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 the Commission
Only (as permitted by Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Inmark Enterprises, 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:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
INMARK ENTERPRISES, INC.
415 Northern Boulevard
Great Neck, New York 11021
-----------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
-------------------------------
The Annual Meeting of the Stockholders (the "Annual Meeting") of
Inmark Enterprises, Inc. (the "Company") will be held at the Company's principal
executive offices, 415 Northern Boulevard, Great Neck, New York 11021, at 10:00
a.m., local New York time, on September 14, 1999, to consider the following
matters:
(1) The election of seven Directors to hold office until the
next Annual Meeting of Stockholders and until their
respective successors are duly elected and qualified.
(2) The approval of an amendment to the Company's Certificate of
Incorporation changing the Company's name to CoActive
Marketing Group, Inc.
(3) The approval of an amendment to the Company's 1992 Stock
Option Plan (the "1992 Plan") to increase the number of
shares of the Company's Common Stock (the "Shares") for
which options may be granted pursuant to the 1992 Plan from
1,125,000 to 1,500,000 and limit the number of Shares with
respect to which options may be granted under the 1992 Plan
to any single participant in any single plan year to
150,000.
(4) The approval and ratification on a retroactive basis of the
Company's 1997 Executive Officer Stock Option Plan.
(5) The transaction of such other businesses as may properly
come before the Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on July 23,
1999 as the record date for the Annual Meeting. Only stockholders of record of
the Company's Common Stock at the close of business on July 23, 1999 will be
entitled to notice of and to vote at the Annual Meeting or any adjournments or
postponements thereof. Shares can be voted at the Annual Meeting only if the
holder is present or represented by proxy.
The accompanying form of 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 Annual
Meeting.
A complete list of stockholders entitled to vote at the Annual
Meeting shall be open to the examination of any stockholder, for any purpose
germane to the Annual Meeting, during ordinary business hours, for a period of
at least ten days prior to the Annual Meeting, at the Company's principal
executive offices, 415 Northern Boulevard, Great Neck, New York 11021.
<PAGE>
Stockholders are cordially invited to attend the Annual Meeting.
Whether or not you expect to attend the Annual Meeting in person, please
complete, date and sign the accompanying proxy card and return it without delay
in the enclosed postage prepaid envelope. Your proxy will not be used if you are
present and prefer to vote in person or if you revoke the proxy.
By Order of the Board of Directors
Donald A. Bernard
Secretary
July 29, 1999
2
<PAGE>
INMARK ENTERPRISES, INC.
415 Northern Boulevard
Great Neck, New York 11021
-------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 14, 1999
--------------------------------------
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Inmark Enterprises, Inc., a
Delaware corporation (the "Company"), for use at the 1999 Annual Meeting of
Stockholders of the Company and for any adjournments or postponements thereof
(the "Annual Meeting") to be held at the Company's principal executive offices,
415 Northern Boulevard, Great Neck, New York 11021, at 10:00 a.m., local New
York time, on September 14, 1999, for the purposes set forth in the accompanying
Notice of Annual Meeting of Stockholders. A Board of Directors' proxy (the
"Proxy") for the Annual Meeting is enclosed, by means of which you may vote as
to the proposals described in this Proxy Statement.
All Proxies which are properly completed, signed and returned to
the Company prior to the Annual Meeting, and which have not been revoked, will
be voted in accordance with the stockholder's instructions contained in such
Proxy. In the absence of instructions, shares represented by such Proxy will be
voted (i) FOR the election of the nominees of the Board of Directors for
Director, (ii) FOR the approval of the amendment to the Company's Certificate of
Incorporation changing the Company's name to Co- Active Marketing Group, Inc.,
(iii) FOR the approval of the amendment to the Company's 1992 Stock Option Plan
(the "1992 Plan") increasing the number of shares of the Company's Common Stock
for which options may be granted pursuant to the 1992 Plan from 1,125,000 to
1,500,000 and limiting the number of Shares with respect to which options may be
granted under the 1992 Plan in any single plan year to 150,000, and (iv) FOR the
approval and ratification on a retroactive basis of the Company's 1997 Executive
Officer Stock Option Plan. The Board of Directors is not aware of any business
to be presented at the Annual Meeting except the matters set forth in the Notice
and described in this Proxy Statement. If any other matters properly come before
the Annual Meeting, the persons named in the accompanying Proxy will vote on
those matters in accordance with their best judgment. A stockholder may revoke
his or her Proxy at any time before it is exercised by filing with the Secretary
of the Company at its principal executive offices at 415 Northern Boulevard,
Great Neck, New York 11021, either a written notice of revocation or a duly
executed Proxy bearing a later date, or by attending in person at the Annual
Meeting and expressing a desire to vote his or her shares in person.
This Proxy Statement and the accompanying Notice of Annual Meeting
of Stockholders, Proxy and Annual Report on Form 10-K (including financial
statements) for the fiscal year ended March 31, 1999 ("Fiscal 1999"), are being
sent to stockholders on or about July 29, 1999.
<PAGE>
VOTING SECURITIES
July 23, 1999 has been fixed as the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting or any adjournment or postponement thereof. As of that date, the Company
had outstanding 4,513,481 shares of Common Stock, $.001 par value (the "Common
Stock"), excluding treasury shares. The presence, in person or by proxy, of
stockholders entitled to cast a majority of votes which stockholders are
entitled to cast on a particular matter at the Annual Meeting will constitute a
quorum for the Annual Meeting. Holders of Common Stock are entitled to one vote
for each share owned upon all matters to be considered at the Annual Meeting.
Proxies marked "Abstain" are included in determining a quorum, but broker
proxies which have not voted in the election of Directors are not included in
determining a quorum for such matter.
Directors will be elected by a plurality of the votes cast at the
Annual Meeting by the holders of shares of Common Stock present in person or
represented by proxy and entitled to vote on the election of Directors. There is
no cumulative voting in the election of Directors. The amendment to the
Company's Certificate of Incorporation will be authorized by a majority of the
outstanding Common Stock entitled to vote at the Annual Meeting. The amendment
to the Company's 1992 Stock Option Plan and the approval and ratification on a
retroactive basis of the Company's 1997 Executive Officer Stock Option Plan will
be authorized by a majority of the votes cast at the Annual Meeting by the
holders of shares of Common Stock present in person or represented by proxy and
entitled to vote at the Annual Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of May 15, 1999
with respect to stock ownership of (i) those persons or groups known to the
Company to beneficially own more than 5% of the Company's outstanding Common
Stock, (ii) each of the Directors and nominees of the Company and the Company's
executive officers named in the summary compensation table, and (iii) the
Company's Directors and executive officers as a group. Unless otherwise
indicated, the named beneficial owner has sole voting and investment power with
respect to the shares.
<TABLE>
<S> <C> <C>
Amount and Nature of Percent
Name and Address of Beneficial Owner Beneficial Ownership(1) of Class(1)
- ------------------------------------ ---------------------- -----------
(i) Beneficial Owners of More Than 5% of the
Common Stock (Other Than Directors,
Nominees and Executive Officers)
OG Holding Corporation Liquidation Trust 706,731(2) 15.7%
9745 Mangham Drive
Cincinnati, OH 45215
Robert F. Hussey 323,343(3) 7.1%
89 White Hill Road
Lloyd Harbor, NY 11734
2
<PAGE>
Amount and Nature of Percent
Name and Address of Beneficial Owner Beneficial Ownership(1) of Class(1)
- ------------------------------------ ---------------------- -----------
(ii) Directors, Nominees and Executive Officers
John P. Benfield 649,078(4) 13.3%
c/o Inmark Enterprises, Inc.
415 Northern Boulevard
Great Neck, NY 11021
Donald A. Bernard 645,998(5) 13.3%
c/o Inmark Enterprises, Inc.
415 Northern Boulevard
Great Neck, NY 11021
Paul A. Amershadian 641,248(6) 13.2%
c/o Inmark Enterprises, Inc.
415 Northern Boulevard
Great Neck, NY 11021
Thomas E. Lachenman 713,504(7) 15.8%
c/o Optimum Group, Inc.
