<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
L.L. KNICKERBOCKER CO., INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
WILLIAM BLACK, ESQ.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
THE L. L. KNICKERBOCKER CO., INC.
June 3, 1996
To Our Stockholders:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of Stockholders to be held Tuesday June 25, 1996 at 10:00 a.m.,
Pacific time, at the Century City Plaza Hotel Tower (Century Level, Cypress
Room), 2025 Avenue of the Stars, Los Angeles, California 90067. The formal
notice and proxy statement for the Annual Meeting are attached to this letter.
It is important that you sign, date and return your proxy card in the
enclosed envelope as soon as possible, even if you currently plan to attend the
Annual Meeting. By doing so, you will ensure that your shares are represented
and voted at the meeting. If you decide to attend, you can still vote your
shares in person, if you wish.
On behalf of the Board of Directors, I thank you for your cooperation and I
look forward to seeing you on June 25th.
Very truly yours,
/s/ LOUIS L. KNICKERBOCKER
--------------------------
Louis L. Knickerbocker
Chairman of the Board
<PAGE>
THE L. L. KNICKERBOCKER CO., INC.
30055 COMERCIO
RANCHO SANTA MARGARITA, CALIFORNIA 92688
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 1996
TO THE STOCKHOLDERS OF THE L. L. KNICKERBOCKER CO., INC.
Notice is hereby given that the annual meeting of stockholders of the L. L.
Knickerbocker Co., Inc. (the "Company") will be held at the Century City Plaza
Hotel Tower (Century Level, Cypress Room), 2025 Avenue of the Stars, Los
Angeles, California 90067 on Tuesday June 25, 1996 at 10:00 a.m., Pacific time
for the following purposes:
1. ELECTION OF DIRECTORS. To elect by vote of the holders of Common
Stock a total of six persons to the Board of Directors to serve until
the next annual meeting of stockholders and until their successors are
elected and have qualified. The Board of Directors, nominees are:
Louis L. Knickerbocker Gerald A. Margolis
Farrah Fawcett Anthony Shutts
William R. Black Lowell W. Paxson
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. To
ratify the Board of Directors' selection of Deloitte & Touche LLP as
the Company's independent accountants for the fiscal years ended
December 31, 1995 and 1996.
3. OTHER BUSINESS. To consider and act upon such other business as
may properly come before the meeting.
Only stockholders of record at the close of business on May 7, 1996
will be entitled to notice of the annual meeting and to vote at the annual
meeting and at any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ PEGGY VICIOSO
-----------------
Peggy Vicioso
Secretary
Dated: June 3, 1996
WHETHER OR NOT YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE
COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE.
YOU MAY REVOKE YOUR PROXY IF YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO
VOTE YOUR SHARES IN PERSON.
<PAGE>
THE L. L. KNICKERBOCKER CO., INC.
30055 COMERCIO
RANCHO SANTA MARGARITA, CALIFORNIA 92688
(714) 858-3661
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 25, 1996
GENERAL
This proxy statement is furnished to stockholders of the L. L.
Knickerbocker Co., Inc., a California corporation (the "Company") in connection
with the solicitation of proxies by the Board of Directors of the Company (the
"Board" or "Board of Directors") for use at the Annual Meeting of Stockholders
to be held at 10:00 a.m., Pacific time on Tuesday, June 25, 1996, at the Century
City Plaza Hotel Tower (Century Level, Cypress Room), 2025 Avenue of the Stars,
Los Angeles, California 90067. and at any adjournments thereof (the "Annual
Meeting" or "Meeting").
Common stockholders of record as of the close of business on May 7,
1996 will be entitled to vote at the Meeting or any adjournments thereof. As of
the record date, the Company has outstanding 14,506,257 shares of Common Stock,
each entitled to one vote on all matters to be voted upon. This proxy
statement, the accompanying form of proxy and the Company's annual report to
stockholders for the fiscal year ended December 31, 1995 are being mailed on or
about June 3, 1996 to each stockholder entitled to vote at the Meeting.
VOTING AND REVOCATION OF PROXIES
VOTING
If the enclosed proxy is executed and returned in time and not
revoked, all shares represented thereby will be voted. Each proxy will be voted
in accordance with the stockholder's instructions. If no such instructions are
specified, the proxies will be voted FOR the election of each person nominated
for election as a director and FOR the ratification of the Board's selection of
Deloitte & Touche LLP as the Company's independent accountants for the fiscal
years ended December 31, 1995 and 1996.
