SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement Confidential, for use of
[X] Definitive proxy statement the Commission only
[ ] Definitive additional materials (as permitted by Rule
[ ] Soliciting material pursuant to Rule 14a-6(e)(20) )
14a-11(c) or 14a-12
PERFECTDATA CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
PERFECTDATA CORPORATION
--------------------------------------------------------------------------------
(Name of Person (s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] 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 transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to exchange Act Rule 0-11:1
(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 statements 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:
(4) Date Filed:
PERFECTDATA CORPORATION
110 West Easy Street
Simi Valley, CA 93065
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
PerfectData Corporation
The Annual Meeting of Shareholders of PerfectData Corporation (the "Company")
will be held at Loews Santa Monica Beach Hotel, located at 1700 Ocean Avenue,
Santa Monica, California 90401 on Thursday, April 25, 2002, at 9:30 a.m.,
Pacific Daylight Time (the "Annual Meeting"), for the following purposes:
1. To elect five directors to serve until the next Annual Meeting of
Shareholders and until their successors are duly elected and
qualify.
2. To ratify the selection of KPMG LLP as independent accountants of
the Company for the fiscal year ending March 31, 2002.
3. To transact such other business as may come before the Annual
Meeting or any adjournment thereof.
Only shareholders of record at the close of business on Thursday, March 21,
2002, are entitled to notice of, and to vote at, the Annual Meeting or any
adjournment thereof.
By Order of the Board of Directors
Irene J. Marino
Secretary
March 27, 2002
Whether or not you expect to be present at the meeting, please date and sign the
enclosed proxy and return it in the enclosed envelope. The proxy may be revoked
in writing prior to the meeting or, if you attend the meeting, you may revoke
the proxy and vote your shares in person.
PERFECTDATA CORPORATION
110 West Easy Street
Simi Valley, CA 93065
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
April 25, 2002
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of PerfectData Corporation (the "Company") of proxies to
be voted at the Company's Annual Meeting of Shareholders (the "Meeting") to be
held on Thursday, April 25, 2002, or at any adjournment thereof. The purposes
for which the Meeting is to be held are set forth in the preceding Notice of
Annual Meeting. This Proxy Statement and the enclosed form of proxy are first
being mailed on or about Thursday, March 28, 2002, to holders of record of the
Company's Common Stock, no par value per share (the "Common Stock"), as of the
close of business on Thursday, March 21, 2002 (the "Record Date"), which has
been fixed as the record date for the determination of the shareholders entitled
to notice of, and to vote at, the Meeting.
The Company had originally intended to hold the Annual Meeting for the
fiscal year ended March 31, 2001 ("fiscal 2001") in September 2001. However,
because the Company was engaged in merger negotiations with GraphCo
Technologies, Inc. until mutually terminated on February 19, 2002, management
delayed the call of such Annual Meeting in order to add this possible
transaction to the agenda. Management currently intends to call the Annual
Meeting for the fiscal year ending March 31, 2002 ("fiscal 2002") for a date in
September 2002.
VOTING SECURITIES
On the Record Date, 6,159,530 shares of the Common Stock, which is the
only class entitled to vote at the Meeting, were issued, outstanding and
entitled to vote. Each shareholder of record is entitled to cast, in person or
by proxy, one vote for each share of the Common Stock held by such shareholder
as of the close of business on the Record Date. A plurality of the votes cast at
the Meeting shall be necessary to elect each of the five directors (i.e.,
Proposal One) unless a shareholder requests at the Meeting the right to vote
his, her or its votes on a cumulative basis as described in the second and third
succeeding paragraphs. In such event, the five candidates receiving the highest
number of votes will be elected directors. The affirmative vote of the holders
of a majority of the shares present in person or represented by proxy and
entitled to vote at the Meeting shall be necessary to approve the selection of
the independent auditors (i.e., Proposal Two).
A majority of the shares entitled to vote, present in person or
represented by proxy, constitutes a quorum at the Meeting. Abstensions and
broker non-votes are treated for the purpose of determining a quorum at the
Meeting and are not treated as a vote for or against a proposal.
Section 7(c) of the Company's Bylaws, consistent with Section 708 of the
California Corporations Code which governs the Company, permits a shareholder,
when voting for directors, to cumulate his, her or its votes and give one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which the shareholder's votes are entitled,
or distribute the shareholder's votes on the same principle among as many
candidates as the shareholder thinks fit. No shareholder is entitled to cumulate
votes for any candidate or candidates pursuant to the preceding sentence unless
such candidate's name or candidates' names have been placed in nomination prior
to the voting and the shareholder gives notice at the Meeting of his, her or its
intention to cumulate the shareholders' vote prior to the voting. Once any
shareholder has given such notice, any other shareholder may cumulate his, her
or its votes for candidates in nomination. However, no other shareholder is
obligated to cumulate his, her or its votes. The five candidates receiving the
highest number of votes will be elected directors.
The following is an example of cumulative voting: If a shareholder owns
1,000 shares of the Common Stock on the Record Date, then such shareholder may,
because five directors are being elected, vote 5,000 shares in favor of one
nominated candidate or divide the 5,000 votes among the five nominated
candidates.
