SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
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 ss.240.14a-11(c) or ss.240.14a-12
UNITEL VIDEO, INC.
-----------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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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):
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<PAGE>
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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-2-
<PAGE>
UNITEL VIDEO, INC.
555 WEST 57TH STREET
NEW YORK, NEW YORK 10019
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, FEBRUARY 5, 1997
-------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Unitel
Video, Inc., a Delaware corporation (the "Company"), will be held at the offices
of Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the Americas, 18th Floor,
New York, New York 10036, on Wednesday, February 5, 1997, at 11:00 A.M., for the
purpose of considering and acting upon the following matters:
1. The election of two Class III directors to serve until the 2000
Annual Meeting of Stockholders and until their respective successors are
elected and qualified.
2. The approval of an amendment to the Company's 1992 Stock Option
Plan.
3. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on December 18, 1996
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting. Accordingly, only stockholders of record at the
close of business on that date will be entitled to vote at the meeting. A
complete list of the stockholders entitled to vote will be available for
inspection by any stockholder during the meeting. In addition, the list will be
open for examination by any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting at the office of the Secretary of the Company, located at 555 West 57th
Street, New York, New York 10019.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the attached proxy statement for further information with
respect to the business to be transacted at the meeting. The Board of Directors
urges you to sign, date and return the enclosed proxy promptly. You are
cordially invited to attend the meeting in person. The return of the enclosed
proxy will not affect your right to vote in person if you do attend the meeting.
KAREN CEIL LAPIDUS,
Secretary
December 30, 1996
<PAGE>
UNITEL VIDEO, INC.
555 WEST 57TH STREET
NEW YORK, NEW YORK 10019
-------------------------
PROXY STATEMENT
-------------------------
GENERAL
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Unitel Video, Inc. (the "Company") for use
at the Company's 1997 Annual Meeting of Stockholders (the "Meeting"), which will
be held on the date, at the time and place and for the purposes set forth in the
foregoing notice, and at any adjournment or postponement thereof. This proxy
statement, the foregoing notice and the enclosed proxy are first being sent to
stockholders of the Company (the "Stockholders") on or about December 30, 1996.
The Board of Directors does not intend to bring any matter before the
Meeting except as specifically indicated in the notice and does not know of
anyone else who intends to do so. If any other matters properly come before the
Meeting, however, the persons named in the enclosed proxy, or their duly
constituted substitutes acting at the Meeting, will be authorized to vote or
otherwise act thereon in accordance with their judgment on such matters. If the
enclosed proxy is properly executed and returned prior to voting at the Meeting,
the shares represented thereby will be voted in accordance with the instructions
marked thereon. In the absence of instructions, the shares will be voted "FOR"
the election of the two nominees for director named herein and "FOR" the
amendment to the Company's 1992 Stock Option Plan (the "1992 Plan").
Any proxy may be revoked at any time prior to its exercise by notifying the
Secretary in writing, by delivering a duly executed proxy bearing a later date,
or by attending the Meeting and voting in person.
VOTING SECURITIES AND SECURITY OWNERSHIP
VOTING SECURITIES
At the close of business on December 18, 1996, the record date fixed for
the determination of Stockholders entitled to notice of and to vote at the
Meeting, there were 2,674,807 outstanding shares of the Company's Common Stock,
its only class of voting securities. Each share of Common Stock entitles the
record holder thereof to one vote. The presence at the Meeting, in person or by
proxy, of a majority of such outstanding shares of Common Stock will constitute
a quorum.
The affirmative vote of a plurality of votes cast at the Meeting is
required to elect directors. The affirmative vote of a majority of shares of
Common Stock present, in person or by proxy, and entitled to vote at the Meeting
will be required to approve the amendment to the 1992 Plan (the "Plan
Amendment"). Proxies submitted which contain abstentions or broker non-votes
will be deemed present at the Meeting in determining the presence of a quorum.
Shares of Common Stock that are voted to abstain with respect to any matter are
considered shares entitled to vote, and cast, with respect to that matter.
Shares of Common Stock subject to broker non-votes with respect to any matter
will not be considered as shares entitled to vote with respect to that matter.
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information at December 18, 1996 (except as
indicated below) with respect to each person (including any "group" as that term
is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), who is known by the Company to be the beneficial owner of
more than 5% of the
<PAGE>
Company's Common Stock. Unless otherwise indicated, each beneficial owner named
below has sole voting and dispositive power with respect to the shares of Common
Stock indicated as beneficially owned by such owner.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------ -------------------- ----------
Herbert Bass ....................... 212,562(1)(2) 7.9%
146 Waters Edge
Admiral's Cove
Jupiter, Florida 33477
Alex Geisler ....................... 242,536(2)(3) 9.1%
131 Regatta Drive
Admiral's Cove
Jupiter, Florida 33477
Dimensional Fund Advisors Inc. ..... 187,100(4) 7.0%
1299 Ocean Avenue
Santa Monica, California 90401
FMR Corp. .......................... 218,500(5) 8.2%
Edward C. Johnson 3d
Abigail P. Johnson
82 Devonshire Street
Boston, Massachusetts 02109
Investment Counselors of Maryland .. 175,000(6) 6.5%
803 Cathedral Street
Baltimore, Maryland 21201
- -----------------
(1) Includes 3,000 shares subject to presently exercisable stock options.
(2) Includes 36,183 unallocated shares held by the Company's 401(k) Employee
Savings and Stock Ownership Plan (the "Savings Plan") as to which Herbert
Bass, Alex Geisler and Barry Knepper, Chief Executive Officer of the
Company, as co-trustees, share the power to vote.
(3) Includes 3,000 shares subject to presently exercisable stock options,
57,193 shares held by Jean Z. Geisler (Mr. Geisler's wife) as trustee for
the benefit of the Geislers' children and 67,234 shares held by Mrs.
Geisler, with respect to all of which shares Mr. Geisler has sole voting
and dispositive power. Mr. and Mrs. Geisler disclaim beneficial ownership
as to the 57,193 shares held by Mrs. Geisler as trustee.
(4) Pursuant to a Schedule 13G, as amended, dated February 7, 1996 filed by
Dimensional Fund Advisors Inc. ("DFA") with the Securities and Exchange
Commission (the "SEC"), DFA has indicated that all shares listed in the
table above opposite its name are owned by advisory clients of DFA, no one
of which, to DFA's knowledge, owns more than 5% of the Company's Common
Stock. DFA has indicated that it has sole dispositive power with respect to
all such shares of Common Stock, that it has sole voting power with respect
to 123,100 of such shares and that certain of its officers, who also serve
as officers of DFA Investment Dimensions Group Inc. (the "Fund") and The
DFA Investment Trust Company (the "Trust"), each an open-end management
investment company registered under the Investment Company Act of 1940,
vote 12,800 additional shares of Common Stock which are owned by the Fund
and 51,200 shares of Common Stock which are owned by the Trust.
(5) Pursuant to a Schedule 13G dated February 14, 1996 jointly filed by FMR
Corp., Edward C. Johnson 3d and Abigail P. Johnson with the SEC, the filers
have indicated that the interest of Fidelity Low-Priced Stock Fund (the
"Stock Fund") amounted to the number and percentage of shares listed in the
table above opposite their names and that the Stock Fund has sole
dispositive power with respect to such shares, that Fidelity Management &
Research Company ("Fidelity"), a wholly-owned subsidiary of FMR Corp., an
investment adviser registered under the Investment Advisors Act of 1940
(the "1940 Act"), is the beneficial owner of such shares as a result of
acting as an investment adviser to the Stock Fund, that Edward C. Johnson
3d and FMR Corp., as a result of their control of Fidelity and the Stock
Fund, each has sole dispositive power with respect to such shares, and that
Edward C. Johnson 3d and Abigail P. Johnson, as a result of their ownership
of shares of the outstanding voting
2
<PAGE>
stock of FMR Corp. and the terms of a shareholders' voting agreement among
Mr. and Ms. Johnson, members of the Johnson family and the Class B
shareholders of FMR Corp., may be deemed under the 1940 Act to be a member
of a controlling group with respect to FMR Corp. The trustees of the Stock
Fund have the power to vote such shares.
