SCHEDULE 14A
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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE
ACT OF 1934
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LASER-PACIFIC MEDIA CORPORATION
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LASER-PACIFIC MEDIA CORPORATION
809 N. Cahuenga Blvd.
Hollywood, California 90038
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 25, 2003
-----------------------------
NOTICE IS HEREBY GIVEN that the 2003 Annual Meeting of Stockholders (the
"Annual Meeting") of Laser-Pacific Media Corporation (the "Company") will be
held on Wednesday, June 25, 2003 at the Company's digital timing theatre,
located at 861 Seward Street, Hollywood, California 90038, at 3:00 p.m. local
time, subject to adjournment or postponement by the Board of Directors, for the
following purposes:
1. To elect five persons to the Board of Directors to serve until the
next annual meeting of stockholders or until their respective successors are
duly elected and qualified; and
2. To transact such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 28, 2003 as
the record date for the determination of stockholders entitled to receive notice
of and to vote at the Annual Meeting and any and all postponements and
adjournments thereof.
Management sincerely hopes that you will attend the Annual Meeting. In
order to constitute a quorum for the conduct of business at the Annual Meeting,
it is necessary that holders of a majority of all outstanding shares of common
stock of the Company be present in person or be represented by proxy. Your
attention is directed to the accompanying proxy statement. To assure your
representation at the Annual Meeting, please date, sign and mail the enclosed
proxy card for which a return envelope is provided. The prompt return of your
proxy will save expenses involved in further communications. Your proxy is
revocable and stockholders who attend the Annual Meeting may vote in person even
though they have previously mailed their proxy card.
By Order of the Board of Directors,
/s/ James R. Parks
----------------------
James R. Parks
Chief Executive Officer and Chairman of the Board
/s/ Robert McClain
----------------------
Robert McClain
Chief Financial Officer, Vice President and Secretary
Hollywood, California
April 29, 2003
LASER-PACIFIC MEDIA CORPORATION
809 N. Cahuenga Blvd.
Hollywood, California 90038
(323) 462-6266
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
June 25, 2003
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. The accompanying proxy is
for use at the 2003 Annual Meeting of Stockholders of the Company (the "Annual
Meeting"). The Annual Meeting is to be held on Wednesday, June 25, 2003 at the
Company's digital timing theatre, located at 861 Seward Street, Hollywood,
California 90038 at 3:00 p.m. local time, and at any and all adjournments or
postponements 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 below under "PROPOSAL NO. 1: ELECTION OF
DIRECTORS." 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 Annual 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 (i) attending the Annual Meeting and voting in person;
(ii) by delivering a written statement to the Company, stating that the proxy is
revoked; or (iii) 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 12, 2003, to the Company's stockholders of record at the
close of business on Friday April 28, 2003 (the "Record Date").
The Company's principal executive offices are located at 809 N. Cahuenga
Boulevard, Hollywood, California 90038.
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.
SECURITIES AND VOTING
The Company has one class of voting stock outstanding, designated Common
Stock, with a par value of $.0001 per share. 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 Record Date are entitled to notice of and to
vote at the Annual Meeting. As of the Record Date, there were 7,101,295 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. In the event that there are insufficient votes for a
quorum at the time of the Annual Meeting, the Annual Meeting may be adjourned or
postponed in order to permit the further solicitation of proxies. Abstentions
and broker 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.
The election of directors requires the favorable vote of the holders of a
plurality of the shares of Common Stock entitled to vote at the Record Date,
which means that the five director nominees receiving the most votes will be
elected. With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions and broker non-votes will have no effect on the
outcome of the election of directors under Proposal No. 1.
Any stockholder proposals that properly come before the Annual Meeting
require, in general, the affirmative vote of a majority of the voting power of
the shares of Common Stock present, in person or represented by proxy, at the
Annual Meeting and entitled to vote on the subject matter.
