has been granted an Option, Stock Appreciation Right, Restricted Stock or Equity Incentive hereunder may be granted an additional Option or Options, Stock Appreciation Right(s), Restricted Stock or Equity Incentive(s) if the Committee shall so determine.
4.Stock Reserved for the Plan.
Subject to adjustment as provided in Section 10 hereof, a total of 6,000,000 shares of the Company’s Common Stock, $0.01 par value per share (the “Stock”), shall be subject to the Plan. The maximum number of shares of Stock that may be subject to Options and Stock Appreciation Rights granted under the Plan to any individual in any calendar year shall not exceed 1,000,000 and the method of counting such shares shall conform to any requirements applicable to performance-based compensation under Section 162(m) of the Code, if qualification as performance-based compensation under Section 162(m) of the Code is intended. The shares of Stock subject to the Plan shall consist of unissued shares, treasury shares or previously issued shares held by any Subsidiary of the Company, and such amount of shares of Stock shall be and is hereby reserved for such purpose. Any of such shares of Stock that may remain unsold and that are not subject to outstanding Options at the termination of the Plan shall cease to be reserved for the purposes of the Plan, but until termination of the Plan the Company shall at all times reserve a sufficient number of shares of Stock to meet the requirements of the Plan. Should any Option, Stock Appreciation Right, Restricted Stock, or Equity Incentives expire or be canceled prior to its exercise or vesting in full or should the number of shares of Stock to be delivered upon the exercise or vesting in full of an Option, Stock Appreciation Right, Restricted Stock, or Equity Incentives be reduced for any reason, the shares of Stock theretofore subject to such Option, Stock Appreciation Right, Restricted Stock, or Equity Incentives may be subject to future Rights under the Plan, except in the case of an Option or Stock Appreciation Right where such reissuance is inconsistent with the provisions of Section 162(m) of the Code where qualification as performance-based compensation under Section 162(m) of the Code is intended.
5.Terms and Conditions of Options.
Options granted under the Plan shall be subject to the following conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a)Option Price. The purchase price of each share of Stock purchasable under an Option shall be determined by the Committee at the time of grant, but shall not be less than 100% of the Fair Market Value (as defined below) of such share of Stock on the date the Option is granted; provided, however, that with respect to an Optionee who, at the time an Incentive Option is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, the purchase price per share of Stock under an Incentive Option shall be at least 110% of the Fair Market Value per share of Stock on the date of grant. The exercise price for each Option shall be subject to adjustment as provided in Section 10 below. “Fair Market Value” means the closing price of publicly traded shares of Stock on the business day immediately prior to the grant on the principal securities exchange on which shares of Stock are listed (if the shares of Stock are so listed), or on the NASDAQ Stock Market (if the shares of Stock are regularly quoted on the NASDAQ Stock Market), or, if not so listed or regularly quoted, the mean between the closing bid and asked prices of publicly traded shares of Stock in the over-the-counter market, or, if such bid and asked prices shall not be available, as reported by any nationally recognized quotation service selected by the Company, or as determined by the Committee in a manner consistent with the provisions of the Code. Anything in this Section 5(a) to the contrary notwithstanding, in no event shall the purchase price of a share of Stock be less than the minimum price permitted under the rules and policies of any national securities exchange on which the shares of Stock are listed.
(b) Option Term. The term of each Option shall be fixed by the Committee, but no Option shall be exercisable more than ten years after the date such Option is granted and in the case of an Incentive Option granted to an Optionee who, at the time such Incentive Option is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, no such Incentive Option shall be exercisable more than five years after the date such Incentive Option is granted.
(c) Exercisability. Subject to Section 5(e) hereof, Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee.
Upon the occurrence of a “Change in Control” (as hereinafter defined), the Committee may accelerate the vesting and exercisability of outstanding Options, in whole or in part, as determined by the Committee in its sole discretion. In its sole discretion, the Committee may also determine that, upon the occurrence of a Change in Control, each outstanding Option shall terminate within a specified number of days after notice to the Optionee thereunder, and each such Optionee shall receive, with respect to each share of Company Stock subject to such Option, an amount equal to the excess of the Fair Market Value of such shares immediately prior to such Change in Control over the exercise price per share of such Option; such amount shall be payable in cash, in one or more kinds of property (including the property, if any, payable in the transaction) or a combination thereof, as the Committee shall determine in its sole discretion.
