LASER-PACIFIC MEDIA CORPORATION
809 N. Cahuenga Blvd.
Hollywood, California 90038
(323) 462-6266
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
June 15, 2001
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
the accompanying proxy by the Board of Directors of Laser-Pacific Media
Corporation, ("the Company"), a Delaware corporation. This proxy is for use at
the annual meeting of stockholders of the Company (the "Annual Meeting"). The
Annual Meeting is to be held at the Hollywood Roosevelt Hotel, 7000 Hollywood
Blvd., Hollywood, CA 90028 on June 15, 2001 at 3:00 p.m., and at any
adjournments thereof, for the purposes set forth in the attached Notice of
Annual Meeting of Stockholders.
All shares of common stock of the Company ("Common Stock") represented by a
properly completed proxy received in time for the Annual Meeting will be voted
by the proxy holders in accordance with the instructions contained therein. If
instructions are not given in the proxy, it will be voted "FOR" the election of
the directors nominated as set forth under "Election of Directors" below. With
respect to any other item of business that may come before the Annual Meeting,
the proxy holders will vote the proxy in accordance with their best judgment. At
the time of the mailing of this Proxy Statement, the Company was not aware of
any matters needing to be acted upon at the meeting except for those matters
discussed in this Proxy Statement.
Any stockholder who returns a proxy has the right to revoke it at any time
before it is exercised by attending the Annual Meeting and voting in person; or
by delivering a written statement to the Company, stating that the proxy is
revoked; or by executing and delivering to the Secretary of the Company a duly
executed proxy bearing a later date than the enclosed proxy.
This Proxy Statement, together with the accompanying proxy, is first being
mailed on or about May 17, 2001, to the Company's stockholders of record at the
close of business on May 7, 2001.
The Company's principal executive offices are located at 809 North Cahuenga
Boulevard, Hollywood, California 90038.
SECURITIES
The Company has one class of voting stock outstanding, designated Common
Stock, with a par value of $.0001. Each share of Common Stock is entitled to one
vote on each matter to be voted on at the Annual Meeting. Only stockholders of
record as of the close of business on May 7, 2001 are entitled to notice of and
to vote at the Annual Meeting. As of the record date, May 7, 2001, there were
7,751,295 shares of Common stock outstanding.
A majority of the outstanding shares of Common Stock must be present in
person or by proxy at the Annual Meeting to constitute a quorum for the
transaction of business. Abstentions and other "non-votes" are counted as
present for establishing a quorum. A broker non-vote occurs on a proposal where
a broker is not permitted to vote on the matter absent instructions from the
beneficial owners of the shares and no instructions are given.
ELECTION OF DIRECTORS
The Company is incorporated in the State of Delaware and neither the laws
of that state nor the Certificate of Incorporation of the Company requires
cumulative voting in the election of the Board of Directors. If a quorum is
present nominees receiving the highest number of affirmative votes cast, up to
the number of directors to be elected, will be elected as directors. Abstentions
and broker non-votes have no effect on the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
NAMED. PROXIES RETURNED TO THE COMPANY WILL BE VOTED "FOR" THE NOMINEES NAMED
UNLESS OTHERWISE INSTRUCTED.
Nominees
Five directors are to be elected at the Annual Meeting, each to hold office
until the next annual meeting and until his respective successor is elected and
qualified. The Board of Directors has nominated for election as directors the
five persons named below. All of these nominees have consented to being named
herein and have indicated their intention to serve as directors of the Company,
if elected. If any of such nominees should be unable or should decline to serve,
the discretionary authority provided in the proxies received will be exercised
to vote for a substitute nominee or nominees of the Board of Directors, unless
otherwise instructed. Unless otherwise directed in the accompanying proxy, the
persons named therein will vote for the election of the five nominees listed
below. The Board of Directors has no reason to believe that any substitute
nominee will be required.
The following table sets forth certain information as of April 30, 2001,
with respect to the Board's nominees:
Director
Name Age Since Position with Company
James R. Parks 50 1990 Chairman of the Board and Chief Executive Officer
Emory M. Cohen 58 1990 President, Chief Operating Officer and Director
Thomas D. Gordon (1) 52 1999 Director
Craig A. Jacobson (1) 48 1999 Director
David C. Merritt (1) 46 2001 Director
- ------------------
(1) Member of the Audit Committee.
BOARD OF DIRECTORS
Biographical Information on Current Directors
The following biographical information is furnished with respect to the
Company's directors:
James R. Parks has been Chairman of the Board and Chief Executive Officer
of the Company since March of 1994 and a director since the inception of the
Company in 1990. Since 1978, Mr. Parks has been a partner of Parks, Palmer,
Turner and Yemenedjian, certified public accountants. Since January 1, 2000, Mr.
Parks has been a Business Unit Leader of CBIZ Southern California Inc, (NASDAQ).
Mr. Parks is Chairman of the Board of Reality Center Management Inc, a privately
held real estate management and development company. Mr. Parks is a director of
Sybron Dental Specialties Inc, (NYSE).