(6) Investment Counselors of Maryland has advised the Company that at December
5, 1996 it held for its clients all of the shares listed in the table above
opposite its name, and that it had sole dispositive power with respect to
all of such shares and sole voting power as to 130,000 of such shares.
The following table sets forth information at December 18, 1996 with
respect to the beneficial ownership of the Company's Common Stock by (a) each
director and each nominee for election as a director of the Company, (b) each
current executive officer named in the Summary Compensation Table under the
caption "EXECUTIVE COMPENSATION" and (c) all directors and executive officers of
the Company as a group (13 persons). Unless otherwise indicated, each person
named below and each person in the group named below has sole voting and
dispositive power with respect to the shares of Common Stock indicated as
beneficially owned by such person or group.
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------------ -------------------- ----------
Herbert Bass ......................... 212,562(1) 7.9%
Alex Geisler ......................... 242,536(2) 9.1%
Walter G. Arader ..................... 23,000(3) *
Philip S. Birsh ...................... 12,400(4) *
Barry Knepper ........................ 87,894(5) 3.2%
Richard Clouser ...................... 56,660(6) 2.1%
Mark Miller .......................... 6,775(7) *
Thomas Eyring ........................ 6,438(8) *
Albert Walton ........................ 6,325(9) *
All directors and executive officers
as a group (13 persons) ............. 619,258(10) 21.9%
- -----------------
* Less than one percent.
(1) See footnotes (1) and (2) above to the first table under the caption "Share
Ownership of Certain Beneficial Owners and Management" for information as
to the beneficial ownership by Mr. Bass of the Company's Common Stock.
(2) See footnotes (2) and (3) above to the first table under the caption "Share
Ownership of Certain Beneficial Owners and Management" for information as
to the beneficial ownership by Mr. Geisler of the Company's Common Stock.
(3) Includes 15,000 shares issuable to Mr. Arader pursuant to presently
exercisable stock options.
(4) Includes 5,000 shares issuable to Mr. Birsh pursuant to presently
exercisable stock options.
(5) Includes 31,000 shares issuable to Mr. Knepper pursuant to presently
exercisable stock options, 4,411 shares allocated to Mr. Knepper and held
in his account under the Savings Plan and 2,100 shares held by Mr. Knepper
in an Individual Retirement Account. Also includes 36,183 unallocated
shares held by the Savings Plan. See footnote (2) to the first table above
under the caption "Share Ownership of Certain Beneficial Owners and
Management."
(6) Includes 33,000 shares issuable to Mr. Clouser pursuant to presently
exercisable stock options, 1,690 shares allocated to Mr. Clouser and held
in his account under the Savings Plan and 4,300 shares purchasable by Mr.
Clouser under the Company's Employee Stock Purchase Plan (the "Purchase
Plan "). Also includes 12,000 shares issuable to Mr. Clouser's wife
pursuant to presently exercisable stock options, 1,370 shares allocated to
his wife and held in her account under the Savings Plan and 4,300 shares
purchasable by her under the Purchase Plan, with respect to all of which
shares Mr. Clouser disclaims beneficial ownership.
(7) Includes 975 shares allocated to Mr. Miller and held in his account under
the Savings Plan and 4,300 shares purchasable by Mr. Miller under the
Purchase Plan.
3
<PAGE>
(8) Includes 2,000 shares issuable to Mr. Eyring pursuant to presently
exercisable stock options, 138 shares allocated to Mr. Eyring and held in
his account under the Savings Plan and 4,300 shares purchasable by Mr.
Eyring under the Purchase Plan.
(9) Includes 2,000 shares issuable to Mr. Walton pursuant to presently
exercisable stock options, 25 shares allocated to Mr. Walton and held in
his account under the Savings Plan and 4,300 shares purchasable by Mr.
Walton under the Purchase Plan.
(10) Includes 112,000 shares issuable to executive officers and directors of the
Company pursuant to presently exercisable stock options and 36,300 shares
purchasable by executive officers of the Company under the Purchase Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
George Horowitz, the Company's Chief Financial Officer, filed late his
Initial Statement of Beneficial Ownership on Form 3.
ELECTION OF DIRECTORS
The Company's By-Laws fix the number of directors of the Company at six and
provide that the Board of Directors shall be divided into three classes,
designated as Class I, Class II and Class III, each class to be as equal in
number as possible. There are presently two directors in each. At each annual
meeting of stockholders, directors are chosen to succeed those in the class
whose term expires at such annual meeting.
At the Meeting, Stockholders will elect two Class III directors to serve
for a term of three years, until the 2000 Annual Meeting of Stockholders and the
election and qualification of their respective successors. Unless otherwise
directed, proxies will be voted for the election of Herbert Bass and Alex
Geisler as Class III directors.
Each of the nominees has indicated a willingness to serve as a director of
the Company. In the event that any of the nominees should become unavailable or
unable to serve for any reason, the persons named in the enclosed proxy will
vote for one or more alternate nominees as the Board of Directors may recommend.
The following table sets forth certain information about each nominee and
each director whose term of office will continue after the Meeting:
CLASS OF DIRECTOR TERM
NAME DIRECTOR AGE SINCE EXPIRES
---- -------- --- -------- -------
Nominees:
---------
Herbert Bass ......................... III 67 1969 1997
Alex Geisler ......................... III 73 1969 1997
Directors whose term of office
will continue after the Meeting:
--------------------------------
Walter G. Arader ..................... I 75 1981 1998
Philip S. Birsh ...................... I 37 1992 1998
Barry Knepper ........................ II 46 1995 1999
Richard Clouser ...................... II 56 1996 1999
PRINCIPAL OCCUPATIONS AND DIRECTORSHIPS HELD BY DIRECTORS OF THE COMPANY
Messrs. Bass and Geisler have served as directors of the Company since its
founding in 1969. Mr. Bass served as President of the Company and Mr. Geisler as
Executive Vice President of the Company from 1969 until 1989, when they became
Co-Chairmen and Co-Chief Executive Officers. On August 11, 1993, they
relinquished their duties as Co-Chief Executive Officers and, from that date
through August 31, 1996, they each served as consultants to the Company.
4
<PAGE>
Mr. Arader has been a director of the Company since March 1981 and has been
Chairman and Chief Executive Officer of Walter G. Arader & Associates, a
financial and management consulting firm, since January 1, 1993. For more than
five years prior thereto, Mr. Arader was Chairman and Chief Executive Officer of
the financial and management consulting firm of Arader, Herzig & Associates,
Inc. Mr. Arader is a former Commissioner of the Pennsylvania Securities
Commission and a former Secretary of Commerce of the Commonwealth of
Pennsylvania. Mr. Arader is a director of HMG/Courtland, Inc.
Mr. Birsh has been a director of the Company since April 1992 and Publisher
of Playbill Incorporated, which publishes "Playbill" Magazine, and President and
Publisher of Racing Today Publishing Inc., which publishes a variety of racing
magazines, since March 1992. In January 1992, Mr. Birsh became President of AJP
Realty Corp., a real estate investment company. From May 1989 to February 1992,
Mr. Birsh was Senior Vice President and director of the private business group
of Kidder Peabody & Co. Incorporated, and for the nine years prior to May 1989,
Mr. Birsh was with Drexel Burnham Lambert Incorporated. At his departure in
1989, Mr. Birsh was a vice president in the mergers and acquisitions department.
Mr. Knepper has been Chief Executive Officer of the Company since April
1996, a Director of the Company since May 1995 and its Treasurer since 1983. Mr.