For purposes of the Plan, a Change in Control shall be deemed to have occurred if:
(i) a tender offer (or series of related offers) shall be made and consummated for the ownership of 50% or more of the outstanding voting securities of the Company, unless as a result of such tender offer more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to the commencement of such offer), any employee benefit plan of the Company or its Subsidiaries, and their affiliates;
(ii) the Company shall be merged or consolidated with another corporation, unless as a result of such merger or consolidation more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to such transaction), any employee benefit plan of the Company or its Subsidiaries, and their affiliates;
(iii) the Company shall sell substantially all of its assets to another corporation that is not wholly owned by the Company, unless as a result of such sale more than 50% of such assets shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to such transaction), any employee benefit plan of the Company or its Subsidiaries and their affiliates; or
(iv) a Person (as defined below) shall acquire 50% or more of the outstanding voting securities of the Company (whether directly, indirectly, beneficially or of record), unless as a result of such acquisition more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to the first acquisition of such securities by such Person), any employee benefit plan of the Company or its Subsidiaries, and their affiliates.
For purposes of this Section 5(c), ownership of voting securities shall take into account and shall include ownership as determined by applying the provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the Exchange Act. In addition, for such purposes, “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; however, a Person shall not include (A) the Company or any of its Subsidiaries; (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries; (C) an underwriter temporarily holding securities pursuant to an offering of such securities; or (D) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company.
(d) Method of Exercise. Options to the extent then exercisable may be exercised in whole or in part at any time during the option period, by giving written notice to the Company specifying the number of shares of Stock to be purchased, accompanied by payment in full of the purchase price, in cash, or by check or such other instrument as may be acceptable to the Committee. As determined by the Committee, in its sole discretion, at or after grant, payment in full or in part may be made at the election of the Optionee (i) in the form of Stock owned by the Optionee (based on the Fair Market Value of the Stock on the trading day before the Option is exercised) which is not the subject of any pledge or security interest, (ii) in the form of shares of Stock withheld by the Company from the shares of Stock otherwise to be received with such withheld shares of Stock having a Fair Market Value on the date of exercise equal to the exercise price of the Option, or (iii) by a combination of the foregoing, provided that the combined value of all cash and cash equivalents and the Fair Market Value of any shares surrendered to the Company is at least equal to such exercise price and except with respect to (ii) above, such method of payment will not cause a disqualifying disposition of all or a portion of the Stock received upon exercise of an Incentive Option. An Optionee shall have the right to dividends and other rights of a stockholder with respect to shares of Stock purchased upon exercise of an Option at such time as the Optionee (i) has given written notice of exercise and has paid in full for such shares and (ii) has satisfied such conditions that may be imposed by the Company with respect to the withholding of taxes.
(e) Limit on Value of Incentive Option. The aggregate Fair Market Value, determined as of the date the Incentive Option is granted, of Stock for which Incentive Options are exercisable for the first time by any Optionee during any calendar year under the Plan (and/or any other stock option plans of the Company or any Subsidiary) shall not exceed $100,000.
(f) Incentive Option Shares. A grant of an Incentive Option under this Plan shall provide that (i) the Optionee shall be required as a condition of the exercise to furnish to the Company any payroll (employment) tax required to be withheld, and (ii) if the Optionee makes a disposition, within the meaning of Section 424(c) of the Code and regulations promulgated thereunder, of any share or shares of Stock issued to him upon exercise of an Incentive Option granted under the Plan within the two-year period commencing on the day after the date of the grant of such Incentive Option or within a one-year period commencing on the day after the date of transfer of the share or shares to him pursuant to the exercise of such Incentive Option, he shall, within 10 days after such disposition, notify the Company thereof and immediately deliver to the Company any amount of United States federal, state and local income tax withholding required by law.
6.Terms and Conditions of Stock Appreciation Rights.
Stock Appreciation Rights shall granted with an exercise price that is not less than 100% of the Fair Market Value (as defined in Section 5(a) herein) of a share of Common Stock on the date the Stock Appreciation Right is granted and shall be exercisable at such time or times and subject to such other terms and conditions as shall be determined by the Committee. Unless otherwise provided, Stock Appreciation Rights shall become immediately exercisable and shall remain exercisable until expiration, cancellation or termination of the award. Such rights may be exercised in whole or in part by giving written notice to the Company. Stock Appreciation Rights to the extent then exercisable may be exercised for payment in cash, shares of Common Stock or a combination of both, as the Committee shall deem desirable, equal to: (i) the excess of the Fair Market Value as defined in Section 5(a) herein of a share of Common Stock on the date of exercise over (ii) the exercise price of such Stock Appreciation Right.
