LASER-PACIFIC MEDIA CORPORATION
809 N. Cahuenga Blvd.
Hollywood, California 90038
(213) 462-6266
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
June 11, 1997
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, a Delaware corporation ("the Company"), for use at the annual
meeting of stockholders of the Company (the "Annual Meeting") to be held at the
Hollywood Roosevelt Hotel, 7000 Hollywood Blvd., Hollywood, CA 90028 on June 11,
1997 at 3:00 p.m. and at any adjournments thereof, for the purposes set forth in
the attached Notice of Annual Meeting of Stockholders. The accompanying proxy
names James R. Parks as proxy holder for purposes of the Annual Meeting.
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 and
"FOR" the adoption of the 1997 Stock Options Plan. 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. 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, by delivering a writing 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 to the Company's stockholders on or about May 9, 1997, to the Company's
stockholders of record at the close of business on May 6, 1997
The Company's principal executive offices are located at 809 North Cahuenga
Boulevard, Hollywood, California 90038
VOTING SECURITIES
The Company has one class of 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, except as described under
"Election of Directors," below. Only stockholders of record at the close of
business on May 6, 1997 are entitled to notice of and to vote at the Annual
Meeting. As of April 30, 1997 there were 7,128,172 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.
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PROPOSAL 1
ELECTION OF DIRECTORS
Voting
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. However, under
certain circumstances, as set forth in Section 2115 of California Corporations
Code, stockholders may be entitled to cumulate their votes. While it is unclear
whether or not the provisions of Section 2115 apply to the Company, the Board of
Directors has determined that stockholders may cumulate their votes with respect
to the election of directors for the Company if one or more stockholders gives
notice at the Annual Meeting, prior to voting, of an intention to cumulate votes
for a nominated director. A stockholder may cumulate votes by casting for the
election of one nominee a number of votes equal to the number of directors to be
elected multiplied by the number of votes to which his shares are entitled, or
by distributing his votes on the same principle among as many candidates as he
sees fit. If a proxy is marked "FOR" the election of directors, it may, at the
discretion of the proxy holders, be voted cumulatively in the election of
directors. If cumulative voting is utilized, the proxy holders intend to
distribute the votes represented by each proxy, unless such authority is
withheld, among the four nominees named, in such proportion as they see fit.
Nominees receiving the highest number of affirmative votes cast, up to the
number of directors to be elected, will be elected as directors.
Nominees
Four 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
four persons named below, all of whom are incumbent directors. 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 four 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, 1997,
with respect to the Board's nominees:
Director
Name Age Since Position with Company
James R.Parks(1)(3) 46 1984 Chairman of the Board and Chief Executive Officer
Emory M.Cohen (1)(3)54 1983 President, Chief Operating Officer and Director
Ronald Zimmerman (2)57 1996 Director
Cornelius P.McCarthyIII(2)
37 1996 Director
(1) Includes service as a director of a predecessor corporation.
(2) Member of the Audit Committee.
(3) Member of the Stock Option Plan Committee.
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.
Biographical Information
The following biographical information is furnished with respect to the
Company's directors:
James R. Parks was a director of Spectra Image Inc. ("Spectra Image")
from July 1984 until its merger (the "Combination") with Pacific Video, Inc.
("Pacific Video") to form the Company in 1990, and since then has been a
director of the Company. Mr. Parks has been Chairman of the Board and Chief
Executive Officer of the Company since March of 1994. Since 1978, Mr. Parks has
been a member of Parks, Palmer, Turner & Yemenidjian, certified public
accountants. During the last six years Mr. Parks has been actively involved in
performing financial turnarounds on various real estate projects. As part of
that activity, Mr. Parks was an officer of a corporation that was co-general
partner of several limited partnerships owning real estate which filed for
reorganization under Chapter 11 of the Federal Bankruptcy Law. All of the
partnerships filing pre-1995 Chapter petitions have been reorganized and emerged
from Chapter 11. In 1995, a partnership in which Mr. Parks was an officer of the
corporate general partner and which held real property, filed for reorganization
under Chapter 11. In 1996, the reorganization was dismissed and the Property was
sold. Mr. Parks was a director of Olympic National Bank ("ONB"), which went into
receivership with the FDIC. The assets of ONB were subsequently sold to Western
Bank, a Los Angeles based financial institution.
Emory M. Cohen is the Company's President and Chief Operating Officer
and a director and has held such positions since the Combination. Previously, he
was President and Chief Operating Officer of Pacific Video from May 1983 until
the Combination. From 1963 until February 1978, Mr. Cohen was employed by Glen
Glenn Sound, a leading motion picture and television sound recording company. He
served in many different capacities at Glen Glenn Sound. From 1974 to 1978, he
held the position of Vice President-Operations. In 1978, he joined Compact
Video, where he became Group Vice President-Service Companies, as well as
President of Compact Video Services, Inc. and of Image Transform, Inc., both
Compact Video subsidiaries. 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).
Ronald Zimmerman has served as a director of the Company since October
1996. Mr. Zimmerman is a self-employed financial advisor and businessman. From
1986 to 1994 he served as Director, Senior Vice President and Chief Financial
Officer of the Todd-AO Corporation.
Cornelius P. McCarthy III has served as a director of the Company
since October 1996. Since December, 1996, Mr. McCarthy has been employed
as an investment banker with Pennsylvania Merchant Group, Ltd. as Senior
Vice President. Mr. McCarthy has served in similar capacities with
Laidlaw and Company, November, 1993 to December, 1996, McCarthy and
Company (January 1993 to November 1993) and Kemper Securities (1988-1992).
Mr. McCarthy currently serves on the Boards of Directors of Bonded Motors,
Inc. and Phoenix International Life Sciences, Inc.
No family relationships exist between any of the officers or directors
of the Company.
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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 above. 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 42 Executive Vice President
Randolph D. Blim 50 Senior Vice President
Robert McClain 49 Chief Financial Officer
Vice President and Secretary
Leon D. Silverman has served as Executive Vice President since the
Combination. He was Pacific Video's Vice President of Marketing and Sales from
1982 until the Combination. Previous to joining Pacific Video, he was Director
of Marketing and Sales at Compact Video Services, Inc., a subsidiary of Compact
Video. Mr. Silverman is a Founding Member of the Technology Council of the
Television and Motion Picture Industry and currently serves as Secretary of its
Executive Committee. In addition, he currently serves on the Board of Directors
of the International Teleproduction Society.
Randolph D. Blim has been the Senior Vice President of Engineering since
the Combination. He was Vice President of Engineering for Pacific Video and
Pacific Video Industries, Inc. (a predecessor company of Pacific Video) from
1972 until the Combination. During the period 1982-1984 Mr. Blim served as a
consultant to the American Broadcasting Company providing design services for
the 1984 Los Angeles Summer Olympic Games. From 1969 to 1972 he was employed by
ABC, working on special camera and engineering projects for ABC's Wide World of
Sports. From 1966 to 1969 he was Director of Engineering for TelWest
Productions, and Seros Mobile Videotape Productions, both television facilities
companies. Mr. Blim was awarded an Emmy in 1989 for Outstanding Achievment in
Engineering Development in connection with the Company's Electronic
Laboratory(TM).
Robert McClain became Chief Financial Officer in November 1994. He was
employed by Arthur Andersen and Co. from 1975 through 1978. He was a Senior
Accountant and a Certified Public Accountant when he left. He was employed at
TRE Corporation, a diversified manufacturing company, from 1978 through 1987
where he served in various capacities ranging from Director of Taxation and
Insurance to Assistant to the CEO, leaving when TRE was acquired by ALCOA
Aluminum Corp. He was employed by Memtech Technology Corp., a manufacturer of
computer memory, as General Manager and CFO from 1987 through 1991 and by Betson
Pacific, a video game developer and distributor, as CFO and Director of
Operations from 1992 through November 1994 when he left to join Laser-Pacific.
Mr.
McClain is a Director of the Orange County Chapter of the American Red Cross.
<PAGE>
BOARD OF DIRECTORS
Committees
The Company has two standing committees of the Board of Directors, the
Audit Committee and the Stock Option Plan Committee. The Audit Committee met
once during 1994 and once in March 1996. The principal duties of the Audit
Committee are to approve selection and engagement of independent auditors and
review with them the plan and scope of their audit for each year, the results of
such audit when completed and their fees for services performed. Mr. Zimmerman
and Mr. McCarthy became members of the Audit Committee in November of 1996, and
are currently the sole members of the Audit Committee.
The principal duty of the Stock Option Plan Committee is to administer
the Company's stock option plan. James R. Parks and Emory M. Cohen are the sole
appointed members of this committee. The Stock Option Plan Committee did not
meet in 1996.