Householding
With regard to the delivery of Annual Reports and Proxy Statements, under
certain circumstances the Securities and Exchange Commission permits a single
set of such documents to be sent to any household at which two or more
stockholders reside if they appear to be members of the same family. Each
stockholder, however, still receives a separate proxy card. This procedure,
known as "householding," reduces the amount of duplicate information received at
a household and reduces mailing and printing costs as well. A number of banks,
brokers and other firms have instituted householding and have previously sent a
notice to that effect to certain of the Company 's stockholders whose shares are
registered in the name of the bank, broker or other firm. As a result, unless
the stockholders receiving such notice gave contrary instructions, only one
Annual Report and one Proxy Statement will be mailed to an address at which two
or more stockholders reside. If any stockholder residing at such an address
wishes to receive a separate Annual Report or Proxy Statement in the future,
such stockholder should telephone toll-free 1-800-542-1061. In addition, if any
stockholder who previously consented to householding desires to receive a
separate copy of the Proxy Statement or Annual Report for each stockholder at
his or her same address, such stockholder should contact his or her bank, broker
or other firm in whose name the shares are registered or contact the Company at
the address or telephone number listed on page 1 of this Proxy Statement.
If the company decides to institute householding procedures, you will be
sent a separate written notice which will further explain the details of
householding. However, even after implementation of householding procedures,
upon your written or oral request, the Company will deliver a separate copy of
the Annual Report or Proxy Statement, as applicable, to you at a shared address
to which a single copy of the document was delivered.
PROPOSAL NO. 1: 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 but will count towards
establishing a quorum.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
NAMED BELOW. 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 15, 2003
with respect to the Board's nominees:
Director
Name of Director Age Since Position(s) with Company
James R. Parks 52 1990 Chairman of the Board and
Chief Executive Officer
Emory M. Cohen 60 1990 President, Chief Operating
Officer and Director
Thomas D. Gordon (1) 54 1999 Director
Craig A. Jacobson (1) 50 1999 Director
David C. Merritt (1) 48 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, and is currently managing
partner. Since January 1, 2001, Mr. Parks has been an executive director of CBIZ
Southern California, Inc. Additionally, Mr. Parks is a principal of Mayer
Hoffman McCann, P.C., an independent CPA firm, and is also Chairman of the Board
of Realty Center Management, Inc, a privately held real estate management and
development company. Mr. Parks is a director of Sybron Dental Specialties, Inc,
a NYSE-listed company and serves on both their Audit and Compensation
committees.
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. Mr. Gordon also serves on the
board of directors for Cedars-Sinai Health System Medical Network Services and
is a member of their compensation committee. Mr. Gordon also 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 also serves on the board of directors at the Wilshire Foundation and the
California Association of Medical Groups. 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 and Sloane, LLP, which he helped 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. From July 1999 to November 2000, Mr. Merritt served as
Chief Financial Officer for CKE Associates. Prior to that, Mr. Merritt served
for 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 and "audit committee financial expert" of Laser-Pacific's Audit
Committee.
Committees
The Audit Committee is the only standing committee of the Board of
Directors. Mr. Gordon, Mr. Jacobson and Mr. Merritt comprise the Audit
Committee. The Board of Directors has determined that Mr. Merritt is
"independent" (as such term is defined under Item 7(d)(3)(iv) of Schedule 14A
under the Exchange Act) and that he qualifies as an "audit committee financial
expert" as defined under applicable Securities and Exchange Commission rules.
The Audit Committee met with the independent accountants four times in 2002 and
once in 2003 to discuss the quarterly reviews and annual audit of the Company's
consolidated financial statements for the fiscal year ended December 31, 2002
and other matters. The principal duties of the Audit Committee are detailed in
the Company's Audit Committee Charter, which was last amended on April 16, 2003
and is attached hereto 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, Inc.'s listing
standards.
Attendance and Compensation
During the year ended December 31, 2002, the Board of Directors met ten
times. Each director attended at least 75% of the total Board meetings and the
meetings of any committee on which he served.
Directors who are officers or employees of the Company receive no
additional remuneration for their service on the Company's Board of Directors.