9745 Mangham Drive
Cincinnati, OH 45215
Brian Murphy 30,000 *
c/o U.S. Concepts, Inc.
16 West 22nd Street, 2nd Floor
New York, NY 10010
Herbert M. Gardner 77,907(8) 1.7%
c/o Janney Montgomery Scott Inc.
26 Broadway
New York, NY 10004
Joseph S. Hellman 25,188(9) *
c/o Kronish Lieb Weiner & Hellman LLP
1114 Avenue of the Americas
New York, NY 10036-7798
(iii) All Directors and Executive Officers as a 2,782,923 (4)(5)(6)(7)(8)(9) 49.1%
Group (7 persons)
- ------------------
* Less than 1%.
3
</TABLE>
<PAGE>
(1) All information is as of May 15, 1999 and was determined in accordance
with Rule 13d-3 under the Securities Exchange Act of 1934, as amended,
based upon information furnished by the persons listed or contained in
filings made by them with the Securities and Exchange Commission.
(2) Represents shares of Common Stock registered in the name of OG Holding
Corporation Liquidation Trust. Mr. Lachenman, President of the Company's
wholly-owned subsidiary Optimum Group, Inc. ("Optimum") until May 31, 1999
and a Director of the Company, is the trustee of, and owns a 59.1%
interest in the property held by him as trustee of the OG Holding
Corporation Liquidation Trust.
(3) Includes 62,500 shares of Common Stock issuable upon exercise of
immediately exercisable warrants and 172,000 shares of Common Stock
pledged to Bear Stearns Securities Corp. as margin loan collateral in Mr.
Hussey's personal brokerage account with full recourse to Mr. Hussey.
(4) Includes 325,000 shares of Common Stock issuable upon exercise of
immediately exercisable options and 34,121 shares of Common Stock issuable
upon exercise of immediately exercisable warrants.
(5) Includes 325,000 shares of Common Stock issuable upon exercise of
immediately exercisable options and 34,121 shares of Common Stock issuable
upon exercise of immediately exercisable warrants. Also includes 4,750
shares held by Mr. Bernard's wife as to which Mr. Bernard disclaims
beneficial interest.
(6) Includes 325,000 shares of Common Stock issuable upon exercise of
immediately exercisable options and 34,121 shares of Common Stock issuable
upon exercise of immediately exercisable warrants. Also includes 141,063
shares of Common Stock pledged to the Company as security for loans from
the Company in the aggregate principal amount of $225,000. See "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS."
(7) Includes 6,773 shares of Common Stock issuable upon exercise of
immediately exercisable options and shares of Common Stock registered in
the name of OG Holding Corporation Liquidation Trust. Mr. Lachenman is the
trustee of, and owns a 59.1% interest in the property held by him as
trustee of, the OG Holding Corporation Liquidation Trust.
(8) Includes 37,500 shares of Common Stock issuable upon exercise of
immediately exercisable warrants, 17,188 shares of Common Stock issuable
upon exercise of immediately exercisable options, and 7,500 shares of
Common Stock held in an individual retirement account for the benefit of
Mr. Gardner. Excludes 9,500 shares of Common Stock held by Mr. Gardner's
wife, as to which Mr. Gardner disclaims any beneficial interest, and 2,500
shares of Common Stock owned by the Gardner Family Foundation, a
charitable organization, of which Mr. Gardner is President and a board
member.
(9) Includes 17,188 shares of Common Stock issuable upon exercise of
immediately exercisable options.
4
<PAGE>
ELECTION OF DIRECTORS
(Proposal No. 1)
A Board of seven Directors of the Company is to be elected at the
Annual Meeting, each to serve, subject to the provisions of the Company's
By-Laws, until the next Annual Meeting of Stockholders and until his successor
is duly elected and qualified. It is management's recommendation that the
accompanying form of Proxy be voted FOR the election as Director of the seven
persons named below, all of whom are currently Directors of the Company. The
Board of Directors believes that the nominees named below are willing to serve
as Directors. However, in the event that any of the nominees should become
unable or unwilling to serve as a Director, the Proxy will be voted for the
election of such person or persons as shall be designated by the Directors.
The following table sets forth information with respect to each
nominee for Director of the Company, all of whom are currently serving as
Directors of the Company:
<TABLE>
<S> <C> <C> <C>
Position with the Company and
Principal Occupation or Employment Director
Name Age During the Past Five Years Since
- -------------------- --- ---------------------------------- --------
Paul A. Amershadian 51 Executive Vice President-Marketing and 1996
Sales and Treasurer of the Company since
September 29, 1995 and of the Company's
respective predecessors, SPAR Promotion
& Marketing Services, Inc. ("Spar") and
R.G. Meadows, Inc. ("Meadows"), from 1986
to September 29, 1995; Secretary of the
Company from October 16, 1996 to September
16, 1997; Director of the
Company since May 1996.
John P. Benfield 48 Director, President and Chief Executive Officer 1995
of the Company since September 29, 1995;
Chairman of the Board of the Company since
October 16, 1996; Executive Vice President of
Operations of both Spar and
Meadows from 1988 to September
29, 1995.
Donald A. Bernard 66 Director, Executive Vice President and 1995
Chief Financial Officer of the Company
since September 29, 1995; Secretary of
the Company since September 16, 1997;
Executive Vice President of Finance of both Spar
and Meadows from 1990 to September 29, 1995.
5
<PAGE>
Position with the Company and
Principal Occupation or Employment Director
Name Age During the Past Five Years Since
- -------------------- --- ---------------------------------- --------
Herbert M. Gardner 59 Director of the Company since May 1, 1997; 1997
Senior Vice President of Janney Montgomery
Scott Inc., an investment banking firm, since
1978; Presently serves as Chairman of the Board
of Directors of Supreme Industries, Inc. and as a
director of Nu Horizons Electronics Corp.,
Transmedia Network, Inc., TGC Industries, Inc.,
and Hirsch International Corp.
Joseph S. Hellman 68 Director of the Company since May 1, 1997; 1997
Partner in the law firm of Kronish Lieb Weiner &
Hellman LLP during the past five years.
Thomas E. Lachenman 48 President of Optimum, a wholly-owned 1998
subsidiary of the Company, from March 31, 1998
until May 31, 1999, and of such company's
predecessor from 1963 through March 31, 1998;
Director of the Company since March 31, 1998.
Brian Murphy 42 President of U.S. Concepts, Inc. ("US 1998
Concepts"), a Delaware corporation that is a
wholly-owned subsidiary of the Company, since
December 29, 1998, and of such company's
predecessor from 1992 through December 29,
1998. Director of the Company since December
29, 1998.
</TABLE>
Thomas E. Lachenman was named a Director on March 31, 1998,
immediately following the closing under the Asset Purchase Agreement (the
"Optimum Agreement") relating to the acquisition of the assets of OG Holding
Corporation, formerly known as Optimum Group, Inc. (the "Optimum Acquisition").
The Optimum Agreement required the Company's existing Board of Directors to
nominate Mr. Lachenman in connection with the election of Directors at the
Company's first Annual Meeting of the Stockholders following the closing under
the Optimum Agreement.
Brian Murphy was named a Director on December 29, 1998,
immediately following the closing under the Asset Purchase Agreement (the "US
Concepts Agreement") relating to the acquisition of the assets of Murphy
Liquidating Corporation, formerly known as U.S. Concepts, Inc., a New York
corporation (the "US Concepts Acquisition"). The US Concepts Agreement requires
the Company to use its reasonable best efforts to nominate and elect Mr. Murphy
as a director of the Company for so long as Mr. Murphy remains an employee of US
Concepts or any affiliate of the Company.
6
<PAGE>
Meetings and Committees of the Board of Directors
The Board of Directors held six meetings during Fiscal 1999 and
acted by unanimous written consent on three occasions.
The Board of Directors has a standing audit committee and
compensation committee. Herbert M. Gardner and Joseph S. Hellman are the sole
members of both committees. The Company does not currently have a nominating
committee.