Knepper served as Senior Vice President-Finance and Administration from May 1995
to April 1996 and was the Company's Chief Financial Officer from 1982 to April
1996.
Mr. Clouser has been President of the Company's Mobile division since 1982,
Senior Vice President-Corporate since April 1996 and a Director since October
1996.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held seven meetings during the fiscal year ended
August 31, 1996. Each of the directors attended at least 75% of the aggregate
number of meetings of the Board of Directors and of the committees on which he
served which were held during the Company's last fiscal year.
The Board of Directors has a Compensation Committee, a Stock Option
Committee and an Audit Committee, the members of which, in each case, are
Messrs. Arader and Birsh. The Board of Directors does not have a Nominating
Committee. The entire Board of Directors considers questions relating to
nominations for directors. The Compensation Committee and the Stock Option
Committee, the functions of which are described below under the caption
"Compensation Committee and Stock Option Committee Report on Executive
Compensation," met informally throughout the fiscal year ended August 31, 1996.
The principal functions of the Audit Committee, which held one meeting during
the fiscal year ended August 31, 1996, are to recommend to the Board of
Directors the appointment of independent auditors, to review the performance and
scope of audit and non-audit services to be performed by the independent
auditors, to review the adequacy of internal auditing and accounting procedures
and to supervise investigation of matters relating to corporate procedures and
controls.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive $2,500 each fiscal
quarter and $1,000 for each Board of Directors' meeting and each committee
meeting attended. Pursuant to the terms of the 1992 Plan, each director of the
Company who is not an employee of the Company or any subsidiary of the Company
is automatically granted an option to purchase 1,000 shares of Common Stock on
May 1 of each year during the term of the 1992 Plan (3,000 shares if
Stockholders approve the Plan Amendment, described below under the caption
"APPROVAL OF AMENDMENT TO 1992 STOCK OPTION PLAN"). Effective as of May 1, 1996,
Messrs. Arader, Birsh, Bass and Geisler were each granted an option under the
1992 Plan to purchase 3,000 shares of Common Stock, subject to approval by
Stockholders of the Plan Amendment, at an exercise price of $5.2812. In the
event that Stockholders do not approve the Plan Amendment, such options will be
exercisable for 1,000 shares in accordance with the original terms of the 1992
Plan.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain summary information concerning
compensation with respect to each person who served as the Company's chief
executive officer during the fiscal year ended August 31, 1996 and each of the
Company's four other most highly compensated executive officers:
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS
ANNUAL COMPENSATION ----------
---------------------- SECURITIES ALL OTHER
NAME AND BONUS UNDERLYING COMPEN-
PRINCIPAL POSITION YEAR SALARY $ (1) $ OPTIONS(#) SATION $
------------------ ---- -------- ----- ---------- --------
<S> <C> <C> <C> <C>
Barry Knepper .......................... 1996 $159,413 25,000 $ 1,389(2)
President and 1995 138,972 10,000 1,600
Chief Executive 1994 131,619 977
Officer
David Micciulla ........................ 1996 $111,731 $64,658(3)
Former President 1995 150,577 $60,000 10,000 1,600
and Chief 1994 114,972 47,267 977
Executive Officer
Richard Clouser ........................ 1996 $191,083 $73,405 15,000 $ 1,389(2)
President, Mobile 1995 173,916 69,300 1,600
Division 1994 173,250 69,300 977
Mark Miller ............................ 1996 $172,517
President, Unitel- 1995 166,009
Hollywood Division 1994 161,853
Albert Walton .......................... 1996 $152,454 10,000 $ 141(2)
President, Editel- 1995 99,597
Los Angeles Division 1994 25,962(4)
Thomas Eyring .......................... 1996 $157,587 $ 8,100 5,000 $ 776(2)
Chief Technology 1995 151,805
Officer 1994 144,577
</TABLE>
- ---------------------
(1) Bonus compensation is shown for the fiscal year in which earned.
(2) Includes the value, as at August 31, 1996, of shares of Common Stock
allocated to such executive officer under the Company's Savings Plan during
the fiscal year ended August 31, 1996.
(3) Includes the value, as at August 31, 1996, of shares of Common Stock
allocated to such executive officer under the Company's Savings Plan during
the fiscal year ended August 31, 1996 ($1,389) and amounts paid to Mr.
Micciulla, including in respect of accrued vacation, during the fiscal year
ended August 31, 1996 in connection with his separation from employment
with the Company ($63,269).
(4) Mr. Walton's employment with the Company began in May 1994.
EMPLOYMENT AND SEVERANCE ARRANGEMENTS
The Company has provided that in the event that Mr. Knepper or Mr. Clouser
is terminated as an employee within one year following a change of control of
the Company, the Company will pay to Mr. Knepper severance in an amount equal to
his aggregate compensation for the twelve-month period preceding such
termination and will pay to Mr. Clouser severance in an amount equal to his
aggregate compensation for the six-month period preceding such termination. In
addition, upon such termination all stock options granted to Mr. Knepper and Mr.
Clouser, as the case may be, would become immediately exercisable.
6
<PAGE>
During fiscal 1996, Mark Miller was a party to an employment agreement with
the Unitel-Hollywood division of the Company pursuant to which he served as
President of that division. Under the agreement, the term of which ended on
October 10, 1996, Mr. Miller was entitled to receive a base salary at the rate
of $170,000 per annum until April 10, 1996 and at the rate of $175,000 per annum
for the remainder of the term of the agreement. In addition, Mr. Miller was
entitled to receive bonus compensation for all fiscal years of the Company, and
portions thereof, during the term of the agreement, commencing with the fiscal
year ending August 31, 1996, in an amount equal to 5% of the pre-tax net income
of the Unitel-Hollywood division for the applicable fiscal year (pro-rated for
portions of fiscal years). Under the agreement, Mr. Miller was provided with an
automobile and related expense allowance and was entitled to participate in the
Company's benefit plans as in effect from time to time.
STOCK OPTIONS
The following table sets forth certain information concerning the grant of
stock options under the 1992 Plan to certain of the executive officers named in
the Summary Compensation Table during the fiscal year ended August 31, 1996. No
options were granted to Mr. Micciulla or Mr. Miller during fiscal 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ------------- ----------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Barry Knepper .......... 25,000 23.3% $5.25 8/11/06 $82,687.50 $208,687.50
Richard Clouser ........ 15,000 14.0% 5.25 8/11/06 49,612.50 125,212.50
Albert Walton .......... 10,000 9.3% 5.25 8/11/06 33,075.00 83,475.00
Thomas Eyring .......... 5,000 4.7% 5.25 8/11/06 16,537.50 41,737.50
2,500 2.3% 5.13 10/22/05 8,079.75 20,391.75
</TABLE>
- ----------------------
(1) Each option was exercisable on the date of grant as to 20% of the total
number of shares subject to the option and is exercisable as to an
additional 20% of such shares on each of the next four anniversaries of the
date of grant.
The following table sets forth certain information with respect to the
exercise of stock options by Barry Knepper during the fiscal year ended August
31, 1996 and with respect to the number and value of unexercised options held as
of the end of the Company's fiscal year ended August 31, 1996 by all executive
officers named in the Summary Compensation Table. No such executive officer,
other than Mr. Knepper, exercised stock options during fiscal 1996.
<TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND
FISCAL 1996 YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
SHARES ACQUIRED AT FY-END(#) AT FY-END ($)
ON EXERCISE VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(1) UNEXERCISABLE UNEXERCISABLE
---- --------------- ------------- ------------- -------------
<C> <C> <C> <C> <C>
Barry Knepper ............... 5,000 $6,250 31,000 / 26,000 $ 1,875 / $7,500
David Micciulla ............. -- -- 0 / 0 0 / 0
Richard Clouser ............. -- -- 33,000 / 12,000 1,125 / 4,500
Mark Miller ................. -- -- 0 / 0 0 / 0
Albert Walton ............... -- -- 2,000 / 8,000 750 / 3,000
Thomas Eyring ............... -- -- 1,500 / 6,000 622.50 / 2,490
</TABLE>
- -----------------------
(1) Represents the closing price on the American Stock Exchange of the
underlying shares of Common Stock on the date of exercise less the option
exercise price.