7.Terms and Conditions of Restricted Stock.
Restricted Stock may be granted under this Plan aside from, or in association with, any other award and shall be subject to the following conditions and shall contain such additional terms and conditions (including provisions relating to the acceleration of vesting of Restricted Stock upon a Change of Control), not inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) Grantee rights. A Grantee shall have no rights to an award of Restricted Stock unless and until Grantee accepts the award within the period prescribed by the Committee and, if the Committee shall deem desirable, makes payment to the Company in cash, or by check or such other instrument as may be acceptable to the Committee. After acceptance and issuance of a certificate or certificates, as provided for below, the Grantee shall have the rights of a stockholder with respect to Restricted Stock subject to the non-transferability and forfeiture restrictions described in section 7(d) below.
(b) Issuance of certificates. The Company shall issue in the Grantee’s name a certificate or certificates for the shares of Common Stock associated with the award promptly after the Grantee accepts such award.
(c) Delivery of certificates. Unless otherwise provided, any certificate or certificates issued evidencing shares of Restricted Stock shall not be delivered to the Grantee until such shares are free of any restrictions specified by the Committee at the time of grant.
(d) Forfeitability, Non-transferability of Restricted Stock. Shares of Restricted Stock are forfeitable until the terms of the Restricted Stock grant have been satisfied. Shares of Restricted Stock are not transferable until the date on which the Committee has specified such restrictions has lapsed. Unless otherwise provided, distributions of additional shares or property in the form of dividends or otherwise in respect of shares of Restricted Stock shall be subject to the same restrictions as such shares of Restricted Stock.
(e) Change of Control. Upon the occurrence of a Change in Control, the Committee may accelerate the vesting of outstanding Restricted Stock, in whole or in part, as determined by the Committee in its sole discretion.
8.Other Equity Incentives or Stock Based Awards.
The Committee may grant Equity Incentives (including the grant of unrestricted shares) to such key persons, in such amounts and subject to such terms and conditions, as the Committee shall in its discretion determine, subject to the provisions of the Plan. Such awards may entail the transfer of actual shares of Common Stock to Plan participants, or payment in cash or otherwise of amounts based on the value of shares of Common Stock.
9.Term of Plan.
No Option, Stock Appreciation Rights, Restricted Stock or Equity Incentives shall be granted pursuant to the Plan on the date which is ten years from the effective date of the Plan, but Options, Stock Appreciation Rights or Equity Incentives theretofore granted may extend beyond that date.
10.Capital Change of the Company.
In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, or similar type of corporate restructuring affecting the Stock, the Committee shall make an appropriate and equitable adjustment in the number and kind of shares reserved for issuance under the Plan and in the number and option price of shares subject to outstanding Options granted under the Plan, to the end that after such event each Optionee’s proportionate interest shall be maintained as immediately before the occurrence of such event. The Committee shall, to the extent feasible, make such other adjustments as may be required under the tax laws so that any Incentive Options previously granted shall not be deemed modified within the meaning of Section 424(h) of the Code. Appropriate adjustments shall also be made in the case of outstanding Stock Appreciation Rights and Restricted Stock granted under the Plan.
11.Purchase for Investment.
Unless the Options and shares covered by the Plan have been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the Company has determined that such registration is unnecessary, each person exercising or receiving Options, Stock Appreciation Rights, Restricted Stock or Equity Incentives under the Plan may be required by the Company to give a representation in writing that he is acquiring the securities (if issued) for his own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof.
12.Taxes.
(a) The Company may make such provisions as it may deem appropriate, consistent with applicable law, in connection with any Options, Stock Appreciation Rights, Restricted Stock or Equity Incentives granted under the Plan with respect to the withholding of any taxes (including income or employment taxes) or any other tax matters.
(b) If any Grantee, in connection with the acquisition of Restricted Stock, makes the election permitted under section 83(b) of the Code (that is, an election to include in gross income in the year of transfer the amounts specified in section 83(b)), such Grantee shall notify the Company of the election with the Internal Revenue Service pursuant to regulations issued under the authority of Code section 83(b).
(c) If any Grantee shall make any disposition of shares of Stock issued pursuant to the exercise of an Incentive Option under the circumstances described in section 421(b) of the Code (relating to certain disqualifying dispositions), such Grantee shall notify the Company of such disposition within 10 days hereof.
13.Effective Date of Plan.