Attendance and Compensation
During the year ended December 31, 1996, the Board of Directors of the
Company met ten times. Each of the directors attended at least 90% of all of the
meetings of the Board of Directors. Directors who are not officers or employees
of the Company receive $1,000 per month.
Delinquent Filings
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, or representations that no Forms 5 were required, the
Company believes that with respect to fiscal 1995, its officers, directors and
beneficial owners of more than 10% of its equity timely complied with all
applicable Section 16 (a) filing requirements, with the following exceptions:
Mr. McCarthy and Mr. Zimmerman did not timely file Form 3 upon being appointed
to the Board of Directors in October of 1996, and did not timely file Form 4
upon the issuance of options in November of 1996. The delinquent reports were
filed on April 3, 1997.
<PAGE>
PROPOSAL 2
Approval of the 1997 Stock Options Plan
The 1997 Stock Option Plan (the "Option Plan") was adopted by the Board
of Directors (the "Board") of the Company on April 2, 1997, subject to approval
of the Option Plan by the Company's stockholders at the Annual Meeting. The
purpose of the Option Plan is to provide participating officers, other key
employees, directors and consultants with added incentives for high levels of
performance and to encourage investment in the Company's common stock by such
persons, thereby increasing their personal interest in the continued success and
progress of the Company.
In general, options granted under the Option Plan are intended to be
either incentive stock options ("ISOs") qualifying for special tax treatment
under the Internal Revenue Code of 1986, as amended (the "Code"), or
non-qualified stock options ("NSOs") not entitled to any special tax treatment
under the Code. The Option Plan is attached hereto as Exhibit A. Some of the
more important features are summarized below, but the summary is qualified in
its entirety by express reference to the terms of the Option Plan attached
hereto.
Shares Subject to Options; Changes in Corporate Structure: Subject to
adjustment as hereinafter provided, no more than 500,000 shares of the Company's
common stock may be issued pursuant to options granted under the Option Plan.
Shares subject to lapsed or terminated options will be available for future
options. If any change is made in the stock subject to the Option Plan (through
merger, consolidation, reorganization, stock split, combination of shares,
exchange of shares or other change in the corporate structure of the Company
effected without the receipt of consideration), such adjustment shall be made as
to the maximum number and class of shares subject to the Option Plan, and the
number, class and option price of shares subject to options granted under the
Option Plan, as may be determined to be appropriate by the Board or the
Committee (as defined below). In the event of a merger or consolidation in which
the Company is not the surviving corporation, or upon the sale of all or
substantially all of the assets of the Company, options outstanding at the time
of such event shall become exercisable (unless the Board or Committee determines
to accelerate the exercise of such options) for the same consideration that a
Company stockholder becomes entitled to receive (less the per share exercise
price) pursuant to such corporate reorganization or sale of assets.
Administration of Option Plan: The Option Plan is to be administered by
the Board, who may delegate administration to a committee composed solely of no
fewer than two (2) non-employee directors of the Company (the "Committee"). The
Board or Committee will designate the participants, the number of shares to be
optioned to them, the option price and the term of each option. Each ISO and NSO
granted pursuant to the Option Plan shall be authorized by action of the Board
or the Committee and shall be evidenced by a separate written agreement with
each participant.
Eligible Participants: Officers, other key employees, directors and
consultants of the Company will be eligible for options. Although it is not
possible at the present time to determine which individuals may be granted
options in the future under the Option Plan, it is expected that such
determination will be made primarily on the basis of an individual's present and
potential contribution to the management and development of the Company's
business, taking into consideration any previous option grants to such
individual. Only employees of the Company (including officers and directors who
are also employees) shall be eligible to receive ISOs. Directors and consultants
who are not full-time officers or employees will not be eligible to receive
ISOs, but may be granted NSOs. The Company currently has two (2) non-employee
directors and approximately 180 employees (including officers and directors).
Option Price: The price at which shares may be purchased upon exercise
of an option must be at least 100% (110% in the case of an ISO granted to "a
more than 10% stockholder") of the fair market value of the Company's common
stock on the date the option is granted.
Maximum Exercisable Amount: The aggregate fair market value (determined
at the time of grant) of the shares with respect to which ISOs are exercisable
for the first time by an employee during any calendar year (under all incentive
stock option plans of the Company) shall not exceed $100,000. No comparable
limit applies with respect to NSOs.
Term of Options: No option may be granted under the Option Plan after
April 1, 2007. The term of ISOs and NSOs shall not exceed ten years (five years
in the case of an ISO granted to "a more than 10% stockholder"). Exercisable
options granted under the Option Plan generally terminate thirty (30) days after
an ISO optionee ceases to be employed by the Company or a NSO optionee ceases to
be a director, officer or employee of the Company. However, in the event of the
death or disability of an optionee, the period for exercise shall be extended
for up to one (1) year following such optionee's death or disability. Upon
termination of an optionee's employment or a non-employee's status as a
director, all options which are not exercisable as provided above shall
terminate.
Company's Repurchase Right: If shares of the Company's common stock are
no longer publicly tradeable, then, unless the Board or Committee determines
otherwise, the Company shall have the right to repurchase any shares received
upon exercise of an option following an optionee's termination of employment by
notice to optionee given within ninety (90) days after such termination of
employment.
Exercise of Options: Each option will be exercisable at such time or
times with respect to such number of shares as shall be fixed by the Board or
Committee. Options granted under the Option Plan may become exercisable in
cumulative increments ("vest") as determined by the Board or Committee. When
exercising options, optionees may pay the exercise price either in cash or, if
the option agreement so provides, in shares of the Company's common stock, by
surrender of options previously granted or any combination thereof. Shares of
the Company's common stock used to exercise an option will be valued at their
fair market value on the day the option is exercised. The difference between the
exercise price and fair market value of the stock subject to any surrendered
options on the day the option is exercised shall be equal to the option price of
the shares being purchased. The Board or Committee may also provide for "reload
options" pursuant to which an optionee who surrenders stock or options in
payment for shares of the Company's common stock will acquire new options, which
may be ISOs or NSOs, for the number of shares and options surrendered. Options
are not transferable by an optionee except by will, the laws of descent and
distribution or pursuant to a qualified domestic relations order. During an
optionee's lifetime, an ISO option is exercisable only by the optionee (or by a
holder acquiring the shares pursuant to a qualified domestic relations order).
Amendment of Plan: The Board may suspend, amend or terminate the Option
Plan, but may not, without the prior approval of the stockholders: (1) make any
material change in the eligible employees as defined in the Option Plan; (b)
increase the total number of shares or maximum term for which options may be
granted; or (c) change any provision of the Option Plan which would affect the
qualification of ISOs as "incentive stock options" under the Code. Thus, the
Board will have the power to alter the Option Plan in a number of ways, some of
which could be significant, without obtaining stockholder approval.
Federal Tax Consequences of Plan: The principal federal income tax
consequences of participation in the Option Plan, in general, are as follows:
A. ISOs
1. No income will be recognized by an optionee at the
time of grant of an ISO or upon its exercise for regular income tax purposes.
2. An optionee's basis for the stock acquired upon the
exercise of an ISO ("ISO stock") will be equal to the price paid for the stock.
See paragraph A.8 below for rules relating to the determination of basis when
ISO stock is acquired in exchange for previously owned shares.
3. The excess of the fair market value of the ISO stock over
the exercise price will be treated as an item of tax preference for purposes of
computing the alternative minimum tax in the year in which the option is
exercised.
4. The holding period for the ISO stock will commence
upon the date the ISO is exercised.
5. Upon the sale of ISO stock by an optionee who has held such
ISO stock for at least (i) two years after the date on which the ISO was
granted, and (ii) one year after the date on which the ISO stock was transferred
to the optionee ("Special Holding Period"), the selling optionee will recognize
long-term capital gain (or loss) in the amount by which the sales price exceeds
(or is less than) the adjusted basis of the ISO stock. Any resulting gain will
not be an item of tax preference; however, for purposes of determining
alternative minimum tax, the basis of ISO stock will include the amount treated
as an item of tax preference for the year in which the ISO was exercised. The
foregoing Special Holding Period requirement does not apply to the exercise of
an ISO after the death of an optionee by the optionee's estate or heirs.
6. Except in the case of a "Disqualifying
Disposition, " as defined in paragraph A.7, below, the Company receives
no income tax deduction on the grant or exercise of an ISO.