Assuming a quorum is present, the affirmative vote of a plurality of
the votes cast at the Meeting will be required for the election of directors;
the affirmative vote of a majority of the votes cast at the Meeting will be
required for the ratification of the Board's selection of Deloitte & Touche LLP
as the Company's independent accountants; and the affirmative vote of a
majority of the votes cast at the Meeting will be required to act on all other
matters to come before the Annual Meeting. For purposes of determining the
number of votes cast with respect to any voting matter, only those cast "for"
or "against" are included. Abstentions and broker non-votes are counted only
for the purposes of determining whether there is a quorum present at the
Meeting. With respect to all matters (other than the election of directors),
abstentions and broker non-votes will have the effect of reducing the number of
affirmative votes required to achieve a majority of the votes cast.
<PAGE>
REVOCATION
A stockholder giving a proxy may revoke it at any time before it is
voted by delivery to the Company of a subsequently executed proxy or a written
notice of revocation. In addition, returning your completed proxy will not
prevent you from voting in person at the Annual Meeting should you be present
and wish to do so.
ELECTION OF DIRECTORS
The Company's Amended and Restated By-laws set the number of directors
at six. The size of the Company's Board is currently five directors, with one
vacancy. On June 30, 1995, Mr. John Galardi resigned from the Board of Directors
and all committees. On November 28, 1995 Mr. James Hann resigned from the Board
of Directors and all committees. On October 16, 1995 the Board appointed Mr.
William R. Black to fill a vacancy on the Board of Directors. One vacancy on the
Board of Directors remains unfilled. Directors hold office until the next annual
meeting of stockholders and until their successors are elected and have
qualified.
Unless otherwise directed, proxies in the accompanying form will be
voted FOR the nominees listed below. If any one or more of the nominees is
unable to serve for any reason or withdraws from nomination, proxies will be
voted for the substitute nominee or nominees, if any, proposed by the Board of
Directors. The Board has no knowledge that any nominee will or may be unable to
serve or will or may withdraw from nomination. All of the following nominees
except Mr. Lowell W. Paxson are current directors of the Company whose terms end
at the 1996 Annual Meeting. Information concerning nominees for director is set
forth below.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE BOARD OF
DIRECTORS' NOMINEES FOR DIRECTOR TO BE ELECTED BY THE HOLDERS OF COMMON STOCK.
NOMINEES FOR ELECTION BY HOLDERS OF COMMON STOCK
MR. LOUIS L. KNICKERBOCKER is the founder of the Company and has been
Chief Executive Officer, President, and Chairman since its inception. He
received an AA degree in 1964 from Santa Monica College with a major in medicine
and a minor in economics, then worked from 1965 through 1974 as a salesman and
sales supervisor at M. Cooper & Son, purchased and sold several liquor stores,
and acquired and sold a total of seven restaurants. Between 1974 and 1985, he
acted as a private investor and businessman, investing in real estate and
purchasing and selling small businesses. Mr. Knickerbocker and his wife,
Tamara, Vice President of the Company, formed the Company as International
Beauty Supply in 1985, co-founded LaVie Cosmetics with Michael Elam and
comedienne, Phyllis Diller in 1987, co-founded MLF Enterprises, in 1989 with
Michael Elam and Farrah Fawcett, formed Knickerbocker Creations, Ltd. in 1990
and began developing the celebrity driven products which are now part of the L.
L. Knickerbocker Co., Inc. Age: 53.
MR. ANTHONY P. SHUTTS, CPA was hired as a consultant on April 1, 1993
and became Chief Financial Officer of the Company on June 30, 1993. He is a
certified public accountant and holds a masters degree in taxation from the
University of Southern California. From 1993 to the present, Mr. Shutts has
maintained a private accountancy and financial consulting practice. Prior to
his private practice, he worked as Business Manager with Breslauer, Jacobson,
Rutman & Sherman from 1992 to 1993 and with Allen, Haight & Schurawel as a
Senior Accountant from 1991 to 1992. Mr. Shutts worked with Deloitte & Touche
as a Senior Consultant from 1986 to 1991. Currently, Mr. Shutts serves as Chief
Financial Officer of the Company approximately 90 hours per month, overseeing
the financial records preparation and reporting, and performing the general
functions of CFO. Age: 32.
MS. FARRAH FAWCETT was appointed to the Board of Directors in June
1994. She is a well known celebrity actress and has been the president and a
director of Tolivar Productions, Inc., an acting services firm since 1978. Ms.
Fawcett has participated in the development and marketing of products with MLF
Enterprises (a company she co-owns with Mr. Knickerbocker and Michael Elam) in
1989, and with Knickerbocker Creations, Ltd. in 1991 to 1993. Age: 49.
