ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS; COMPLIANCE WITH SECTION 16(a) of the
Exchange Act
The following table sets forth the name, age and position of each of our
directors and executive officers:
NAME AGE POSITION
---- --- --------
Robert Greene............................. 44 Chief Executive Officer and Chairman of
the Board
Roger Berman.............................. 46 Director
John Carrington........................... 57 Director
Mark Mangiola............................. 45 Director
Michael Wheeler........................... 51 Director
Joshua D.J. Sharfman...................... 43 President and Chief Technology Officer
Bennet Lientz, Jr......................... 31 Chief Financial Officer
Brian Berlin.............................. 49 Vice President, Sales
Ralph Boulware............................ 58 Vice President, Services
Shawn Butler.............................. 31 Vice President, Business Development
David Florence............................ 39 Vice President, Marketing
Robert Greene has served as Chief Executive Officer and a director of
Digital Lava since June 1999. From 1995 to June 1999, Mr. Greene served as
Senior Vice President of The Lightspan Partnership Inc., an interactive
educational software vendor. From 1982 to 1995, Mr. Greene served as Senior Vice
President and Zone General Manager of Showtime Networks, Inc., a cable
television network. Mr. Greene holds a B.A. degree from the University of
Virginia, a Certificate of Marketing Management and a Speakeasy Senior Executive
Certificate from the University of Denver.
Roger Berman has served as a director of Digital Lava since its inception
in July 1995. From July 1995 to December 1997, Mr. Berman was the President of
Digital Lava. Prior to joining Digital Lava, Mr. Berman served as President of
St. Eve International, Inc., an apparel company, from May 1992 to July 1995 and
Sherne Lingerie, Inc. from January 1986 to December 1991. Mr. Berman holds a
B.A. degree from Hamilton College and an MBA from New York University.
John Carrington has served as director of Digital Lava since April 1999.
Since May 1999, Mr. Carrington has served as the President and Chief Executive
Officer of Websense, Inc., a provider of employee Internet management products,
and has served as its Chairman since June 1999. From 1996 to 1998, Mr.
Carrington served as Chairman, President and Chief Executive Officer of Artios,
Inc., a provider of hardware and software design solutions to companies in the
packaging industry. From 1991 to 1995, he served as President and Chief
Executive Officer of Digitalk, a software development tools company. Mr.
Carrington currently serves on the boards of directors for Interact Corp, a
sales automation and e-commerce provider, and Websense, Inc. Mr. Carrington
holds a B.A. degree from the University of Texas and an MBA from the Southern
Methodist University.
Mark Mangiola has served as a director of Digital Lava since November 2000.
Since 1997, Mr. Mangiola has served as President and CEO of @Home Solutions
Network Inc. From 1996 to 1997, Mr. Mangiola served as Vice President of
Operations for @Home. From 1995 to 1996, Mr. Mangiola served as President and
CEO of Positive Communications Inc., a provider of personal communications
products. From 1979 to 1995, Mr. Mangiola served as Executive Vice President and
General Manager for Time Warner/KBLCOM. He completed his undergraduate studies
at California State University, Long Beach, where he earned a B.S. degree, and
graduate studies at the University of Southern California, where he earned a
business degree.
Michael Wheeler has served as a director of Digital Lava since March 2000.
Mr. Wheeler is currently President and Director of e2enet. From 1996 to 1999,
Mr. Wheeler was President of CNBC/Dow Jones Business Video a joint venture
between NBC, Microsoft and Dow Jones. From 1991 to 1996, Mr. Wheeler
2
was Senior Vice President and General Manager of NBC New Media. From 1987 to
1991, Mr. Wheeler was President of the Financial News Network. Mr. Wheeler is
also a founding member and Vice Chairman of the New York New Media Association.
Mr. Wheeler is a member of the NYNMA Angels Investor group and also helped
create the handbook "Building A Successful New Media Business." Mr. Wheeler
received a B.A. in journalism from the University of Missouri.