The Plan shall be effective on April 30, 2009; provided, however, that if, and only if, certain options are intended to qualify as Incentive Stock Options, the Plan must subsequently be approved by majority vote of the Company’s stockholders no later than April 30, 2010, and further, that in the event certain Option grants hereunder are intended to qualify as performance-based compensation within the meaning of Section 162(m) of the Code, the requirements as to shareholder approval set forth in Section 162(m) of the Code are satisfied.
14.Amendment and Termination, Section 409A of the Code.
The Board may amend, suspend, or terminate the Plan, except that no amendment shall be made that would impair the rights of any Optionee or Grantee under any Option, Stock Appreciation Right, Restricted Stock or Equity Incentive theretofore granted without the Optionee or Grantee’s consent, and except that no amendment shall be made which, without the approval of the stockholders of the Company would:
(a) materially increase the number of shares that may be issued under the Plan, except as is provided in Section 10;
(b) materially increase the benefits accruing to the Optionees or Grantees under the Plan;
(c) materially modify the requirements as to eligibility for participation in the Plan;
(d) decrease the exercise price of an Incentive Option to less than 100% of the Fair Market Value per share of Stock on the date of grant thereof or the exercise price of a Nonqualified Option to less than 100% of the Fair Market Value per share of Stock on the date of grant thereof; or
(e) extend the term of any Option beyond that provided for in Section 5(b).
The Committee may amend the terms of any Option, Stock Appreciation Right, Restricted Stock or Equity Incentive theretofore granted, prospectively or retroactively, but no such amendment shall impair the rights of any Optionee or Grantee without the Optionee or Grantee’s consent. The Committee may also substitute new Options, Stock Appreciation Rights or Restricted Stock for previously granted Options, Stock Appreciation Rights or Restricted Stock including options granted under other plans applicable to the participant and previously granted Options having higher option prices, upon such terms as the Committee may deem appropriate.
It is the intention of the Board that the Plan comply strictly with the provisions of Section 409A of the Code and Treasury Regulations and other Internal Revenue Service guidance promulgated thereunder (the “Section 409A Rules) and the Committee shall exercise its discretion in granting Options, Stock Appreciation Rights or Restricted Stock hereunder (and the terms of such grants), accordingly. The Plan and any grant of an Option, Stock Appreciation right or Restricted Stock hereunder may be amended from time to time (without, in the case of an Award, the consent of the Participant) as may be necessary or appropriate to comply with the Section 409A Rules.
15.Government Regulations.
The Plan, and the grant and exercise of Options, Stock Appreciation Rights, Restricted Stock and Equity Incentives hereunder, and the obligation of the Company to sell and deliver shares under such Options, Stock Appreciation Rights, Restricted Stock and Equity Incentives shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies, national securities exchanges and interdealer quotation systems as may be required.
16.General Provisions.
(a) Certificates. All certificates for shares of Stock delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, or other securities commission having jurisdiction, any applicable Federal or state securities law, any stock exchange or interdealer quotation system upon which the Stock is then listed or traded and the Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions.
(b) Employment Matters. The adoption of the Plan shall not confer upon any Optionee or Grantee of the Company or any Subsidiary any right to continued employment or, in the case of an Optionee or Grantee who is a director, continued service as a director, with the Company or a Subsidiary, as the case may be, nor shall it interfere in any way with the right of the Company or any Subsidiary to terminate the employment of any of its employees, the service of any of its directors or the retention of any of its consultants or advisors at any time.
(c) Limitation of Liability. No member of the Board or the Committee, or any officer or employee of the Company acting on behalf of the Board or the Committee, shall be personally liable for any action, determination or interpretation taken or made in good faith with respect to the Plan, and all members of the Board or the Committee and each and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination or interpretation.
(d) Registration of Stock. Notwithstanding any other provision in the Plan, no Option may be exercised unless and until the Stock to be issued upon the exercise thereof has been registered under the Securities Act and applicable state securities laws, or are, in the opinion of counsel to the Company, exempt from such registration in the United States. The Company shall not be under any obligation to register under applicable federal or state securities laws any Stock to be issued upon the exercise of an Option granted hereunder in order to permit the exercise of an Option and the issuance and sale of the Stock subject to such Option, although the Company may in its sole discretion register such Stock at such time as the Company shall determine. If the Company chooses to comply with such an exemption from registration, the Stock issued under the Plan may, at the direction of the Committee, bear an appropriate restrictive legend restricting the transfer or pledge of the Stock represented thereby, and the Committee may also give appropriate stop transfer instructions with respect to such Stock to the Company’s transfer agent.