Proxies will be voted as indicated in this Proxy Statement and the
enclosed proxy. Shares presented by properly executed proxies, if received in
time, will be voted in accordance with any specifications made therein. A proxy
may be revoked by delivering a written notice of revocation to the Company
(Attention: Irene J. Marino, Secretary) at its principal executive office or in
person at the Meeting, or by a subsequently dated proxy, at any time prior to
the voting thereof. The principal executive office of the Company is located at
the address in the heading to this Proxy Statement.
Rules 451 and 452 of the New York Stock Exchange, Inc. (the "NYSE")
permit a member firm to vote for the directors and/or for the proposal to ratify
the selection of independent auditors if the member firm holds the shares of the
Common Stock for a beneficial owner and receives no instructions to the contrary
by the tenth day before the Meeting. Rules 576 and 577 of the American Stock
Exchange LLC (the "AMEX") are substantially similar to the foregoing NYSE Rules.
Rule 2260 (c)(2) of the National Association of Securities Dealers, Inc. (the
"NASD") permits a NASD member firm to deliver a proxy, with respect to shares of
the Common Stock held by the NASD member firm for a beneficial owner, pursuant
to the rules of any national securities exchange (such as the NYSE and the AMEX)
to which the NASD member firm is also responsible provided that the records of
the member firm clearly indicate which procedure it is following.
The Company, nevertheless, urges each beneficial owner to instruct the
member firm which holds of record the shareholder's shares of the Common Stock
to vote in favor of the two proposals submitted to the shareholders for a vote
even though such instruction is not required.
A shareholder shall have no right to receive payment for his, her or its
shares as a result of shareholders' approval of any proposal in the Notice of
Annual Meeting.
Each of the persons who has served as a director or as an executive
officer of the Company since April 1, 2000 (i.e., the beginning of the last
fiscal year of the Company) and each of the persons nominated by the Board of
Directors of the Company for election as a director at the Meeting, all of which
nominees are currently serving as directors, has no substantial interest, direct
or indirect, by security holdings or otherwise, in either of the proposals
submitted to a vote at the Meeting (as described in the eighth preceding
paragraph), other than, if he or she is a nominee for election as a director,
that he or she has an interest in being elected as a director (i.e., Proposal
One).
PROPOSAL ONE: ELECTION OF DIRECTORS
Nominees for Election as Directors
Five directors will be elected at the Meeting, each to serve for a
one-year term until the next Annual Meeting of Shareholders and until his or her
successor is duly elected and qualifies.
Proxies received in response to this solicitation, unless specified
otherwise, will be voted, on a non-cumulative basis, in favor of the five
nominees named below, all of whom are currently serving as directors of the
Company. If a nominee should not be available for election as contemplated, the
management proxy holders will vote for such lesser number of directors as are
available to serve or will vote for a substitute designated by the current Board
of Directors. In no event will proxies be voted for more than five nominees.
The next following table sets forth certain information, as of the
Record Date, concerning the nominees for election as directors of the Company.
The information as to age has been furnished to the Company by the individual
named. For information as to the shares of the Common Stock beneficially owned
by each nominee, see the table under the caption "Security Ownership of Certain
Beneficial Holders and Management" elsewhere in this Proxy Statement.
Year First
Elected
Name of Nominee Age Director Position and Offices with the Company
--------------- --- -------- ------------------------------------
Harris A. Shapiro 66 2000 Director, Chairman of the Board and
Chief Executive Officer
Bryan Maizlish 40 2000 Director
Timothy D. Morgan 47 2000 Director
Tracie Savage 39 1995 Director
Corey P. Schlossmann 46 2000 Director
Family Relationships of Nominees and Executive Officers
There are no family relationships among the nominees for election as
directors and the executive officers of the Company.
Business History of Nominees
Harris A. Shapiro was elected as a director of the Company and Chairman
of the Board on March 31, 2000. On September 7, 2000, he was designated Chief
Executive Officer of the Company. Mr. Shapiro has been the President of
Millennium Capital Corporation, a consulting firm specializing in mergers and
acquisitions, since 1994. He was Senior Vice President Corporate Finance of
Gilford Securities Incorporated, a registered broker-dealer, from January 1,
1999 to March 29, 2000. Prior to Gilford Securities, he was a Managing Director
of Whale Securities Co., L.P., a registered broker-dealer, from June 1993 until
December 1998.
Bryan Maizlish was elected as a director of the Company on March 31,
2000. Since August 2000, he has been serving as the Director of Marketing and
Business Development for Lockheed Martin Global Telecommunications. Prior
thereto, he served as the Executive Vice President, Chief Strategy Officer and
Chief Financial Officer of Magnet Interactive Noor Group Ltd., a private company
furnishing engineering comprehensive interactive services. Prior thereto, he
held various managerial positions for over a decade with companies in the media
communications industry, such as MCA, Inc., Gulf & Western Corporation and
Eugene Roddenbury's Norway Corporation. Mr. Maizlish serves on the Architecture
Committee, Service Provider Group and Marketing Counsels at Sun Microsystems for
the SunTone Certification program. Mr. Maizlish was awarded the "Most Valuable
Senior Award" as a member of the UCLA Football Team, and received an MBA from
The Wharton School of Business.