Emory M. Cohen is the Company's President and Chief Operating Officer and a
director and has held such positions since the inception of the Company in 1990.
Mr. Cohen received a motion picture Academy Award in 1978 for inventing a system
that applies electronic and videotape technology to motion picture
post-production sound recording, and an Emmy Award in 1989 in connection with
the Company's Electronic Laboratory(TM).
Thomas D. Gordon has served as a director of the Company since July 1999.
Since 1994 Mr. Gordon has served as the Chief Executive Officer of the
Cedars-Sinai Medical Care Foundation, Cedars-Sinai Health System Medical Network
Services and Medical Group of Beverly Hills, Inc. From 1989 to 1994, Mr. Gordon
served as the Chief Executive Officer of the Medical Group of Beverly Hills. In
addition, Mr. Gordon serves as Assistant Clinical Professor for the Graduate
Program in Health Care Administration and Institute for Diversity Program at the
University of Southern California. Mr. Gordon is a member of Laser-Pacific's
Audit Committee.
Craig A. Jacobson has served as a director of the Company since December
1999. Mr. Jacobson is a partner with the law firm Hansen, Jacobson, Teller,
Hoberman, Newman, Warren, Hertz and Goldring, LLP, which he helped to found in
1987. The firm specializes in entertainment law for the motion picture and
television industry. Mr. Jacobson is a member of Laser-Pacific's Audit
Committee.
David C. Merritt has served as a director of the Company since January
2001. Mr. Merritt heads the Entertainment Media Advisory Group of Gerard Klauer
Mattison & Company Inc. Previously, Mr. Merritt served 24 years at KPMG LLP.
During his tenure with KPMG, which included 14 years as a partner, he headed the
Media Entertainment Practice. Mr. Merritt is the Chairman of Laser-Pacific's
Audit Committee.
Committees
The Audit Committee is the only standing committee of the Board of
Directors. As of January 9, 2001 Mr. Gordon, Mr. Jacobson and Mr. Merritt
comprised the Audit Committee. The Audit Committee met twice in 2000 and met on
two separate occasions in 2001 with the independent accountants to discuss the
year ended December 31, 2000. The principal duties of the Audit Committee are
detailed in the Company's Audit Committee Charter, adopted June 7, 2000, which
is attached as Appendix A. The Audit Committee as currently comprised meets the
independence requirements of the Securities and Exchange Commission and the
National Association of Securities Dealers.
Attendance and Compensation
During the year ended December 31, 2000, the Board of Directors met seven
times. All directors attended at least 80% of the total Board meetings and the
meetings of the committee on which they serve.
Directors who are not officers or employees of the Company receive $1,000
per month and are granted options to purchase the Company's Common Stock. Craig
Jacobson was granted options to purchase 20,000 shares of Common Stock, with an
exercise price of $4.13, on April 25, 2000. On April 25, 2000 options to
purchase 20,000 shares of Common Stock, that were originally granted to Thomas
Gordon on December 22, 1999, were repriced from $9.94 to $4.13 per share.
Additionally, Thomas Gordon and Craig Jacobson were each granted options to
purchase 10,000 shares of Common Stock, with an exercise price of $1.78, on
November 9, 2000. David Merritt was granted options to purchase 10,000 shares of
Common Stock, with an exercise price of $2.13, on March 21, 2001.
EXECUTIVE OFFICERS
Officers are appointed by the Board of Directors of the Company.
Information with respect to Messrs. James R. Parks (Chairman of the Board and
Chief Executive Officer) and Emory M. Cohen (President and Chief Operating
Officer) is set forth on page three. Information with respect to Leon D.
Silverman, Robert McClain and Randolph D. Blim is set forth below:
Name Age Position with Company
Leon D. Silverman 46 Executive Vice President
Randolph D. Blim 54 Senior Vice President
Robert McClain 53 Chief Financial Officer
Vice President and Secretary
Leon D. Silverman has served as Executive Vice President since the
inception of the Company in 1990. Mr. Silverman is a Founding Member of the
Technology Council of the Television and Motion Picture Industry and currently
serves as Executive Vice President of its Executive Committee. In addition, he
currently serves as President of the Southern California Chapter of the
International Teleproduction Society.
Randolph D. Blim has been the Senior Vice President of Engineering since
the inception of the Company in 1990. Mr. Blim was awarded an Emmy in 1989 for
Outstanding Achievement in Engineering Development in connection with the
Company's Electronic Laboratory(TM).
Robert McClain is a Certified Public Accountant; he became Chief Financial
Officer in November 1994. He was employed by Betson Pacific; a privately held
corporation that develops and distributes coin operated equipment, as Chief
Financial Officer and Director of Operations from 1992 through November 1994
when he left to join the Company.
No family relationships exist between any of the officers or directors of
the Company.
REPORT OF THE BOARD OF DIRECTORS ON
EXECUTIVE COMPENSATION
The Board of Directors is responsible for reviewing benefits and
compensation for all of the Company's officers. The Board's executive
compensation policies are designed to enhance the financial performance of the
Company and stockholder value.