7
<PAGE>
COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors, which consists of
Walter G. Arader and Philip S. Birsh, determines the salaries, bonuses and other
compensation (other than stock options), of the Company's executive officers.
The Stock Option Committee of the Board of Directors, which also consists of
Messrs. Arader and Birsh, is authorized to grant incentive and non-qualified
stock options to key employees of the Company, including executive officers,
under the 1992 Plan and to administer all of the Company's stock option plans.
The primary objectives of the Company's executive compensation structure
are to maintain executive compensation at competitive levels to retain qualified
personnel and to reward individuals for their respective contributions to the
Company's success. Bonuses are granted in order to reward and acknowledge
employees for, among other things, individual initiative and achievement. The
grant of stock options is intended to provide executives with a stake in the
long-term success of the Company and to coordinate executives' and stockholders'
long-term interests by creating a direct link between a portion of executive
compensation and increases in the market price of the Company's Common Stock.
A number of factors are considered in determining compensation of
executives, such as historical financial results, anticipated revenues and
earnings for the next fiscal year, individual contributions to, and length of
service with, the Company, compensation levels at other companies (both within
and outside the Company's industry), and equity and fairness within the top
levels of management. Decisions on executive officer compensation are, however,
primarily subjective. No pre-determined weight is generally assigned to any of
the factors mentioned above. A guideline in determining bonus compensation for
division presidents and other designated executive officers has historically
been the achievement of budgeted sales and earnings levels, but no other
specific corporate performance related targets are otherwise used and the
achievement of such goals is not, in all cases, determinative of whether an
executive officer will receive bonus compensation or the amount of such
compensation.
The salary rate of David Micciulla, former President and Chief Executive
Officer of the Company, did not change during fiscal 1996 and reflected the
Compensation Committee's determination that the Company's operating results
during fiscal 1995 did not warrant an increase for fiscal 1996. No bonus
compensation was paid to Mr. Micciulla for fiscal 1996. In April 1996, the Board
of Directors elected Barry Knepper to serve as the Company's Chief Executive
Officer, succeeding Mr. Micciulla. At the time of his election, Mr. Knepper's
base salary rate was increased to $175,000 after consideration of a number of
factors, including historical levels of base salary compensation for the Chief
Executive Officer of the Company and Mr. Knepper's length of service with the
Company. Mr. Knepper's base salary rate for the portion of fiscal 1996 during
which he served as Senior Vice President-Finance and Administration and Chief
Financial Officer of the Company did not change from his salary rate in fiscal
1995. The Compensation Committee did not grant Mr. Knepper a bonus for fiscal
1996, primarily due to the Company's continuing unfavorable operating results.
The Stock Option Committee granted to Mr. Knepper during fiscal 1996 an
option to purchase 25,000 shares of Common Stock. The grant was made to Mr.
Knepper to provide him with additional incentive compensation in view of his
leading role in the continuing refocusing of the Company's resources toward the
entertainment and corporate communications areas of the Company's operations,
and to coordinate a portion of his compensation with the market price of the
Company's Common Stock, thereby linking such compensation to the interests of
the Company's stockholders. The option is presently exercisable as to 20% of the
shares of Common Stock subject to the option and will become exercisable as to
an additional 20% on each of the next four anniversaries of the date of grant.
The Compensation Committee
The Stock Option Committee
--------------------------
Walter G. Arader
Philip S. Birsh
PERFORMANCE GRAPH
The following graph compares the yearly change in the cumulative total
return on the Company's Common Stock for the five fiscal years ended August 31,
1996 with (i) Media General Financial Services' American Stock Exchange Index
and (ii) a peer group of three companies, consisting of Northwest
Teleproductions, Inc.,
8
<PAGE>
Laser-Pacific Media Corporation and Carlton Communications PLC, which either
compete with the Company in one of its service areas or are engaged in related
fields. The comparison assumes an investment of $100 on September 1, 1991 in the
Company and in each of the comparison groups and that all dividends were
reinvested.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
UNITEL VIDEO, INC. PEER GROUP AMEX MARKET INDEX
- ------------------ ---------- -----------------
1991 100 1991 100 1991 100
1992 140.00 1992 95.77 1992 106.12
1993 101.54 1993 95.14 1993 123.97
1994 76.92 1994 91.64 1994 125.16
1995 78.46 1995 116.29 1995 149.85
1996 69.23 1996 131.95 1996 155.94
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act, that might incorporate future filings, including this Proxy Statement, in
whole or in part, the information set forth above under the captions
"Compensation Committee and Stock Option Committee Report on Executive
Compensation" and "Performance Graph" shall not be incorporated by reference
into any such filings.
CERTAIN TRANSACTIONS
The Company is a party to an agreement (each, an "Agreement") with each of
Messrs. Herbert Bass and Alex Geisler, directors and former Co-Chairmen and
Co-Chief Executive Officers of the Company. Under the Agreements, Messrs. Bass
and Geisler served as consultants to the Company through August 31, 1996. Each
of the consultants received compensation for services rendered during the
Company's last fiscal year of $125,000. The Agreements also provide each of the
consultants with disability payments, life insurance and fringe benefits that
are generally available to the Company's executives. Beginning September 1,
1996, Mr. Bass and Mr. Geisler are each entitled to receive retirement benefits
for the rest of his life at an annual rate of $92,061 per annum. These
retirement benefits are payable for a minimum of 10 years and will be paid to
the consultant's estate in the event of his death prior to August 31, 2006. Each
consultant also is entitled to receive non-competition payments of $50,000 per
annum for the 10 years following the terms of the Agreements.
Susan Devlin, wife of Richard Clouser, President of the Company's Mobile
division, was employed by the Company during the fiscal year ended August 31,
1996 as a vice president of its Mobile division and, during fiscal 1996, was
paid a salary of $150,417 and earned bonus compensation of $73,405.
9
<PAGE>
APPROVAL OF AMENDMENT TO 1992 STOCK OPTION PLAN
In May 1992 the Board of Directors adopted, and in July 1992 stockholders
of the Company approved, the 1992 Plan. The 1992 Plan is designed to provide an
incentive to key employees, and to directors who are not employees
("Non-Employee Directors"), of the Company and its present and future
subsidiaries and to offer an additional inducement in obtaining the services of
such individuals.
The 1992 Plan presently provides for the automatic grant on each May 1
during the term of the 1992 Plan to each Non-Employee Director of an option
(each, a "Director Option") to purchase 1,000 shares of Common Stock at an
exercise price equal to the fair market value of the shares subject to the
Director Option on the date of grant. The Board of Directors believes that the
grant of Director Options is important not only in attracting and retaining the
services of experienced and knowledgeable Non-Employee Directors, but also in
creating a direct link between a portion of the compensation of Non-Employee
Directors and increases in the market value of shares of Common Stock. However,
the Board also believes that the number of shares subject to each Director
Option is not significant in light of the number of outstanding shares of Common
Stock and that an increase in the number of shares subject thereto would more
meaningfully link the compensation of Non-Employee Directors to stockholders'
long-term interests.
Accordingly, the Board of Directors adopted the Plan Amendment, subject to
approval by Stockholders at the Meeting, which would increase the number of
shares subject to each Director Option from 1,000 shares to 3,000 shares. Each
Non-Employee Director of the Company was granted a Director Option to purchase
3,000 shares of Common Stock as of May 1, subject to approval of Stockholders of
the Plan Amendment. In the event that Stockholders do not approve the Plan
Amendment, each May 1996 Director Option will be exercisable for 1,000 shares in
accordance with the original terms of the 1992 Plan and the number of shares of
Common Stock subject to each future Director Option will continue to be 1,000
shares.