2
<PAGE>
MR. GERALD A. MARGOLIS was appointed to the Board of Directors and
elected Secretary of the Company in June 1994. He graduated from U.C.L.A. Law
School in 1954 and has been a licensed attorney in private practice and a member
of the California State Bar since 1955. Mr. Margolis was a City Council member
of the Culver City Counsel from 1962 to 1966. Mr. Margolis has advised the
Company on general corporate matters since its inception in 1985. Age: 66.
MR. WILLIAM R. BLACK was appointed to the Board of Directors in
October 1995. He received a BSBA and an MBA from the University of Denver in
1978 and 1981 respectively, and a Juris Doctor from Western State University
College of Law in 1987. Mr. Black is a licensed attorney and a member of the
California State and Federal Bars. Mr. Black worked as an Area Manager for Deere
& Company from 1979 through 1984, Director of Analysis for Management Resource
Services Company from 1984 through 1985, and Senior Vice President of Geneva
Corporation from 1985 through 1990. He maintains a private law practice and is
currently General Counsel of Sunclipse, Inc.; General Counsel and Director of
Pyraponic Industries, Inc.; Special Counsel for Amcor, Ltd.; General Counsel,
Secretary and Director of Anle Paper Co., Inc.; General Counsel, Secretary and
Director of Mann-Craft Container Corporation; Director of Raymark Container,
Inc.; Director General of Amcor de Mexico, S.A. de C.V. in Jalisco Mexico; and
Director General of Kent H. Landsberg Co. de Mexico, S.A. de C.V. in Baja
California Mexico. Age: 43.
MR. LOWELL W. PAXSON has been the Chairman of the Board and Chief
Executive Officer of Paxson Communications Corporations, Inc. since that
company's inception in 1991. Mr. Paxson was the President of Home Shopping
Network, Inc. from 1985 to 1990. Presently, the Company is involved in a joint
venture with Paxson Communications Corporation, Inc. to develop and promote
products through the home shopping industry and other marketing venues. Age: 61.
FURTHER INFORMATION CONCERNING
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company directs the management of the
business and affairs of the Company as provided by California law, and conducts
its business through meetings of the Board and two standing committees:
Compensation and Stock Option. In addition, from time to time, special
committees may be established under the direction of the Board when necessary to
address specific issues. The Company has no nominating or similar committees.
COMMITTEES OF THE BOARD - BOARD MEETINGS
The Board of Directors of the Company held four meetings in fiscal
1995. Each director attended 75% or more of the aggregate of (i) meetings of
the Board held during the period for which he or she served as a director and
(ii) meetings of all committees held during the period for which he or she
served on those committees. Average attendance at all such meetings of the
Board and committees was approximately 92%.
The COMPENSATION COMMITTEE is charged with the responsibility of
supervising the Company's compensation policies, management awards, reviewing
salaries, approving significant changes in salaried employee benefits, and
recommending to the Board such other forms of renumeration as it deems
appropriate. The Compensation Committee is currently comprised of Mr.
Knickerbocker as chairman, and Ms. Fawcett, Mr. Margolis and Mr. Black. The
Compensation Committee held one meeting in fiscal 1995.
The STOCK OPTION COMMITTEE has the principal functions of determining
individuals to whom stock options will be granted under the L. L. Knickerbocker
1995 Amended and Restated Stock Option Plan (the "Stock Option Plan"), the terms
on which such stock options will be granted, and to administer the Stock Option
Plan. The Stock Option Committee is currently comprised of Mr. Knickerbocker as
chairman, and Ms. Fawcett, Mr. Margolis and Mr. Black, who are independent non-
employee directors and "disinterested persons" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934 (the "Exchange Act"). Mr. Black
replaced Mr. Galardi who was a member until his resignation in June 1995. The
Stock Option Committee held three meetings in fiscal 1995.
3
<PAGE>
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the accounting firm of Deloitte &
Touche LLP to audit the Company's financial statements for and otherwise act as
the Company's independent accountants with respect to, the fiscal years ended
December 31, 1995 and 1996. In accordance with the Board's resolution, its
selection of Deloitte & Touche LLP as the Company's independent accountants for
fiscal 1995 and 1996 is being presented to the stockholders for ratification at
the Annual Meeting. The Company knows of no direct or material indirect
financial interest of Deloitte & Touche LLP in the Company or any connection of
that firm with the Company in the capacity of promoter, underwriter, voting
trustee, officer or employee.