The executive compensation program is viewed in total considering all of
the component parts: base salary, bonus and long-term incentive compensation in
the form of stock options. In evaluating the performance of and in setting the
salary and incentive compensation of the executive officers, the Board
considers, in the aggregate, the following factors: industry factors, taking
into account compensation paid by competitors and the amount required to be paid
by the Company to retain key employees; the progress made by the Company in the
growth of its business; the performance of the Company's stock; and the
Company's overall financial performance.
The Chief Executive Officer's salary was set at $208,000 annually in March
1994, and was based on the criteria discussed in the preceding paragraph and has
not changed. Mr. Parks received a performance bonus of $12,000 in 2000. Mr.
Parks, as a major stockholder of the Company, believes that most of his
compensation incentive is derived from increasing the share value of the
Company's stock which is directly related to the Company's performance.
The Board of Directors awarded a performance bonus based on the Company's
superior operating performance in 2000 of $50,000 to Emory M. Cohen and
performance bonuses of $35,000 each to Randolph D. Blim, Leon D. Silverman, and
Robert McClain for the fiscal year ended December 31, 2000. Options to purchase
shares of the Company's Common Stock at $4.13 were granted to James R. Parks,
Emory M. Cohen, Leon Silverman, Randolph D. Blim, and Robert McClain on April
25, 2000. The number of options granted is detailed on the schedule on page 10
(ten) of this proxy statement.
Following is a summary of the current compensation of the Chief Executive
Officer of the Company and the four other most highly compensated executive
officers of the Company.
James R. Parks is currently employed by the Company at an annual salary of
$208,000. Mr. Parks is not employed pursuant to a written agreement, but serves
at the discretion of and on terms determined by the Board of Directors. Mr.
Parks provides services to the Company on an as-needed basis.
Emory M. Cohen has a five-year employment agreement with the Company,
entered into as of May 15, 1990, which has no termination date but is terminable
upon five years' written notice or upon 30 days notice for cause, as defined.
Under the terms of the agreement, Mr. Cohen is entitled to a minimum annual
salary of $350,000, subject to adjustment if the cost of living increases more
than 10 percent in any year, with a bonus in an amount to be determined by the
Board of Directors. In addition, he is entitled to other specified benefits such
as an automobile, reimbursement of expenses, and life, health, and disability
insurance benefits. Commencing on the effective date of a change of control of
the Company, if either the Company terminates the executive's employment
contract, other than for specified reasons, or the executive elects to terminate
his employment within nine months of the change in control, then the executive
shall, on the date of either termination, receive a lump sum payment of three
times his annual compensation. In the event payments are required as a result of
a change of control, then no further compensation shall be payable to the
executive under this agreement.
Leon D. Silverman is currently employed by the Company at an annual salary
of $275,000, and is entitled to other specified benefits such as an automobile
allowance, reimbursement of expenses, and life, health, and disability insurance
benefits. Mr. Silverman has no written agreement with the Company and serves at
the discretion of the Board of Directors.
Randolph D. Blim is employed by the Company pursuant to an employment
agreement that expires on July 23, 2002. The agreement requires that the
executive be given 120 days written notice prior to the date of termination. If
a 120-day written notice is not given by either party, prior to the expiration
of the current agreement, and in all subsequent years, the agreement will be
renewed for one additional year. The agreement is terminable upon 30 days notice
for cause as defined in the agreement. Mr. Blim's current annual salary is
$219,600 with required yearly increases of 3% over the term of the agreement,
with an annual bonus in an amount to be determined by the Board of Directors. He
is also entitled to other specified benefits such as an automobile allowance,
reimbursement of expenses, and life, health, and disability insurance benefits.
Robert McClain is currently employed by the Company pursuant to an
employment agreement that expires July 31, 2002. The agreement requires that the
executive be given 120 days written notice prior to the date of termination. If
a 120-day written notice is not given by either party, prior to the expiration
of the current agreement, and in all subsequent years, the agreement will be
renewed for one additional year. The agreement is terminable upon 30 days notice
for cause as defined in the agreement. Mr. McClain's current annual salary is
$200,000 with an annual bonus in an amount to be determined by the Board of
Directors. He is also entitled to other specified benefits such as an automobile
allowance, reimbursement of expenses, and life, health, and disability insurance
benefits.
The SEC requires public companies to state their compensation policies with
respect to federal income tax laws that limit to $1,000,000 the deductibility of
compensation paid to the executive officers named in this proxy statement. In
light of the current level of compensation of the Company's named executive
officers, the Board of Directors of the Company has not adopted a policy with
respect to the deductibility limit, but will adopt such a policy should it
become relevant.
SUBMITTED BY THE BOARD OF DIRECTORS
OF LASER-PACIFIC MEDIA CORPORATION
/s/ James R. Parks
James R. Parks, Chairman
/s/ Emory M. Cohen
Emory M. Cohen
/s/ Thomas D. Gordon
Thomas D. Gordon
/s/ Craig A. Jacobson
Craig A. Jacobson
/s/ David C. Merritt
David C. Merritt
The Board of Directors does not have a compensation committee. During
fiscal year ended December 31, 2000, two members of the Board, each of whom
participated in decisions regarding executive officer compensation, were
executive officers of the Company, James R. Parks and Emory M. Cohen. There are
no interlocks between the Company and other entities involving the Company's
executive officers and Board members who serve as executive officers or Board
members of such other entities.