Timothy D. Morgan was elected as a director of the Company on March 31,
2000. He has, since October 1997, been a consultant on matters of business
strategies, taxation, finance, and asset protection techniques, and providing
interim Chief Financial Officer and Controller services. From 1980 through
October 1997, he was a principal of Abacus Tax and Financial Services, a firm
specializing in tax compliance and pension plan administration. Prior to 1982,
Mr. Morgan was manager of purchasing and accounting departments for various
companies, including Dennison Eastman Corporation, Syntel Cavitron,
Incorporated, and Contempo Causals, Incorporated.
Tracie Savage was elected in July 1995 as a director of the Company. She
is currently a main news anchor for KFWB Radio in Los Angeles. She previously
worked for the Los Angeles television subsidiary of the National Broadcasting
Company, Inc. ("NBC"). From March 1994 to March 2001, Ms. Savage was the
co-anchor of NBC Channel 4's "Today in LA: Weekend". From 1991 to 1994, she was
a general assignment reporter for the independent Los Angeles station, KCAL. Ms.
Savage has been in broadcast journalism for more than 16 years and has been the
recipient of numerous awards and honors in her field.
Corey P. Schlossmann was elected as a director of the Company on March
31, 2000. Mr. Schlossmann has been Chief Executive Officer since October 1999,
and Chief Financial Officer since January 1999, of Nationwide Auction Systems.
Since January 1996, he also serves as a partner and board member of Gordon,
Fishburn & Schlossmann, a management consulting and accounting firm. Mr.
Schlossmann was a partner of Hankin & Co., a consulting firm, from 1988 until
1995.
Directorships on Other Public Companies
Since October 1999, Corey P. Schlossmann has served as a director of
Entrade, Inc., a New York Stock Exchange holding company whose online
subsidiaries (including Nationwide Auction Systems of which he is an executive
officer as indicated in the preceding section "Business History" under this
caption "Proposal One: Election of Directors") provide auction and asset
disposition services to the utility and manufacturing industries, among others.
No other director of the Company currently serves on any board other
than the Company with a class of securities registered pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or subject
to the reporting requirements of Section 15(d) of the Exchange Act or any
company registered as an investment company under the Investment Company Act of
1940, as amended.
Committees and Board Meetings
The Board has two standing committees: Audit and Compensation.
For additional information relating to the Audit Committee, see the
succeeding section "Report of Audit Committee" under this caption "Proposal One:
Election of Directors."
Since March 31, 2000, Harris A. Shapiro and Corey P. Schlossmann have
served as members of the Compensation Committee, with Mr. Shapiro serving as the
Chairman. The Compensation Committee has the authority to approve the
remuneration of key officers of the Company and, if incorporated or acquired,
its subsidiaries, review and recommend to the Board of Directors changes in the
Company's stock benefit and executive, managerial or employee compensatory and
benefit plans or programs and administer stock option, restricted stock or
similar plans of the Company. However, to date the Board itself, rather than its
Compensation Committee, has been acting on the matters described in the
preceding sentence.
Although the Company has no Nominating Committee, if a shareholder has a
recommendation as to a nominee for election as a director, such shareholder
should make his, her or its recommendation in writing addressed to Harris A.
Shapiro, as the Chairman of the Board of the Company, at the Company's address
shown in the heading to this Proxy Statement, giving the business history and
other relevant biographical information as to the proposed nominee and the
reasons for suggesting such person as a director of the Company. The Board will
then promptly review the recommendation and advise the shareholder of its
conclusion and, if a rejection, the reasons therefor.
During fiscal 2001, there were five meetings of the Board. Each director
participated in all meetings of the Board during such fiscal year, except that
Mr. Maizlish, because of prior commitments, could not participate in two of the
meetings. Neither the Audit Committee nor the Compensation Committee held any
meetings during fiscal 2001, although the Chairman of the Audit Committee
reviewed with management and the independent auditors the quarterly reports of
the Company before they were filed. On June 28, 2001, the Audit Committee met
with the independent auditors to review the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 2001 before it was filed and, based on such
meeting, recommended that the latter Report be filed.
Report of Audit Committee
General
The Audit Committee of the Board of Directors of the Company is
comprised of three non-employee directors and operates under a written charter
adopted by the Board of Directors on May 22, 2000 (the "Charter"), a copy of
which is attached to this Proxy Statement as Appendix A. The Audit Committee, at
its meeting on March 13, 2002, reviewed the Charter and determined not to
recommend to the Board that any changes be made. The Board of Directors has
determined that each Committee member is independent in accordance with Rule
4200(a)(15) of the National Association of Securities Dealers, Inc. applicable
to companies like the Company whose Common Stock is traded on The Nasdaq Stock
Market, Inc.
Since March 31, 2000, Timothy D. Morgan, Tracie Savage and Corey P.
Schlossmann have served as members of the Audit Committee, with Mr. Schlossmann
serving as the Chairman.
The Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management is responsible for the Company's
internal controls, financial reporting process and compliance with laws and
regulations and ethical business standards. The independent auditors are
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with generally accepted auditing standards
and to issue a report thereon. The Committee's responsibility is to monitor and
oversee these processes.