Directors who are not officers or employees of the Company receive $1,500 per
month for their service on the Board of Directors. Additionally, in 2002,
non-employee directors each received options to purchase 10,000 shares of the
Company's Common Stock for their service on the Board of Directors. Mr. Merritt
is paid an additional $5,000 per year for his service as Chairman of the Audit
Committee.
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 4 hereto. Information with respect to Leon D.
Silverman, Randolph D. Blim, Jane Swearingen and Robert McClain is set forth
below:
Name Age Position(s) with Company
Leon D. Silverman 48 Executive Vice President
Randolph D. Blim 56 Senior Vice President
Jane Swearingen 46 Senior Vice President
Robert McClain 55 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 the founder and current
President of The Hollywood Post Alliance. Mr. Silverman is a Manager of the
Hollywood section of The Society of Television and Motion Picture Engineers
(SMPTE) where he also chairs its Education Committee. He also serves on the
board of directors and as a member of the Technical Advisory Board of the
Entertainment Technology Center at the University of Southern California.
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).
Jane Swearingen was appointed Senior Vice President of the Company in
November 2001 and prior to that had served as General Manager since September
1992 and in other capacities at the Company between 1988 and 1992. Ms.
Swearingen served as General Manager of Film/Video Equipment Services Co. in
Denver, Colorado from 1980 to 1988, when she left to join the Company.
Robert McClain is a Certified Public Accountant. He was appointed Chief
Financial Officer of the Company 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. Additionally, Mr.
McClain sits on the board of directors for the Orange County chapter of the
American Red Cross and serves on their compensation committee.
No family relationships exist among any of the executive officers,
directors, or director nominees 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 Common 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 chose to forego the performance bonus he was entitled to
in 2002. 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.
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.
The Board of Directors awarded a performance bonus based on the Company's
operating performance in 2002 of $30,000 each to Messrs. Cohen, Silverman, Blim
and McClain for the fiscal year ended December 31, 2002.
Mr. 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.
Mr. 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
therein. 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 Mr. Cohen's employment
contract, other than for specified reasons, or Mr. Cohen elects to terminate his
employment within nine months of the change in control, then Mr. Cohen shall, on
the date of either termination, receive a lump sum payment of three times his
annual compensation and the continuation of certain employee benefits for
eighteen months. In the event payments are required as a result of a change of
control, then no further compensation shall be payable to Mr. Cohen under this
agreement.
Mr. 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.
Mr. Blim is employed by the Company pursuant to an employment agreement
that expires on July 23, 2003. The agreement requires that Mr. Blim 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 $229,000, with
required yearly increases of 3% over the term of the agreement and 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.
Mr. McClain is currently employed by the Company pursuant to an employment
agreement that expires on July 31, 2003. The agreement requires that Mr. McClain
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 (as defined below), 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
James R. Parks, Chairman
Emory M. Cohen
Thomas D. Gordon
Craig A. Jacobson
David C. Merritt
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors does not have a compensation committee. During the
fiscal year ended December 31, 2002, 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, to the Company's knowledge, 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 that requires
disclosure herein under applicable rules.
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 the Company's Board of Directors submits the following
report:
Audit Committee Report to Stockholders
The Audit Committee is responsible for providing independent, objective
oversight of the Company's accounting functions and internal controls on behalf
of the Board. The Audit Committee is composed of three directors, each of whom
is independent as defined by the National Association of Securities Dealers,
Inc.'s listing standards. The Audit Committee operates under a written charter
approved by the Board of Directors.
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 auditing standards generally accepted in the United States of
America 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 audited
December 31, 2002 consolidated 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 from the Company and its
management.
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, 2002, filed with the Securities and Exchange Commission on March
28, 2003.
Respectfully Submitted
THE AUDIT COMMITTEE
David C. Merritt, Chairman
Craig A. Jacobson
Thomas D. Gordon
The Audit Committee Report above shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act or the Exchange Act, except
to the extent that the Company specifically incorporates this information by
reference and shall not otherwise be deemed filed under such Acts.