7. Any sale or other disposition of ISO stock prior to the
satisfaction of the Special Holding Period is generally a "Disqualifying
Disposition." A Disqualifying Disposition has the following income tax
consequences to the optionee and the Company in the year of such Disqualifying
Disposition:
(a) Generally, the optionee will recognize
compensation income in an amount equal to the excess of the fair market value
of the ISO stock on the exercise date over the option price. If the
Disqualifying Disposition is for a price which is less than the fair market
value of the ISO stock on the exercise date, compensation income is
reduced to the difference between the disposition price and the option price.
If the Disqualifying Disposition results in a loss, i.e., the amount received
in the Disqualifying Disposition is less than the option price, there is no
compensation income.
(b) In addition, the optionee will
recognize capital gain income in an amount equal to the excess of the cash
and fair market value of the other property received in the Disqualifying
Disposition over the fair market value of the ISO stock on the exercise date.
The capital gain will be treated as long-term capital gain if the ISO
stock is held for more than one year prior to the Disqualifying
Disposition. In all other events, the capital gain will be treated as
short-term capital gain. If the selling optionee recognizes a loss because
the sale price is less than the adjusted basis in the stock, the character of
the loss will be long-term if the ISO stock is held for more than one year after
its acquisition. In all other events, such capital loss shall be treated as
short-term capital loss.
(c) The Company will deduct as
compensation expense an amount equal to the compensation income recognized
by the optionee.
8. If the ISO stock is acquired in exchange for shares of the
Company's common stock previously acquired by an optionee, no income will be
recognized by the optionee at the time of the exchange, but the optionee will be
treated as having received two blocks of stock. To the extent that the total
fair market value of the ISO stock received exceeds the fair market value of the
Company's common stock surrendered (the shares constituting such excess fair
market value being herein referred to as "Spread Shares"), it is possible that
the Internal Revenue Service will contend that the price paid for the Spread
Shares is zero, that an optionee's basis in the Spread Shares is therefore zero,
and that the optionee's holding period in the Spread Shares commences on the
date he exercises the option. The remaining shares will have a basis equal to
the basis of the Company's common stock surrendered and a holding period which
includes the period the Company's common stock surrendered was held. No
regulations have been issued by the Treasury on this issue, and it may be
reasonable for the holder of the ISO stock to take the position that the basis
of the Company's common stock surrendered be allocated pro-rata to all of the
ISO stock received and that all shares have a "carryover" holding period,
including the period the Company's common stock surrendered was held. The
surrender of old ISO stock in exchange for a new ISO stock pursuant to the
exercise of an ISO is not a Disqualifying Disposition.
9. If the ISO stock is acquired for surrender of options held
by the optionee, the optionee will have compensation income equal to the
difference between the exercise price and the fair market value of the stock
subject to the surrendered options. The optionee is then treated as having
acquired the ISO stock for an equivalent amount of cash.
B. NSOs
1. No income will be recognized by an optionee at the
time of grant of a NSO.
2. At the time of exercise of a NSO, compensation income will
be recognized by the optionee in an amount equal to the excess of the fair
market value of the acquired stock ("NSO stock") on the exercise date over the
option price.
3. If the disposition of the NSO stock is restricted by
applicable securities laws for a period of time, then no income will be
recognized by such optionee until the expiration of the time period of such
restrictions. At that time, the option holder will recognize gain in an amount
equal to the excess of the fair market value of the NSO stock on the date the
restriction expires over the option price. However, the option holder of the
restricted stock may elect to recognize ordinary income upon the exercise of the
NSO (as described in paragraph 2 above) rather than on the date the restriction
expires.
4. The amount of income recognized by the optionee upon
exercise of a NSO will be deductible by the Company in the taxable year in which
ordinary income is recognized by the optionee.
5. An optionee's basis for the NSO stock will be the option
price plus any amount recognized as ordinary income by reason of the exercise of
the NSO, or upon expiration of the restriction under Section 16(b) of the
Securities Exchange Act of 1934 (the "1934 Act").
6. The holding period for the NSO stock will commence on the
later of (i) the day after the NSO stock is transferred to the optionee, or (ii)
with respect to an optionee whose shares are subject to a restriction under
Section 16(b) of the 1934 Act, the day after the date the restriction expires,
unless the option holder elects to recognize ordinary income upon exercise of
the NSO, in which event the holding period will commence on the day after the
NSO stock is transferred to the optionee.
7. Upon the sale of NSO stock, capital gain (or capital loss)
will be recognized by the optionee in the amount by which the sales price
exceeds (or is less than) the adjusted basis of the stock. The gain (or loss)
will be long-term or short-term capital gain (or loss), depending on the holding
period for the stock. NSO stock held for more than one year will give rise to
long-term capital gain (or loss).
8. If NSO stock is acquired in exchange for shares of the
Company's common stock previously acquired by an optionee, the optionee will be
treated as having received two blocks of stock. To the extent that the total
fair market value of the NSO stock received exceeds the fair market value of the
Company's common stock surrendered (a number of shares having a fair market
value equal to the excess being referred to as the "Spread Shares"), an optionee
must include in gross income the fair market value of the Spread Shares as
compensation income. The optionee's basis in the Spread Shares will be equal to
the amount included in gross income and the holding period will commence on the
day after the NSO stock is transferred to the optionee. The optionee will
recognize no gain or loss with respect to the remaining shares which will have a
basis equal to the basis of the Company's common stock surrendered and a holding
period which includes the period the Company's common stock surrendered was
held.
9. If NSO stock is acquired for surrender of options held by
the optionee, the optionee will have compensation income equal to the difference
between the exercise price and the fair market value of the stock subject to the
surrendered options. The optionee is then treated as having acquired the NSO
stock for an equivalent amount of cash.
C. Withholding Taxes
To the extent that any amount recognized by an optionee upon exercise
of an option or upon a Disqualifying Disposition is subject to withholding for
income and employment tax purposes, the Company may require the optionee to pay,
in addition to the amount required to exercise the option, the appropriate
amount of withholding, or the Company may withhold such amount from the
optionee's other compensation.
[For a description of prior option plans of the Company, see
"Executive Compensation - Stock Option Plans"]
Stockholders are requested in this Proposal 2 to approve the Option
Plan. The affirmative vote by the holders of at least a majority of the shares
of the Company's common stock present in person or represented by proxy at the
1997 Annual Meeting and entitled to vote on the proposal is required for
approval of the Option Plan. Unless instructed otherwise, it is the intention of
the persons named in the accompanying form of proxy to vote shares represented
by properly executed proxies "FOR" approval of the Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2
<PAGE>
EXECUTIVE COMPENSATION
Under rules adopted by the Securities and Exchange Commission (the
"SEC") in October 1992, the Company is required to provide certain data and
information relating to the compensation and benefits provided to the Company's
chief executive officer and the four other most highly compensated executive
officers of the Company at the end of 1996, a report furnished by the Company's
Board of Directors regarding executive compensation, and certain information
regarding the performance of the Company's Common Stock.
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 thus stockholder value, by significantly aligning the financial
interest of the key executives with those of stockholders
The executive compensation program is viewed in total considering all
of the component parts: base salary and long-term incentive compensation in the
form of restricted stock awards and stock options. In evaluating the performance
and setting the base 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 business, performance of the Company's stock and
the Company's overall financial performance
The Board of Directors did not award any performance bonuses for the fiscal
year ended December 31, 1996.
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.
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, and he is entitled to other specified benefits such as an
automobile, reimbursement of expenses, and health, life and disability
insurance. In the event of a change in control of the Company, Mr. Cohen shall
be entitled to a lump sum payment of three times his annual compensation or if
he is terminated other than for specified reasons or if he terminates his
contract within nine months of such event.
Leon D. Silverman is employed by the Company at a current annual
salary of $215,000, and is entitled to other specified benefits such as an
automobile allowance, reimbursement of expenses, health, life and disability
benefits. Mr. Silverman currently 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 the terms of a
three-year employment agreement entered into as of July 24, 1995. The agreement
expires on July 23, 1998 if the executive is given written notice 120 dates
prior to date of termination. If the 120 day written notice is not given by
either party at the end of the current three year term, 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
is entitled to a minimum annual salary of $189,000 with required minimum 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,
health, life and disability benefits.
Robert McClain is employed by the Company at a current annual salary of
$145,000 and is entitled to specified benefits such as an automobile allowance,
reimbursement of expenses, health, life and disability benefits. Mr. McClain is
employed under a letter of agreement with the Company and serves at the
discretion of the Board of Directors
The SEC requires public companies to state their
compensation policies with respect to recently enacted federal income tax
laws that limit to $1,000,000 the deductibility of compensation paid to
executive officers named in the proxy statement of such companies. In light
of the current level of compensation of the Company's named executive
officers, the Board of Directors of the Company has not adopted a policy with
respect to the deductibility limit, but will adopt such a policy should it
become relevant.