In this context, the Committee has discussed and reviewed with the
independent auditors all matters required to be discussed by Statement on
Auditing Standards No. 61 (Communications with Audit Committees). The Committee
has met with the Company's independent auditors, with and without management
present, to discuss the overall scope of its audit, the results of its
examinations, its evaluations of the Company's internal controls and the overall
quality of its financial reporting.
The Committee has received from the independent auditors a formal
written statement describing all relationships between the independent auditors
and the Company that might bear on the auditor's independence consistent with
Independence Standards Boards Standard No. 1 (Independence Discussions with
Audit Committees), discussed with the auditors any relationships that may impact
their objectivity and independence, and satisfied itself as to the auditor's
independence.
Audit Fees
KPMG LLP, the Company's independent auditors, billed $65,000 for
professional services rendered for the audit of the Company's annual financial
statements for the fiscal year ended March 31, 2001 ("fiscal 2001") and the
reviews of the financial statements included in the Company's Forms 10-Q filed
for fiscal 2001.
Financial Information Systems Design and Implementation Fees
During fiscal 2001, KPMG LLP did not, directly or indirectly, operate or
supervise the operation of the Company's information system or manage the
Company's local area network or design or implement for the Company a hardware
or software system that aggregates source data underlying the Company's
financial statements or generates information that is significant to the
Company's financial statements taken as a whole.
All Other Fees
KPMG LLP billed $2,200 for services in connection with the review of a
registration statement filed by the Company in fiscal 2001 under the Securities
Act of 1933, as amended, which required the firm's consent to the audited
financial statements appearing in the prior Form 10-K, which was the only other
service performed for the Company for fiscal 2001 other than those services
described under the caption "Audit Fees." The Audit Committee has reviewed these
services and has concluded that they are compatible with maintaining the
independence of KPMG LLP.
Services with respect to the quarterly and annual tax filings for the
Company are performed by an accounting firm other than KPMG LLP.
Recommendations
Based on the review and discussions referred to above, the Committee
recommended to the Board of Directors that the Company's audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 2001 for filing with the Securities and Exchange
Commission. The Committee and the Board also have approved, subject to
shareholder ratification, the selection of the Company's independent auditors
for the fiscal year ending March 31, 2002.
Submitted by the Audit Committee
Corey P. Schlossman, Chairman
Timothy D. Morgan
Tracie Savage
MANAGEMENT
Directors and Executive Officers
The following table contains certain information relating to the
directors and executive officers of the Company as of the Record Date:
Name Age Position
---- --- --------
Harris A. Shapiro 66 Chairman of the Board,
Chief Executive Officer and a Director
Bryan Maizlish 40 Director
Timothy D. Morgan 47 Director
Tracie Savage 39 Director
Corey P. Schlossmann 46 Director
Irene J. Marino 57 Vice President Finance, Chief Financial
Officer and Corporate Secretary
Each director is elected to serve until the next Annual Meeting of
Shareholders or until his or her successor is elected and shall have qualified.
All of the directors named in the foregoing table are the Board's nominees for
re-election as directors at the Meeting. See the section "Nominees for Election
as Directors" under the caption "Proposal One: Election of Directors." Each
officer of the Company is elected by the Board of Directors to serve at the
discretion of the Board.
Business History
For information as to the business histories of Ms. Savage and Messrs.
Shapiro, Maizlish, Morgan and Schlossmann, see the section "Business History of
Nominees" under the caption "Proposal One: Election of Directors."
Ms. Irene J. Marino originally joined the Company in March 1982 and
rejoined the Company in September 1987 after a leave of approximately four
months. Ms. Marino was promoted to Manager of Finance and Administration in
March 1983 and to Controller and Assistant Secretary in March 1986. Upon
rejoining the Company in September 1987, Ms. Marino assumed the positions of
Controller, Chief Financial Officer and Secretary of the Company. She was
appointed Vice President of Finance in August 1989, and has more than 30 years'
experience in finance, accounting and administration.
Compliance with Section 16(a) of the Exchange Act
Based solely on a review of Forms 3 and 4 furnished to the Company under
Rule 16a-3(e) promulgated under the Exchange Act, with respect to fiscal 2001,
the Company is not aware of any director or executive officer of the Company who
failed to file on a timely basis, as disclosed in such forms, reports required
by Section 16(a) of the Exchange Act during fiscal 2001.
As of March 31, 2001, i.e., the end of fiscal 2001, there were no
beneficial owners of 10% or more of the Common Stock known to the Company other
than Joseph Mazin who was, until July 27, 2000, the President and Chief
Executive Officer of the Company and, until March 31, 2000, a director of the
Company. Mr. Mazin has advised the Company that he timely filed all reports
required by Section 16(a) of the Exchange Act during fiscal 2001.