SUMMARY COMPENSATION TABLE
The table below shows, for the years ended December 31, 2002, 2001 and
2000, 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, 2002 (collectively, the "Named Executive
Officers").
Long-Term
Annual Compensation Compensation Awards
---------------------------------------- ---------------------------------
Name and Securities
Principal Position(s) Year Salary ($) Bonus ($) Other($)(1) Underlying Options (#)
- ------------------------------- -------------------------------------------------- ---------------------------------
James R. Parks 2002 208,000 -0- -0- 10,000
CEO 2001 208,000 -0- -0- -0-
2000 208,000 12,000 -0- 7,000
Emory M. Cohen 2002 350,000 30,000 51,442 (2) 40,000
President and COO 2001 350,000 52,500 64,567 (2) -0-
2000 350,000 50,000 47,936 (2) 50,000
Leon D. Silverman 2002 275,004 30,000 36,822 (3) 35,000
Executive Vice President 2001 275,005 37,500 36,822 (3) -0-
2000 275,004 35,000 37,433 (3) 50,000
Randolph D. Blim 2002 229,023 30,000 27,347 (4) 35,000
Senior Vice President 2001 222,402 37,500 29,980 (4) -0-
2000 211,847 35,000 19,504 (4) 40,000
Robert McClain 2002 200,004 30,000 23,102 (5) 30,000
CFO, Vice President 2001 199,716 37,500 23,096 (5) -0-
and Secretary 2000 185,004 35,000 22,221 (5) 30,000
(1) Includes the value of additional benefits and automobiles provided to
the employee.
(2) Includes auto expense reimbursement of $13,231 in 2002, $12,942 in
2001, and $14,832 in 2000.
(3) Includes auto expense reimbursement of $30,000 in 2002, $30,000 in
2001, and $30,000 in 2000.
(4) Includes auto expense reimbursement of $15,000 in 2002, $15,000 in
2001, and $15,000 in 2000.
(5) Includes auto expense reimbursement of $16,800 in 2002, $16,800 in
2001, and $16,800 in 2000.
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 the fiscal year ended December 31, 2002 and stock options
outstanding as of December 31, 2002, 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 17,000 / 0 $0 / $0
Emory M. Cohen 0 $0 90,000 / 0 $0 / $0
Leon D. Silverman 0 $0 35,000 / 50,000 $0 / $0
Randolph D. Blim 0 $0 75,000 / 0 $0 / $0
Robert McClain 0 $0 60,000 / 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 31, 2002 (the last trading day of 2002). The closing price per share of
the Company's Common Stock on that day on the Nasdaq National Market was $1.64.
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 sets forth certain information with respect to stock
options granted to each of the Named Executive Officers during the fiscal year
ended December 31, 2002.
Individual Grants
- --------------------------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees in Price Per Expiration Grant Date Present
Name Granted (#) Fiscal Year Share Date Value (1)
---- ------------ -------------- ------------ ------------- -----------------
James R. Parks 10,000 4.8% $2.50 1/16/12 20,400
Emory M. Cohen 40,000 19.0% $2.50 1/16/12 81,600
Leon D. Silverman 35,000 16.7% $2.50 1/16/12 71,400
Randolph D. Blim 35,000 16.7% $2.50 1/16/12 71,400
Robert McClain 30,000 14.3% $2.50 1/16/12 61,200
(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:
2002
---------------
Expected life (in years) 10.00
Risk-free interest rate 1.57
Volatility 0.81
Dividend yield --
Fair value - grant date 2.04
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 table and graph compare the Company's cumulative total
stockholder return on its Common Stock for the period from December 31, 1997
through December 31, 2002, with the cumulative return of the Standard and Poor's
500 Index (the "S&P 500 Index") and the Standard and Poor's Movies &
Entertainment Index (the "S&P Movies and Entertainment Index," which was
formerly known as the S&P Entertainment Index), neither of which includes the
Company. The S&P Entertainment Index was renamed the S&P Movies & Entertainment
Index in December 2001. The Performance Graph assumes $100 invested on December
31, 1997 in the Company's Common Stock, the S&P Movies & 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 during this period. 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 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
- ------------------------------------------- ----------- ------------ ----------- ------------ ------------ -----------
Laser-Pacific Media Corporation 100 1,286.76 5,381.02 802.14 1,540.11 877.01
S&P 500 Index 100 128.58 155.63 141.46 124.65 97.10
S&P Movies & Entertainment Index (1) 100 135.50 158.25 135.04 116.67 72.82
(1) The S&P Entertainment Index was renamed the S&P Movies & Entertainment Index
in December 2001.