Joshua D.J. Sharfman has served as President and Chief Technology Officer
of Digital Lava since February 1999. From May 1996 to June 1999, Mr. Sharfman
served as Chief Executive Officer and a director of Digital Lava. From 1994 to
1996, Mr. Sharfman served as Vice President of Research and Development at
ParcPlace-Digitalk, Inc., a cross-platform object-oriented software firm. Since
1980, Mr. Sharfman has also served as an Adjunct Professor of Engineering at the
University of Southern California. In addition, Mr. Sharfman has served for four
years on the Scientific Advisory Board of the University of Southern
California's Integrated Media Systems Center, a National Science Foundation
funded multimedia research program. Mr. Sharfman holds a B.S. degree from the
University of California, Los Angeles and an M.S. degree from the University of
Southern California.
Bennet Lientz, Jr. served as Interim Chief Financial Officer of Digital
Lava from December 2000 through March 2000, and began serving as Chief Financial
Officer on April 1, 2001. From January 2000 to December 2000, Mr. Lientz served
as the Chief Financial Officer and in-house counsel for Harvest Solutions, Inc.,
a full service provider of Internet tracking and reporting software solutions
for e-commerce and traditional companies. From February 1999 to October 1999,
Mr. Lientz served as Controller for Rainmaker Digital Pictures, a subsidiary
Rainmaker Entertainment Group, a post production and visual effects company.
From February 1998 through February 1999, Mr. Lientz served as Assistant
Controller for Digital Domain, Inc., a provider of visual effects for commercial
and film production. During 1996 and 1997, Mr. Lientz worked as an independent
forensic accountant and financial consultant. Mr. Lientz has also worked as an
senior associate at Coopers & Lybrand, LLP and internal auditor for California
Federal Bank, Inc. He is a licensed Certified Public Accountant and an attorney
in the State of California. He holds his B.A. in Business Economics from the
University of California at Santa Barbara, and received his Juris Doctorate from
Southwestern University School of Law.
Brian Berlin has served as Digital Lava's Vice President of Sales since
April 2001 and previously served as Director of Sales, Western Region and as
Director of Business Development since 1998. From 1994 to 1998, Mr. Berlin
served as the Director of Sales at NovaQuest, a Los Angeles-based systems
integrator. From 1991 to 1994, Mr. Berlin served as the Director of Sales,
Western Region for AimTech Corporation, a multimedia software firm providing
Computer Based Training authoring software and services to major corporations
throughout the Western United States. From 1989 to 1991, Mr. Berlin was National
Sales and Marketing Director for Hitachi America Ltd., Office Automation
Division. From 1986 to 1989, Mr. Berlin served as Regional Sales Director for
NEC Technologies. Mr. Berlin holds a B.S. in Mass Communications from Kansas
State University.
Ralph Boulware has served as Vice President of Services for Digital Lava
since February 2000. From 1996 to January 2000, Mr. Boulware served as Senior
Vice President and Director of Operations for WFS Financial, a financing
organization. From 1992 to 1996, Mr. Boulware served as Managing Partner for
Alternative Resources Now, Inc., a receivables factoring organization. From 1989
to 1992 Mr. Boulware was Chief Operating Officer for Data Line Service Company,
an organization providing data processing support to financial institutions. Mr.
Boulware holds a B.S. from the University of San Francisco and an MBA from the
University of California at Los Angeles.
Shawn Butler joined Digital Lava in January 2001 as Vice President of
Business Development. From 1999 to September 2000, Mr. Butler served in several
leadership positions, including Executive Director and Vice President, at Akamai
Technologies and INTERVU (which was acquired by Akamai in April 2000) in both
business development and product management. From August 1995 to December 1998,
Mr. Butler served as Director of Business and Marketing at Wavefunction, a
provider of molecular modeling and visualization software to the academic and
pharmaceutical research industry. From 1994 to 1995, he served as a financial
consultant to the U.S. Department of Justice, and as a Legislative Aide to (now)
Congressman
3
Mike Thomson. He received his MBA (MPIA) from the University of California at
San Diego in 1994, where he also graduated as an undergraduate with honors and
earned a B.A. in both history and mathematics.