Certain Relationships and Related Transactions
On March 31, 2000 (the "Private Placement Closing Date"), Millennium
Capital Corporation ("Millennium"), JDK & Associates Inc. ("JDK") and other
buyers (Millennium, JDK and these other buyers being collectively referred to
herein as the "Buyers") purchased from the Company, pursuant to a Stock Purchase
Agreement dated as of January 20, 2000 (the "Stock Purchase Agreement") by and
among the Company, Millennium, JDK and persons or entities who or which became
Buyers pursuant to the Stock Purchase Agreement subsequent to its execution, an
aggregate of 1,333,333 shares of the Common Stock, at $2.25 per share or an
aggregate purchase price of $2,999,999.25. Harris A. Shapiro, the Chairman of
the Board, Chief Executive Officer, and a director of the Company, is the sole
director, officer and shareholder of Millennium.
On the Private Placement Closing Date, as a result of the foregoing
closing, Millennium and JDK became financial advisors to the Company to seek
acquisitions and financings on its behalf pursuant to a Consulting Agreement
dated as of January 20, 2000 (the "Consulting Agreement") by and among
Millennium, JDK and the Company. For their services, Millennium and JDK are to
receive a cash fee equal to five percent of the Consideration (as defined)
received or paid by the Company with respect to the acquisition or the financing
offering.
Recognizing that an added inducement was necessary to solicit persons or
entities to become Buyers, Millennium and JDK negotiated with the Company, for
inclusion in the Consulting Agreement, Common Stock purchase warrants expiring
March 30, 2005 (the "Consulting Warrants") to purchase an aggregate of 1,800,000
shares of the Common Stock at $2.75 per share. In order to make the investment
more attractive to potential Buyers, the Consulting Warrants were made
immediately exercisable and provision was also made for "cash-less" exercises.
The Company, in consideration thereof, obtained Millennium's and JDK's consent
to the grant of Consulting Warrants to purchase an aggregate of 30,000 shares of
the Common Stock to designated employees of the Company (including its two then
executive officers, one of whom is still serving the Company). On the Private
Placement Closing Date, all holders of the Consulting Warrants (including the
five current directors) exercised the same and received an aggregate of
1,515,391 shares of the Common Stock net of an aggregate of 264,609 shares of
the Common Stock surrendered in payment of the exercise price (such surrendered
shares being valued at $18.50 per share, i.e., the closing market price of the
Common Stock on the Private Placement Closing Date). Millennium and JDK had, on
the Private Placement Closing Date, advised the Company that they were reserving
the aggregate of 20,000 shares of the Common Stock issuable upon the exercise of
the Consulting Warrants which were not exercised on the Private Placement
Closing Date for future grants or, if not granted to a third person or persons,
exercise by them.
As a result of the transactions described in the first and third
preceding paragraphs, (1) Mr. Shapiro, as the sole officer, director and
shareholder of Millennium, became the beneficial owner of 284,500 shares of the
Common Stock; (2) Corey P. Schlossmann, a director of the Company, became the
beneficial owner of 496,259 shares of the Company Common Stock; and (3) each of
Bryan Maizlish, Timothy D. Morgan and Tracie Savage, the other directors, became
the beneficial owners of 4,256 shares of the Common Stock.
On September 7, 2000, the Board designated Mr. Shapiro as the Chief
Executive Officer of the Company and authorized that the Company enter into an
employment agreement with him providing for (1) a one-year term commencing
September 1, 2000 and (2) a base annual salary of $150,000, which will be
deducted from any fees paid to Millennium pursuant to the Consulting Agreement.
The Board authorized, on October 31, 2001, an extension of the term of the
employment agreement until December 31, 2001 and, on February 18, 2002, an
extension until June 30, 2002.
EXECUTIVE COMPENSATION
For information as to the executive compensation paid by the Company in
fiscal 2001 and the two prior fiscal years, reference is made to Item 11 of the
Company's Annual Report on Form 10-K, a copy of which accompanies the Proxy
Statement and which information as to executive compensation is incorporated
herein by this reference.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the Record Date, certain
information with respect to (1) any person known to the Company who beneficially
owned more than 5% of the Common Stock, (2) each director of the Company, each
of whom is a nominee for election at the Meeting, (3) the Chief Executive
Officer of the Company and (4) all directors and executive officers as a group.
Each beneficial owner who is a natural person has advised the Company that he or
she has sole voting and investment power as to the shares of the Common Stock,
except that, until a stock option is exercised, there is no voting right and
except as noted in Note 2 to the table.
Name and Address Number of Shares Percentage of
of Beneficial Owner of Common Stock Common Stock
------------------- Beneficially Owned Beneficially Owned(1)
------------------ --------------------
Joseph Mazin 399,003 (2) 6.5
11120 Sherman Way
Sun Valley, CA 91252
William B. Wachtel, 427,873 6.9
Trustee of Digital Trust (3)
c/o Wachtel & Masyr, LLP
110 East 59th Street
New York, NY 10022
Harris A. Shapiro (4) 309,499 (5) 5.0
245 East 63rd Street
New York, NY 10021
Bryan Maizlish (6) 29,255 (7) Nil
9705 Conestoga Way
Potomac, MD 20854
Timothy D. Morgan (6) 30,455 (7) Nil
11734 Gladstone Circle
Fountain Valley, CA 92708
Tracie Savage (6) 39,555 (8) Nil
6212 Banner Avenue
Los Angeles, CA 90038
Corey P. Schlossmann (6) 521,258 (7) 8.4
19654-A Roscoe Blvd.