The audit committee reviews and reports to the Board of Directors
with respect to various auditing and accounting matters, including
recommendations to the Board of Directors as to the selection of the Company's
independent auditors, the scope of audit procedures, general accounting policy
matters and the performance of the Company's independent auditors. The audit
committee held two meetings during Fiscal 1999.
The compensation committee was formed to review and make
recommendations to the Board of Directors regarding all executive compensation
matters. The compensation committee held one meeting with respect to Fiscal
1999.
Compensation of Directors
As of April 1, 1998, each non-employee Director receives an annual
stipend equal to $10,000 per annum, a fee of $1,000 per Board meeting attended
and a fee of $500 per Committee meeting attended, and all Directors are
reimbursed for reasonable travel expenses incurred in connection with attending
Board meetings.
Additionally, under a "formula plan" provided for in the Company's
1992 Stock Option Plan, each of the Company's non-employee Directors is granted
an option to purchase up to 6,875 shares of Common Stock (as adjusted for the
Company's 25% stock dividend paid on or about June 14, 1998 to shareholders of
record on May 14, 1998) annually on each April 30 as long as he remains on the
Board of Directors. Each such option becomes exercisable as to 3,438 of the
shares covered thereby on the first anniversary of the date of grant and as to
the remaining 3,437 shares on the second anniversary of the date of grant.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
During Fiscal 1999, Herbert M. Gardner was a member of the
Company's Compensation Committee and was an officer of Janney Montgomery Scott
Inc., an investment banking firm that was retained to perform services for the
Company in connection with the Optimum Acquisition during Fiscal 1999 and that
continues to perform services for the Company during the fiscal year ending
March 31, 2000 ("Fiscal 2000"). Similarly, during Fiscal 1999, Joseph S. Hellman
was a member of the Company's Compensation Committee and was a member of Kronish
Lieb Weiner & Hellman LLP, a law firm that the Company retained as its general
counsel for Fiscal 1999 and Fiscal 2000.
7
<PAGE>
EXECUTIVE OFFICERS
John P. Benfield, Donald A. Bernard, Paul A. Amershadian and Brian
Murphy are the current executive officers of the Company and its subsidiaries.
Each of Messrs. Benfield, Bernard and Amershadian has an employment contract
with the Company for a term of office expiring on September 28, 2001. Mr. Murphy
has an employment contract with U.S. Concepts for a term of office expiring on
January 1, 2003. Thomas E. Lachenman was an executive officer of Optimum until
his retirement effective May 31, 1999 and is a party to an employment contract
with Optimum. Additional information regarding those individuals is provided
above in "Election of Directors" and below in "Executive Employment Contracts,
Termination of Employment and Change-in-Control Arrangements".
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid to the
Company's chief executive officer and to each of the other executive officers of
the Company whose compensation exceeded $100,000 during Fiscal 1999.
<TABLE>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C> <C> <C>
Annual Compensation Long-Term Compensation
------------------- ----------------------
Other Value of Securities
Annual Restricted Underlying All Other
Name and Fiscal Compen- Stock Options/ Compen-
Principal Position Year Salary($) Bonus($) sation($) Awards($) SARs(#) * sation($)
- ------------------ ---- --------- -------- ---------- --------- ------------ ---------
John P. Benfield 1999 $250,000 $0 - - - $8,000(3)
President and Chief Executive 1998 $240,000(1) $60,000 - - 187,500 $8,000(3)
Officer and Director 1997 $220,000(2) - - - 125,000 $3,950(3)
Donald A. Bernard 1999 $250,000 $0 - - - $8,000(3)
Executive Vice President and 1998 $240,000(1) $60,000 - - 187,500 $8,000(3)
Chief Financial Officer and 1997 $220,000(2) - - - 100,000 $3,950(3)
Director
Paul A. Amershadian 1999 $250,000 $0 - - - $8,000(3)
Executive Vice President - 1998 $240,000(1) $60,000 - - 187,500 $8,000(3)
Marketing and Sales and 1997 $220,000(2) - - - 100,000 $3,950(3)
Director
Thomas E. Lachenman 1999 $215,000 $11,875 - - 6,773(6) $8,000(3)
President - Optimum Group, Inc. 1998 $203,846(5) $33,000(5) - - - $8,000(5)
and Director(4) 1997 - - - - - -
Brian Murphy 1999 $200,000(8) - - - 42,500 -
President - U.S. Concepts, Inc. 1998 - - - - - -
and Director(7) 1997 - - - - - -
- ---------------------------
* Adjusted for the Company's 25% stock dividend paid on or about June 14,
1998 to shareholders of record on May 14, 1998.
(1) Represents annual base salary, adjusted in October 1997, under employment
contracts. Actual salary paid to the named individuals during Fiscal 1998
is as follows: Mr. Benfield - $230,000; Mr. Bernard - $230,000; Mr.
Amershadian - $230,000.
9
<PAGE>
(2) Represents annual base salary, adjusted in October 1996, under employment
contracts. Actual salary paid to the named individuals during Fiscal 1997
is as follows: Mr. Benfield - $210,000; Mr. Bernard - $210,000; Mr.
Amershadian - $210,000.
(3) Represents executive's share of Company's matching contribution to
Company's 401(k) Retirement Plan.
(4) Mr. Lachenman commenced employment, at an annual base salary of $222,480
pursuant to an employment contract, with the Company's wholly-owned
subsidiary Optimum on March 31, 1998 upon consummation of the Optimum
Acquisition. Mr. Lachenman retired as President of Optimum effective May
31, 1999.
(5) Represents respectively, annual base salary, bonus and 401(k) Retirement
Plan contribution paid by predecessor company of Optimum during Fiscal
1998.
(6) Represents portion of bonus granted during Fiscal 2000 with respect to
Fiscal 1999.
(7) Mr. Murphy commenced employment, at an annual base salary of $200,000
pursuant to an employment contract, with the Company's wholly-owned
subsidiary, U.S. Concepts, Inc. on December 29, 1998 upon consummation of
the US Concepts Acquisition.
(8) Represents annual base salary under employment contract. Actual salary
paid to Mr. Murphy during Fiscal 1998 was $50,000.
</TABLE>
Stock Options
The following tables set forth certain information concerning
stock options granted to and exercised by the individuals named in the Summary
Compensation Table during Fiscal 1999 and unexercised stock options held by such
individuals at the end of Fiscal 1999.
Option Grants in Fiscal 1999 *
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Potential Realizable Value
At Assumed Annual Rates
Of Stock Price Appreciation
Individual Grants For Option Term
----------------- -------------------------------
% of
Number of Total Options
Securities Granted to Exercise or
Underlying Employees in Base Price Expiration
Name Options Fiscal Year ($/Shares) Date
---------- ------------- ---------- ---------
5% ($) 10% ($)
------ -------
Brian Murphy 42,500(1) 28.1% $8.33(2) 12/28/03 201,836 320,161
- ------------------------
* Adjusted for the Company's 25% stock dividend paid on or about June 14, 1998 to shareholders of record on
May 14, 1998.
(1) The option is exercisable as to all shares commencing on December 29, 2000.
(2) The exercise price per share is equal to the fair market of the shares on the date of grant.
</TABLE>
10
<PAGE>
<TABLE>
Aggregated Option Exercises in Fiscal 1999 and FY-End Option Values *
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Fiscal Options at Fiscal
Year End (#) Year End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable (1)
- ---- --------------- ------------------ ------------- -----------------
John P. Benfield -- -- 317,454/104,167 1,049,802/361,999
Donald A. Bernard -- -- 317,454/104,167 1,049,802/361,999
Paul A. Amershadian -- -- 317,454/104,167 1,049,802/361,999
Brian Murphy -- -- 0/42,500 0/0
- ------------------------
* Adjusted for the Company's 25% stock dividend paid on or about June 14, 1998 to shareholders of record
on May 14, 1998.
(1) The value has been determined based on an average of the closing bid and ask price on March 31, 1999, the
last trading day of Fiscal 1999.