David Florence joined Digital Lava in January 2001 as Vice President of
Marketing. From May 2000 to December 2000, he was responsible for marketing and
advertising programs at OnlineLearning.net. From 1997 to 2000, he oversaw
advertiser's marketing programs for GoTo.com and directed global marketing
efforts for Lucent Technologies. From 1996 to 1997, he served as a senior
product line manager for Sun Microsystems. From 1993 to 1995, he served as a
Senior Marketing Manager at Motorola, overseeing advanced two-way
communications. Mr. Florence graduated magna cum laude and Phi Beta Kappa from
UCLA, where he earned a B.A. in quantitative psychology. He received a graduate
fellowship in human factors engineering at Virginia Tech, and an MBA in
marketing and new venture management from the University of Southern California.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1943 requires our directors
and executive officers and persons who own more than 10% of a registered class
of our equity securities to file with the SEC initial reports of ownership and
reports of changes in ownership of our equity securities. These people are
required by SEC regulations to furnish us with copies of all such filed reports.
To our knowledge, based solely on a review of the copies of such reports
furnished to us, and written representations from certain insiders that no other
reports were required during the year ended December 31, 2000, all section 16(a)
filing requirements applicable to such persons were complied with, except that
(i) Messrs. Lientz, Berlin, Boulware, Butler and Florence did not timely file a
Form 3 and (ii) Mr. Boulware did not timely file a Form 4.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid during 2000,
1999 and 1998 to our Chief Executive Officer and each of the three most highly
compensated executive officers other than the Chief Executive Officer who were
serving as executive officers as of December 31, 2000.
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)
--------------------------- ---- --------- -------- ------------
Robert Greene...................................... 2000 $300,000 $100,000 100,000
Chief Executive Officer 1999 $159,231 -- 376,820
1998 -- -- --
Joshua Sharfman.................................... 2000 $253,000 $ 43,750 100,000
President and Chief Technology Officer 1999 $230,000 $ 60,000 90,000
1998 -- -- --
Peter Webb......................................... 2000 $322,079 -- 50,000
Vice President, Sales 1999 $ 28,333 $ 25,000 50,000
1998 -- -- --
Ralph Boulware..................................... 2000 $131,006 $ 21,063 50,000
Vice President, Services 1999 -- -- --
1998 -- -- --
4
Option Grants. The following option grants were made to officers named in
the above table during 2000:
NUMBER OF PERCENTAGE OF
SECURITIES TOTAL OPTIONS EXERCISE OR
UNDERLYING GRANTED TO BASE PRICE EXPIRATION
OPTIONS GRANTED EMPLOYEES (PER SHARE) DATE
--------------- ------------- ----------- ----------------
Robert Greene..................... 100,000 7.62% $ 5.250 June 21, 2010
Joshua Sharfman................... 100,000 7.62% $ 6.875 August 22, 2010
Peter Webb........................ 50,000 3.81% $ 6.875 August 22, 2010
Ralph Boulware.................... 25,000 1.91% $6.1875 February 3, 2010
Ralph Boulware.................... 25,000 1.91% $ 6.875 August 22, 2010
Option Exercises and Option Values. The following table sets forth
information with respect to stock options held by the above-named officers on
December 31, 2000. These officers did not exercise any options in 2000. The
value of the options is based on the fair market value of the options at
December 31, 2000.