Northridge, CA 91324
All directors and officers as a 934,838 (9) 14.8
group (6 in number)
-----------
(1) The percentages computed in the table are based upon 6,159,530 shares of
the Common Stock which were outstanding on the Record Date. Effect is
given, pursuant to Rule 13-d(1)(i) under the Exchange Act, to shares
issuable upon the exercise of options currently exercisable or
exercisable within 60 days of the Record Date.
(2) The shares of the Common Stock reported in the table include (a) 187,997
shares owned by Flamemaster Corporation ("Flamemaster") for which Mr.
Mazin has voting power as the President, Chairman and Chief Executive
Officer of Flamemaster; (b) 36,000 shares owned by the Flamemaster
Employees' Profit Sharing Plan for which Mr. Mazin is the fiduciary; and
(c) 23,000 shares owned by Altius Investment Corporation ("Altius") for
which Mr. Mazin has shared voting power as Chairman of the Board of
Altius. The shares reported in the table also include (x) 5,000 shares
issuable upon the exercise of an option expiring November 6, 2003 and
(4) 1,000 shares issuable upon the exercise of an option expiring
January 27, 2003, both options being held by Donna Mazin, his wife.
Certain of the shares reported in the table are owned by Ms. Mazin or as
to which shares she shares dispositive and voting powers with Mr. Mazin.
(3) The following disclosure in this Note 3 is based on information from a
Schedule D: William B. Wachtel as the Trustee of the Digital Trust has,
under the trust agreement, sole voting and investment power with respect
to the shares reported in the table. Harris Shapiro, currently the
Chairman of the Board, Chief Executive Officer and a director of the
Company, was the settler of the Digital Trust and made an irrevocable
grant to it of the assets which the Digital Trust used to effect the
purchase of the shares. The beneficiaries of the Digital Trust are Mr.
Shapiro's children and grandchildren who survive him, although the
Trustee, in his absolute discretion, may pay or apply yearly income or
the principal of the Trust to any beneficiary. Because he made an
irrevocable grant and has no voting or investment power with respect to
the shares, Mr. Shapiro is not the beneficial owner of the shares
reported in the table as being owned of record by the Digital Trust and
beneficially by the Trustee.
(4) Mr. Shapiro is the Chairman of the Board, Chief Executive Officer and a
director of the Company.
(5) The shares of the Common Stock reported in the table reflect (a) 284,500
shares owned by Millennium for which Mr. Shapiro has voting power as its
President; (b) 16,666 shares issuable upon the exercise of an option
expiring March 30, 2010 under the Company's Stock Option Plan of 2000
(the "2000 Option Plan"); and (c) 8,333 shares issuable upon the
exercise of a stock option expiring September 6, 2010 under the 2000
Option Plan. The shares of the Common Stock reported in the table do not
include (x) 8,334 shares issuable upon the exercise of the option
described in (b) or (y) 16,667 shares issuable upon the exercise of the
option described in (c), neither of which was exercisable as to such
shares at the Record Date or within 60 days thereafter. In addition, the
shares of the Common Stock do not reflect 10,000 shares issuable upon
the exercise of a Consulting Warrant which, if not granted to a third
person or persons, may be exercised by Millennium.
(6) A director of the Company.
(7) The shares of the Common Stock reported in the table include (a) 16,666
shares issuable upon the exercise of an option expiring March 30, 2010
under the 2000 Option Plan and (b) 8,333 shares issuable upon the
exercise of a stock option expiring September 6, 2010 under the 2000
Option Plan. The shares of the Common Stock reported in the table do not
include (x) 8,334 shares issuable upon the exercise of the option
described in (a) or (y) 16,667 shares issuable upon the exercise of the
option described in (b), neither of which was exercisable as to such
shares at the Record Date or within 60 days thereafter.
(8) The shares of the Common Stock reported in the table include (a) 10,000
shares issuable upon the exercise of an option expiring July 20, 2005;
(b) 16,666 shares issuable upon the exercise of an option expiring March
30, 2010 under the 2000 Option Plan; and (c) 8,333 shares issuable upon
the exercise of a stock option expiring September 6, 2010 under the 2000
Option Plan. The shares of the Common Stock reported in the table do not
include (x) 8,334 shares issuable upon the exercise of the option
described in (b) or (y) 16,667 shares issuable upon the exercise of the
option described in (c), neither of which was exercisable as to such
shares at the Record Date or within 60 days thereafter.
(9) The shares of the Common Stock reported in the table include (a) those
shares indicated in the text to Notes 5, 7 and 8 and (b) 1,500 shares
issuable to an executive officer upon the exercise of a stock option
expiring February 3, 2003. The shares of the Common Stock reported in
the table do not include an option expiring October 30, 2011 to purchase
2,500 shares granted to this executive officer under the 2000 Option
Plan which was not exercisable at the Record Date or within 60 days
thereafter.
PROPOSAL TWO: APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee has re-appointed KPMG as the Company's independent
public accountants for fiscal 2002. KPMG LLP became the independent auditors for
the Company in connection with the audit for fiscal 2000.