(e) Non-transferability. Options and Stock Appreciation Rights granted hereunder are not transferable and may be exercised solely by the Optionee or Grantee during his lifetime or after his death by the person or persons entitled thereto under his will or the laws of descent and distribution. The Committee, in its sole discretion, may permit a transfer of a Nonqualified Option to (i) a trust for the benefit of the Optionee or (ii) a member of the Optionee’s immediate family (or a trust for his or her benefit). Any attempt to transfer, assign, pledge or otherwise dispose of, or to subject to execution, attachment or similar process, any Option or Stock Appreciation Right contrary to the provisions hereof shall be void and ineffective and shall give no right to the purported transferee.
(f) No rights as a Stockholder. No Optionee or Grantee (or other person having the right to exercise such award) shall have any of the rights of a stockholder of the Company with respect to shares subject to such award until the issuance of a stock certificate to such person for such shares. Except as otherwise provided herein, no adjustment shall be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) for which the record date is prior to the date such stock certificate is issued.
(g) Termination by Death. Unless otherwise determined by the Committee, if any Optionee or Grantee’s employment with or service to the Company or any Subsidiary terminates by reason of death, the Option or Stock Appreciation Right may thereafter be exercised, to the extent then exercisable (or on such accelerated basis as the Committee shall determine at or after grant), by the legal representative of the estate or by the legatee of the Optionee or Grantee under the will of the Optionee or Grantee, for a period of one year after the date of such death or until the expiration of the stated term of such Option or Stock Appreciation Right as provided under the Plan, whichever period is shorter.
(h) Termination by Reason of Disability. Unless otherwise determined by the Committee, if any Optionee or Grantee’s employment with or service to the Company or any Subsidiary terminates by reason of total and permanent disability, any Option or Stock Appreciation Right held by such Optionee or Grantee may thereafter be exercised, to the extent it was exercisable at the time of termination due to Disability (or on such accelerated basis as the Committee shall determine at or after grant), but may not be exercised after 60 days after the date of such termination of employment or service or the expiration of the stated term of such Option or Stock Appreciation Right, whichever period is shorter; provided, however, that, if the Optionee or Grantee dies within such 60-day period, any unexercised Option or Stock Appreciation Right held by such Optionee or Grantee shall thereafter be exercisable to the extent to which it was exercisable at the time of death for a period of one year after the date of such death or for the stated term of such Option or Stock Appreciation Right, whichever period is shorter.
(i) Termination by Reason of Retirement. Unless otherwise determined by the Committee, if any Optionee or Grantee’s employment with or service to the Company or any Subsidiary terminates by reason of Normal or Early Retirement (as such terms are defined below), any Option or Stock Appreciation Right held by such Optionee or Grantee may thereafter be exercised to the extent it was exercisable at the time of such Retirement (or on such accelerated basis as the Committee shall determine at or after grant), but may not be exercised after 60 days after the date of such termination of employment or service or the expiration of the stated term of such Option or Stock Appreciation Right, whichever period is shorter; provided, however, that, if the Optionee or Grantee dies within such 60-day period, any unexercised Option or Stock Appreciation Right held by such Optionee or Grantee shall thereafter be exercisable, to the extent to which it was exercisable at the time of death, for a period of one year after the date of such death or for the stated term of such Option or Stock Appreciation Right, whichever period is shorter. For purposes of this paragraph (i), “Normal Retirement” shall mean retirement from active employment with the Company or any Subsidiary on or after the normal retirement date specified in the applicable Company or Subsidiary pension plan or if no such pension plan, age 65, and “Early Retirement” shall mean retirement from active employment with the Company or any Subsidiary pursuant to the early retirement provisions of the applicable Company or Subsidiary pension plan or if no such pension plan, age 55.
(j) Other Termination. Unless otherwise determined by the Committee, if any Optionee or Grantee’s employment with or service to the Company or any Subsidiary terminates for any reason other than death, Disability or Normal or Early Retirement, the Option or Stock Appreciation Right shall thereupon terminate, except that the portion of any Option or Stock Appreciation Right that was exercisable on the date of such termination of employment or service may be exercised for the lesser of 30 days after the date of termination or the balance of such Option or Stock Appreciation Right’s term if the Optionee or Grantee’s employment or service with the Company or any Subsidiary is terminated by the Company or such Subsidiary without cause or for good reason by the Optionee or Grantee (the determination as to whether termination was for cause or for good reason to be made by the Committee). The transfer of an Optionee or Grantee from the employ of or service to the Company to the employ of or service to a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be deemed to constitute a termination of employment or service for purposes of the Plan.
| Wilhelmina International, Inc. |
| |
| April 30, 2009 |
Important Notice Regarding the Availability of Proxy Materials for
Wilhelmina International, Inc.’s Annual Meeting of Stockholders to be Held on
January 20, 2011. The Proxy Statement and the 2009 Annual Report are available
at www.wilhelmina.com/investor_relations.cfm
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
WILHELMINA INTERNATIONAL, INC.