INSERT GRAPH HERE
The graph above shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act or the Exchange Act, except to the extent that
the Company specifically incorporates this information by reference and shall
not otherwise be deemed filed under such Acts.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock as of April 11, 2003 by each person
believed by the Company to be the beneficial owner of more than 5% of the
Company's outstanding Common Stock, and also beneficial ownership by each of the
Company's directors, each of the Company's Named Executive Officers and by all
of the Company's executive officers and directors as a group. On April 11, 2003
there were 7,101,295 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) 694,154 9.75%
Emory M. Cohen (3) 296,797 4.13%
Leon D. Silverman (4) 109,660 1.54%
Randolph D. Blim (5) 112,060 1.56%
Robert McClain (6) 104,100 1.45%
Jane Swearingen (7) 74,336 1.04%
Thomas D. Gordon (8) 40,000 *
Craig A. Jacobson (9) 40,000 *
David C. Merritt (10) 40,000 *
J.P. Morgan Chase & Co. (11) 372,193 5.23%
270 Park Ave.
New York, NY 10017
Mohnish Pabrai (12) 568,990 8.01%
1350 Busch Parkway
Buffalo Grove, IL 60089-4505
All Directors and Executive Officers 1,064,107 14.98%
as a Group (9 persons)
- ----------------------------------------
* Less than one percent.
(1) Except as otherwise indicated, the address for each person is c/o
Laser-Pacific Media Corporation, 809 N. Cahuenga Blvd., Hollywood,
California 90038. Calculated pursuant to Rule 13d-3(d) under the Exchange
Act, shares of Common Stock not outstanding that are subject to options
exercisable by the holder thereof within 60 days of April 11, 2003 are
deemed outstanding for the purposes of calculating the number and
percentage ownership by such stockholder, but not deemed outstanding for
the purpose of calculating the percentage owned by each other stockholder
listed. Unless otherwise noted, all shares listed as beneficially owned by
a stockholder are actually outstanding.
(2) Includes 17,000 shares of Common Stock subject to stock options, and also
includes 289,590 shares of Common Stock held by partnerships in which Mr.
Parks is a partner.
(3) Includes 90,000 shares of Common Stock subject to stock options.
(4) Includes 35,000 shares of Common Stock subject to stock options.
(5) Includes 75,000 shares of Common Stock subject to stock options.
(6) Includes 60,000 shares of Common Stock subject to stock options.
(7) Includes 50,000 shares of Common Stock subject to stock options.
(8) Includes 40,000 shares of Common Stock subject to stock options.
(9) Includes 40,000 shares of Common Stock subject to stock options.
(10) Includes 40,000 shares of Common Stock subject to stock options.
(11) This information is based on a Schedule 13G/A filed by J.P. Morgan Chase &
Co. with the Securities and Exchange Commission on February 17, 2003. J.P.
Morgan Chase & Co. reported that it was the beneficial owner of 372,193
shares of the Company's issued and outstanding Common Stock.