The Board is seeking shareholders' approval of the Audit Committee's
selection of KPMG LLP. The California Corporations Code does not require the
approval of the selection of independent auditors by the Company's shareholders;
however, in view of the importance of the financial statements to shareholders,
the Board of Directors deems it desirable that the Company's shareholders pass
upon the selection of auditors. In the event that shareholders disapprove of the
selection, the Audit Committee will consider the selection of other auditors.
A representative of KPMG LLP will be present at the Meeting. The Company
has been informed that the representative does not intend to make any statement
to the shareholders at the Meeting, but will be available to respond to
appropriate questions from shareholders.
OTHER MATTERS COMING BEFORE THE MEETING
As of the date of this Proxy Statement, the Board of Directors does not
know of any matters to be presented to the Meeting other than the two proposals
set forth in the attached Notice of Annual Meeting. If any other matters
properly come before the Meeting, it is intended that the holders of the
management proxies will vote thereon in their discretion.
MISCELLANEOUS
The solicitation of proxies on the enclosed form of proxy is made by and
on behalf of the Board of Directors of the Company and the cost of this
solicitation is being paid by the Company. In addition to the use of the mails,
proxies may be solicited personally, or by telephone or telegraph, by the
officers or directors of the Company.
Shareholders' proposals for inclusion in the Company's proxy statement
for the Annual Meeting of Shareholders for fiscal 2002 must be received no later
than a reasonable time before the Company prints and mails its proxy material
for such Annual Meeting. If a shareholder intends to submit a proposal for
consideration at such Annual Meeting by means other than the inclusion of the
proposal in the Company's proxy statement for such Annual Meeting, the
shareholder must notify the Company of such intention no later than a reasonable
time before the Company prints and mails its proxy material for such Annual
Meeting, or risk management exercising discretionary voting authority with
respect to the management proxies to defeat such proposal when and if presented
at the Annual Meeting. The Company currently anticipates mailing the proxy
material on or before Friday, August 23, 2002.
A copy of the Annual Report to Shareholders is being mailed to all
shareholders as of the Record Date with this Proxy Statement. The Annual Report
incorporates the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2001, including financial statements (including the one schedule). A
request for any exhibit to the Form 10-K may be made by written or oral request
to Irene J. Marino, Vice President, Finance and Chief Financial Officer of the
Company, at the following address: 110 West Easy Street, Simi Valley, CA 93065,
or telephone number: (805) 581-4000, extension 215. A reasonable fee for
duplicating and mailing will be charged if a copy of any exhibit is requested.
In addition, a copy of the Company's Quarterly Report on Form 10-QSB for the
quarter ended December 31, 2001 is being mailed to all stockholders as of the
Record Date because of the delay in holding this Meeting as described at the
introduction of this Proxy Statement.
By Order of the Board of Directors
/s/ Irene J. Marino
---------------------
Irene J. Marino
Secretary
March 27, 2002
Appendix A
PERFECTDATA CORPORATION
AUDIT COMMITTEE CHARTER
Organization
This Charter governs the operations of the Audit Committee (the "Committee") of
PerfectData Corporation (the "Company"). The Committee shall review and reassess
the Charter at least annually and obtain the approval of the Board of Directors
(the "Board"). The Committee shall be appointed by the Board and shall consist
of at least three directors appointed annually and serving at the pleasure of
the Board, each of whom is independent of management and the Company. For
meetings of the Committee two members (a majority if there are more than three
members of the Committee) of the Committee shall constitute a quorum. No action
may be taken except by the affirmative vote of at least two members (a majority
if there are more than three members of the Committee) of the Committee. In the
absence or disqualification of a member of the Committee, the member or members
present at any meeting and not disqualified from voting, whether or not he, she
or they constitute a quorum, may unanimously appoint another member of the Board
to act at the meeting in place of any such absence of disqualified member,
provided that a majority of the persons acting at the meeting are independent of
management and the Company. Members of the Committee shall be considered
"independent" if they have no relationship that may interfere with the exercise
of their independence from management and the Company. So long as the Company's
Common Stock shall be traded on The Nasdaq Stock Market, Inc., or if in the
future the Common Stock be listed on the American Stock Exchange LLC, the Board
shall interpret "independence" as defined in the rules of the National
Association of Securities Dealers, Inc. (the "NASD"). If the Common Stock should
ever be listed on the New York Stock Exchange, Inc., the Board shall interpret
"independence" as defined by such Exchange or, if appropriate, continue to use
the definition in the NASD rules. All Committee members shall be financially
literate, or shall become financially literate within a reasonable period of
time after appointment to the Committee, and at least one member shall have
accounting or related financial management expertise.
Statement of Policy
The Committee shall provide assistance to the Board in fulfilling its oversight
responsibility to the shareholders, potential shareholders, the investment
community and others relating to the Company's financial statements and the
financial reporting process, the systems of internal accounting and financial
controls, the internal audit function (when established), the annual independent
audit of the Company's financial statements and the legal compliance and ethics
programs as established by management and the Board. In so doing, it is the
responsibility of the Committee to maintain free and open communication between
the Committee, the independent auditors, the internal auditors (when engaged)
and management of the Company. In discharging its oversight role, the Committee
is empowered to investigate any matter brought to its attention with full access
to all books, records, facilities and personnel of the Company and the power to
retain outside counsel, including outside counsel to the Company, or other
experts for this purpose. Responsibilities and Processes
The primary responsibility of the Committee is to oversee the Company's
financial reporting process on behalf of the Board and report the results of its
activities to the Board. Management is responsible for preparing the Company's
financial statements, and the independent auditors are responsible for auditing
those financial statements. The Committee, in carrying out its responsibilities,
believes its policies and procedures should remain flexible, in order to best
react to changing conditions and circumstances. The Committee should take the
appropriate actions to set the overall corporate "tone" for quality financial
reporting, sound business risk practices and ethical behavior.