The following is a summary of certain terms of the 1992 Plan:
SHARES SUBJECT TO THE 1992 PLAN
The maximum number of shares as to which options may be granted under the
1992 Plan (subject to adjustment as described below) is 350,000 shares of Common
Stock. The Plan Amendment does not increase the number of shares of Common Stock
subject to the 1992 Plan. Upon expiration, cancellation or termination of
unexercised options, the shares of Common Stock subject to such options will
again be available for the grant of options under the 1992 Plan. The closing
market price per share of Common Stock on December 18, 1996 on the American
Stock Exchange was $7.375.
TYPE OF OPTIONS
Options granted to key employees under the 1992 Plan may either be
incentive stock options, within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, or non-qualified options. Director Options
granted under the 1992 Plan are non-qualified options.
ADMINISTRATION
The 1992 Plan is administered by a Stock Option Committee (the "1992
Committee") consisting of at least two members of the Board of Directors, each
of whom is a "non-employee director" within the meaning of Rule 16b-3
promulgated under the Exchange Act. The members of the 1992 Committee are
Messrs. Arader and Birsh.
ELIGIBILITY
Plan participation is limited to directors (including Non-Employee
Directors) and key employees (as designated by the 1992 Committee) of the
Company or of any subsidiary of the Company. Approximately 16 persons, including
4 Non-Employee Directors, are presently eligible to participate in the 1992
Plan.
DIRECTOR OPTIONS
As mentioned above, on each May 1 during the term of the 1992 Plan, each
Non-Employee Director is granted a Director Option to purchase 1,000 shares
(3,000 shares if Stockholders approve the Plan Amendment) of Common Stock. In
the event the remaining shares available for grant under the 1992 Plan are not
sufficient to grant the Director Options to Non-Employee Directors in any year,
the number of shares subject to each Director Option for such year will be
reduced proportionately.
10
<PAGE>
TERMS AND CONDITIONS OF OPTIONS
Options granted under the 1992 Plan will be subject to, among other things,
the following terms and conditions:
(1) Options granted to key employees ("Key Employee Options") may be
granted for terms determined by the 1992 Committee; provided, however, that
the term of an incentive stock option may not exceed 10 years (5 years if
the option holder owns (or is deemed to own) more than 10% of the voting
power of the Company).
(2) Each Director Option will have a term of ten years commencing on
the date of grant.
(3) The exercise price of the shares of Common Stock subject to a Key
Employee Option will be determined by the 1992 Committee; provided,
however, that the exercise price may not be less than the fair market value
of the Common Stock on the date of grant; and further provided that the
exercise price of an incentive stock option granted to an employee who owns
(or is deemed to own) more than 10% of the voting power of the Company must
be at least 110% of the fair market value on the date of grant.
(4) The exercise price of the shares of Common Stock subject to a
Director Option will be equal to the fair market value of the Common Stock
on the date of grant.
(5) Each option is payable in full upon exercise or, if the applicable
stock option contract permits, in installments. Payments of the exercise
price of an option may be made in cash or by certified check, or, with the
consent of the 1992 Committee, in shares of Common Stock, or any
combination of the foregoing.
(6) Options may not be transferred other than by will or by the laws
of descent and distribution, and may be exercised during the employee's
lifetime only by him or her.
(7) If the employment, or status as a director, of a optionee is
terminated for any reason other than death or a permanent and total
disability, the option may be exercised, to the extent exercisable by the
holder at the time of such termination, within three months thereafter, but
in no event after expiration of the term of the option. However, if such
employment or status was terminated either for cause or without the consent
of the Company, such option shall terminate immediately. In the case of the
death of an optionee while an employee or a director, his or her legal
representative or beneficiary may exercise the option, to the extent
exercisable on the date of death, within one year after such date, but in
no event after the expiration of the term of the option. An optionee whose
employment, or status as a director, was terminated by disability may
exercise his or her option, to the extent exercisable at the time of such
termination, with one year thereafter, but not after the expiration of the
term of the Director Option.
(8) The Company may withhold cash and/or shares of Common Stock having
an aggregate fair market value equal to the amount which the Company
determines is necessary to meet its obligation to withhold federal, state
and local taxes incurred by reason of the grant or exercise of an option,
its disposition or the disposition of shares acquired upon the exercise of
the option. Alternatively, the Company may require the optionee to pay the
Company such amount, in cash, promptly upon demand.
OPTION CONTACTS
Each option will be evidenced by a written contract between the Company and
the optionee, containing such terms and conditions not inconsistent with the
1992 Plan as may be determined by the 1992 Committee.
ADJUSTMENT IN EVENT OF CAPITAL CHANGES
Appropriate adjustments shall be made in the number and kind of shares
available under the 1992 Plan, in the number and kind of shares subject to each
outstanding option and in the exercise prices thereof, in the event of any
change in the Common Stock by reason of any stock dividend, recapitalization,
merger, consolidation, reorganization, split-up, combination, exchange of shares
or the like.
DURATION AND AMENDMENT OF THE 1992 PLAN
No option may be granted pursuant to the 1992 Plan after April 30, 2002.
The Board of Directors may at any time terminate or amend the 1992 Plan;
provided, however, that without the approval of the Company's stockholders, no
amendment may be made which would (a) increase the maximum number of shares
available for the grant of options
11
<PAGE>
(except as a result of the anti-dilution adjustments described above), (b)
materially increase the benefits accruing to participants under the 1992 Plan or
(c) change the eligibility requirements for individuals who may receive options.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the federal income tax consequences
under current tax law of incentive and non-qualified stock options. It does not
purport to cover all of the special rules, including special rules relating to
the exercise of an option with previously-acquired shares, or the state or local
income or other tax consequences inherent in the ownership and exercise of stock
options and the ownership and disposition of the underlying shares.
The optionee will not recognize any income for federal income tax purposes,
and the Company will not be entitled to any deduction, upon the grant of an
option.
In the case of an incentive stock option, no taxable income is recognized
upon exercise of the option (although the spread between the fair market value
and the exercise price is an adjustment to income for alternative minimum tax
purposes). If the optionee disposes of the shares acquired pursuant to the
exercise of an incentive stock option more than two years after the date of
grant and more than one year after the transfer of the shares to him or her, the
optionee will recognize long-term capital gain or loss and the Company will not
be entitled to a deduction. However, if the optionee disposes of such shares
within the required holding period, a portion of his or her gain will be treated
as ordinary income and the Company will generally be entitled to deduct such
amount.
Upon the exercise of a non-qualified stock option, generally, an optionee
recognizes ordinary taxable income in an amount equal to the excess, if any, of
the fair market value of the shares of Common Stock on the date of exercise over
the exercise price. The Company generally will be entitled to a compensation
deduction for Federal income tax purposes at the same time as, and in the same
amount that, the option holder recognizes such income. When an optionee
subsequently disposes of the shares of Common Stock received upon exercise of a
non-qualified stock option, the optionee will recognize long-term or short-term
capital gain or loss (depending upon the holding period of the shares) in an
amount equal to the difference between the sale price and the fair market value
of the shares on the date of exercise of the option.
CERTAIN PLAN BENEFITS
The grant of stock options, other than Director Options, is within the
discretion of the 1992 Committee. Accordingly, the Company is unable to
determine future options, if any, that may be granted to eligible participants
under the 1992 Plan other than to Non-Employee Directors. If Stockholders
approve the Plan Amendment, an aggregate of 72,000 shares (including the May
1996 Director Options) will be granted to Non-Employee Directors as a group
(4 persons) during the remaining term of the 1992 Plan.