Members of Deloitte & Touche LLP will be present at the meeting, will
have an opportunity to make a statement if they so desire, and will be available
to respond to appropriate questions.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT ACCOUNTANTS OF THE
COMPANY.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
shares of Common Stock beneficially owned as of May 7, 1995 by (i) each person
known to the Company to own beneficially more than 5% of the outstanding shares
of Common Stock as of such date, (ii) each director of the Company and all non-
director nominees for director, (iii) the CEO of the Company and the four most
highly compensated executive officers of the Company for the fiscal year ended
December 31, 1995, and (iv) all directors and executive officers as a group:
<TABLE>
<CAPTION>
Common Stock Percent
Name Beneficially Owned (1) of Shares (1)
- ---- ---------------------- --------------
<S> <C> <C>
Louis L. Knickerbocker and Tamara
Knickerbocker, Husband and Wife as
Community Property (2) 7,489,285 51.6%
Peggy Vicioso (3) 0 N/A
Anthony Shutts (4) 25,000 *
Gerald A. Margolis (5) 50,000 *
Farrah Fawcett (6) 235,000 1.6%
William R. Black (7) 50,000 *
Lowell W. Paxson (8) 50,000 *
All Directors and Executive Officers
as a Group (7 persons) (9) 7,899,285 54.5%
</TABLE>
- ----------------------
* The percentage of shares of Common Stock beneficially owned does not exceed
one percent of the outstanding shares of Common Stock
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares of common stock which such person has
the right to acquire within 60 days following May 7, 1996. For purposes
of computing the percentage of outstanding shares of Common Stock held by
each person or group of persons named above, any security which such person
or persons has or have the right to acquire within 60 days following May 7,
1996 is deemed to be outstanding, but is not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person.
4
<PAGE>
(2) Percentage is based on the 7,139,285 shares currently held of record plus
options issued by the Company to Mr. Knickerbocker that enables Mr.
Knickerbocker to currently acquire 350,000 shares of the Company's common
stock.
(3) Ms. Vicioso was granted options to acquire 151,250 shares of the Company's
Common Stock, none of which will have vested within 60 days of May 7, 1996.
(4) Mr. Shutts currently owns options to acquire 25,000 shares of the
Company's Common Stock, all of which will have vested within 60 days of May
7, 1996.
(5) Mr. Margolis currently holds options to acquire 50,000 shares of the
Company's Common Stock, all of which will have vested within 60 days of May
7, 1996.
(6) Ms. Fawcett currently owns 25,000 shares of Common Stock, 10,000 Stock
Purchase Warrants, and options to acquire 400,000 shares of the Company's
Common Stock, 200,000 of which will have vested within 60 days of May 7,
1996 and 200,000 of which will not have vested within 60 days following May
7, 1996
(7) Mr. Black currently owns 50,000 shares of Common Stock acquired upon the
exercise of options granted to him under the Company's Stock Option Plan.
(8) Mr. Paxson currently holds options to acquire 50,000 shares of the
Company's Common Stock, all of which will have vested within 60 days of May
7, 1996.
(9) Beneficial ownership of the Directors and Executive Officers as a group is
based on 7,214,285 shares of the Company's Common Stock currently held of
record plus options issued by the Company to Directors and Executive
Officers to acquire 685,000 shares of the Company's Common Stock which
will have vested within 60 days of May 7, 1996.
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and holders of more than 10% of the Company's Common Stock to
file with the Securities and Exchange Commission reports of ownership and
changes in ownership of Common Stock and other equity securities of the Company
on Forms 3, 4 and 5. Based on a review of such forms and written
representations of reporting persons, the Company believes that during the
fiscal year ended December 31, 1995, its officers and directors and holders of
more than 10% of the Company's Common Stock complied with all applicable filing
requirements.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is certain information regarding each of the current
executive officers of the Company. Information about Messrs. Knickerbocker and
Shutts is presented in "ELECTION OF DIRECTORS - Nominees for Election by Holders
of Common Stock." Officers are appointed by and serve at the discretion of the
Board.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Louis L. Knickerbocker 53 Chief Executive Officer, President
and Chairman of the Board
Peggy Vicioso 34 Executive Vice President and
Secretary
Tamara Knickerbocker 32 Vice President
Anthony P. Shutts 32 Chief Financial Officer and Director
- ------------------
</TABLE>
The principal occupations and positions for the past five years, and in
certain cases prior years, of the executive officers of the Company who are not
also nominees for election as director, are as follows:
5
<PAGE>
Ms. Peggy Vicioso joined the Company in December of 1993. She assumed the
position of Executive Vice President in May 1995. Ms. Vicioso graduated in 1981
from Brooks College in California with an Associate of Arts degree in
Merchandising. From 1983 through 1987 Ms. Vicioso served as Operation Manager
for Ocean Pacific Images, a licensee of Ocean Pacific Sportswear. From 1987
through 1993 she worked on the senior merchandising team and ultimately served
as Vice President of Merchandising for Pacific Outlook Sportswear, the largest
licensee of Ocean Pacific Sportswear.