The following shall be the principal recurring processes of the Committee in
carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the Committee may supplement them as
appropriate.
o The Committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately accountable to
the Board and the Audit Committee as representatives of the Company's
shareholders. The Committee shall have the ultimate authority and responsibility
to evaluate and, where appropriate, to replace the independent auditors. The
Committee shall discuss with the auditors their independence from management and
the Company and the matters included in the written disclosures required by the
Independence Standards Board. Annually, the Committee shall review and recommend
to the Board the selection of the Company's independent auditors, subject to
shareholders' approval.
o The Committee shall approve the scope of the annual audit by the independent
auditors and authorize any supplementary reviews, investigations or audits as it
shall deem advisable. Also, the Committee shall discuss with management, the
internal auditors (when engaged) and the independent auditors the adequacy and
effectiveness of the accounting and financial controls, including the Company's
system to monitor and manage business risk, and legal and ethical compliance
programs. Further, the Committee shall meet separately with the internal
auditors (when engaged) and the independent auditors, with and without
management present, to discuss the results of their examinations.
o The Committee shall review the interim financial statements with management
and the independent auditors prior to the filing of the Company's Quarterly
Report on Form 10-Q. Also, the Committee shall discuss the results of the
quarterly review and any other matters required to be communicated to the
Committee by the independent auditors under generally accepted auditing
standards. The Chairperson of the Committee may represent the entire Committee
for the purposes of this review.
o The Committee shall review with management and the independent auditors the
financial statements to be included in the Company's Annual Report on Form 10-K
(or the annual report to shareholders if distributed prior to the filing of Form
10-K), including its judgment about the quality, not just acceptability, of
accounting principles, the reasonableness of significant judgments and the
clarity of the disclosures in the financial statements. Also, the Committee
shall discuss the results of the annual audit and any other matters required to
be communicated to the Committee by the independent auditors under generally
accepted auditing standards.
o The Committee shall review the independent auditors' management letters with
the auditors and with the corporate staff and engage in the appropriate
follow-up of a recommendation in any such management letter.
o The Committee shall determine the appropriate actions that should be taken
regarding all irregularities uncovered.
o The Committee shall report to the Board on the activities and findings of the
Committee and, when appropriate, make recommendations to the Board based on
these findings.
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Table of Contents
Page
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Notice of Annual Meeting of Shareholders ........N/A
Proxy Statement:
Voting Securities..................................1
Proposal One: Election of Directors................3 PERFECTDATA CORPORATION
Management.........................................8
Executive Compensation............................10
Security Ownership of Certain Beneficial
Holders and Management.........................10
Proposal Two: Appointment of Independent
Auditors.......................................13
Other Matters Coming Before the Meeting...........13 Notice of Annual Meeting
Miscellaneous.....................................13 of Shareholders and
Appendix A - Audit Committee Charter.............A-1 Proxy Statement
March 27, 2002
================================================================================
PERFECTDATA CORPORATION
110 West Easy Street
Simi Valley, CA 93605
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Harris A. Shapiro and Corey P.
Schlossmann as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all of the
shares of the Common Stock of PerfectData Corporation (the "Company") held of
record by the undersigned on March 21, 2002 at the Annual Meeting of
Shareholders to be held on April 25, 2002 or at any adjournment thereof.
1. Election of Harris A. Shapiro, Bryan Maizlish, Timothy D. Morgan, Tracie
Savage and Corey P. Schlossmann as Directors of the Company.
[ ] FOR all nominees listed above.
FOR all nominees listed above EXCEPT: ______________________________
(INSTRUCTION: To withhold authority to vote on any individual nominee(s), write
his/her name(s) in the space above.)
[ ] WITHHOLD AUTHORITY to vote for all the nominees listed above.
2. Proposal to Ratify the Appointment of KPMG LLP as Independent Auditors of the
Company.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
3. To transact such other business as may come before the Annual Meeting or any
adjournment thereof.
This proxy, when executed, will be voted in the manner directed by the
undersigned shareholder(s). If no direction is made, this proxy will be voted
FOR Proposals 1 and 2
PLEASE MARK, SIGN, DATE, AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
I (we) shall attend the Annual Meeting in person Yes[ ] No[ ]
Please sign exactly as your name
appears to the left. When shares
are held by joint tenants, please
both sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give
full title as such. If a
corporation, please sign in full
corporate name by the President or
other authorized officer. If a
partnership, please sign in full
partnership name by a duly
authorized person.
-----------------------------------
Signature
-----------------------------------
Signature, if held jointly
Date: _____________________,2002