(12) This information is based on a Schedule 13G/A filed by Mohnish Pabrai (and
certain affiliates hereafter described) with the Securities and Exchange
Commission on February 12, 2003. Pursuant to the Schedule 13G/A: (i) The
Pabrai Investment Fund 2, L.P. has sole voting and investment power over
387,148 shares of Common Stock and shared voting and investment power over
568,990 shares of Common Stock; (ii) Leeds Pabrai Investment Fund I, L.P.
has sole voting and investment power over 69,197 shares of Common Stock and
shared voting and investment power over 568,990 shares of Common Stock;
(iii) Pabrai Investment Fund 3, Ltd. has sole voting and investment power
over 104,000 shares of Common Stock and shared voting and investment power
over 568,990 shares of Common Stock; and (iv) Mohnish Pabrai has sole
voting and investment power over 8,645 shares of Common Stock and shared
voting and investment power over 568,990 shares of Common Stock. Mohnish
Pabrai beneficially owns 384 shares which are held of record by IRA FBO
Mohnish Pabrai (an IRA account for his benefit over which he has sole
voting and dispositive power) and 8,261 shares which are held of record by
Momachi Pabrai UGMA Account (an Uniform Gift to Minors Act account for
Mohnish Pabrai's minor child's benefit over which Mohnish Pabrai has sole
voting and dispositive power until his child reaches majority age). Dalal
Street, Inc., whose sole shareholder and chief executive officer is Mohnish
Pabrai, is the general partner of each of the limited partnership funds
named above. Dalal Street, Inc. is also the sole investment manager of
Pabrai Investment Fund 3, Ltd. Mohnish Pabrai is also a shareholder and the
President of Pabrai Investment Fund 3, Ltd. Dalal Street, Inc. and Mohnish
Pabrai, in his capacity as sole shareholder and Chief Executive Officer of
Dalal Street, Inc., have the sole power to vote or direct the vote and the
sole power to dispose or direct the disposition of shares beneficially
owned by each of the limited partnership funds and Pabrai Investment Fund
3, Ltd.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Exchange Act and the rules promulgated
thereunder and requirements of the National Association of Securities Dealers,
Inc., officers and directors of the Company and persons who beneficially own
more than 10% of the Common Stock of the Company are required to file with the
Securities and Exchange Commission and the National Association of Securities
Dealers, Inc., and furnish to the Company reports of ownership and change in
ownership with respect to all equity securities of the Company.
Based solely on its review of the copies of such reports received by it
during or with respect to the year ended December 31, 2002 and/or written
representations from such reporting persons, the Company believes that its
officers, directors and greater than 10% stockholders complied with all Section
16(a) filing requirements applicable to such individuals except that the Form 5s
reporting option grants for each of the following individuals were not timely
filed: James R. Parks, Emory M. Cohen, Leon D. Silverman, Randolph D. Blim, Jane
Swearingen, Robert McClain, Craig A. Jacobson, David C. Merritt, and Thomas D.
Gordon.
RELATED PARTY TRANSACTIONS
James R. Parks, Chairman of the Board and Chief Executive Officer of the
Company, is an executive director of CBIZ Southern California, Inc. ("CBIZ").
CBIZ provides tax, accounting, and management consulting services to the
Company. CBIZ charges for services were approximately $81,000, $83,000, and
$77,000 for the fiscal years ended December 31, 2002, 2001 and 2000,
respectively.
James R. Parks, Chairman of the Board and Chief Executive Officer of the
Company, is a member of Local Boys, LLC and an executive producer. The Company
has been providing services for a movie produced by Local Boys, LLC since
September 2001. Fees for services were billed at the Company's standard rates
and the total amount billed for services through December 31, 2002 was $271,000.
As of December 31, 2002, $54,000 of the total amount billed was outstanding. As
of March 27, 2003, no invoices were outstanding relating to the activities of
Local Boys, LLC.
In July 2001, 35 Lake Avenue L.P., a California limited partnership in
which James R. Parks, the Company's Chief Executive Officer, is a partner,
exercised warrants to purchase 250,000 shares of the Company's Common Stock at
an exercise price of $1.00 per share. The warrants originally were issued during
1997 in connection with a short-term debt financing arrangement.
David Merritt, a director of the Company and chairman of the Audit
Committee is a member of Gerard Klauer Mattison & Co., Inc. In April 2001, the
Company engaged Gerard Klauer Mattison & Co., Inc. as a financial advisor.
Gerard Klauer Mattison & Co., Inc. billed fees of $21,000 in 2002 and $75,000 in
2001 for services provided to the Company.