Ms. Tamara Knickerbocker has been with the Company as Vice President since
its inception. In 1985 Ms. Knickerbocker helped to form the Company as
International Beauty Supply, and thereafter helped to form LaVie Cosmetics, MLF
Enterprises and Knickerbocker Creations, Ltd. Since 1985, she has worked to
develop and market products and programs for the home shopping industry. Her
focus has mainly been the creation and development of the products, and she has
emphasized collectibles. Ms. Knickerbocker is currently managing all aspects of
the Marie Osmond Doll Collection program, including product and program
development, production, marketing and sales. In addition, she also oversees
the other collectible programs, including the collectable bears. She has had
primary responsibility for the profitability and diversity of the collectible
lines and is currently coordinating expansion in these programs.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth certain
--------------------------
information concerning annual, long term and other compensation received during
the last three fiscal years and to be received by each of the Named Executive
Officers for services rendered in all capacities to the Company during the three
fiscal years ended December 31, 1995, 1994 and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------------------------------- ---------------
Securities
Fiscal All Other underlying
Name and Principal Position Year Salary Bonus Compensation Options(1)
- --------------------------- ------ --------- --------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Louis L. Knickerbocker 1995 $175,000 $175,000 N/A 500,000
Chairman, Chief Executive 1994 $175,000 N/A N/A N/A
Officer and President 1993 $123,000 N/A N/A N/A
Peggy Vicioso 1995 $ 75,000 $ 35,000 N/A 151,250
Executive Vice President 1994 $ 60,000 $ 13,000 N/A N/A
and Secretary 1993 N/A N/A N/A N/A
Tamara Knickerbocker 1995 $ 75,000 N/A N/A N/A
Vice President 1994 $ 50,000 N/A N/A N/A
1993 $ 44,500 N/A N/A N/A
Anthony Shutts 1995 $ 63,046 N/A N/A 50,000
Chief Financial Officer 1994 $ 42,500 N/A N/A N/A
1993 $ 13,250 N/A N/A N/A
</TABLE>
- ---------------------------
(1) All share amounts have been retroactively adjusted to give effect to the
five for one stock split effective August 1995.
6
<PAGE>
Table of Option Grants. The following table sets forth information
----------------------
concerning the grant of stock options during the fiscal year ended December 31,
1995 to each of the Named Executive Officers.
OPTION GRANTS
IN THE FISCAL YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Individual Grants(1)(3)
---------------------------------------------------------- Potential Realizable
Percent of Value at Assumed
Total Options Annual Rates of
Granted to Stock Price Appreciation
Employees Exercise or for Option Term
Options in Fiscal Base Price Expiration --------------------------
Name Granted Year 1995(2) (per share)(3) Date(4) 5% (5) 10%(5)
- ------------------------- ------- ------------- -------------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Louis L. Knickerbocker 500,000 25.0% $.75 6/15/05 $610,835 $972,653
Peggy Vicioso 151,250 7.6% $.75 6/15/05 $184,778 $294,228
Tamara Knickerbocker N/A N/A $.75 6/15/05 N/A N/A
Anthony Shutts 50,000 2.5% $.75 6/15/05 $ 61,084 $ 97,265
</TABLE>
- ---------------------
(1) These options were granted pursuant to the Company's Stock Option Plan.
(2) In fiscal 1995, 2,000,000 options were granted pursuant to the Company's
Stock Option Plan. This number was used in calculating the percentages in
the above table.
(3) All share amounts and exercise prices have been retroactively adjusted to
give effect to the five for one stock split effective August 1995.
(4) The Options granted under the Company's Stock Option Plan expire on the
tenth anniversary of the date of grant.
(5) The assumed 5% and 10% annual rates of appreciation over the term of the
options are set forth in accordance with rules and regulations adopted by
the Securities and Exchange Commission and do not represent the Company's
estimate of stock price appreciation.
Aggregate Options Exercised. There were no options exercised by the Named
---------------------------
Executive Officers during the fiscal year ended December 31, 1995.
DIRECTOR COMPENSATION
Directors, other than management directors (Louis L. Knickerbocker and
Anthony Shutts) currently receive $500 per Board or Committee meeting attended.
Each director, including management directors, is reimbursed for his or he out-
of-pocket expenses arising from attendance at meetings of the Board or
committees thereof.