NUMBER OF SHARES VALUE OF UNEXERCISED
OF STOCK UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS
AT DECEMBER 31, 2000 AT DECEMBER 31, 2000
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Robert Greene.............................. 150,728 326,092 -- --
Joshua Sharfman............................ 52,500 137,500 $ 781 $ 2,344
Peter Webb................................. 12,500 87,500 $5,469 $16,406
Ralph Boulware............................. -- 50,000 -- --
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of our common stock, as of April 13, 2001 by (1) each person known by
us to be the beneficial owner of more than 5% of the outstanding shares of our
common stock, (2) each of our directors and named executive officers and (3) all
of our executive officers and directors as a group.
Beneficial ownership has been determined in accordance with the rules of
the Securities and Exchange Commission and includes voting or investment power
with respect to shares. Unless otherwise indicated, the persons named in the
table have sole voting and investment power with respect to the number of shares
indicated as beneficially owned by them. The number of shares of common stock
outstanding used in calculating the percentage ownership for each listed person
includes the shares of common stock underlying options or warrants held by that
person and exercisable within 60 days of April 13, 2001, but excludes shares of
common stock underlying options or warrants held by any other person.
5
Unless otherwise indicated, the address of each beneficial owner is 13160
Mindanao Way, Suite 350, Marina del Rey, California 90292.
SHARES OF PERCENTAGE OF
COMMON STOCK COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED
------------------------------------ ------------------ ------------------
Robert Greene(1)............................................ 165,728 2.25%
Roger Berman(2)............................................. 165,902 2.30%
John Carrington(3).......................................... 20,000 *
Mark Mangiola(4)............................................ 10,000 *
Michael Wheeler(5).......................................... 20,000 *
Joshua Sharfman(6).......................................... 135,583 1.87%
Peter Webb(7)............................................... 12,500 *
Ralph Boulware(8)........................................... 6,250 *
Austin W. Marxe & David M. Greenhouse(9).................... 667,100 9.27%
153 East 53rd Street
New York, NY 10022
All executive officers and directors as a group (11
persons)(10).............................................. 523,663 7.02%
* Less than 1%.
(1) Includes 150,728 shares of common stock issuable upon exercise of options
exercisable within 60 days.
(2) Includes 10,000 shares of common stock issuable upon exercise of options
exercisable within 60 days.
(3) Includes 20,000 shares of common stock issuable upon exercise of options
exercisable within 60 days.
(4) Includes 10,000 shares of common stock issuable upon exercise of options
exercisable within 60 days.
(5) Includes 20,000 shares of common stock issuable upon exercise of options
exercisable within 60 days.
(6) Includes 52,500 shares of common stock issuable upon exercise of options
exercisable within 60 days.
(7) Includes 12,500 shares of common stock issuable upon exercise of options
exercisable within 60 days.
(8) Includes 6,250 shares of common stock issuable upon exercise of options
exercisable within 60 days.
(9) Information is based on Schedule 13G filed on February 14, 2001. Such
Schedule 13G reported that 667,100 shares of common stock are beneficially
owned by Austin W. Marxe and David Greenhouse, of which 10,600 shares of
common stock are owned by Special Situations Fund III, L.P., 250,000 shares
of common stock are owned by Special Situations Technology Fund, L.P.,
2,500 shares of common stock are owned by Special Situations Cayman Fund,
L.P. and 404,000 shares of common stock are owned by Special Situations
Private Equity Fund, L.P.
(10) Includes 263,428 shares of common stock issuable upon exercise of options
exercisable within 60 days.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
EMPLOYMENT AND CONSULTING AGREEMENTS
Robert Greene. We have entered into an employment agreement with Robert
Greene, Chief Executive Officer, which expires on June 30, 2002. Under the terms
of his employment agreement, Mr. Greene receives an annual base salary of
$300,000 and stock options to purchase 5% of the equity of Digital Lava on a
fully diluted basis as of July 1, 1999. Subject to certain conditions, these
stock options will vest as follows: 40% on July 1, 2000, and 20% on each of the
first, second and third anniversaries of such date. Mr. Greene is eligible to
receive an annual bonus of up to $100,000 and future grants of stock options at
the discretion of the board of directors. A state court may determine not to
enforce, or only partially enforce, certain provisions of this agreement.