AUDIT COMMITTEE REPORT
Pursuant to rules adopted by the SEC designed to improve disclosures
related to the functioning of corporate audit committees and to enhance the
reliability and credibility of financial statements of public companies, the
Audit Committee of Laser-Pacific Media Corporation's Board of Directors submits
the following report:
Audit Committee Report to Shareholders
The Audit Committee of the Board is responsible for providing independent,
objective oversight of the Company's accounting functions and internal controls.
The Audit Committee is composed of three directors, each of whom is independent
as defined by the National Association of Securities Dealers' listing standards.
The Audit Committee operates under a written charter approved by the Board of
Directors. A copy of the charter is attached to this Proxy Statement as Appendix
A.
Management is responsible for the Company's internal controls and financial
reporting process. The independent accountants are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and to issue a report
thereon. The Audit Committee's responsibility is to monitor and oversee these
processes.
In connection with these responsibilities, the Audit Committee met with
management and the independent accountants to review and discuss the December
31, 2000 financial statements. The Audit Committee also discussed with the
independent accountants the matters required by Statement on Auditing Standards
No. 61, Communication with Audit Committees. The Audit Committee also received
written disclosures from the independent accountants required by Independence
Standards Board Standard No. 1, Independence Discussions with Audit Committees,
and the Audit Committee discussed with the independent accountants that firm's
independence.
Based upon the Audit Committee's discussions with management and the
independent accountants, and the Audit Committee's review of the representations
of management and the independent accountants, the Audit Committee recommended
that the Board of Directors include the audited consolidated financial
statements in the Company's Annual Report on Form 10-K for the year ended
December 31, 2000, to be filed with the Securities and Exchange Commission.
Respectfully Submitted
THE AUDIT COMMITTEE
/s/ David C. Merritt /s/ Craig A. Jacobson /s/ Thomas D. Gordon
David C. Merritt, Chairman Craig A. Jacobson Thomas D. Gordon
SUMMARY COMPENSATION TABLE
The table below shows, for the years ended December 31, 2000, 1999 and
1998, the annual and long-term compensation that was paid or accrued for those
years to the Chief Executive Officer and the other four most highly compensated
persons who were serving as executive officers of the Company at the end of the
fiscal year ended December 31, 2000 (collectively, the "Named Executive
Officers").
Long -Term
Annual Compensation Compensation Awards
--------------------------------------- ---------------------------------
Name and Securities
Principal Position Year Salary ($) Bonus ($) Other ($) (1) Underlying Options (#)
- ----------------------------------------------------------------------------- ---------------------------------
James R. Parks 2000 208,000 12,000 -0- 7,000
CEO 1999 208,000 -0- -0- -0-
1998 208,000 25,000 -0- -0-
Emory M. Cohen 2000 350,000 50,000 (2) 47,936 50,000
President and COO 1999 350,000 60,000 (2) 31,427 -0-
1998 *468,491 25,000 21,759 -0-
Leon D. Silverman 2000 275,004 35,000 (3) 37,433 50,000
Executive Vice President 1999 274,080 35,000 *(3) 46,439 -0-
1998 266,731 25,000 8,223 -0-
Randolph D. Blim 2000 211,847 35,000 (4) 19,504 40,000
Senior Vice President 1999 205,797 35,000 (4) 19,504 -0-
1998 *281,883 25,000 4,504 -0-
Robert McClain 2000 185,004 35,000 (5) 22,221 30,000
CFO, Vice President 1999 172,773 35,000 (5) 17,918 -0-
and Secretary 1998 159,006 25,000 9,600 -0-
*Payment of compensation includes payments deferred from prior periods.
Includes the value of additional benefits and automobiles provided to the employee.
(2) Includes auto expense reimbursement of $12,000 in 2000 and $12,000 in 1999.
(3) Includes auto expense reimbursement of $30,000 in 2000 and $35,035 in 1999.
(4) Includes auto expense reimbursement of $15,000 in 2000 and $15,000 in 1999.
(5) Includes auto expense reimbursement of $16,800 in 2000 and $16,800 in 1999.
STOCK OPTIONS
The Company's 1997 Incentive Stock Option Plan, as amended (the "Option
Plan"), provides for an aggregate of 1,000,000 shares that may be purchased
pursuant to incentive or nonqualified stock options granted to officers,
directors or key employees at prices equal to or greater than the fair market
value at the date of grant. All granted options currently outstanding; expire no
later than 10 years from the grant date and are generally vested at date of
grant. All options outstanding under the Option Plan were vested at December 31,
2000. Under a prior stock option plan, which has expired, 36,150 stock options
remain outstanding and were exercisable at December 31, 2000.
At December 31, 2000, under all plans, options with respect to 314,550
shares of Common Stock were outstanding, 264,550 of the options were exercisable
and 288,100 shares remained available for future grant.