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, 2002 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. A representative of KPMG LLP is expected to be present at the Annual
Meeting. The representative will have the opportunity to make a statement if he
or she desires to do so 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 independence. The Audit
Committee was presented written disclosure of independence by KPMG LLP.
Audit Fees
KPMG LLP billed the Company $139,700 for services provided for the annual
audit and for the interim reviews of the financial statements included in the
Company's Form 10-Qs for the fiscal year ended December 31, 2002.
Financial Information Systems Design and Implementation Fees
KPMG LLP did not bill the Company for any Financial Information System
Design and Implementation services during the fiscal year ended December 31,
2002.
All Other Fees
During the fiscal year ended December 31, 2002, KPMG LLP did not bill the
Company for any other fees.
STOCKHOLDER PROPOSALS
Any proposal of a stockholder intended to be presented at the Company's
2004 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 December 31, 2003. Such proposals should be addressed to the
Company's Secretary, and may be included in next year's proxy statement if they
comply with certain rules and regulations promulgated by the Securities and
Exchange Commission.
Stockholders who do not present proposals for inclusion in the proxy
statement but who still intend to submit a proposal at the 2004 Annual Meeting
of Stockholders must follow the procedures set forth in the company's Bylaws.
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 would 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.
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 Annual Report on Form 10-K for the fiscal year ended December
31, 2002, which comprises the Annual Report to Stockholders, is being mailed to
the stockholders along with this Proxy Statement. The Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2002, as filed with the
Securities and Exchange Commission (without exhibits) on March 28, 2003, is
available to stockholders without charge upon written request to the Company.
Exhibits to the Annual Report on Form 10-K may be obtained from the Company upon
payment of the Company's reasonable expenses to furnish such exhibits. To obtain
any of these materials, you should contact Robert McClain, Laser-Pacific Media
Corporation, 809 N. Cahuenga Blvd., Hollywood, California 90038. The Annual
Report is not to be considered part of the soliciting materials.
By Order of the Board of Directors of
Laser-Pacific Media Corporation
Hollywood, California Robert McClain, Secretary
April 29, 2003
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
If you have any question, or have any difficulty voting your shares, please
contact Robert McClain of the Company at (323) 960-2180.
Appendix A
LASER-PACIFIC MEDIA CORPORATION
AUDIT COMMITTEE CHARTER
(Last Amended on April 16, 2003)
I. PURPOSE
The primary function of the Audit Committee is to represent and assist the Board
of Directors in fulfilling its oversight responsibilities with respect to: (1)
the Corporation's financial reporting processes, including the financial
information which will be provided to the Corporation's stockholders and others,
and the integrity of the Corporation's financial statements; (2) the systems of
internal controls which management has established; (3) the Corporation's
compliance with legal and regulatory requirements; and (4) the Corporation's
audit processes, including the qualifications and independence of the outside
auditor and the performance of the Corporation's internal audit function and the
outside auditor.
II. COMPOSITION
The Audit Committee will be comprised of three or more independent directors, as
appointed by the Board, including one chair. For purposes hereof, the term
"independent" shall mean a director who meets The Nasdaq Stock Market, Inc.
("NASDAQ") definition of "independence," as determined by the Board.
All members of the Audit Committee shall be able to read and understand
fundamental financial statements and at least one member of the Audit Committee
shall have accounting or related financial management expertise. At least one
member of the Audit Committee shall be an "audit committee financial expert," as
determined by the Board.
III. MEETINGS
The Audit Committee shall meet, either in person or telephonically, as often as
may be deemed necessary or as circumstances require in its judgment. The Audit
Committee shall meet separately in executive session, periodically, with
management, the principal internal auditor (or other personnel responsible for
the audit function) of the Corporation, and the outside auditor. The Audit
Committee shall report regularly to the Board with respect to its activities.