</TABLE>
11
<PAGE>
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Board of Directors believes that increasing the value of the Company
to its stockholders is the Board of Directors' most important objective and
should be the key measure of management performance. The Board of Directors also
believes that executive compensation should be objectively determined. For this
reason, the Compensation Committee, which is made up of Directors who are not
employees of the Company, is responsible for determining the compensation
packages of the Company's executives. The Compensation Committee also approves
the potential levels of contribution to the Company's 401(k) plan.
The Compensation Committee's role in determining the compensation of the
executives of the Company is to assure that the Company's compensation strategy
is aligned with the Board of Directors' overall objective and that executive
compensation is structured to provide fair, reasonable and competitive base
salary levels and the opportunity for the executives to earn incentive
compensation reflecting both the Company's and the individual's performance.
The compensation for Fiscal 1999 for the Company's Chief Executive Officer
and other executive officers consisted of base salary. Base salaries are
established by the employment agreements for each person within the executive
group, subject to annual adjustment by the Compensation Committee. Factors
considered in establishing salaries include the responsibilities of the
position, compensation of executives in companies of similar size or in the same
industry, external market conditions and financial performance of the Company.
In addition, the salaries reflect the unique qualifications of the Company's
executive officers, who serve in a collegial manner as the "Office of the CEO"
with respect to major issues facing the Company, who are directly responsible
for the success of the Company and who would be very difficult to replace.
Finally, during the fiscal year ended March 31, 1998, the Compensation Committee
engaged the services of an outside compensation consultant to obtain information
and advice about competitive levels of compensation and particular compensation
techniques of public companies of comparable size which are engaged in
comparable businesses, and to obtain recommendations regarding and assistance in
structuring bonuses and stock option awards for Fiscal 1999 and executive
compensation packages for Fiscal 1999.
Incentive compensation awards, payable in cash bonuses and stock options,
and salary increases may be awarded in recognition of the Company's financial
performance. Based upon the Company's fiscal performance during Fiscal 1999, the
Chief Executive Officer and other executive officers of the Company other than
Thomas E. Lachenman were not awarded any cash bonuses, stock options or salary
increases. Pursuant to his employment agreement with Optimum, Mr. Lachenman was
awarded a performance-based cash bonus of $11,875 and options to purchase 6,773
shares of Common Stock.
Herbert M. Gardner
Joseph S. Hellman
12
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Executive Employment Contracts, Termination of
Employment and Change-in-Control Arrangements
Pursuant to employment agreements, dated September 29, 1995 and amended
on May 2, 1997 and March 24, 1998, the Company employed Messrs. Benfield,
Bernard and Amershadian as President, Executive Vice President and Chief
Financial Officer, and Executive Vice President - Marketing and Sales,
respectively. Each agreement, as amended, currently provides for a base salary
of $240,000 and payment of such bonuses or additional compensation as the Board
of Directors may determine in its sole discretion. The term of each agreement
expires on September 28, 2001 (unless sooner terminated for cause, disability or
incapacity) and automatically renews for additional one-year terms unless
terminated by either party thereto upon at least sixty days notice before the
expiration of the then current term.
Pursuant to an employment agreement, dated March 31, 1998, the
Company's subsidiary, Optimum, employed Mr. Lachenman as President and Chief
Executive Officer. During Fiscal 1999, the agreement provided for a base salary
of $222,480 and, in the event that the pre-tax profits of Optimum equaled or
exceeded $2 million in Fiscal 1999, a bonus equal to 1.33% of the amount of such
pre-tax profits which did not exceed $3 million. Mr. Lachenman retired from his
positions of President and Chief Executive Officer of Optimum effective May 31,
1999.
Pursuant to an employment agreement, dated December 29, 1998, the
Company's subsidiary, US Concepts, employed Mr. Murphy as President and Chief
Executive Officer. The agreement currently provides for a base salary of
$200,000. In addition, in the event that the pre-tax earnings of US Concepts
during any calendar year (the "Bonus Period") commencing January 1, 1999 equal
or exceed the greater of (a) $600,000 or (b) 20% of the average outstanding
equity of US Concepts during such Bonus Period (calculated by averaging the
outstanding stockholder's equity of US Concepts as set forth on US Concepts'
balance sheet as of the last day of each calendar quarter during the Bonus
Period), US Concepts must, at Mr. Murphy's option, pay to Mr. Murphy and such
other officers and executives of US Concepts as Mr. Murphy determines a bonus
equal to an aggregate of 5% of the amount by which such pre-tax earnings exceed
the greater of the amounts specified in clauses (a) and (b). Mr. Murphy has the
right to allocate such bonus, if any, to and among himself and such other
officers and executives. The initial term of the agreement expires on January 1,
2003 (unless sooner terminated for cause) but the term of the agreement
automatically continues thereafter unless terminated by either party thereto
upon at least ninety days notice of termination effective on or after January 1,
2003.
Each employment agreement prohibits the executive officer that is a
party thereto from competing with the Company or inducing or attempting to
influence any employee of the Company or any subsidiary to terminate his
employment with the Company or any subsidiary during the term of the agreement
and for a period of two years after the termination of the officer's employment
with the Company, in the case of Messrs. Benfield, Bernard and Amershadian, and
18 months after the termination of the officer's employment with Optimum or any
of its affiliates, in the case of Mr. Lachenman, or U.S. Concepts or any of its
affiliates, in the case of Mr. Murphy. Each agreement also prohibits the
executive officer from disclosing certain confidential information of the
Company.
Finally, the employment agreements with each of Messrs. Benfield,
Bernard and Amershadian provide that if the officer's employment is terminated
due to (i) the sale or transfer of a majority of the Company's outstanding
capital stock, property or business assets, (ii) the consolidation or merger of
the Company into or with another entity where the Company is not the surviving
entity, or (iii) certain
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specified changes in the identity of the Board of Directors, the Company must
make a lump sum cash payment to the executive officer in a maximum amount equal
to two times the executive officer's then annual base salary.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 10, 1996, the Company loaned $200,000 to Paul A.
Amershadian, the Company's Executive Vice President-Marketing and Sales and a
Director. The loan bears interest at an annual rate of 10%. Pursuant to a Pledge
Agreement, Mr. Amershadian pledged to the Company 141,063 shares of the
Company's Common Stock owned by him (as adjusted for the Company's 25% stock
dividend paid on or about June 14, 1998 to shareholders of record on May 14,
1998) to secure his obligation in connection with the loan. On April 7, 1997,
the Company loaned an additional $25,000 to Mr. Amershadian with interest at an
annual rate of 10% and amended the Pledge Agreement to secure the additional
$25,000 loan as well as the original $200,000 loan to Mr. Amershadian. The
aggregate $225,000 loan is payable in full on April 7, 2001.
Joseph S. Hellman, a Director and nominee, is a member of Kronish Lieb
Weiner & Hellman LLP, a law firm that the Company retained as its general
counsel for Fiscal 1999 and Fiscal 2000. During Fiscal 1999, the Company
retained Mr. Hellman's son, James Hellman, to provide accounting services for
fees totaling approximately $76,500.
Herbert M. Gardner, a Director and nominee, is an officer of Janney
Montgomery Scott Inc., an investment banking firm that has been retained, other
than as participating underwriter in a syndicate, to perform services for the
Company during Fiscal 1999 and Fiscal 2000.
On March 31, 1998, Optimum, formerly known as OG Acquisition Corp., a
wholly-owned subsidiary of the Company, completed the acquisition of the assets
of OG Holding Corporation, formerly known as Optimum Group, Inc. The purchase
price for the Optimum Acquisition, which was paid to OG Holding Corporation,
consisted of (i) approximately $8.7 million in cash, (ii) a subordinated note of
the Company in the principal amount of $2.5 million, (iii) 565,385 shares of
Common Stock of the Company, and (iv) the payment or assumption by Optimum, of
approximately $2.0 million of the OG Holding Corporation's liabilities and debt.
Within the one-year period following the consummation of the Optimum
Acquisition, the assets of OG Holding Corporation were transferred to OG Holding
Corporation Liquidation Trust. Mr. Lachenman is the trustee of, and owns a 59.1%
interest in the property held by him as trustee of, the OG Holding Corporation
Liquidation Trust.