The Company's Option Plan is administered by the Board of Directors.
Aggregated Option Exercises In Fiscal Year And Fiscal Year-End Option Values
The following table sets forth select information relating to stock options
exercised during 2000 and outstanding as of December 31, 2000, held by each of
the Named Executive Officers.
_____________________________________________________________________________
Number of Securities
Underlying Value of Unexercised
Unexercised Options at In-The-Money Options
Fiscal Year-End at Fiscal Year-End (1)
------------------------- -------------------------
Shares Acquired Exercisable / Exercisable /
Name on Exercise Value Realized Unexercisable Unexercisable
- ---- --------------- -------------- ------------- -------------
James R. Parks 0 $ 0 7,000 / 0 $0 / $0
Emory M. Cohen 61,147 $ 802,554 50,000 / 0 $0 / $0
Leon D. Silverman 0 $ 0 22,594 / 50,000 $0 / $0
Randolph D. Blim 0 $ 0 53,556 / 0 $0 / $0
Robert McClain 30,000 $ 33,750 30,000 / 0 $0 / $0
(1) These amounts represent the difference between the exercise price of
the in-the-money options and the market price of the Company's Common Stock on
December 29, 2000 (the last trading day of 2000). The closing price of the
Company's Common Stock on that day on the Nasdaq National Market was $1.50.
Options are in-the-money if the market value of the shares covered thereby is
greater than the option exercise price.
Option Grants in Last Fiscal Year
The following table set forth certain information with respect to options
to purchase Common Stock granted during the year ended December 31, 2000 to each
of the Named Executive Officers.
Individual Grants
- -----------------------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees in Price Per Expiration Grant Date
Name Granted (#) Fiscal Year Share Date Present Value (1)
- ------ --------------- -------------- ----------- ------------- ------------------
James R. Parks 7,000 3.6% $4.13 4/25/10 $27,650
Emory M. Cohen 50,000 25.4% $4.13 4/25/10 $197,500
Leon D. Silverman 50,000 25.4% $4.13 4/25/10 $197,500
Randolph D. Blim 40,000 20.3% $4.13 4/25/10 $158,000
Robert McClain 30,000 15.2% $4.13 4/25/10 $118,500
(1) Fair value of common stock options is estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted average
assumptions:
2000
---------------
Expected life (in years) 10.00
Risk-free interest rate 4.50
Volatility 1.22
Dividend yield --
Fair value - grant date 3.95
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. Because the Company's options have characteristics significantly
different from those of trade options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in the opinion
of management, the existing models do not necessarily provide a reliable single
measure of the fair value of its options.
STOCK PERFORMANCE TABLE AND GRAPH
The following Indexed Returns Performance Table and Graph compares the
Company's cumulative total stockholder return on its Common Stock for the period
from January 1, 1996 through December 31, 2000, with the cumulative return of
the Standard and Poor's 500 Stock Index and a peer group of companies, the
Standard and Poor's Entertainment Index, neither of which includes the Company.
The Performance Graph assumes $100 invested on January 1, 1996 in the Company's
Common Stock, the S&P Entertainment Index and the S&P 500 Index and that all
dividends were reinvested. No cash dividends have been declared on the Company's
Common Stock. The comparisons in the graph are required by the Securities and
Exchange Commission and are not intended to forecast or be indicative of
possible future performance of the Company's Common Stock.
Indexed Returns
Base
Period
Company/Index Dec 95 Dec 96 Dec 97 Dec 98 Dec 99 Dec 00
- ----------------------------------------- ------------ ------------ ----------- ------------ ------------ -----------
Laser-Pacific Media Corp. 100 83.33 24.93 320.80 1341.60 200.00
S&P 500 Index 100 122.96 163.98 210.85 255.21 231.98
S&P Entertainment-500 100 101.53 148.15 200.72 234.87 200.48
(Performance Graph)
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information with respect to those persons
known by the Company to own beneficially more than 5% of the Company's Common
Stock as of April 15, 2001. On April 15, 2001 there were 7,751,295 shares of the
Company's Common Stock outstanding. Except as otherwise noted, and subject to
applicable community property and similar laws, each person listed has sole
voting power (if applicable) and investment discretion with respect to the
securities shown as beneficially owned. All information with respect to
beneficial ownership is based on filings made by the respective beneficial
owners with the Securities and Exchange Commission or information provided to
the Company by such beneficial owners.
Name and Address Amount and Nature of Percent of
Of Beneficial Owner Beneficial Ownership(1) Class(1)
James R. Parks (2) 661,254 8.26%
1990 South Bundy Drive, Suite 550
Los Angeles, California 90025
Digital Creative Development Corporation (3) 1,014,100 13.08%
67 Irving Place North, 4th Floor
New York, New York 10003
- ----------------------------------------
(1) For purposes of calculating each person's percentage, shares that may be
acquired within 60 days upon exercise of warrants or stock options have
been treated as outstanding.
(2) Includes 164,590 shares of Common Stock held by partnerships in which Mr.