Pursuant to the Company's Stock Option Plan, each non-management director
receives 50,000 options at the time of his or her initial appointment to the
Board and an additional 10,000 options upon each subsequent election to the
Board by the vote of the stockholders.
7
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company entered into employment agreements with Louis L. Knickerbocker,
its President, on September 27, 1994, and with Ms. Tamara Knickerbocker, its
Vice President, on September 27, 1994. The respective terms of the employment
agreements are five years each. The agreements are subject to early termination
by the Company under certain conditions, including breach of the agreement,
fraud by the employee, and/or breach of fiduciary duty owed to the Company by
the employee. The Company has the right to extend the terms of the employment
agreements for an additional five years each upon written notice to the
employees. Under terms of the agreements, each of the employees agrees to devote
his or her full time and effort to the business affairs of the Company and to
use his or her best efforts to promote the best interests of the Company.
The Company had previously entered into an employment agreement with Mr.
Gary Rulin as Executive Vice President. Mr. Rulin left the Company on May 1,
1995 prior to the granting of any Stock Options granted to employees under the
Stock Option Plan and is owed no further compensation for services rendered to
the Company.
Except for the provisions of the Stock Option Plan, there are no
compensatory plans or arrangements with respect to any of the Named Executive
Officers which are triggered by, or result from, the resignation, retirement or
other termination of such executive officer's employment, a change-in-control of
the Company or a change in the executive officer's responsibilities following a
change-in-control.
During the first year, the employment agreements called for Louis L.
Knickerbocker, President, to receive an annual base salary of $175,000 and for
Tamara Knickerbocker, Vice President, to receive an annual base salary of
$75,000. Current compensation for Peggy Vicioso, Executive Vice President, is
an annual base salary of $75,000. In addition, these three officers are
eligible to receive an annual bonus in an amount to be determined by a
compensation committee and ratified by the Board of Directors out of a
Management Bonus Fund which is equal to 10% of the pretax profits of the Company
and are entitled to receive certain stock options from the Stock Option Plan
previously adopted by the Company.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
From June 1994 through the present, Louis L. Knickerbocker, who was on the
Compensation Committee throughout 1995, has served as President of the Company
and also served as Chairman of the Board of Directors and served on the Stock
Option Committee. Mr. Knickerbocker received no compensation from the Company
for services rendered as Chairman of the Board of Directors or on the
Compensation or Stock Option Committees.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES
ON EXECUTIVE COMPENSATION
INTRODUCTION. The Compensation Committee of the Board of Directors in 1995
was comprised of Louis L. Knickerbocker, Gerald A. Margolis, Farrah Fawcett and
William R. Black. The Company's Stock Option Plan is administered by the Stock
Option Committee, which was comprised in 1995 Louis L. Knickerbocker, Gerald A.
Margolis, Farrah Fawcett and William R. Black.
COMPENSATION OBJECTIVES AND POLICIES. The principle objectives of the
Company's executive compensation are to: (i) support the achievement of desired
Company performance, (ii) align the executive officers' interests with the
success of the Company and with the interests of the Company's stockholders and
(iii) provide compensation that will attract and retain superior talent and
reward performance. These objectives are principally achieved through
compensation in the form of annual base salaries, bonuses and equity investment
opportunities.
8
<PAGE>
The Company entered into employment agreement with certain of its key
employees including Louis L. Knickerbocker, Gary Rulin and Tamara Knickerbocker
in September, 1994 . These agreements are described in section "Employment
Contracts and Termination of Employment and Change-in-Control Arrangements". On
May 1, 1995, Gary Rulin resigned as Executive Vice President and left the
Company for other employment.
Executive officers generally receive salary increases at the time of their
respective employment anniversaries as approved by the Compensation Committee,
taking into consideration the recommendations of the Company's Chairman and the
Company's Chief Executive Officer. In 1995, executive officer salary increases
ranged from zero% to 50%. In deciding to provide these salary increases to the
executive officers, the Compensation Committee took into account the expectation
that bonuses would be payable under the Company's Executive Bonus Plan (the
"Bonus Plan") for 1995. Based on the Company's performance, the Bonus Plan was
expected to represent a significant portion of the total compensation for the
executive officers in 1995 as compared to 1994.
The Compensation Committee believes that overall 1995 executive
compensation levels adequately reflected (i) each executive's business results
and performance in his or her area of responsibility, (ii) each executive's
contribution to the overall management team and (iii) each executive's expected
future contributions to the Company.
Bonus awards granted under the Bonus Plan were predicated on the actual
financial performance of the Company at the end of the Company's fiscal year.