Annual Meeting of Stockholders
June 4, 2009To be held on January 20, 2011
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Proxy Statement and 2008 Annual Report on Form 10-K are available at:
www.wilhelmina.com/investorrelations.cfm
The undersigned, a stockholder of Wilhelmina International, Inc., a Delaware corporation (the “Company”), does hereby appoint John Murray and Evan Stone, and each of them, the true and lawful attorneys and proxies with full power of substitution, for and in the name, place and stead of the undersigned, to vote all of the shares of Common Stockcapital stock of the Company whichthat the undersignedstockholder would be entitled to vote if personally present aton all matters that may properly come before the 2009Company’s Annual Meeting of Stockholders of the Company to be held at the offices of the Company located at 200 Crescent Court, Suite 1400, Dallas, Texas 75201, on June 4, 2009Thursday, January 20, 2011, at 9:10:00 a.m., local time, or at any adjournment or adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.“FOR” THE ELECTION OF NOMINEES NAMED HEREIN. PROPERLY EXECUTED PROXIES WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO SUCH DIRECTIONS ARE GIVEN, SUCH PROXIES WILL BE VOTED “FOR” THE ELECTION OF NOMINEES NAMED HEREIN.
The undersigned hereby instructs said proxies or their substitutes:
| 1. | ELECTION OF DIRECTOR NOMINEES |
Nominees: | Mark E. Schwarz | Evan StoneTo elect seven directors to serve until the next Annual Meeting of Stockholders and until their successors are duly elected and qualify. |
| | Jonathan Bren | Derek Fromm | |
| | James Risher | Dr. Hans-Joachim Bohlk |
| John Murray | |
| FOR ALL NOMINEES [ ] | WITHHOLD AUTHORITY TO [ ] VOTE FOR ALL NOMINEES |
| |
| | |
TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE(S), PRINT NAME(S) ABOVE.
| Nominees: | 01 Mark E. Schwarz | 05 James Dvorak |
2. | [ ] APPROVAL OF 2009 INCENTIVE STOCK PLAN | 02 Horst-Dieter Esch | 06 Mark Pape |
| | 03 Brad Krassner | 07 James Roddey |
| | 04 Clinton Coleman | |
DISCRETIONARY AUTHORITY:TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S), PRINT NAME(S) BELOW.
In their discretion, the proxies are authorized to vote upon such other and further business as may properly come before the meeting. | 2. | To transact such other business as may properly be brought before the Annual Meeting. |
|
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS AND REGARDLESS OF THE NUMBER OF SHARES YOU OWN, PLEASE DATE, SIGN AND RETURN THIS PROXY WILL BE VOTEDCARD IN ACCORDANCE WITH ANY DIRECTIONS HEREINBEFORE GIVEN. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OFENCLOSED ENVELOPE (WHICH REQUIRES NO POSTAGE IF MAILED IN THE NOMINEES NAMED HEREIN AND FOR THE APPROVAL OF THE 2009 INCENTIVE STOCK PLAN.UNITED STATES).
The undersigned stockholder hereby revokes any other proxy or proxies heretofore given to vote or act with respect to the shares of Common Stock of the Company held by the undersigned for the Company’s Annual Meeting of Stockholders and hereby ratifies and confirms all action the herein named attorneys and proxies, their substitutes, or any of them may lawfully take by virtue hereof.
Dated: _______________________, 2009
_____________________________DATED:__________________________
_____________________________
(Print Full Name of Stockholder
Signature(s)
(Signature of Stockholder)
(Signature if held jointly)
NOTE: Please sign exactly as your name or names appear hereon. When signing as attorney, executor, administrator, trustee or guardian, please indicate the capacity in which signing. When signing as joint tenants, all parties in the joint tenancy should sign. When a proxy is given by a corporation, it should be signed with full corporate name by a duly authorized officer. Please mark, date, sign and mail this proxy in the envelope provided for this purpose. No postage is required if mailed in the United States.