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COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and Directors and persons who
own more than 10% of a registered class of the Company's equity securities
(collectively, the "Reporting Persons") to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and to furnish the
Company with copies of these reports. To the Company's knowledge, based solely
on a review of the Forms 3, 4, and 5 submitted to the Company during and with
respect to Fiscal 1999, there are no known failures to file a required Form 3, 4
or 5 and no known late filings of a required Form 3, 4 or 5 during Fiscal 1999
by any person required to file such forms with respect to the Company pursuant
to Section 16 of the Exchange Act.
Comparison of Cumulative Total Returns
Performance Graphs for
INMARK ENTERPRISES, INC.
The following graph reflects a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of an
initial $100 investment on March 31, 1994 in the Company's Common Stock, the
Standard & Poor's 500 Stock Index and two peer group indexes consisting of those
public companies traded on an exchange and listed under the Standard Industry
Classification (S.I.C.) Code 7311 for Advertising, and other related S.I.C.
Codes. The peer group used in the Company's Proxy Statement for its 1998 Annual
Meeting of Shareholders (the "1998 Peer Group") is made up of Acxiom
Corporation, Advo, Inc., Concord EFS, Inc., Cendant Corporation, Dun &
Bradstreet Corporation, Grey Advertising Inc., Information Resources, Inc., PIA
Merchandising Services, Inc., Quick Reponses Services, Inc. and Valassis
Communications, Inc. The current peer group, which was selected by the Company
because it presents a more relevant comparison for the Company than the 1998
Peer Group, is made up of Ha Lo Industries, Inc., Cyrk, Inc., Equity Marketing,
Inc., Grey Advertising Inc., Catalina Marketing Corporation, Valassis
Communications, Inc., True North Communications, Inc., and Omnicon Group, Inc.
The comparisons in this table are required by the Securities and Exchange
Commission. The stock price performance shown on the graph is not intended to
forecast or be indicative of future price performance.
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[GRAPHIC OMITTED]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Measurement Period (Fiscal Year Covered)
----------------------------------------
3/31/94 3/31/95 3/31/96 3/31/97 3/31/98 3/31/99
------- ------- ------- ------- ------- -------
IMKE 100 31 67 146 215 168
S & P 500 100 112 145 170 247 289
Current Peer Group Index 100 114 185 205 384 600
1998 Peer Group Index 100 118 138 163 280 195
</TABLE>
16
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AMENDMENT TO THE CERTIFICATE OF INCORPORATION
OF THE COMPANY
(Proposal No. 2)
The Board of Directors has determined that to expand its sales and
marketing potential, the Company's name should reflect the Company's status as a
holding company for Inmark Services, Inc., Optimum, US Concepts and any other
subsidiary of the Company which services customers independently yet through a
unified approach. To achieve this result, in January 1999, the Board of
Directors approved an amendment to the Company's Certificate of Incorporation
changing the Company's name from Inmark Enterprises, Inc. to CoActive Marketing
Group, Inc. and voted to recommend that the stockholders of the Company approve
such amendment at the next Annual Meeting of Stockholders.
The Board of Directors is seeking stockholder approval of the amendment to
the Certificate to change the name of the Company from Inmark Enterprises, Inc.
to CoActive Marketing Group, Inc. Stockholder approval requires the affirmative
vote of the holders of a majority of the shares entitled to vote at the Annual
Meeting. The Board of Directors recommends a vote FOR the amendment to the
Certificate to change the name of the Company from Inmark Enterprises, Inc. to
CoActive Marketing Group, Inc. It is intended that shares represented by the
enclosed form of proxy will be voted in favor of such amendment to the
Certificate unless otherwise specified in such proxy.
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<PAGE>
AMENDMENT TO 1992 STOCK OPTION PLAN
(Proposal No. 3)
The Company's 1992 Stock Option Plan (such Plan, as amended prior to
the date hereof, the "1992 Plan") was approved by the Company's Board of
Directors and stockholders on April 30, 1992. Pursuant to the 1992 Plan, options
to purchase shares of Common Stock (the "Shares") may be granted to employees,
officers and directors of the Company and its subsidiaries, including
non-employee directors of the Company who are granted options under a "formula"
(the "Formula Options") which provides for automatic, non- discretionary grants
designed to permit the 1992 Plan to comply with certain exemptions from the
"short-swing profits" liability provisions of the Exchange Act.
The 1992 Plan originally permitted the grant of options to purchase an
aggregate of 275,000 Shares and placed no limitations upon the number of Shares
with respect to which options may be granted under the 1992 Plan to any single
participant in any single plan year. On April 25, 1995, the Board of Directors
authorized an amendment, which was approved by the Company's stockholders on
September 29, 1995, increasing the number of Shares reserved under the 1992 Plan
from 275,000 Shares to 900,000 Shares. On May 4, 1998, the Board of Directors
approved the issuance of a dividend to each stockholder of record on May 14,
1998 of one Share for every four Shares owned of record by such stockholder. In
connection with that dividend, the number of Shares reserved for issuance
pursuant to the 1992 Plan was adjusted to 1,125,000. On May 11, 1999, the Board
of Directors adopted, subject to stockholder approval, an amendment (the "Plan
Amendment") to the 1992 Plan, increasing the aggregate number of shares of
Common Stock authorized for issuance under the 1992 Plan from 1,125,000 to
1,500,000 and limiting the number of Shares with respect to which options may be
granted under the 1992 Plan to any single participant in any single plan year to
150,000. On such date, the Board of Directors also granted pursuant to the 1992
Plan, subject to stockholder approval of the Plan Amendment, options to purchase
an aggregate of 37,500 Shares to management of Optimum as payment for bonuses
payable pursuant to their employment contracts.
The Board of Directors has also established the 1997 Executive Officer
Stock Option Plan, pursuant to which non-qualified options to purchase 125,000
Shares were granted to each of Messrs. Benfield, Bernard and Amershadian,
subject to stockholder approval and ratification on a retroactive basis as set
forth in Proposal No. 4 of this Proxy Statement.
At June 1, 1999, there were 1,102,311 Shares reserved for issuance upon
the exercise of the outstanding options under the 1992 Plan (excluding the
options to purchase 37,500 Shares granted to Optimum management) and 22,681
Shares available for grants of options in the future. All of the options granted
to date have been granted at an exercise price equal to the fair market value of
the Shares on the date of grant, ranging in prices from $1.12 to $10.00.
The Board of Directors believes that the availability of a non-cash
employment compensation benefit in the form of stock option enables the Company
to compete in the marketplace for qualified personnel without having to deplete
its cash resources. Additionally, stock options create an incentive for such
personnel to remain in the employ of the Company and devote themselves to the
Company's success by providing them with an opportunity to acquire or increase
their pecuniary interest in the Company through equity ownership. In light of
the increase in the number of employees of the Company who are eligible to
18
<PAGE>
receive options under the 1992 Plan since it was last amended, the Board of
Directors believes that the proposed increase in the number of Shares available
under the 1992 Plan will provide the Company with the ability to retain and
attract qualified personnel, a significant factor in contributing to the
Company's anticipated growth.
In addition, the Board of Directors is proposing limiting the number of
Shares with respect to which options may be granted under the 1992 Plan to any
single participant in any single plan year to 150,000 in order for compensation
earned by participants under the 1992 Plan to be treated as "qualified
performance based compensation" under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"). Generally Section 162(m) limits a
corporation's deduction for compensation in excess of $1 million paid to certain
employees. Compensation treated as qualified performance based compensation is
not subject to the $1 million deduction limitation.
The key provisions of the 1992 Plan are as follows:
1. Number of Shares. The aggregate maximum number of Shares for which
options may be granted under the 1992 Plan is 1,125,000 Shares. If the Plan
Amendment is approved, the maximum number of Shares will be increased to
1,500,000 Shares. In each case, the maximum number of Shares is subject to
adjustment upon the occurrence of stock dividend, stock split, recapitalization
or certain other capital adjustments.