Since the adoption of the 1992 Plan, the following persons and groups have
been granted options under the 1992 Plan to purchase the number of shares of
Common Stock set forth after their respective names: Barry Knepper, Chief
Executive Officer, 52,000 shares; Richard Clouser, President, Mobile Division,
40,000 shares; Albert Walton, President, Editel--Los Angeles Division, 10,000
shares; Thomas Eyring, Chief Technology Officer, 7,500 shares; David Micciulla,
Former Chief Executive Officer, 20,000 shares; Susan Devlin, 20,000 shares;
Herbert Bass, 20,000 shares (including options to purchase 17,000 shares granted
to Mr. Bass in 1992, as Co-Chairman and Chief Executive Officer of the Company,
which options have since expired); Alex Geisler, 20,000 shares (including
options to purchase 17,000 shares granted to Mr. Geisler in 1992, as Co-Chairman
and Chief Executive Officer of the Company, which options have since expired);
all current executive officers as a group (9 persons), 134,500 shares; all
current directors who are not executive officers as a group (4 persons), 50,000
shares (including the options granted to Mr. Bass and Mr. Geisler in 1992,
described above); and all employees as a group (16 persons), 224,500 shares
(including the options granted to Mr. Bass and Mr. Geisler in 1992, described
above).
REQUIRED VOTE
The affirmative vote of a majority of shares of Common Stock present, in
person or by proxy, and entitled to vote on this proposal is required to approve
the Plan Amendment. The Board of Directors recommends that Stockholders vote FOR
approval of the Plan Amendment.
12
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Grant Thornton as the
Company's principal certified public accountants for the fiscal year ending
August 31, 1997. A representative of Grant Thornton is expected to be present at
the Meeting with the opportunity to make a statement if he or she desires to do
so. The representative is also expected to be available to respond to
appropriate questions of stockholders.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Company by August 31, 1997 in
order to be considered for inclusion in the Company's proxy statement and form
of proxy relating to that meeting.
SOLICITATION OF PROXIES
The Company will bear the cost of the solicitation of proxies for the
Meeting, including the cost of preparing, assembling and mailing proxy
materials, the handling and tabulation of proxies received and charges of
brokerage and other institutions, nominees and fiduciaries in forwarding such
materials to beneficial owners. The solicitation may be made in person or by
telephone or telegraph by directors, officers and regular employees of the
Company, or by a professional proxy solicitation organization engaged by the
Company.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS
PROXY STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO) AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR ITS
MOST RECENT FISCAL YEAR. SUCH WRITTEN REQUEST SHOULD BE DIRECTED TO KAREN CEIL
LAPIDUS, VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY, AT THE ADDRESS OF THE
COMPANY APPEARING ON THE FIRST PAGE OF THIS PROXY STATEMENT.
KAREN CEIL LAPIDUS,
Secretary
December 30, 1996
13
<PAGE>
UNITEL VIDEO, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS--FEBRUARY 5, 1997
The undersigned stockholder of UNITEL VIDEO, INC. (the "Company"), revoking
all previous proxies, hereby appoints HERBERT BASS and BARRY KNEPPER, and each
of them acting individually, as the attorney and proxy of the undersigned, with
full power of substitution and resubstitution, to vote all shares of Common
Stock of the Company which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders of the Company, to be
held at 11:00 A.M. at the offices of Parker Chapin Flattau & Klimpl, LLP, 1211
Avenue of the Americas, 18th Floor, New York, New York 10036 on February 5,
1997, and at any adjournment or postponement thereof; provided that said proxies
are authorized and directed to vote as indicated with respect to the following
matters:
1. [ ] FOR the two nominees for directors named below.
[ ] WITHHOLD AUTHORITY to vote for both of the nominees for directors named
below.
[ ] FOR both of the nominees for directors named below, EXCEPT WITHHOLD
AUTHORITY TO VOTE FOR THE NOMINEE WHOSE NAME IS LINED THROUGH.
Nominees: HERBERT BASS and ALEX GEISLER.
2. Approval of an Amendment to the Company's 1992 Stock Option Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To vote on such other business as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. UNLESS
OTHERWISE SPECIFIED, THE SHARES WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES
FOR DIRECTOR AND "FOR" APPROVAL OF THE AMENDMENT TO THE COMPANY'S 1992 STOCK
OPTION PLAN. THIS PROXY ALSO DELEGATES DISCRETIONARY AUTHORITY TO THE PROXIES TO
VOTE WITH RESPECT TO ANY OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE
MEETING AND AT EACH ADJOURNMENT OR POSTPONEMENT THEREOF.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting, Proxy Statement and Annual Report of Unitel Video, Inc.
Dated:____________________________, 1997
________________________________________
Sigature of Stockholder
________________________________________
Signature of Stockholder
NOTE: Please sign this Proxy exactly as
the name(s) appear in the address. When
signing as attorney-in-fact, executor,
administrator, trustee or guardian,
please add your title as such. If the
stockholder is a corporation, please
sign with full corporate name by duly
authorized officer or officers. Where
stock is held in the name of two or more
persons, all such persons should sign.
PLEASE SIGN, DATE AND RETURN THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
1992 STOCK OPTION PLAN
of
UNITEL VIDEO, INC.
1. PURPOSES OF THE PLAN. This stock option plan (the "Plan") is designed to
provide an incentive to key employees (including officers and directors who are
key employees) and to directors who are not employees of Unitel Video, Inc., a
Delaware corporation (the "Company"), and its present and future subsidiary
corporations, as defined in Paragraph 18 ("Subsidiaries"), and to offer an
additional inducement in obtaining the services of such individuals. The Plan
provides for the grant of "incentive stock options" ("ISOs") within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and nonqualified stock options ("NQSOs"), but the Company makes no warranty as
to the qualification of any option as an "incentive stock option" under the
Code.
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph 12,
the aggregate number of shares of Common Stock, $.01 par value per share, of the
Company ("Common Stock") for which options may be granted under the Plan shall
not exceed 350,000. Such shares of Common Stock may, in the discretion of the
Committee (as defined in Paragraph 3), consist either in whole or in part of
authorized but unissued shares of Common Stock or shares of Common Stock held in
the treasury of the Company. The Company shall at all times during the term of
the Plan reserve and keep available such number of shares of Common Stock as
will be sufficient to satisfy the requirements of the Plan. Subject to the
provisions of Paragraph 13, any shares of Common Stock subject to an option
which for any reason expires, is cancelled, is terminated unexercised or which
ceases for any reason to be exercisable shall again become available for the
granting of options under the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Company's Board of Directors which, to the extent that it may determine, may
delegate its powers with respect to the administration of the Plan to a
committee of the Board of Directors of the Company (the "Committee") consisting
of not less than two directors, each of whom shall be a "Non-Employee Director"
within the meaning of Rule 16b-3 (or any successor rule or regulation)
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). References in the Plan to determinations or actions by the Committee
shall be deemed to include determinations and actions by the Board of Directors.
Subject to the express provisions of the Plan, the Committee shall have the
authority, in its sole discretion, with respect to Key Employee Options (as
defined in Paragraph 18): to determine the key employees who shall receive
options; the times when they shall receive options; whether an option shall be
an ISO or a NQSO; the number of shares of Common Stock to be subject to each
option; the term of each option; the date each option shall become exercisable;
whether an
<PAGE>
option shall be exercisable in whole, in part or in installments, and, if in
installments, the number of shares of Common Stock to be subject to each
installment; whether the installments shall be cumulative; the date each
installment shall become exercisable and the term of each installment; whether
to accelerate the date of exercise of any installment; whether shares of Common
Stock may be issued on exercise of an option as partly paid, and, if so, the
dates when future installments of the exercise price shall become due and the
amounts of such installments; the exercise price of each option; the form of
payment of the exercise price; whether to restrict the sale or other disposition
of the shares of Common Stock acquired upon the exercise of an option and to
waive any such restriction; whether to subject the exercise of all or any
portion of an option to the fulfillment of contingencies as specified in the
contract referred to in Paragraph 11 (the "Contract"), including without
limitation, contingencies relating to entering into a covenant not to compete
with the Company and its Parent (as defined in Paragraph 18) and Subsidiaries,
financial objectives for the Company, a Subsidiary, a division, a product line
or other category, and/or the period of continued employment of the optionee
with the Company or its Subsidiaries, and to determine whether such
contingencies have been met; and with respect to Key Employee Options and
Outside Director Options (as defined in Paragraph 18): to construe the
respective Contracts and the Plan; to determine the amount, if any, necessary to
satisfy the Company's obligation to withhold taxes; with the consent of the
optionee, to cancel or modify an option, provided such option as modified would
be permitted to be granted on such date under the terms of the Plan; to
prescribe, amend and rescind rules and regulations relating to the Plan; and to
make all other determinations necessary or advisable for administering the Plan.