SUBMITTED BY THE BOARD OF DIRECTORS
OF LASER-PACIFIC MEDIA CORPORATION
James R. Parks, Chairman Emory M. Cohen
Ronald Zimmerman Cornelius P. McCarthy III
<PAGE>
SUMMARY COMPENSATION TABLE
Long Term Compensation
----------------------------------------
----------------------------------------
Annual Compensation Awards Payouts
-------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Name Annual Restricted Securities Other
and Compen- Stock Underlying LTIP Compen-
Principal sation Award(s) Options Payouts sation
Position Year Salary($) Bonus($)($) ($) ($) ($)
James R.Parks
CEO 1994 168,000 -0- -0- -0- -0- -0- -0-
1995 208,000 -0- -0- -0- -0- -0- -0-
1996 208,000 -0- -0- -0- -0- -0- -0-
Emory M. Cohen
President 1994 292,100 -0- 7,338 -0- -0- -0- -0-
1995 317,577 -0- 21,965 -0- -0- -0- -0-
1996* 410,002 -0- 17,394 -0- -0- -0- -0-
Gregory L. Biller
Vice Chairman of the
Board (Retired 3/31/96)
1994 195,000 -0- 2,134 -0- -0- -0- -0-
1995 180,000 -0- 19,738 -0- -0- -0- -0-
1996 39,067 -0-*107,000 -0- -0- -0- -0-
Leon D. Silverman
Vice President
1994 175,223 -0- 11,227 -0- -0- -0- -0-
1995 215,000 -0- 72,427 -0- -0- -0- -0-
1996 *244,372 -0- 9,868 -0- -0- -0- -0-
Randolph D. Blim
Vice President
1994 157,937 -0- 6,192 -0- -0- -0- -
1995 178,519 -0- 3,562 -0- -0- -0- -0-
1996 *244,462 -0- 4,753 -0- -0- -0- -0-
Robert McClain
Vice President, CFO
1994 13,781 -0- -0- -0- -0- -0- -0-
1995 134,483 -0- 8,919 -0- -0- -0- -0-
1996 153,464 -0- 13,349 -0- -0- -0- -0-
*Includes repayment in 1996 of voluntary payroll deferrals in 1993, 1994,
and 1995
<PAGE>
The following Performance Graph compares the
Company's cumulative total shareholder return on its Common Stock for the
period starting January 1, 1992 to December 31, 1996, with the cumulative
return of the Standard and Poor's Stock Index and a peer group of companies,
the Standard and Poor's Entertainment
Index, neither of which include the Company. The Performance Graph assumes
$100 invested on January 1, 1992 in the Company's Common Stock, the S&P 500
Index and the S&P Entertainment Index.
Company/Index Dec92 Dec93 Dec94 Dec95 Dec96
- ----------------------------- ------- ---------- -------- -------- --------
Laser-Pacific Media Corp. -10.71 -82.02 33.45 0.00 -16.67
S&P Entertainment-500 43.00 15.58 -4.62 20.14 1.53
S&P 500 Index 7.62 10.08 1.32 37.58 22.96
Base
Period
Company/Index Dec91 Dec92 Dec93 Dec94 Dec95 Dec96
- ------------------ ------------ ------ -------- -------- -------- ----------
Laser-Pacific Media Corp.100 89.29 16.06 21.43 21.43 17.86
S&P Entertainment-500 100 143.00 165.28 157.64 189.40 196.30
S&P 500 Index 100 107.62 118.46 120.03 165.13 203.05
<PAGE>
Stock Option Plans
In April 1985, Spectra Image adopted a ten-year employee stock option
plan which provided for the grant to executive officers and key employees of
options qualified under the Internal Revenue Code of 1986, as amended
("incentive stock options") to purchase up to 300,000 shares of common stock at
an exercise price not less than the fair market value of the common stock on the
date of grant. In connection with the Combination, outstanding options under the
plan became exercisable into shares of Common Stock of the Company. This plan
terminated April, 1995, 89,531 options to purchase common stock remain
outstanding as of December 31, 1996.
In June 1987, Pacific Video adopted a nine-year stock option plan
providing for the issuance of options to officers, directors and key employees
to acquire up to an aggregate of 165,029 shares of Common Stock pursuant to
incentive or non-qualified stock options. The exercise price of all options
granted under the plan was required to be not less than the fair market value on
the date of grant. In connection with the Combination, outstanding options under
the plan became exercisable into shares of Common Stock of the Company. This
plan terminated April, 1996, 69,206 options to purchase common stock remain
outstanding as of December 31, 1996.
In September 1990 in connection with the Combination, the Board of
Directors of the Company adopted the 1990 Stock Option Plan (the "1990 Plan")
which provides for the issuance of incentive or non-qualified stock options. An
aggregate of 150,000 shares of Common Stock were initially reserved for grant
under the 1990 Plan to officers, directors and key employees of the Company. The
exercise price of a stock option granted under the plan may not be less than the
fair market value of the underlying shares on the date of the grant; options may
be granted for a term of up to 10 years. Under the terms of the 1990 Plan,
participants may receive options to purchase Common Stock in such amounts and
for such prices as may be established by the stock option plan committee;
provided, however, that the exercise price of a stock option granted under the
Plan may not be less than the fair market value of the underlying shares on the
date of grant. The options may be granted for a term of up to 10 years.
The 1990 Plan provides that the aggregate fair market value (determined
at the time the option is granted) of the Common Stock with respect to which
incentive stock options are exercisable for the first time by an optionee during
any calendar year shall not exceed $100,000. All options granted under the 1990
Plan are nontransferable during the optionee's lifetime, but are transferable at
death unless otherwise determined by the plan committee. Options granted
terminate within a specified period of time following termination of an
optionee's employment with the Company, not to exceed 30 days. The Board of
Directors may amend the 1990 Plan and, with the consent of each affected
optionee, the option agreements; provided, however, that certain changes may
only be made with the approval of the Company's stockholders.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
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 30, 1997. 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.
Name and Address Amount and Nature of Percent of
Of Beneficial Owner Beneficial Ownership(1) Class(1)
John Paul De Joria _____________ 606,000 7.6%
2745 S. Buffalo
Las Vegas, Nevada 89117
Robert E. Seidenglanz (2) (4) ________ 983,563 12.3%
9831 Civic Center Drive, Suite 103
Beverly Hills, California 90210
James R. Parks (3) (4) __________ 458,403 5.7%
1990 South Bundy Drive
Los Angeles, California 90025
304 E. 45th Associates _______________________ 500,000 6.3%
C/O Williams Real Estate Company, Inc.
530 5th Avenue
New York, New York 10036
McCrae Holdings Inc. __________________________ 512,993 6.4%
C/O Chemical Bank
270 Park Avenue
New York, New York 10017
(1) For the purposes of calculating each person's percentage and that of all
officers and directors as a group, shares which may be acquired within 60
days upon the exercise of warrants, stock options have been treated as
outstanding.
(2) Includes 111,111 shares issuable upon the exercise of outstanding
stock options and 55,000 shares beneficially held by Mrs. Seidenglanz
for which Mr. Seidenglanz disclaims control.
(3) Includes 344,590 shares of Common Stock held by partnerships in which Mr.
Parks is a partner and 37,500 shares issuable upon the exercise of
outstanding warrants held by partnerships in which Mr. Parks is a partner.
(4) Includes 91,351 shares transferred to Mr. Parks by Mr. Seidenglanz under
a letter of agreement in settlement of professional fees. The shares have
been removed from Mr. Seidenglanz' total and added to Mr. Parks'
total. At April 30, 1997, the shares had not been transferred.
Mr. Seidenglanz has stated that he also transferred 100,000 shares to
his attorney. The 100,000 shares have been removed from Mr.
Seidenglanz's total even though the shares had not been transferred at
April 30, 1997.
<PAGE>
Security Ownership of Management
The following table sets forth information with respect to the
beneficial ownership of the Company's common stock as of April 30, 1997 by all
the Company's directors and the Company's chief executive officer and the four
other most highly compensated executive officers of the Company at the end of
1996. 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. An asterisk (*) denotes beneficial ownership of less than 1%.
Name and Address Amount and Nature of Percent of
Of Beneficial Owner Beneficial Ownership(1) Class(1)
Randolph D. Blim (2) 40,387 *
Emory M. Cohen (3) 203,900 2.6%
James R. Parks (4) (5) 458,403 5.7%
Leon D. Silverman (6) 59,425 *
Cornelius McCarthy (7) 10,000 *
Robert McClain (8) 30,000 *
Ronald Zimmerman (9) 10,000 *
All Directors and Officers as a Group
(7 persons) (10) 812,115 10.18%
(1) For purposes of calculating each person's percentage, shares which
may be acquired within 60 days upon exercise of warrants or stock options
have been treated as outstanding.