2. Eligibility. All Employees, including officers, of the Company and
its subsidiaries are eligible to receive options under the 1992 Plan.
Additionally non-employee directors receive Formula Options on a
non-discretionary basis as described above. At June 1, 1999, the Company and its
subsidiaries had 11 executive officers and 199 employees (excluding executive
officers) eligible to receive options under the 1992 Plan and three non-employee
directors entitled to receive Formula Options.
3. Option Grants. Except as to Formula Options, there is currently no
maximum number of Shares which may be subject to any one option granted under
the 1992 Plan or a limit on the number of options which may be granted to any
single optionee, except to the extent limitations are imposed under the Code
with respect to incentive stock options granted under the 1992 Plan. If the Plan
Amendment is approved, the 1992 Plan would limit the maximum number of shares of
Common Stock with respect to which options may be granted under the 1992 Plan to
any single participant in any single plan year to 150,000. With respect to
Formula Options, each non-employee director is granted an option to purchase
6,875 Shares on each April 30 during his term as a director. All Formula Options
are exercisable as to 3,438 Shares on the date of the grant and as to 3,347
Shares on the first anniversary of the date of grant.
4. Administration. The Board of Directors has the power to administer
the 1992 Plan and to designate a committee composed of two or more of its
non-employee directors to operate and administer the 1992 Plan in its stead (the
"Committee"). With respect to the Formula Options granted to non-employee
directors, the 1992 Plan must be administered by the Board of Directors. Except
with respect to Formula Options granted to non-employee directors, the Committee
has the full authority to direct the Company to grant options pursuant to the
1992 Plan and to (a) determine the optionees to whom, the times at which and the
price at which options shall be granted, (b) determine the type of option to be
granted and the number of shares subject thereto, and (c) approve the form and
terms and conditions of the option documents.
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<PAGE>
5. Term of 1992 Plan. The 1992 Plan provides that no option may
be granted under it after April 29, 2002.
6. Option Price. The option price per share for a non-qualified stock
option is determined by the Committee in its discretion but may not be less than
the par value per share. The option price for incentive options must be equal to
100% of the fair market value of the Common Stock on the date of grant;
provided, however, that the option price for a stock option granted to a
stockholder owning ten percent or more of the Common Stock of the Company may
not be less than 110% of the fair market value of the Common Stock on the date
of grant. On June 1, 1999, the closing bid and asked prices for the Common Stock
were $2.969 and $3.063, respectively.
7. Term of Options. Options granted under the 1992 Plan terminate on
the earlier to occur of: (a) the option expiration date specified in the option
document of grant, which may not exceed ten years from the date of grant, or
five years from the date of grant with respect to an incentive option granted to
a stockholder owning ten percent or more of the Common Stock of the Company; (b)
the expiration of three months from the date the optionee's employment or
service with the Company terminates due to disability or death; (c) the
expiration of one year from the date the optionee's employment or service with
the Company terminates due to disability or death; (d) the date upon which a
determination is made by the Committee that the employee has breached his
employment contract with the Company or has been engaged in any type of
disloyalty to the Company, including fraud, embezzlement, theft, commission of a
felony, disclosure of trade secrets or confidential information and other
similar acts; and (e) with respect to non-employee director Formula Options, the
date of a Change of Control (as defined in the 1992 Plan) and, with respect to
options granted to employees, the date fixed by the Board of Directors as an
accelerated expiration date in the event of a liquidation or dissolution of the
Company or a Change in Control.
8. Payment. An optionee may pay for option shares (a) in cash, (b) by
certified or cashier's check payable to the order of the Company or (c) by such
other mode as the Committee may approve. In addition, in the Committee's
discretion, payment may be made in whole or in part in Shares.
9. Option Contract. Each grant is set forth in a separate agreement
with the optionee and indicates whether the option is a non-qualified or
incentive option, and the terms and conditions of the option. No option may be
transferred under the 1992 Plan except by will or by the laws of descent and
distribution.
10. Provisions Relating to a "Change in Control." In the event of a
"Change in Control, " the Committee may take whatever action with respect to
outstanding options it deems necessary or desirable, including accelerating the
exercisability and the expiration date of the options. A "Change in Control"
will occur under the 1992 Plan upon requisite stockholder approval (or Board of
Directors approval, if stockholder approval is not required) of a plan of
liquidation or dissolution or the sale of substantially all of the assets of the
Company. Subject to certain exceptions, a "Change in Control" will also occur
upon requisite approval by the Company's and the other constituent corporation's
stockholders (or Board of Directors, if stockholder approval is not required) of
the merger or consolidation of the Company with or into such other constituent
corporation. In addition, a Change of Control will occur if certain entities,
persons or groups specified in the 1992 Plan have become beneficial owners of or
have obtained voting control over 25% of the Company's outstanding Shares or on
the first date upon which a majority of the Board of Directors consists of
persons who have been members of the Board of Directors for less than two
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<PAGE>
years, unless the nomination of each new director who was not a director at the
beginning of such period was approved by a vote of two-thirds of the directors
then still in office who were directors at the beginning of such period.
11. Amendment of the Option Contract and the 1992 Plan. Generally, the
Committee has the right to the amend an option document, subject to the
optionee's consent, if such amendment is not favorable to the Optionee. The
Board of Directors may amend the 1992 Plan from time to time as it deems
advisable; provided, however, that no amendment may be made which would change
the class of individuals eligible to receive an incentive stock option or
increase the number of Shares as to which options may be granted without
obtaining stockholder approval of such amendment within twelve months from the
date of such amendment. In addition, except in limited circumstances, amendments
to provisions of the 1992 Plan pertaining to Formula Options granted to
non-employee directors may not be made more than once every six months.
12. Federal Income Tax Consequences. The following discussion is
intended to briefly summarize the general principals of Federal income tax law
applicable to options granted under the 1992 Plan. A recipient of an incentive
stock option ("ISO") will not recognize taxable income, for regular tax
purposes, upon either the grant or the exercise of the ISO. The holder of the
ISO will recognize long-term capital gain or loss on a disposition of the Shares
acquired upon exercise of the ISO, provided the option holder does not dispose
of the Shares within two years from the date the ISO was granted or within one
year after the Shares were transferred to the option holder. Currently for
regular Federal Income tax purposes, long-term capital gain is taxed at a
maximum rate of 20%, while ordinary income may be subject to a maximum rate of
39.6% . If the option holder satisfies both the foregoing holding periods, then
the Company will not be allowed a deduction by reason of the grant or exercise
of the ISO.
As a general rule, if the option holder disposes of the Shares before
satisfying both holding period requirements (a "disqualifying disposition"), the
gain recognized by the option holder on the disqualifying disposition will be
taxed as ordinary income to the extent of the difference between (a) the lesser
of the fair market value of the Shares on the date of exercise or the amount
received for the Shares in the disqualifying disposition, and (b) the adjusted
basis of the Shares, and the Company will be entitled to deduction in that
amount. The gain (if any) in excess of the amount recognized as ordinary income
on a disqualifying disposition will be long-term or short term capital gain,
depending on the length of time the option holder held the Shares prior to the
disposition.
The amount by which the fair market value of the Shares at the time of
exercise exceeds the option price will be included in the computation of such
holder's "alternative minimum taxable income" in the year the option holder
exercises the ISO. If the option holder pays the alternative minimum tax with
respect to the exercise of the ISO, the amount of such tax paid will be allowed
as a credit against regular tax liability in subsequent years. The option
holder's basis in the Shares for purposes of the alternative minimum tax will be
adjusted when income is included in the alternative minimum taxable income.
A recipient of a non-qualified stock option will not recognize taxable
income at the time of grant and the Company will not be allowed a deduction by
reason of the grant. The holder of a non-qualified stock option will recognize
ordinary income in the taxable year in which the option holder exercises the
non-qualified stock option, in an amount equal to the excess of the fair market
value of the Shares received upon exercise at the time of the exercise of such
options over the exercise price of the option, and the Company
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<PAGE>
will be allowed a deduction in that amount. Upon the disposition of the Shares
subject to the option, an option holder will recognize long-term or short-term
capital gain or loss, depending upon the length of time the Shares were held
prior to the disposition, equal to the difference between the amount realized on
the disposition and the option holder's basis in the Shares subject to the
option (which basis ordinarily is the fair market value of the Shares subject to
the option on the date the option was exercise).