The determinations of the Committee on the matters referred to in this Paragraph
3 shall be conclusive.
No member or former member of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any option
granted hereunder.
4. ELIGIBILITY; GRANTS. The Committee may, consistent with the purposes of
the Plan, grant Key Employee Options from time to time, to key employees of the
Company or any of its Subsidiaries. Key Employee Options granted shall cover
such number of shares of Common Stock as the Committee may determine; provided,
however, that the aggregate fair market value (determined at the time the option
is granted) of the shares of Common Stock for which any eligible person may be
granted ISOs under the Plan or any other plan of the Company, or of a Parent or
a Subsidiary of the Company, which are exercisable for the first time by such
optionee during any calendar year shall not exceed $100,000. The $100,000 ISO
limitation shall be applied by taking ISOs into account in the order in which
they were granted. Any option (or the portion thereof) granted in excess of such
amount shall be treated as a NQSO.
On the date the Plan is adopted by the Board of Directors, each member of
the Board of Directors who is not on such date an employee of the Company or any
of its Subsidiaries shall be granted an Outside Director Option to purchase
1,000 shares of Common Stock. In addition, on each anniversary of the date the
Plan is adopted by the Board of Directors, each member of the Board of Directors
who is not on that anniversary date an employee of the Company or any of its
Subsidiaries shall be granted an Outside Director Option to purchase 3,000
shares of Common Stock. In the event the remaining shares available for grant
under the Plan are not sufficient to grant the
-2-
<PAGE>
Outside Director Options to such non-employee directors in any year, the number
of shares subject to each Outside Director Option for such year shall be reduced
proportionately. The Committee shall have no discretion with respect to the
selection of directors to receive Outside Director Options or the amount, the
price or the timing with respect thereto. A director who is not an employee of
the Company or any of its Subsidiaries shall not be entitled to receive any
options other than Outside Director Options as provided herein.
5. EXERCISE PRICE. The exercise price of the shares of Common Stock under
each Key Employee Option shall be determined by the Committee; provided,
however, that the exercise price shall not be less than the fair market value of
the Common Stock subject to such option on the date of grant; and further,
provided, that if, at the time an ISO is granted, the optionee owns (or is
deemed to own under Section 424(d) of the Code) stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company, of
any of its Subsidiaries or of a Parent, the exercise price of such ISO shall not
be less than 110% of the fair market value of the Common Stock subject to such
ISO on the date of grant. The exercise price of the shares of Common Stock under
each Outside Director Option shall be equal to the fair market value of the
Common Stock subject to such option on the date of grant.
The fair market value of the Common Stock on any day shall be (a) if the
principal market for the Common Stock is a national securities exchange, the
average of the highest and lowest sales prices of the Common Stock on such day
as reported by such exchange or on a composite tape reflecting transactions on
such exchange, (b) if the principal market for the Common Stock is not a
national securities exchange and the Common Stock is quoted on the National
Association of Securities Dealers Automated Quotations System ("NASDAQ"), and
(i) if actual sales price information is available with respect to the Common
Stock, the average of the highest and lowest sales prices of the Common Stock on
such day on NASDAQ, or (ii) if such information is not available, the average of
the highest bid and lowest asked prices for the Common Stock on such day on
NASDAQ, or (c) if the principal market for the Common Stock is not a national
securities exchange and the Common Stock is not quoted on NASDAQ, the average of
the highest bid and lowest asked prices for the Common Stock on such day as
reported on the NASDAQ OTC Bulletin Board Service or by National Quotation
Bureau, Incorporated or a comparable service; provided, however, that if clauses
(a), (b) and (c) of this Paragraph are all inapplicable, or if no trades have
been made or no quotes are available for such day, the fair market value of the
Common Stock shall be determined by the Committee by any method consistent with
applicable regulations adopted by the Treasury Department relating to stock
options. The determination of the Committee shall be conclusive in determining
the fair market value of the stock.
6. TERM. The term of each Key Employee Option shall be such term as is
established by the Committee, in its sole discretion, at or before the time such
option is granted. Notwithstanding the foregoing, the term of each ISO granted
pursuant to the Plan shall be for a period not exceeding 10 years from the date
of grant thereof, and further provided, that if, at the time an ISO is granted,
the optionee owns (or is deemed to own under Section 424(d) of the Code) stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company,
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of any of its Subsidiaries or of a Parent, the term of the ISO shall be for a
period not exceeding five years from the date of grant. Each Outside Director
Option shall have a term of ten years commencing on the date of grant. Options
shall be subject to earlier termination as hereinafter provided.
7. EXERCISE. An option (or any part or installment thereof), to the extent
then exercisable, shall be exercised by giving written notice to the Company at
its principal office (at present 555 West 57th Street, New York, New York 10019,
Attn: Barry Knepper, Executive Vice President), stating which ISO, NQSO or
Outside Director Option is being exercised, specifying the number of shares of
Common Stock as to which such option is being exercised and accompanied by
payment in full of the aggregate exercise price therefor (or the amount due on
exercise if the Contract permits installment payments) (a) in cash or by
certified check, or (b) with the consent of the Committee (in the Contract or
otherwise), with previously acquired shares of Common Stock having an aggregate
fair market value, on the date of exercise, equal to the aggregate exercise
price of all options being exercised, or with any combination of cash, certified
check or shares of Common Stock.
A person entitled to receive Common Stock upon the exercise of an option
shall not have the rights of a stockholder with respect to such shares of Common
Stock until the date of issuance of a stock certificate to him for such shares;
provided, however, that until such stock certificate is issued, any option
holder using previously acquired shares of Common Stock in payment of an option
exercise price shall continue to have the rights of a stockholder with respect
to such previously acquired shares.
In no case may a fraction of a share of Common Stock be purchased or issued
under the Plan.
8. TERMINATION OF RELATIONSHIP WITH COMPANY. Any holder of a Key Employee
Option whose employment with the Company (and its Parent and Subsidiaries), and
any holder of an Outside Director Option whose status as a director of the
Company, has terminated for any reason other than his death or Disability (as
defined in Paragraph 18) may exercise such option, to the extent exercisable on
the date of such termination, at any time within three months after the date of
termination, but not thereafter and in no event after the date the option would
otherwise have expired; provided, however, that if his employment or status as a
director shall be terminated either (a) for cause, or (b) without the consent of
the Company, said option shall terminate immediately. Key Employee Options
granted under the Plan shall not be affected by any change in the status of the
holder so long as he continues to be a full-time employee of the Company, its
Parent or any of the Subsidiaries (regardless of having been transferred from
one corporation to another).
Nothing in the Plan or in any option granted under the Plan shall confer on
any individual any right to continue in the employ of the Company, its Parent or
any of its Subsidiaries, or as a director of the Company, or interfere in any
way with the right of the Company, its Parent or
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any of its Subsidiaries to terminate the employee's employment at any time for
any reason whatsoever without liability to the Company, its Parent or any of its
Subsidiaries.