(2) Includes 29,527 shares issuable upon exercise of stock options
(3) Includes 58,249 shares issuable upon exercise of stock options
(4) Includes 344,590 shares of Common Stock held by partnerships in which Mr.
Parks is a partner and 37,500 shares issuable upon the exercise of
outstanding warrants held by partnerships in which Mr. Parks is a partner.
(5) Includes 91,351 shares transferred to Mr. Parks by Mr. Seidenglanz under
a letter of agreement in settlement of professional fees. The shares
have been removed from Mr. Seidenglanz' total and added to Mr. Parks'
total. At April 30, 1997, the shares had not been transferred.
(6) Includes 48,565 shares issuable upon exercise of stock options
(7) Includes 10,000 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 186,341 shares issuable on exercise of stock options and
37,500 shares issuable upon exercise of warrants.
<PAGE>
CERTAIN TRANSACTIONS
James R. Parks, Chairman of the Board and Chief Executive Officer of the
Company, is a member of Parks, Palmer, Turner & Yemenidjian (PPTY), an
accounting firm, which provides tax accounting and management consulting
services to the Company. PPTY's billings for the year ended December 31, 1996
were approximately $39,000. Mr. Parks purchased 60,000 shares of Laser-Pacific
Common Stock from the company in November 1996 at $.50 per share. The shares
purchased are subject to 144 Trade Restrictions. On the date of the transaction,
the last trade on NASDAQ was at $.75.
In 1993, the Company borrowed amounts ranging from $100,000 to $225,000
from Delores C. Biller, wife of Gregory R. Biller and from Partnerships in which
Mr. Parks was a partner. Each of the borrowings was evidenced by a promissory
note which provided that the borrowings were to be fully repaid on or before
March 31, 1994, and until fully repaid, each of the borrowings would accrue
interest at the rate of 14% per annum payable quarterly. During 1994, and 1995,
the loans were partially repaid and to the extent not repaid were extended to
August 31, 1995, and again to November 30, 1996. All notes were fully repaid in
1996. As additional consideration for making and then extending the loans, the
Company granted warrants to purchase the Company's Stock at prices ranging from
$.50 to $1.6888 per share. In total, the participants were issued 352,500
warrants. None of the warrants have been exercised. As of April 1, 1997, 282,500
warrants had expired only 70,000 are exersiable.
In connection with Gregory L. Biller's retirement on March 31, 1996 the
Company entered into a settlement agreement with Mr. Biller for any and all
claims he may have had against the Company. Mr. Biller was paid $75,000 as of
the date of the agreement and an additional $100,000 in October 1996. The
Company had previously accrued $150,000 for past due wages. These amounts
included any and all payments made for past due wages, reimbursement of interest
charges for the delayed sale of real estate caused by his guarantee to the Bank
of California and any emotional distress and suffering. Due to the nature of the
payments they are not included as compensation on the summary compensation
table.
In April 1993 the Company retired debentures payable to Gregory L.
Biller and PPTY in the principal amounts of $500,000 and $100,000 respectively.
Bank of California, a lender to the Company, brought suit against Mr. Biller and
PPTY alleging that Mr. Biller and PPTY had executed agreements subordinating
their respective right to the repayment of principal amount of the debentures to
repayment to the Bank of California's loan to the Company. In 1994 the Bank of
California obtained a summary judgment against Mr. Biller in the amount of
$500,000. PPTY believed that they were not parties to the subordination
agreement and that they had a valid cause of action against Bank of California.
In March 1995, after extensive negotiations the Company amended its loan
agreement with Bank of California. As part of the renegotiation of the loan
agreement with the Bank of California, Bank of California agreed to drop its
suit against PPTY and not to enforce its judgment against Mr. Biller on the
condition that PPTY waive any cause of action against the Bank of California and
that the Company continue to timely perform its obligations under the
renegotiated loan agreement. In the event Bank of California were ever to
enforce its judgment against Mr. Biller, it is likely that Mr. Biller would have
a right of subrogation against the company. The Company had outstanding
borrowings aggregating $400,000 at December 31, 1995 with the Bank of California
under an amended loan agreement. The loan is secured by certain real property,
payable in monthly installments of up to $65,000 plus interest at prime plus 3%.
The loan was paid in full as of August, 1996.
<PAGE>
RELATIONSHIP WITH INDEPENDENT AUDITORS
KPMG Peat Marwick LLP has been the Company's independent auditors since the
Company's inception. Audit services performed by KPMG Peat Marwick LLP in the
fiscal year ended December 31, 1996, included the examination of, and reporting
on, the annual 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.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Annual Meeting, and they will have the opportunity to make a statement if they
so desire. They will also be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Stockholders are advised that any stockholder proposal intended to be
presented at the annual meeting of stockholders to be held in 1998 must be
received by the Company at its principal executive offices no later than January
9, 1998.
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 1996 10-K Report, which includes the Annual Report, 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 Robert McClain
May 8, 1996 Secretary
<PAGE>
EXHIBIT A
LASER-PACIFIC MEDIA CORPORATION
INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN (1997)
<PAGE>
1. PURPOSES OF THE PLAN.
(a) In General. The purpose of
this Laser-Pacific Media Corporation Incentive and Non-Qualified Stock Option
Plan (1997) (the "Plan") is to benefit the business of Laser-Pacific Media
Corporation, a Delaware corporation (the "Company"), and its Subsidiaries
(as hereinafter defined), by providing to participating employees,
directors, consultants and officers added incentives for high levels of
performance and to encourage stock ownership in the Company by such persons.
The Plan seeks to accomplish these goals by providing a means whereby
directors, officers and key employees of the Company and its
Subsidiaries may be given an opportunity to purchase by way of option shares of
voting common stock of the Company ("Company Shares").
(b) Retention of Key Employees,
Directors, Officers and Consultants. The Company, by means of this Plan,
seeks to secure and retain the services of persons now employed by, or
serving as a director or an officer of the Company or any of its Subsidiaries,
and to provide incentives for such persons to exert maximum efforts for the
success of the Company and its Subsidiaries, and to reward other persons,
including directors and consultants who provide valuable services to the
Company or its Subsidiaries.
(c) Nature of Options. The Company
intends that the options issued under the Plan shall, in the discretion
of the Board of Directors of the Company (the "Board"), or any committee
to which responsibility for administration of the Plan has been
delegated pursuant to Section 2(d), be either incentive stock options
("ISO"), as that term is used in Section 422 of the Internal Revenue Code of
1986, as amended, or any successor thereto (the "Code"), or options which do
not qualify as ISOs ("Non-qualified Options").
2. ADMINISTRATION.
(a) Administration by Board or
Committee. The Plan shall be administered by the Board unless and until the
Board delegates administration; to a committee ("Committee"), as provided in
Section 2(d).
(b) Powers. The Board shall have the
power, subject to, and within the limitations of, the express provisions of
the Plan:
(i) To determine, from time to time, which of the persons
eligible under the Plan shall be granted an option; when and how the
option shall be granted; whether the option will be an ISO or
Non-qualified Option; the provisions of each option granted (which need
not be identical), including, without limitation, the purposes of
leaves of absence which may be granted to participants without
constituting a termination of their employment for purposes of the
Plan; and the number of shares for which an option shall be granted to
each such person;
(ii) To determine any conditions or restrictions imposed on
stock acquired pursuant to the exercise of an option (including, but
not limited to, repurchase rights, forfeiture restrictions and
restrictions on transferability);
(iii) To construe and interpret the Plan and the options
granted under it, to construe and interpret any conditions or
restrictions imposed on stock acquired pursuant to the exercise of an
option, to define the terms used herein, and to establish, amend and
revoke rules and regulations for its administration; and, in the
exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any option agreement in a manner and to
the extent it shall deem necessary or expedient to make the Plan fully
effective;
(iv) To cancel, at any time and from time to time, with the
consent of the affected Optionee, any or all outstanding options
granted under the Plan and the grant and substitution therefor of new
options under the Plan (subject to the limitations contained herein)
covering the same or different number of shares of stock and, with
respect to ISOs, at an option price per share in all events not less
than the fair market value on the new grant date; and
(v) Generally, to exercise such powers and to perform such
acts as it deems necessary or expedient to promote the best interests
of the Company.
(c) Compliance With Securities Laws.