Adoption of the foregoing amendment to the 1992 Plan requires the
affirmative vote of the majority of the votes cast at the Annual Meeting by the
holders of Shares present in person or represented by proxy and entitled to vote
at the Annual Meeting. All of the directors of the Company have indicated their
intent to vote for the proposal. The Board of Directors recommends that
stockholders vote FOR the proposal to amend the 1992 Plan. It is intended that
shares represented by the enclosed form of proxy will be voted in favor of such
amendment to the 1992 Plan unless otherwise specified in such proxy.
APPROVAL AND RATIFICATION ON A RETROACTIVE BASIS
OF 1997 EXECUTIVE OFFICER STOCK OPTION PLAN
(Proposal No. 4)
On May 2, 1997, the Board of Directors granted incentive stock options
to purchase 125,000 Shares (as adjusted for a 5-for-4 stock dividend payable on
June 15, 1998) pursuant to the 1992 Plan to each of Paul A. Amershadian, John P.
Benfield and Donald A. Bernard, the executive officers of the Company, in
connection with the extension of the terms of their employment agreements. On
May 11, 1999, the Board of Directors, upon recommendation of the Compensation
Committee, established the 1997 Executive Officer Stock Option Plan (the "1997
Plan"), pursuant to which each of Messrs. Amershadian, Benfield and Bernard was
granted, with retroactive effect to May 2, 1997 and subject to stockholder
approval and ratification on a retroactive basis, non-qualified stock options to
purchase 125,000 Shares in exchange for the surrender of his incentive stock
options to purchase 125,000 Shares pursuant to the 1992 Plan.
The key provisions of the 1997 Plan are as follows:
1. Number of Shares. The aggregate maximum number of Shares for which
options may be granted under the 1997 Plan is 375,000 Shares, all of which have
been granted subject to stockholder approval and ratification on a retroactive
basis. The maximum number of Shares is subject to adjustment upon the occurrence
of stock dividend, stock split, recapitalization or certain other capital
adjustments.
2. Eligibility. Messrs. Amershadian, Benfield and Bernard, the
executive officers of the Company, are the sole persons eligible to receive
options under the 1997 Plan.
3. Administration. The Board of Directors has the power to administer
the 1997 Plan and to designate a committee to operate and administer the 1997
Plan in its stead.
4. Option Price. The option price per Share for each option granted
under the 1997 Plan is $4.00 per Share, which equals 100% of the fair market
value of the Common Stock on May 2, 1997, as
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adjusted for the 5-for-4 stock dividend payable on June 15, 1998. In comparison,
the closing price of the Common Stock on July 13, 1999 was $4.1875 and on May
11, 1999, the date on which the Board of Directors approved the exchange of the
options granted pursuant to the 1992 Plan for options granted pursuant to the
1997 Plan, was $2.9375.
5. Term of Options. The options granted under the 1997 Plan become
exercisable in three equal installments on May 1, 1998, May 1, 1999 and May 1,
2000. Options granted under the 1997 Plan terminate on the earlier to occur of:
(a) April 30, 2007; (b) the expiration of three months from the date the
optionee's employment with the Company terminates due to disability or death;
(c) the expiration of one year from the date the optionee's employment with the
Company terminates due to disability or death; (d) the date upon which a
determination is made by the committee designated to administer the 1997 Plan
that the employee has breached his employment contract with the Company or has
been engaged in any type of disloyalty to the Company, including fraud,
embezzlement, theft, commission of a felony, disclosure of trade secrets or
confidential information and other similar acts; and (e) the date fixed by the
Board of Directors as an accelerated expiration date in the event of a
liquidation or dissolution of the Company or a Change in Control.
6. Payment. An optionee may pay for option shares (a) in cash, (b) by
certified or cashier's check payable to the order of the Company, (c) by Shares
held by the optionee for at least one year or (d) any combination of the
foregoing.
7. Option Contract. Each grant is set forth in a separate agreement
with the optionee.
8. Transferability. No option may be transferred except by will or by
the laws of descent and distribution.
9. Provisions Relating to a Change in Control. In the event of a change
in control, the option will become immediately exercisable in full. In addition,
the committee designated to administer the 1997 Plan or the Board of Directors
may take whatever action with respect to outstanding options it deems necessary
or desirable, including accelerating the expiration date of the options.
10. Federal Income Tax Consequences. All of the options granted under
the 1997 Plan are non-qualified stock options. A recipient of a non-qualified
stock option will not recognize taxable income at the time of grant and the
Company will not be allowed a deduction by reason of the grant. The holder of a
non-qualified stock option will recognize ordinary income in the taxable year in
which the option holder exercises the non-qualified stock option, in an amount
equal to the excess of the fair market value of the Shares received upon
exercise at the time of the exercise of such options over the exercise price of
the option, and the Company will be allowed a deduction in that amount. Upon the
disposition of the Shares subject to the option, an option holder will recognize
long-term or short-term capital gain or loss, depending upon the length of time
the Shares were held prior to the disposition, equal to the difference between
the amount realized on the disposition and the option holder's basis in the
Shares subject to the option (which basis ordinarily is the fair market value of
the Shares subject to the option on the date the option was exercise).
Approval and ratification on a retroactive basis of the 1997 Plan
requires the affirmative vote of the majority of the votes cast at the Annual
Meeting by the holders of Shares present in person or represented by proxy and
entitled to vote at the Annual Meeting. All of the directors of the Company have
indicated
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their intent to vote for the proposal. The Board of Directors recommends that
stockholders vote FOR the proposal to approve the 1997 Plan. It is intended that
shares represented by the enclosed form of proxy will be voted to approve the
1997 Plan unless otherwise specified in such proxy.
RELATIONSHIP WITH INDEPENDENT AUDITORS
KPMG LLP was the Company's auditors for Fiscal 1999, and has been
selected to serve as the auditors for the Fiscal 2000. A representative of KPMG
LLP is expected to be present at the Annual Meeting to respond to appropriate
questions from stockholders and to make a statement if he desires to do so.
EXPENSES
The entire cost of preparing, assembling, printing and mailing this
Proxy Statement, the enclosed Proxy, Annual Report on Form 10-K and other
materials, and the cost of soliciting Proxies with respect to the Annual
Meeting, will be borne by the Company. The Company will request banks and
brokers to solicit their customers who beneficially own shares listed of record
in names of nominees, and will reimburse those banks and brokers for the
reasonable out-of-pocket expenses of such solicitations. The Company has
retained Morrow & Co., Inc. to solicit proxies for a fee of approximately $3,000
plus reimbursable expenses. The solicitation of Proxies by mail may be
supplemented by telephone and telegram by officers and other regular employees
of the Company, but no additional compensation will be paid to such individuals.
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present
proper proposals for inclusion in the Company's proxy statement and for
consideration at the next annual meeting of its stockholders by submitting their
proposals to the Company in a timely manner. To be included in the proxy
statement for the Company's Annual Meeting of Stockholders in 2000, stockholder
proposals must be received by the Company at its principal executive office no
later than March 31, 2000 and must otherwise comply with the requirements of
Rule 14a-8. In addition, the Company's By-laws establish an advance notice
procedure with regard to certain matters, including stockholder proposals not
included in the Company's proxy statement, to be brought before an annual
meeting of stockholders. In general, notice must be received by the Secretary of
the Company not less than 60 days nor more than 90 days prior to the anniversary
date of the immediately preceding annual meeting and must contain specified
information concerning the matters to be brought before such meeting and
concerning the stockholder proposing such matters. Therefore, to be presented at
the Company's Annual Meeting of Stockholders in 2000, such a proposal must be
received by the Company after June 16, 2000 but no later than July 16, 2000.