Joshua Sharfman. We have entered into an employment agreement with Joshua
Sharfman, President, which expires on December 31, 2001. Under the terms of his
employment agreement, Mr. Sharfman is entitled to receive an annual base salary
of not less than $230,000. In addition, the agreement provides that if Mr.
Sharfman is terminated without cause he will receive a severance payment equal
to his annual salary.
6
Mr. Sharfman's employment agreement provides that he will not, directly or
indirectly, compete with us for a period of six months following his termination
in certain circumstances.
Roger Berman. On March 1, 1999, we entered into a consulting agreement with
Roger Berman under which Mr. Berman has agreed to provide us with certain
financial, operational and strategic development services, including financing
and credit strategies, cash management and human resources. The agreement had a
term of two years. Under the agreement, Mr. Berman received an annual fee of
$60,000 and received a $60,000 bonus in February 1999. Mr. Berman is a director
of Digital Lava.
Shawn Butler. On January 2, 2001, we entered into a letter agreement with
Shawn Butler, Vice President, Business Development. Under the terms of such
agreement, Mr. Butler is an at-will employee and is entitled to receive an
annual base salary of not less than $150,000. In addition, the agreement
provides that a change of control will result in the vesting fully and
immediately of all of the options granted to Mr. Butler.
DIRECTORS' COMPENSATION
Our directors who are not full-time employees of Digital Lava receive
$1,000 for attendance at each meeting of the board of directors or any committee
of the board and are reimbursed for their out-of-pocket expenses in connection
with their attendance.
Under the Company's 1996 Incentive and Non-Qualified Stock Option Plan (the
"Plan"), each individual who first joins the board of directors anytime after
the Company's initial public offering will receive, on the date of initial
election or appointment, an automatic nonstatutory option grant to purchase
30,000 shares of the Company's common stock, provided that such person is not an
employee of the Company. In addition, on the date of each annual stockholders
meeting thereafter, each individual who continues to serve as an Independent
Director (as defined in the Plan) will automatically be granted a nonstatutory
option to purchase 10,000 shares of the Company's common stock, provided such
individual has served on the board for at least ninety days prior to such annual
meeting. Each such grant will have an exercise price per share equal to the
closing price of the Company's common stock on Nasdaq on the option grant date,
and will have a term of 10 years, subject to earlier termination should the
director cease to serve on the board. The shares subject to each initial
30,000-share automatic option grant will be exercisable in a series of three
successive equal annual installments commencing on the grant date. The shares
subject to each subsequent 10,000-share automatic option grant will be
exercisable in four annual installments commencing on the grant date. However,
the shares will immediately become exercisable in full upon changes in control
or ownership.
OTHER TRANSACTIONS
In November 1999, we issued a $230,000 loan to Joshua Sharfman in exchange
for a promissory note. The note bears no interest and is payable on or before
July 1, 2001.
7
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized on April
30, 2001.
DIGITAL LAVA INC.
By: /s/ ROBERT GREENE
--------------------------------------
Robert Greene
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on April 30, 2001 by the following persons on
behalf of the registrant and in the capacities indicated.
SIGNATURE TITLE
--------- -----
/s/ ROBERT GREENE Chairman and Chief Executive Officer
--------------------------------------------- (Principal Executive Officer)
Robert Greene
/s/ BENNET LIENTZ, JR. Chief Financial Officer
--------------------------------------------- (Principal Financial and Accounting Officer)
Bennet Lientz, Jr.
/s/ ROGER BERMAN Director
---------------------------------------------
Roger Berman
/s/ JOHN CARRINGTON Director
---------------------------------------------
John Carrington
Director
---------------------------------------------
Mark Mangiola
/s/ MICHAEL WHEELER Director
---------------------------------------------
Michael Wheeler
Next Section
Previous Section