With respect to persons subject to Section 16 of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), transactions under this Plan are
intended to comply with all applicable conditions of the 1934 Act. To the
extent any provision of the Plan or action by the Committee (as defined below)
fails to so comply, it shall be deemed null and void, to the extent permitted
by law and deemed advisable by the Board or the Committee, as applicable.
(d) Delegation to Committee. The
Board may delegate administration of the Plan to a committee (the
"Committee") of individuals appointed by the Board and composed solely of
no fewer than two (2) "non-employee directors," as defined in Rule 16b-3
under the 1934 Act. Members of the Committee shall serve for such terms as
the Board may determine and shall be subject to removal by the Board at any
time. If any member of the Committee is removed for any reason, the Board shall
have the sole right to appoint a replacement member. The Committee shall
have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board as set forth in Section 2(b), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. Any action of the Committee
with respect to administration of the Plan shall be taken pursuant to a majority
vote of its members. The Board may abolish the Committee at any time and revest
in the Board the administration of the Plan.
(e) Final Determination. The
determination of the Board or the Committee on matters referred to in this
Section 2 shall be final and conclusive.
3. SHARES SUBJECT TO THE PLAN.
Subject to the provisions of Section 6 relating to adjustments upon
changes in stock, the aggregate number of shares that may be sold pursuant to
options granted under the Plan shall not exceed, in the aggregate, Five Hundred
Thousand (500,000) Company Shares. If any option granted under the Plan shall
for any reason expire, be canceled, or otherwise terminate without having been
exercised in full, the stock not purchased under such option shall again become
available for issuance pursuant to the Plan.
4. ELIGIBILITY.
(a) ISOs. The persons who shall be
eligible to receive ISOs pursuant to the Plan shall be such employees of the
Company or its Subsidiaries (whether or not they are directors) as the
Board shall select from time to time. The individuals who from time to
time hold such options are referred to herein as the "ISO Optionees."
Directors who are not employees or officers of the Company or any Subsidiary
shall not be eligible to receive ISOs under the Plan.
(b) Non-qualified Options. The
persons who shall be eligible to receive Non-qualified Options pursuant to
the Plan shall be such employees, officers, directors and other persons who
provide valuable services to the Company or its Subsidiaries as the Board
shall select from time to time. The individuals who from time to time hold
such options are referred to herein as the "Non-qualified Optionees.
" Non-qualified Optionees and ISO Optionees are sometimes collectively referred
to as "Optionees."
(c) Limitation. Notwithstanding any
contrary provision hereof, the aggregate fair market value (determined at
the time the ISO is granted) of the stock with respect to which ISOs are
exercisable for the first time by the Optionee during any calendar year
(under all ISO plans of the Company, whether in effect or terminated,
whether such ISOs have expired or terminated, or whether such ISOs were
issued in exchange for or upon cancellation of other ISOs pursuant to Section
15) shall not exceed One Hundred Thousand Dollars ($100,000). Should
it be determined that any ISO granted pursuant to the Plan exceeds such
maximum, such ISO shall be considered to be a Non-qualified Option and shall
not qualify for treatment as an ISO under Section 422 of the Code to the
extent, but only to the extent, of such excess.
(d) Subsidiary. For purposes of this
Plan, the term "Subsidiary" shall mean any corporation in an unbroken
chain of corporations beginning with the Company if, at the time of the
granting of the subject option, each of such corporations other than the
last entity in the unbroken chain owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain. This Section 4(d) shall be interpreted in a manner
consistent with Code Section 424(e) in the case of the grant of an ISO.
5. OPTION PROVISIONS.
(a) In General. Each ISO and
Non-qualified Option granted pursuant to this Plan shall be authorized by
action of the Board or the Committee and shall be evidenced by a separate
agreement (the "Agreement") in such form and containing such terms,
conditions and restrictions as the Board or the Committee shall from time to
time approve and, with respect to ISOs, such terms as are required by
Section 422 of the Code or any regulation thereunder. Each grant to an
Optionee shall be subject to and conditioned upon the execution by the
Company and such Optionee of an Agreement reflecting the terms and conditions of
such grant, and such Optionee shall have no rights under such grant unless such
Agreement is so executed (i) in the case of an Optionee who is a director or an
officer but is not an employee, prior to his resignation or removal or the
expiration of his term of office of all such positions; and (ii) in the case of
an Optionee who is an employee, prior to the termination of his employment.
(b) Specific Provisions. Notwithstanding
the generality of the foregoing, unless stated otherwise, each ISO and
Non-qualified Option shall comply with and incorporate the following terms,
conditions and restrictions:
(i) Term. Each option granted and all rights or obligations
thereunder by its terms shall expire on such date as the Board or the
Committee may determine as set forth in such Agreement, but not later
than ten (10) years from the date the option was granted and shall be
subject to earlier termination as provided elsewhere in this Plan. For
purposes of this Plan, the date of grant of an option shall be the date
on which the Board or the Committee (as the case may be) takes final
action approving the award of the option, notwithstanding the date the
Optionee accepts the option, the date of execution of the Agreement, or
any other date with respect to such option.
(ii) Exercise Price. The exercise price for each option shall
be determined by the Board or the Committee and, if such option is an
ISO, shall be not less than one hundred percent (100%) of the fair
market value of the stock subject to the option on the date the option
is granted. The fair market value of such stock shall be determined by
the Board or the Committee in accordance with any reasonable valuation
method, including the valuation method described in Treasury Regulation
Section 20.2031-2.
(iii) Grants to Substantial Owners. Notwithstanding the
foregoing, in the case of a grant of an ISO hereunder to any employee
who directly or indirectly owns or is deemed to own (within the meaning
of Code Section 422(b)(6)) more than 10% of the total combined voting
power or value of all classes of stock of the Corporation (or any
parent or Subsidiary thereof) at the time of the grant, the option
price per share shall be at least 110% of the fair market value of a
share of common stock of the Company on the date of the option grant,
and the option shall not be exercisable after the expiration of five
years from the date of the option grant.
(iv) Notice Of Exercise. Options may be exercised by ten (10)
days written notice delivered to the Company stating the number of
shares with respect to which the option is being exercised together
with payment for such shares. Not less than one hundred (100) shares
may be purchased at one time unless the number purchased is the total
number of shares remaining which may be purchased under the option.
(v) Payment. The purchase price of stock acquired pursuant to
an option shall become immediately due upon exercise of the option and
shall be payable in cash or check payable to the order of the Company
in an amount equal to the option price for the Company Shares being
purchased, unless the Board or the Committee, in its sole discretion,
in the Agreement authorizes payment in any of the following alternate
forms:
(A) in whole shares of Company Shares
owned by the Optionee having a fair market value on the exercise
date (determined by the Board or the Committee in accordance with
any reasonable valuation method including the valuation method
described in Treasury Regulation Section 20.2031-2) equal to the
option price for the shares being purchased;
(B) by surrender of options for a
number of Company Shares, the difference between the exercise
price and the fair market value on the exercise date (determined by
the Board or the Committee in accordance with any reasonable valuation
method including the valuation method described in Treasury
Regulation Section 20.2031-2) of which is equal to the option price
for the shares being purchased; or
(C) a combination of cash, stock,
and options equal in the aggregate to the option price for the shares
being purchased.
Payments of Company Shares shall be made by delivery of stock
certificates properly endorsed for transfer in negotiable form. If the
person or persons exercising the option is a person other than the
Optionee, such persons shall be required to furnish the Company
appropriate documentation that such person or persons have the full
legal right and power to exercise the option on behalf of and for the
Optionee. No Company Shares shall be delivered upon the exercise of an
option granted hereunder unless and until the exercise price for such
Company shares are paid for in full.
Payments of options shall be made by delivery of the option
agreement covering the options to be surrendered for cancellation, and,
if applicable, reissuance of a new option agreement covering any
balance of options not surrendered.
(vi) Options Nontransferable. No Option granted hereunder
shall be transferable by the Optionee to whom granted otherwise than by
will or the laws of descent and distribution or pursuant to a qualified
domestic relations order. An ISO may be exercised during the lifetime
of the person to whom the option is granted only by such person.
(vii) Exercise. Except as otherwise provided in Section 4(c),
the total number of Company Shares subject to an ISO or a Non-qualified
Option granted to an Optionee shall become exercisable as determined by
the Board at the time of the grant of the applicable Option.
Exercisable installments may be exercised in whole or in part and, to
the extent not exercised, shall be exercisable at any time on or prior
to the expiration of the term of the option. The provisions of this
Section 5(b) are subject to any option provisions contained elsewhere
in this Plan or in the Agreement governing the minimum number of shares
as to which an option may be exercised, including, without limitation,
Section 5(b)(iv).