Parks is a partner, 250,000 shares issuable upon the exercise of
outstanding warrants held by partnerships in which Mr. Parks is a partner,
and 7,000 shares issuable upon the exercise of options held by Mr. Parks.
(3) Includes 178,600 shares of Common Stock held by Bruce Galloway for and on
behalf of accounts over which he has control and 20,300 shares of Common
Stock held by Ralph J. Sorrentino.
SECURITY OWNERSHIP OF MANAGEMENT AND DIRECTORS
The following table sets forth information with respect to the beneficial
ownership of the Company's common stock as of April 15, 2001 by each of the
Company's directors, the Company's chief executive officer and the four other
most highly compensated executive officers of the Company, and by all of the
Company's executive officers and directors as a group. On April 15, 2001 there
were 7,751,295 shares of the Company's Common Stock outstanding. Except as
otherwise noted, and subject to applicable community property and similar laws,
each person listed has sole voting power (if applicable) and investment
discretion with respect to the securities shown as beneficially owned. All
information with respect to beneficial ownership is based on filings made by the
respective beneficial owners with the Securities and Exchange Commission or
information provided to the Company by such beneficial owners.
Name of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership (1) Class (1)
James R. Parks (2) 661,254 8.26%
Emory M. Cohen (3) 256,797 3.29%
Leon D. Silverman (4) 96,254 1.24%
Randolph D. Blim (5) 90,616 1.16%
Robert McClain (6) 74,100 *
Thomas D. Gordon (7) 30,000 *
Craig A. Jacobson (8) 30,000 *
David C. Merritt (9) 10,000 *
All Directors and Executive Officers 1,249,021 15.17%
as a Group (7 persons) (10)
- ----------------------------------------
* Less than one percent.
(1) For the purposes of calculating each person's percentage and that of all
officers and directors as a group, shares that may be acquired within 60
days upon the exercise of warrants, stock options have been treated as
outstanding.
(2) Includes 7,000 shares issuable upon exercise of stock options, and also
includes 164,590 shares of Common Stock held by partnerships in which Mr.
Parks is a partner and 250,000 shares issuable upon the exercise of
outstanding warrants held by partnerships in which Mr. Parks is a partner.
(3) Includes 50,000 shares issuable upon exercise of stock options.
(4) Includes 22,594 shares issuable upon exercise of stock options.
(5) Includes 53,556 shares issuable upon exercise of stock options.
(6) Includes 30,000 shares issuable upon exercise of stock options.
(7) Includes 30,000 shares issuable upon exercise of stock options.
(8) Includes 30,000 shares issuable upon exercise of stock options.
(9) Includes 10,000 shares issuable upon exercise of stock options.
(10) Includes 233,150 shares issuable on exercise of stock options and 250,000
shares issuable upon exercise of warrants.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of Forms 3 and 4 and any amendments thereto
furnished to the Company pursuant to Rule 16a-3 (e) under the Securities
Exchange Act of 1934 (the "Exchange Act"), or representations that no Form 5s
were required, the Company believes that with respect to the year ended December
31, 2000, its officers, directors and beneficial owners of more than 10% of its
shares of Common Stock timely complied with all applicable Section 16 (a) filing
requirements under the Exchange Act.
CERTAIN TRANSACTIONS
James R. Parks, Chairman of the Board and Chief Executive Officer of the
Company, is a Business Unit Leader of CBIZ Southern California Inc, formerly
known as Parks, Palmer Business Services, Inc., which provides tax accounting
and management consulting services to the Company. Parks, Palmer Business
Services, Inc.'s billings for the year ended December 31, 2000 were
approximately $77,000.
In July 1997, the Company issued $1,000,000 of short-term Installment
(Fixed Rate) Line of Credit Notes, Series 1997 to 35 Lake Avenue, a California
limited partnership. James R. Parks, the Company's, Chief Executive Officer, is
a partner in 35 Lake Avenue. The principal balance of the Notes bore interest at
the rate of fourteen percent (14%) per annum. The accrued interest on the
outstanding principal was payable on September 30, 1997, December 31, 1997,
January 30, 1998, February 28, 1998 and March 30, 1998. The Company granted 35
Lake Avenue warrants to purchase 250,000 shares of the Company's common stock at
the exercise price of $1.00 per share. In January 1998, 35 Lake Avenue agreed to
amend the terms of the short-term Installment Line of Credit Notes extending the
due date from March 30, 1998 until November 30, 1998. In consideration for the
extension of the principal payments the expiration date of the warrants was
extended for two additional years. On May 15, 1998, the outstanding principal
balance on the notes was paid in full.
In April 2001, the Company engaged Gerard Klauer Mattison & Co., Inc., as
it's financial advisor. David Merritt, a director of the Company is a member of
that firm. The non-refundable fee for this engagement is $15,000.