The majority of the members of the Audit Committee shall constitute a quorum.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
1. Review and discuss with management and the outside auditor the
Corporation's annual audited and quarterly unaudited financial
statements, including: (a) an analysis of the auditor's judgment as to
the quality of the Corporation's accounting principles, setting forth
significant financial reporting issues and judgments made in
connection with the preparation of the financial statements; (b) the
Corporation's disclosures under "Management's Discussion and Analysis
of Financial Condition and Results of Operations," including the
development, selection and reporting of accounting policies and
estimates that may be regarded as critical; and (c) major issues
regarding the Corporation's accounting principles and financial
statement presentations, including (i) any significant changes in the
Corporation's selection or application of accounting principles and
financial statement presentations, and (ii) significant changes in
accounting and financial reporting rules that may have a significant
impact on the Corporation's financial reports. In addition, the Audit
Committee shall receive any required reports from the outside auditor.
2. Recommend to the Board, based on the review and discussion described
in paragraphs (1) and (7) hereto, whether the financial statements
should be included in the Annual Report on Form 10-K.
3. Review and discuss earnings press releases. (The chair of the Audit
Committee may represent the entire Audit Committee for purposes of
this review).
4. Be directly responsible, in its capacity as a committee of the Board,
for the appointment, compensation and oversight of the outside
auditor, which auditor shall be ultimately accountable to the Board.
In this regard, the Audit Committee shall have the sole authority to:
(a) appoint and retain, (b) approve the fees and other compensation to
be paid to, (c) when appropriate, terminate, and (d) oversee, the
outside auditor, which shall report directly to the Audit Committee.
5. Approve in advance all audit services to be provided by the outside
auditor. (By approving the audit engagement, an audit service within
the scope of the engagement shall be deemed to have been approved in
advance.)
6. Establish policies and procedures for the engagement of the outside
auditor to provide permissible non-audit services, which shall require
approval in advance by the Audit Committee of all permissible
non-audit services to be provided by the outside auditor.
7. Consider, at least annually, the independence of the outside auditor,
including whether the outside auditor's performance of permissible
non-audit services is compatible with the auditor's independence; on
an annual basis, obtain a formal written statement from the outside
auditor delineating all relationships between the auditor and the
Corporation consistent with Independence Standards Board Standard No.
1; and review and discuss with the outside auditor any disclosed
relationships or services that may impact the objectivity and
independence of the auditor.
8. Review with the outside auditor the scope and results of the annual
audit and, following completion of the annual audit, review separately
with the outside auditor, the internal auditing department, if any,
and management any significant difficulties encountered during the
course of the audit.
9. Review with the outside auditor, the internal auditing department, and
management the adequacy and effectiveness of the Corporation's: (a)
internal controls (including any significant deficiencies or changes
and any material weaknesses in internal controls reported to the Audit
Committee by the outside auditor or management); and (b) disclosure
controls and procedures (and management reports thereon).
10. Review and approve all related-party transactions.
11. Review and discuss the Corporation's policies with respect to risk
assessment and risk management.
12. Establish procedures for receiving and handling complaints regarding
accounting, internal accounting controls and auditing matters,
including procedures for confidential, anonymous submission of
concerns by employees regarding accounting and auditing matters.
13. Review, with outside counsel, material pending legal proceedings
involving the Corporation and other contingent liabilities.
14. Establish policies for the Corporation's hiring of current and former
employees of the outside auditing firm.
15. Review the Corporation's Code of Ethics and the Corporation's program
to monitor compliance with the Code.
16. Oversee the preparation of the Audit Committee Report required by SEC
rules to be included in the Corporation's proxy statement.
17. Evaluate annually the performance of the Audit Committee and the
adequacy of this Charter and recommend any changes to the Board.
18. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Audit Committee or the
Board deems necessary or appropriate.
V. OUTSIDE ADVISORS
The Audit Committee shall have the authority to retain such outside counsel,
accountants, experts and other advisors as it determines appropriate to assist
the Audit Committee in the performance of its functions. The Audit Committee
shall have sole authority to approve related fees and retention terms.
Approved at a Meeting of the Board of Directors of Laser-Pacific Media
Corporation on April 16, 2003.
/s/Robert McClain
Robert McClain,
Secretary