(viii) Reload Options. In the sole discretion of the Board or
Committee, as applicable, an Agreement may provide for "reload options"
pursuant to which an Optionee who surrenders stock or options in
payment for Company Stock pursuant to Section 5(b)(v) will acquire new
options for the number of shares of Company Stock and options so
surrendered. Subject to the other terms and limitations of this Plan,
reload options may be ISOs or Non-qualified Options.
6. INVESTMENT REPRESENTATIONS.
The Company may require any Optionee, or any person to whom an
option is transferred under Section 5(b)(vi), as a condition of exercising any
such option, to give written assurances satisfactory to the Company stating,
among other things, that such person is acquiring the stock subject to the
option for such person's own account and not with any present intention of
selling or otherwise distributing the stock. The requirement of providing
written assurances, and any assurances given pursuant to the requirement, shall
be inoperative if (i) the shares to be delivered upon the exercise of the option
have been registered under a then currently effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), or (ii) a
determination is made by counsel for the Company that, under the circumstances,
such written assurances are not required pursuant to all then applicable federal
or state securities laws.
7. EFFECT OF TERMINATION OF EMPLOYMENT.
(a) Death. Should an Optionee die
at any time during the term of his option, then the executors or
administrators of such Optionee's estate or the person or persons to whom the
option is transferred pursuant to the Optionee's will or by the laws of
descent and distribution (as the case may be) shall have the right to exercise
any and all outstanding options granted to such Optionee which are exercisable
on the date of death pursuant to the Agreement evidencing such options,
subject to any restrictions on such exercise provided in such Agreement.
Any such option shall terminate and cease to be exercisable upon the earlier of
(i) the expiration of one (1) year from the date of death, or (ii) the
expiration of the specified option term.
(b) Disability. Should an ISO
Optionee cease to be an employee of the Company or its Subsidiaries by
reason of disability at any time during the term of his ISO, or should a
Non-qualified Optionee (other than a Non-qualified Optionee who received
Non-qualified Options in a capacity other than as an employee, director or
officer) cease to be a director, officer or employee (and not otherwise become
or remain as a director, officer or employee) of the Company or its
Subsidiaries by reason of disability, at any time during the term of his
Non-qualified Option, then such Optionee (or his legal guardian, unless
the exercise by such guardian would disqualify such ISO as an ISO) shall have
the right to exercise any and all outstanding options granted to such Optionee
which are exercisable on the date of such cessation of employment pursuant to
the Agreement evidencing such options, subject to any restrictions on such
exercise provided in such Agreement. Any such option shall terminate and cease
to be exercisable upon the earlier of (i) the expiration of one (1) year from
the date of such cessation of employment, or (ii) the expiration of the
specified option term. For these purposes, the "disability" of an Optionee shall
be determined as defined by Section 22(e)(3) of the Code.
(c) Other. Should an ISO Optionee cease
to be an employee of the Company or its Subsidiaries for any reason other
than disability or death at any time during the term of his ISO, or should a
Non-qualified Optionee (other than a Non-qualified Optionee who received
Non-qualified Option in a capacity other than as an employee, director or
officer) cease to be a director, officer or employee (and not otherwise become
or remain as a director, officer or employee)of the Company or its Subsidiaries
for any reason other than disability or death at any time during the term of
his Non-qualified Option, then such Optionee shall have the right to
exercise any and all outstanding options granted to such
Optionee which are exercisable on the date of such cessation of employment
pursuant to the Agreement evidencing such options, subject to any restrictions
on such exercise provided in such Agreement. Any such option shall terminate and
cease to be exercisable upon the earlier of (i) the expiration of thirty (30)
days from the date of such cessation of employment, or (ii) the expiration of
the specified option term.
(d) No Extension. Sections 7(a)(b)
and (c) shall not be construed to extend the term of any option or to permit
anyone to exercise the option after expiration of its term, nor shall it be
construed to increase the number of shares as to which any option is
exercisable from the amount exercisable on the date of termination of the
Optionee's employment.
8. TAXES AND WITHHOLDING.
Any option granted hereunder shall provide for appropriate
arrangements (as determined by the Board or Committee in their respective sole
discretion) for the satisfaction by the Company and the optionee of all federal,
state, local and other income, excise or employment taxes or tax withholding
requirements applicable to the exercise of the option or the later disposition
of Company Shares thereby acquired, and all such additional taxes or amounts as
determined by the Board or Committee in its discretion, including without
limitation, the right of the Company or any Subsidiary thereof to deduct or
withhold in the form of cash or, if permitted by law, shares of stock from any
transfer or payment to an Optionee or, if permitted by law, to receive transfers
of Company Shares or other property from the Optionee, in such amount or amounts
deemed required or appropriate by the Board of the Committee in its discretion.
Any Company Shares transferred pursuant to the exercise of an option and
transferred by the Optionee to the Company for purposes of satisfying any
withholding obligation shall not again be available for purposes of this Plan.
9. ADJUSTMENT OF SHARES.
(a) Adjustment in Case of Corporate
Reorganization. In the event of any change in the number of outstanding
Company Shares by reason of merger, consolidation, reorganization,
recapitalization, stock split, reverse stock split, stock dividend,
combination of shares, exchange of shares, or any other change in corporate
structure effected without receipt of consideration (other than changes
occurring on account of a stock issuance upon exercise of options,
rights or warrants, or the conversion of convertible securities), then the Board
or Committee (either before or after such event) shall make appropriate
adjustments to the number or class of shares and the option price per share of
Company Shares subject to each outstanding option and to the maximum number or
class of shares to be issued under this Plan, all in order to prevent the
dilution of benefits under such options and this Plan, and to provide to the
extent practicable after such event benefits identical to those provided under
such options and this Plan prior to such event; provided that, notwithstanding
the foregoing, in the case of ISOs only, any and all such adjustments shall in
each case comply with Code Sections 422 and 424 and the regulations thereunder.
The adjustments determined by the Board or Committee shall be final, binding and
conclusive; provided, however, that if the Board and Committee fail to consider
whether an adjustment is appropriate, then until such time, if any, as the Board
or Committee may undertake such consideration, the number and/or class of shares
and the option price per share of the Company Shares subject to each outstanding
option and to the maximum number and/or class of shares issuable under this Plan
shall be deemed adjusted in the most reasonable manner so as to prevent dilution
of benefits under such options and this Plan, and to provide to the extent
practicable benefits after such event identical to those provided under such
options and this Plan prior to such event.
(b) Preservation Of Rights In
Consolidation, Merger Or Sale Of Assets. In the event the Company enters
into any agreement to dispose of all or substantially all of its assets by
sale, exchange, dissolution or liquidation, or to merge or consolidate with
and into one or more other corporations pursuant to a statutory merger in which
the Company is not the surviving entity, and the outstanding options are not
assumed or equivalent options substituted for the outstanding options of the
surviving or successor corporation, or a Parent or Subsidiary thereof, then
an option outstanding at the time of the occurrence of such event 1shall
become exercisable, without otherwise being accelerated (unless the Board
or Committee has previously determined to accelerate the exercise of such
options), for the same consideration that any owner of a share of the Company
becomes entitled to receive (less the per share exercise price of such option)
pursuant to such merger, consolidation, sale of assets or liquidation.
(c) Rights Of Company And Subsidiaries.
The grant of options under this Plan shall in no way affect or limit the
right of the Company or any of its Subsidiaries to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
10. REPURCHASE RIGHT.
Unless agreed to the contrary by the Board or the Committee, each
Agreement shall provide for the Company's right to purchase any Company Shares
received upon the exercise of an option following an Optionee's termination of
employment with Company or its Subsidiaries for any reason by notifying the
Optionee of its decision to so purchase the Company Shares within ninety (90)
days of such termination of employment. The purchase price for such Company
Shares shall be their fair market value, as determined in the good faith
judgment of the Board or the Committee, at the date of notification. In the
event that the Company exercises its purchase option under this Section 10, the
Optionee shall deliver the Company Shares so purchased to the Company within
five (5) business days of the Company's notification, and upon receipt of the
Company Shares, the Company shall pay the purchase price, in cash or by check,
in equal quarterly installments over the three year period following such
purchase, together with interest at a rate equal to the "prime" or "reference"
rate as set by Bank of America NT & SA or Citibank, N.A., as the Board or the
Committee selects. The provisions of this Section 10 shall expire without any
further action by the parties if the Company Shares (or the equity securities of
a successor) issued upon the exercise of options hereunder are or become
publicly tradeable.
11. COVENANTS OF THE COMPANY.
(a) Authorized Shares. During the
terms of the options granted under this Plan, the Company shall authorize
and reserve for issuance at all times the number of Company Shares required to
satisfy such options in full.