RELATIONSHIP WITH INDEPENDENT AUDITORS
KPMG LLP has been the Company's independent auditor since the Company's
inception. Audit services performed by KPMG LLP in the fiscal year ended
December 31, 2000, included the examination of, and reporting on, the annual
consolidated financial statements of the Company, periodic discussions with
management concerning accounting and reporting matters, and assistance and
consultation in connection with filings with the Securities and Exchange
Commission. The Board of Directors has retained KPMG LLP as the Company's
independent accountants for the fiscal year ended December 31, 2001. A
representative of KPMG LLP is expected to be present at the annual meeting of
stockholders. The representative will have the opportunity to make a statement
and is expected to be available to respond to appropriate questions.
The Audit Committee has considered whether provision of the services
provided below is compatible with maintaining KPMG LLP's (the Company's
principal accountant) independence. The Audit Committee was presented
certification of independence by KPMG LLP.
Audit Fees
KPMG LLP billed the Company $94,500 for services provided for the annual
audit and for the review of financial statements included in the Company's Form
10-Qs for the year-ended December 31, 2000.
All Other Fees
During the fiscal year-ended December 31, 2000 KPMG LLP billed the Company
no other fees.
STOCKHOLDER PROPOSALS
Any proposal of a stockholder intended to be presented at the Company's
2002 Annual Meeting of Stockholders must be received in writing by the Company
at its principal executive offices for inclusion in the proxy statement and
proxy card for that meeting pursuant to Rule 14a-8, under the Exchange Act no
later than January 17, 2002. Under Rule 14a-4 promulgated under the Exchange
Act, the Company may exercise discretionary voting authority at the 2002 Annual
Meeting of Stockholders under proxies it solicits to vote on a proposal made by
a stockholder that the stockholder does not seek to include in the Company's
proxy statement pursuant to Rule 14a-8, unless the Company is notified about the
proposal no later than April 2, 2002, and the stockholder satisfies the other
requirements of Rule 14a-4(c).
In addition, the Company's Bylaws require that for nominations or other
business to be properly brought before an annual meeting by a stockholder, (1)
the stockholder must have given timely notice thereof in writing to the
secretary of the Company, (2) such business must be a proper matter for
stockholder action under the Delaware General Corporation Law, as amended or
replaced, (3) if the stockholder, or the beneficial owner on whose behalf any
such proposal or nomination is made, has provided the Company with a
Solicitation Notice, as that term is defined in subclause (c) (iii) of this
paragraph, such stockholder or beneficial owner must, in the case of a proposal,
have delivered a proxy statement and form of proxy to holders of at least the
percentage of the Company's voting shares required under applicable law to carry
any such proposal, or, in the case of a nomination or nominations, have
delivered a proxy statement and form of proxy to holders of a percentage of the
Company's voting shares reasonably believed by such stockholder or beneficial
holder to be sufficient to elect the nominee or nominees proposed to be
nominated by such stockholder, and must, in either case, have included in such
materials the Solicitation Notice, and (4) if no Solicitation Notice relating
thereto has been timely provided pursuant to this section, the stockholder or
beneficial owner proposing such business or nomination must not have solicited a
number of proxies sufficient to have required the delivery of such a
Solicitation Notice under this section. To be timely, a stockholder's notice
must be delivered to the secretary at the principal executive offices of the
Company not less than 90 or more than 120 days prior to the first anniversary of
the date on which the Company first mailed its proxy materials for the preceding
year's annual meeting of stockholders; provided, however, that if the date of
the annual meeting is advanced more than 30 days prior to or delayed by more
than 30 days after the anniversary of the preceding year's annual meeting,
notice by the stockholder to be timely must be so delivered not later than the
close of business on the later of (i) the 90th day prior to such annual meeting
and (ii) the 10th day following the day on which public announcement of the date
of such meeting is first made. Such stockholder's notice must set forth (a) as
to each person whom the stockholder proposes to nominate for election or
reelection as a director, all information relating to such person as wold be
required to be disclosed in solicitations of proxies for the election of such
nominees as directors pursuant to Regulation 14A under the Exchange Act, and
such person's written consent to serve as a director if elected; (b) as to any
other business that the stockholder proposes to bring before the meeting, a
brief description of such business, the reasons for conducting such business at
the meeting and any material interest in such business of such stockholder and
the beneficial owner, if any, on whose behalf the proposal is made; (c) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
stockholder, as they appear on the Company's books, and of such beneficial
owner, (ii) the class and number of shares of the Company that are owned
beneficially and of record by such stockholder and such beneficial owner, and
(iii) whether such stockholder or beneficial owner intends to deliver a proxy
statement and form of proxy to holders of, in the case of a proposal, at least
the percentage of the Company's voting shares required under applicable law to
carry the proposal or, in the case of a nomination or nominations, a sufficient
number of holders of the Company's voting shares to elect such nominee or
nominees (an affirmative statement of such intent, a "Solicitation Notice").
The chairman of the meeting has the power and the duty to determine whether
a nomination or any business proposed to be brought before the meeting has been
made in accordance with the procedures set forth in the Company's Bylaws and, if
any proposed nomination or business is not in compliance with the Bylaws, to
declare that such defective proposed business or nomination shall not be
presented for stockholder action at the meeting and shall be disregarded.