9. DEATH OR DISABILITY OF AN OPTIONEE. If an optionee dies (a) while he is
employed by the Company, its Parent or any of its Subsidiaries, or while he is a
director of the Company, (b) within three months after the termination of such
relationship (unless such termination was for cause or without the consent of
the Company) or (c) within one year following the termination of such
relationship by reason of Disability, the Key Employee Options and Outside
Director Options, respectively, may be exercised, to the extent exercisable on
the date of his death, by his executor, administrator or other person at the
time entitled by law to his rights under such option, at any time within one
year after death, but not thereafter and in no event after the date the option
would otherwise have expired.
Any optionee whose employment or status as a director has terminated by
reason of Disability may exercise his Key Employee Options and Outside Director
Options, respectively, to the extent they are exercisable upon the effective
date of such termination, at any time within one year after such date, but not
thereafter and in no event after the date the option would otherwise have
expired.
10. COMPLIANCE WITH SECURITIES LAWS. The Committee may require, in its
discretion, among other things, as a condition to the exercise of any option
that either (a) a Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the shares of Common Stock to be
issued upon such exercise shall be effective and current at the time of
exercise, or (b) there is an exemption from registration under the Securities
Act for the issuance of shares of Common Stock upon such exercise. Nothing
herein shall be construed as requiring the Company to register shares subject to
any option under the Securities Act.
The Committee may require the optionee to execute and deliver to the
Company his representation and warranty, in form and substance satisfactory to
it, that the shares of Common Stock to be issued upon the exercise of the option
are being acquired by the optionee for his own account, for investment only and
not with a view to the resale or distribution thereof. In addition, the
Committee may require the optionee to represent and warrant in writing that any
subsequent resale or distribution of shares of Common Stock by such optionee
will be made only pursuant to (i) a Registration Statement under the Securities
Act which is effective and current with respect to the shares of Common Stock
being sold, or (ii) a specific exemption from the registration requirements of
the Securities Act, but in claiming such exemption, the optionee shall, at the
request of the Committee and prior to any offer of sale or sale of such shares
of Common Stock, provide the Company with a favorable written opinion of
counsel, in form and substance satisfactory to the Company, as to the
applicability of such exemption to the proposed sale or distribution.
11. STOCK OPTION CONTRACTS. Each option shall be evidenced by an
appropriate Contract which shall be duly executed by the Company and the
optionee, and shall contain such terms and conditions not inconsistent herewith
as may be determined by the Committee.
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12. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Not withstanding any other
provisions of the Plan, in the event of any change in the outstanding Common
Stock by reason of a stock dividend, recapitalization, merger or reorganization,
split-up, combination or exchange of shares or the like, (a) the aggregate
number and kind of shares subject to the Plan, (b) the aggregate number and kind
of shares subject to each outstanding option and the exercise price thereof and
(c) the aggregate number and kind of shares to be granted pursuant to Paragraph
4 to directors who are not employees of the Company shall each be appropriately
adjusted by the Committee, whose determination shall be conclusive.
13. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was adopted by the
Board of Directors of the Company on May 1, 1992. No option may be granted under
the Plan after April 30, 2002. The Board of Directors, without further approval
of the Company's stockholders, may at any time and from time to time suspend or
terminate the Plan, in whole or in part, or amend it from time to time in such
respects as it may deem advisable, including without limitation, in order that
ISOs granted hereunder meet the requirements for "incentive stock options" under
the Code, to comply with applicable requirements of the Securities Act and the
Exchange Act, or to conform to any change in applicable law or to regulations or
rulings of administrative agencies; provided, however, that no amendment shall
be effective without the requisite prior or subsequent stockholder approval
which would (a) except as contemplated in Paragraph 12, increase the maximum
number of shares of Common Stock for which options may be granted under the
Plan, (b) materially increase the benefits to participants under the Plan or (c)
change the eligibility requirements for individuals entitled to receive options
hereunder. Notwithstanding the foregoing, the provisions regarding the selection
of directors for participation in, and the amount, the price or the timing of,
Outside Director Options shall not be amended more than once every six months,
other than to comport with changes in the Code, the Employee Retirement Income
Security Act or the rules thereunder. No termination, suspension or amendment of
the Plan shall, without the consent of the holder of an existing option affected
thereby, adversely affect his rights under such option. The power of the
Committee to construe and administer any options granted under the Plan prior to
the termination or suspension of the Plan nevertheless shall continue after such
termination or during such suspension.
14. NON-TRANSFERABILITY OF OPTIONS. No option granted under the Plan shall
be transferable otherwise than by will or the laws of descent and distribution,
and options may be exercised, during the lifetime of the holder thereof, only by
him or his legal representatives. Except to the extent provided above, options
may not be assigned, transferred, pledged, hypothecated or disposed of in any
way (whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process.
15. WITHHOLDING TAXES. The Company may withhold cash and/or shares of
Common Stock to be issued to the optionee having an aggregate fair market value
equal to the amount which it determines is necessary to satisfy its obligation
to withhold Federal, state and local income taxes or other taxes incurred by
reason of the grant or exercise of an option, its disposition, or the
disposition of the underlying shares of Common Stock. Alternatively, the Company
may
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require the holder to pay to the Company such amount, in cash, promptly upon
demand. The Company shall not be required to issue any shares of Common Stock
pursuant to any such option until all required payments have been made. Fair
market value of the shares of Common Stock shall be determined in accordance
with Paragraph 5.
16. LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such legend or
legends upon the certificates for shares of Common Stock issued upon exercise of
an option under the Plan and may issue such "stop transfer" instructions to its
transfer agent in respect of such shares as it determines, in its discretion, to
be necessary or appropriate to (a) prevent a violation of, or to perfect an
exemption from, the registration requirements of the Securities Act, (b)
implement the provisions of the Plan or any agreement between the Company and
the optionee with respect to such shares of Common Stock, or (c) permit the
Company to determine the occurrence of a "disqualifying disposition," as
described in Section 421(b) of the Code, of the shares of Common Stock
transferred upon the exercise of an ISO granted under the Plan.
17. SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CERTAIN CONSTITUENT
CORPORATIONS. Anything in this Plan to the contrary notwithstanding, the
Committee may, without further approval by the stockholders, substitute new
options for prior options of a Constituent Corporation (as defined in Paragraph
18) or assume the prior options of such Constituent Corporation.
18. DEFINITIONS.
a. Subsidiary. The term "Subsidiary" shall have the same definition as
"subsidiary corporation" in Section 424(f) of the Code.
b. Parent. The term "Parent" shall have the same definition as "parent
corporation" in Section 424(e) of the Code.
c. Constituent Corporation. The term "Constituent Corporation" shall mean
any corporation which engages with the Company, its Parent or any Subsidiary in
a transaction to which Section 424(a) of the Code applies (or would apply if the
option assumed or substituted were an ISO), or any Parent or any Subsidiary of
such corporation.
d. Disability. The term "Disability" shall mean a permanent and total
disability within the meaning of Section 22(e)(3) of the Code.
e. Key Employee Option. The term "Key Employee Option" shall mean an option
granted pursuant to the Plan to a person who, at the time of grant, is a key
employee of the Company or a Subsidiary of the Company.
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f. Outside Director Option. The term "Outside Director Option" shall mean a
NQSO granted pursuant to the Plan to a person who, at the time of grant, is a
director of the Company but is not an employee of the Company or any of its
Subsidiaries.
19. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by a
majority of the votes present in person or by proxy at the next meeting of its
stockholders at which a quorum is present. No options granted hereunder may be
exercised prior to such approval, provided that the date of grant of any options
granted hereunder shall be determined as if the Plan had not been subject to
such approval. Notwithstanding the foregoing, if the Plan is not approved by a
vote of the stockholders of the Company on or before May 1, 1993, the Plan and
any options granted hereunder shall terminate.
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