The bonuses awarded were derived from a bonus pool set at 10% of pretax profits
for the Company. The bonus for each participant is set by the Compensation
Committee based upon the Committee's determination of the contribution of the
individual. In establishing the bonuses, the Committee determined that it was
important that the bonus payment structure be designed to reward executive
officers for high levels of performance by the Company, weighted so that
superior performance (viewed against the performance then expected in accordance
with management's internal projections for 1995 performance as approved by the
Board of Directors) would result in substantially higher bonuses than would
result from merely acceptable performance.
The Board of Directors believes that executive officers who are in a
position to make a substantial contribution to the long-term success of the
Company and to build stockholder value should have a significant stake in the
Company's on-going success. To this end, the Company's compensation objectives
have been designed to be achieved through significant stock ownership in the
Company by executive officers in additional to base salary and bonus payments.
The purpose of the Stock Plan is to provide an additional incentive to
employees and independent contractors to work to maximize stockholder value and
to facilitate broadening and increasing stock ownership by executives, employees
and other key persons. In 1995, options to purchase an aggregate of 2,000,000
shares were granted, with 701,250 of those being granted to the Named Executive
Officers. The Stock Option Committee believes that these stock option grants
were appropriate in light of the policy of the Board of Directors that
significant equity ownership by executive officers is an important contributor
to aligning the interests of executive officers with those of the stockholders
of the Company. The number of options awarded to individual officers were set
based on the Stock Option Committee's perception, partly in light of
recommendations by the Company's Chairman and Chief Executive Officer, as to
each officer's ability to affect the Company's overall future performance.
The Stock Option Committee believes that these options have provided
significant incentives for executives to increase the value of the Company for
the benefit of all stockholders and have offered executives significant
opportunities to profit personally from their efforts to increase that value.
The Compensation Committee and the Stock Option Committee have considered
the impact of Section 162(m) of the Internal Revenue Code on their executive
compensation decisions. Section 162(m) generally disallows a federal income tax
deduction to any publicly-held corporation for compensation paid to the chief
executive officer and the four other most highly compensated executive officers
to the extent that such compensation in a taxable year exceeds $1 million.
Section 162(m), however, does not disallow a deduction for qualified
"performance-based compensation" the material terms of which are disclosed to
and approved by stockholders. The Company's Bonus Plan as in effect in 1995
does not qualify as performance-based compensation for the purposes of Section
162(m). During 1995, the
9
<PAGE>
Compensation Committee believed it unlikely that any executive officer of the
Company would receive in excess of $1 million in compensation, and the
Compensation Committee believes that it unlikely that any executive officer will
receive in excess of that amount in 1996. As a result, the Compensation
Committee has not taken any steps to qualify the bonus plan as performance based
compensation, although it anticipates that the Company would do so before any
executive receives salary, bonus and other non-performance based compensation in
excess of $1 million.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. Louis L. Knickerbocker's
compensation during 1995 as President and Chief Executive Officer was reviewed
in connection with the Compensation Committee's overall review of executive
officer compensation. As provided above, Mr. Knickerbocker has entered into an
employment agreement with the Company (See "--Employment Contracts and
Termination of Employment and Change-in Control Arrangements"). Mr.
Knickerbocker also received a bonus under the Bonus Plan. As was the case with
the increases in salary approved for the other executive officers, the
Compensation Committee believed that his and the Company's performance since his
last compensation review and the bonus for 1995 justified a modest increase in
his base salary. In June 1995, as part of the general grant referred to above,
the Stock Option Committee awarded Mr. Knickerbocker options to acquire 500,000
shares of the Company's Common Stock. The Stock Option Committee believed that
this number of options was appropriate in light of the importance of Mr.
Knickerbocker's position to the Company and his level of stock ownership. The
Compensation Committee also continues to believe that Mr. Knickerbocker's
participation in the Bonus Plan in conjunction with his stock ownership and
employee stock options have provided substantial incentives for him to create
stockholder value.
<TABLE>
<CAPTION>
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
---------------------- ----------------------
<S> <C>
Louis L. Knickerbocker Louis L. Knickerbocker
Gerald A. Margolis Gerald A. Margolis
Farrah Fawcett Farrah Fawcett
William R. Black William R. Black
Jim Hann* John Galardi*
</TABLE>
The Board Compensation Committee Report on Executive Compensation shall not
be deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of 1933,
as amended (the "Securities Act") or the Exchange Act and shall not otherwise be
deemed filed under such Acts.