Notwithstanding the foregoing, a stockholder must also comply with all
applicable requirements of the Exchange Act and the rules and regulations
thereunder with respect to stockholder proposals. Nothing in this section shall
be deemed to affect any rights of stockholders to request inclusion of proposals
in the Company's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
PROXY SOLICITATION
The solicitation of proxies will be by mail. Certain officers, executives
and regular employees of the Company (without additional compensation) may
solicit proxies by telephone, telegraph, mail or personal interviews, and
arrangements will be made with banks, brokerage firms and others to forward
proxy materials to all holders of shares of Common Stock. The total cost of such
solicitation will be borne by the Company and will include reimbursement to
banks, brokerage firms and others for their reasonable expenses in forwarding
this Proxy Statement and the accompanying materials regarding the Annual Meeting
to stockholders.
OTHER MATTERS
The only business that the Board of Directors intends to act upon at the
Annual Meeting consists of the matters set forth in this proxy statement, and
the Board of Directors knows of no other matters that will be acted on by any
person or group. However, if any other matter properly comes before the Annual
Meeting, the proxy holders will vote the proxies thereon in accordance with
their best judgment.
ANNUAL REPORT TO STOCKHOLDERS
The Company's Annul Report on Form 10-K for the calendar year ended
December 31, 2000, which comprises the Annual Report to Stockholders, is being
mailed to the stockholders along with this Proxy Statement. The Annual Report is
not to be considered part of the soliciting material.
By Order of the Board of Directors
Laser-Pacific Media Corporation
Hollywood, California /s/ Robert McClain
April 30, 2001 Robert McClain, Secretary
Appendix A
Laser-Pacific Media Corporation
Audit Committee Charter
The Audit Committee of the Board of Directors of Laser-Pacific Media Corporation
will have the oversight responsibility, authority and specific duties as
described below.
COMPOSITION
The Audit Committee will be comprised of three or more directors as determined
by the Board. The members of the Committee will meet the independence and
experience requirements of the Securities and Exchange Commission and the stock
exchange where the Company's shares are traded (NASDAQ at the time of adoption
of this charter). The members of the Committee will be elected annually at a
meeting of the full Board.
RESPONSIBILITIES
The Audit Committee of the Board of Directors of Laser-Pacific is to assist the
Board in fulfilling the Board's oversight responsibility by reviewing the
financial information which is to be provided to the SEC and shareholders, the
Company's systems of internal financial control, and the audit process. The
Committee shall provide an avenue for communication between the independent
accounts, financial management and the Board. The Committee will make regular
reports to the Board concerning its activities.
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits to
determine that the Company's financial statements are complete and accurate and
are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty of
the Audit Committee to conduct investigations to resolve disagreements, if any,
between management and the independent auditor or to assure compliance with the
laws and regulations.
The Audit Committee represents and advises the full Board of Directors in
performing some of its oversight responsibilities, but does not itself prepare
financial statements or perform audits, and its members are not auditors or
certifiers of the Company's financial statements
AUTHORITY
The Committee may investigate any matter or activity involving financial
accounting and financial reporting as well as the internal financial controls of
the Company.
DUTIES
In carrying out it oversight responsibility the Audit Committee will:
i. Evaluate and recommend to the Board of Directors the firm of independent
certified public accountants to be appointed as auditor of the Company,
which firm shall be ultimately accountable to the Board of Directors.
ii. Review with the independent auditor their audit procedures, including the
scope, fees and timing of the audit, and the results of the annual audit
examination and any accompanying management letters.
iii. Review with the independent auditor the written statement from the auditor,
required by Independence Standards Board Standard No. 1, concerning any
relationships between the auditor and the Company or any other
relationships that may adversely affect the independence of the auditor
and, based on such review, assess the independence of the auditor.
iv. Review and discuss with management and the independent auditor the
Company's annual audited financial statement, including a discussion of the
auditor's judgement as to the quality of the Company's accounting practices
and principles.
v. Review with management and the independent auditor the results of any
significant matters identified as a result of the independent auditor's
interim review procedures prior to the filing of each Form 10-Q or as soon
thereafter as possible.
vi. Review the adequacy of the Company's internal financial controls.
vii. Review significant changes in the accounting policies of the Company and
accounting and financial reporting rule changes that may have a significant
impact on the Company's financial reports.
viii.Review material pending legal proceedings involving the Company and other
contingent liabilities as relate to financial reporting.
ix. Review the adequacy of the Audit Committee Charter on an annual basis and
recommend changes to the Board of Directors if the Committee determines
changes are appropriate.
MEETINGS
The Audit Committee shall meet, either in person or telephonically, as often as
may be deemed necessary or appropriate in its judgement. The Audit Committee
shall meet in executive session with the independent auditors at least annually.
The Audit Committee shall report to the full Board of Directors with respect to
its meetings and shall make reports to shareholders as are required by
applicable regulations. The majority of the members of the Audit Committee shall
constitute a quorum.
Approved at a Meeting of the Laser-Pacific Board of Directors June7, 2000
/s/ Robert McClain
Robert McClain,
Secretary