(b) Applicable Regulatory Approval.
The Company shall seek to obtain from each regulatory commission or agency
having jurisdiction over this Plan or the Company such authority as may be
required to sell Company Shares upon exercise of the options granted under
this Plan; provided, however, that this undertaking shall not require the
Company to register under the Securities Act or any state securities laws
either this Plan, any option granted under this Plan or any stock delivered
or to be delivered pursuant to any such option or grant. If the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful delivery and
sale of stock under this Plan, the Company shall be relieved from any liability
for failure to sell stock upon grant or upon exercise of such options unless
and until such authority is obtained.
(c) Indemnification. The Company shall
indemnify and hold harmless the members of the Board and the Committee in any
action brought against any member in connection with the administration
of this Plan to the maximum extent permitted by then applicable law, except
in the case of willful misconduct or gross misfeasance by such member in
connection with this Plan and its administration.
(d) Annual Report. Upon request of
an Optionee, the Company shall provide annually to each Optionee a copy
of the annual report of the Company that is provided to its shareholders
during the period such Optionee's options are outstanding.
12. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted under this
Plan shall be used for general corporate purposes of the Company.
13. SHAREHOLDER RIGHTS.
Neither an Optionee nor any person to whom an option is transferred
pursuant to this Plan shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such option unless and
until such person has satisfied all requirements for exercise of the option
pursuant to its terms and has, in fact, exercised such option in accordance with
the terms of this Plan and the Agreement.
14. CONTINUATION OF EMPLOYMENT.
Nothing contained in this Plan, or in any option granted pursuant to
this Plan, shall obligate the Company to employ or continue to employ any
employee for any period or interfere in any way with the right of the Company to
reduce the compensation of any employee.
15. CANCELLATION, EXCHANGE AND NEW GRANT OF
OPTIONS.
The Board, or the Committee, if applicable, shall have the authority to
effect, at any time and from time to time, with the consent of the affected
Optionees, the cancellation of any or all outstanding ISOs or Non-qualified
Options under this Plan and to grant in substitution therefor new options under
this Plan covering the same or different numbers of Company Shares, provided
that any substitute ISO granted hereunder shall have an option price per share
not less than 100% of the fair market value of such shares on the date such
substitute option is granted, as determined under and subject to Sections 4(c)
and 5(b)(ii). The exercise of any substitute ISO or Non-qualified Option granted
under this Section 15 shall at all times be subject to and comply with the
terms, conditions and restrictions of this Plan and the applicable Agreement.
16. AMENDMENT OF THE PLAN.
(a) Board Authority. Except as set
forth herein, the Board shall have complete and exclusive power and
authority to amend, suspend or modify this Plan in any or all respects and
at any time; provided, however, that no such amendment or modification
shall adversely affect rights and obligations with respect to outstanding
options without the consent of the affected Optionees. No option may be granted
hereunder during any suspension of the Plan or after the termination of this
Plan.
(b) Compliance. Subject to
Section 20(a), the Board hereby expressly reserves the right, in its
sole determination, to amend or modify the terms and provisions of this Plan
and of any outstanding options under this Plan to the extent necessary to
qualify any or all options under this Plan for such favorable federal income
tax treatment (including deferral of taxation upon exercise) as may be
afforded employee stock options under amendments to the Code or other statutes
or regulations which become effective after the effective date of this Plan.
(c) Limitations. Notwithstanding
the provisions of Section 20(a) and (b), the Board shall not, without
having first obtained all necessary regulatory, governmental and
shareholder approvals required by law or by the Code to maintain the status
of ISOs as "incentive stock options" within the meaning of Code Section
422 (if any), (i) increase the maximum number of shares to be delivered
under this Plan, except for permissible adjustments under Section 9, (ii)
increase the maximum term of options provided hereunder, (iii)change any
provision of this Plan which would affect the qualification of ISOs granted
hereunder as "incentive stock options" within the meaning of Code Section
422, or (iv) modify the eligibility requirements for the grant of options
under this Plan.
17. EFFECTIVE DATE AND TERM OF THE PLAN.
(a) Effective Date. This Plan shall
be effective as of the date it is approved by the Board, provided, however,
that the Plan is approved by the shareholders of the Company within a 12
month period before or after this Plan's approval by the Board. No option
granted under this Plan shall become exercisable until this Plan has been
approved by the shareholders of the Company and, if required, an appropriate
permit has been issued by the appropriate state securities authorities. Any
options granted following approval of this Plan by the Board shall expire and
be of no force or effect upon the first anniversary of the approval of this
Plan by the Board unless shareholders' approval of this Plan is obtained by
such date.
(b) Termination. This Plan shall
terminate upon the earlier of (i) the date on which all shares available
for delivery under this Plan have been delivered pursuant to the valid exercise
of options granted hereunder, or (ii) 10 years from the adoption of this Plan
by the Board. Options outstanding on the date of the termination of this Plan
may be exercised after the termination of this Plan, unless otherwise
provided in the Agreement evidencing such stock options.
IN WITNESS WHEREOF, the Company has executed this Plan on this 2nd day
of April, 1997.
LASER-PACIFIC MEDIA CORPORATION
a Delaware corporation
By: /s/James R. Parks
James R. Parks
Chairman of the Board and
Chief Executive Officer
<PAGE>
LASER-PACIFIC MEDIA CORPORATION
809 N. Cahuenga Blvd.
Hollywood, California 90038
------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 11, 1997
---------------------------------
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the
"Annual Meeting") of Laser-Pacific Media Corporation("the Company") will
be held at the Hollywood Roosevelt Hotel, 7000 Hollywood Blvd., Los
Angeles CA 90038, at 3:00 PM, on June 11, 1997, to consider and vote on the
following matters, as more fully described in the attached Proxy Statement:
1. To elect the directors of the company; and
2. To approve the Company's Incentive and Non-Qualified Stock option
Plan (1997).
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The names of nominees to the Board of Directors, detail
information on the Stock Option Plan, and other information concerning
these matters is set forth in the attached Proxy Statement, and Exhibit A
which are part of this Notice of Annual Meeting of Stockholders.
The Board of Directors have fixed the close of business on May 6, 1997
as the record date for determining the stockholders entitled to receive
notice of and to vote at the Annual Meeting or any adjournment thereof.
Management sincerely hopes that you will attend the Annual Meeting.
However, in order to ensure your representation at the Annual Meeting, you
are requested to promptly complete, sign and date the enclosed proxy and
return it in the postage-prepaid envelope provided whether or not you
expect to attend the Annual Meeting in person. The prompt return of your
proxy will save expenses involved in further communication. Your proxy is
revocable and will not affect your right to vote in person in the event you
attend the Annual Meeting.
The 10K of the Company for the fiscal year ended December 31,
1996, accompanies this Notice of Annual Meeting of Stockholders.
By order of the Board of Directors
LASER-PACIFIC MEDIA CORPORATION
Hollywood, California Robert McClain
May 6, 1997 Secretary
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. IF A QUORUM IS NOT REACHED, THE COMPANY WILL HAVE THE ADDED EXPENSE
OF RE-ISSUING THESE PROXY MATERIALS. IF YOU ATTEND THE MEETING AND SO DESIRE,
YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON. THANK YOU FOR ACTING PROMPTLY.
<PAGE>
Proxy
Laser Pacific Media Corporation
809 Cahuenga Blvd.
Hollywood, CA 90038
Telephone 213.462.6266
This Proxy is Solicited on Behalf of the Board of Directors
THE UNDERSIGNED hereby appoints James R. Parks as proxy, with the power to
appoint his substitute, and hereby authorizes him to represent and to vote, as
designated below, all the shares of Common Stock of Laser-Pacific Media
Corporation held on record by the undersigned on May 6, 1997, at the Annual
Meeting of Stockholders to be held on June 11, 1997 or any adjournment thereof.
1. ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee strike a
line through the nominees name in the list below)
Emory M. Cohen; Cornelius P. McCarthy; James R. Parks; Ronald Zimmerman
2. APPROVAL OF 1997 STOCK OPTION PLAN
FOR approval of 1997 Stock Option Plan AGAINST approval of 1997 Stock Option
Plan
ABSTAIN
3. In his discretion, the Proxy is authorized to vote upon such other
business as may properly come before the meeting.
This proxy when executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will
be voted for Proposal 1 and Proposal 2.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such.
If corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership
name by authorized person.[GRAPHIC OMITTED]
Dated:____________________, 1997 _________________________
Signature
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY __________________________
CARD PROMPTLY USING THE ENCLOSED ENVELOPE Signature, if held jointly