*Resigned from the Board of Directors and all committees thereof during
1995.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended December 31, 1995
(the "1995 Annual Report") is included with the mailing of this Proxy Statement.
The 1995 Annual Report contains financial statements of the Company and a report
thereon of Deloitte & Touche LLP, independent accountants.
PROXY SOLICITATION
The cost of soliciting proxies will be paid by the Company. American
Securities Transfer, Inc. has been retained to solicit proxies by mail. The
Company has also arranged for reimbursement, at the rate suggested by NASDAQ, of
brokerage houses, nominees, custodians and fiduciaries for the forwarding of
proxy materials to the beneficial owners of shares held of record. Proxies may
also be solicited by directors, officers and employees of the Company, but such
persons will not be specially compensated for such services.
10
<PAGE>
PROPOSALS OF STOCKHOLDERS
Under certain circumstances, stockholders are entitled to present proposals
at stockholder meetings. Any such proposals to be included in the Proxy
Statement for the Company's 1997 Annual Meeting of Stockholders must be received
by the Company no later than December 4, 1996 in a form that complies with
applicable regulations. Proposals should be directed to the Secretary of the
Company.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the" Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "SEC"). Reports, proxy statements and other information filed
by the Company may be inspected and copied at the public reference facilities
maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N. W.,
Washington, DC 20549 and at the Sec's Regional Offices located at 7 World Trade
Center (13th Floor), New York, New York 10048 and Suite 1400 Northwest Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
materials can be obtained by mail from the Public Reference Section of the SEC
at 450 Fifth Street, N. W., Washington, DC 20549 at prescribed rates. In
addition, such material may also be inspected and copied at the offices of the
National Association of Securities Dealers, Inc. 1735 K Street, N. W.,
Washington, DC 20006-1506.
OTHER MATTERS
The Board knows of no matters other than those listed in the attached
Notice of Annual Meeting which are likely to be brought before the Meeting.
However, if any other matter properly comes before the Meeting, the persons
named on the enclosed proxy card will vote the proxy in accordance with their
best judgment on such matter.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ PEGGY VICIOSO
-----------------
Peggy Vicioso
Secretary
June 3, 1996
11
<PAGE>
LOGO
THE L. L. KNICKERBOCKER CO., INC.
The undersigned stockholder of the L. L. Knickerbocker Co., Inc. hereby
appoints LOUIS L. KNICKERBOCKER, PEGGY VICIOSO and ANTHONY P. SHUTTS, or any of
them, Proxies of the undersigned, each with full power to act without the other
and with the power of substitution, to represent the undersigned at the Annual
Meeting of Stockholders of the L. L. Knickerbocker Co., Inc., to be held at the
Century City Plaza Hotel Tower, 2025 Avenue of the Stars, Los Angeles,
California 90067 on Tuesday, June 25, 1996 at 10:00 a.m. Pacific time, and at
any adjournments thereof, and to vote all shares of stock of the Company
standing in the name of the undersigned with all the powers the undersigned
would possess if personally present, in accordance with the instructions below
and on the reverse hereof, and in their discretion upon such other business as
may properly come before the meeting or any adjournments thereof.
THIS PROXY WILL BE VOTED ON THE REVERSE HEREOF, AND WILL BE VOTED IN FAVOR OF
PROPOSALS 1, 2 AND 3, IF NO INSTRUCTIONS ARE INDICATED.
IMPORTANT: SIGNATURE REQUIRED ON REVERSE SIDE
- --------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS.
-----------------
Common
1.ELECTION OF DIRECTORS
[_]FOR all nominees [_]WITHHOLD AUTHORITY to vote for all
listed (except as nominees listed
marked to the
contrary)
Nominees: Louis L. Knickerbocker, Anthony P. Shutts, Farrah Fawcett, Gerald A.
Margolis, William R. Black, Lowell W. Paxson
(Continued and to be signed on reverse side)
P R O X Y
LOGO
2. Ratification of the appointment of Deloitte & Touche LLP as the independent
accountants of the Company.
[_] FOR [_] AGAINST [_] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
[_] FOR [_] AGAINST [_] ABSTAIN
I PLAN TO ATTEND THE MEETING[_]
COMMENTS/ADDRESS CHANGE Please mark this
box if you have written comments/address
change on the reverse
side. [_]
The undersigned hereby acknowledges
receipt of the Notice of Annual Meeting
of Stockholders to be held June 25,
1996 and the Proxy Statement furnished
herewith.
Signature(s) Date
Please sign exactly as your name
appears hereon. When signing as
attorney, executor, administrator,
trustee or guardian, give full title as
such. If more than one name appears
hereon, all parties should sign.