However, if the date of the Company's Annual Meeting of Stockholders in 2000 is
more than 30 days earlier or more than 30 days later than the date of the
immediately preceding Annual Meeting (i.e., prior to August 15, 2000 or after
October 14, 2000), then notice must be received not later than the close of
business on the earlier of the 10th day following the day on which notice of the
date of the meeting is mailed or public disclosure of the date of such meeting
is made. If a stockholder who has notified the Company of his intention to
present
24
<PAGE>
a proposal at an annual meeting does not appear or send a qualified
representative to present his proposal at such meeting, the Company need not
present the proposal for a vote at such meeting.
25
<PAGE>
All notices of proposals by stockholders, whether or not to be included in
the Company's proxy materials, should be sent to the Secretary of the Company at
415 Northern Boulevard, Great Neck, New York 11021.
By Order of the Board of Directors
Donald A. Bernard
Secretary
Great Neck, New York
July 29, 1999
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 31,
1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, BUT EXCLUDING EXHIBITS), IS
BEING MAILED WITH THIS PROXY STATEMENT. THE COMPANY WILL PROVIDE TO EACH PERSON
SOLICITED BY THIS PROXY STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON AND
UPON PAYMENT OF A FEE OF $3.00 PER EXHIBIT, A COPY OF ANY EXHIBIT TO THE
ENCLOSED ANNUAL REPORT ON FORM 10-K. A LIST OF EXHIBITS IS SET FORTH IN SECTION
IV OF THE ANNUAL REPORT ON FORM 10-K. REQUESTS FOR COPIES OF EXHIBITS SHOULD BE
DIRECTED TO DONALD A. BERNARD, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER, INMARK ENTERPRISES, INC., 415 NORTHERN BOULEVARD, GREAT NECK, NEW YORK
11021 (TELEPHONE: (516) 622-2800).
26
<PAGE>
APPENDIX
<PAGE>
INMARK ENTERPRISES, INC.
AMENDED AND RESTATED STOCK OPTION
THIS AMENDED AND RESTATED STOCK OPTION (the "Option") is
granted as of May 1, 1997 by INMARK ENTERPRISES, INC., a Delaware corporation
(the "Company"), to PAUL A. AMERSHADIAN (the "Optionee").
WITNESSETH:
1. Grant. The Company hereby grants to the Optionee an Option
to purchase on the terms and conditions hereinafter set forth all or any part of
an aggregate of 100,000 shares of the Company's Common Stock, par value $.001
(the "Option Shares") at the purchase price of $5.00 per share (the "Option
Price"). This Option is intended to be a "non-qualified stock option" and is not
intended to qualify as an "incentive stock option" within the meaning of Section
422A(b) of the Internal Revenue Code of 1986 (the "Code"). This Option is
granted pursuant to the Company's 1997 Executive Officer Stock Option Plan (the
"Plan").
2. Term. (a) General Rule. The Option granted hereunder shall
be exercisable(i) on or after May 1, 1998 as to 33,334 of the 100,000 Option
Shares, (ii) on or after May 1, 1999 as to an additional 33,333 of the 100,000
Option Shares and (iii) on or after May 1, 2000 as to an additional 33,333 of
the 100,000 Option Shares, but in no case later than the termination date. The
termination date of the Option with respect to the Option Shares exercisable
hereunder
<PAGE>
shall be at 5:00 p.m., New York, New York local time on April 30, 2007 unless
sooner terminated under subsections 2(b), (c) or (d) below.
(b) Termination of Employment. If the employment of
the Optionee by the Company and its Affiliates (as defined below) should
terminate for any reason other than death or disability (within the meaning of
subsection 22(e)(3) of the Code), then the Option shall terminate three (3)
months from the date such employment terminates, but in no event later than the
termination date set forth in subsection 2(a). In the event the Optionee's
employment with the Company and its Affiliates terminates by reason of the
Optionee's death or disability (within the meaning of subsection 22(e)(3) of the
Code), then the Option shall terminate one (1) year from the date such
employment terminates, but in no event later than the termination date set forth
in subsection 2(a). For purposes of this Option, the term "Affiliate" shall mean
a corporation which is a parent corporation or a subsidiary corporation with
respect to the Company within the meaning of subsection 425(e) or (f) of the
Code.
(c) Certain Transactions. In the event of a Change
in Control (as defined in the Plan), the committee designated by the Board of
Directors of the Company (the "Board") to operate and administer the Plan (the
"Committee"), or if no Committee has been designated, the Board, may take
whatever action it deems necessary or desirable with respect to this Option
including, without limitation, accelerating the expiration or termination date
of the Option to a date no earlier than thirty (30) days after notice of such
acceleration is given to the Optionee. In addition to the foregoing, in the
event of a Change of Control, this Option shall become immediately exercisable
in full.
2
<PAGE>
(d) Forfeiture. If the Committee (or if no Committee
has been designated, the Board) makes a finding, after full consideration of the
facts, that the Optionee has breached his employment contract with the Company
or has been engaged in disloyalty to the Company or to an Affiliate, including,
without limitation, fraud, embezzlement, theft, commission of a felony, proven
dishonesty or disloyalty in the course of his employment or service, or has
disclosed trade secrets or confidential information of the Company or an
Affiliate, then in addition to immediate termination of the Option, the Optionee
shall forfeit all Option Shares for any exercised portion of the Option for
which the Company has not yet delivered the share certificates to the Optionee
upon refund by the Company of the Option Price paid by the Optionee. Further,
upon any purported exercise of this Option, the Board of Directors may withhold
delivery of share certificates pending the resolution of an inquiry that could
lead to a finding resulting in a forfeiture.
3. Transfers. This Option is not transferable by the Optionee
otherwise than by will or pursuant to the laws of descent and distribution in
the event of the Optionee's death, in which event the Option may be exercised by
the heirs or legal representatives of the Optionee. The Option may be exercised
during the lifetime of the Optionee only by the Optionee. Any attempt at
assignment, transfer, pledge or disposition of the Option contrary to the
provisions hereof or the levy of any execution, attachment or similar process
upon the Option shall be null and void and without effect. Any exercise of the
Option by a person other than the Optionee shall be accompanied by appropriate
proofs of the right of such person to exercise the Option.
4. Method of Exercise and Payment. When exercisable under
Section 2, the Option may be exercised by written notice, pursuant to Section 8,
to the Company's Treasurer
3
<PAGE>
specifying the number of Option Shares to be purchased and, unless the Option
Shares are covered by a then current registration statement or a Notification
under Regulation A under the Securities Act of 1933 (the "Act") and current
registrations under all applicable state securities laws, containing the
Optionee's acknowledgment, in form and substance satisfactory to the Company,
that the Optionee:
(a) is purchasing such Option Shares for investment
and not for distribution or resale (other than a distribution or resale which,
in the opinion of counsel satisfactory to the Company, may be made without
violating the registration provisions of the Act),
(b) has been advised and understands that (i) the
Option Shares have not been registered under the Act and are "restricted
securities" within the meaning of rule 144 under the Act and are subject to
restrictions on transfer and (ii) the Company is under no obligation to register
the Option Shares under the Act or to take any action which would make available
to the Optionee any exemption from such registration,
(c) has been advised and understands that such
Option Shares may not be transferred without compliance with all applicable
federal and state securities laws, and
(d) has been advised that an appropriate legend
referring to the foregoing restrictions on transfer may be endorsed on the
certificates representing the Option Shares. The notice shall be accompanied by
payment of the aggregate Option Price of the Option Shares being purchased (a)
in cash, (b) by certified check payable to the order of the Company, (c) by
shares of Common Stock of the Company held by the Optionee for at least one year
or (d) by a combination of the foregoing. Such exercise shall be effective upon
the actual receipt by the
4
<PAGE>
Company's Treasurer of such written notice and payment. If payment is made in
whole or in part in shares of the Common Stock, if so permitted by the Committee
(or if no Committee has been designated, the Board), then the Optionee shall
deliver to the Company certificates registered in the name of such Optionee
representing shares of Common Stock, legally and beneficially owned by such
Optionee, free of all liens, claims and encumbrances of every kind and having a
fair market value on the date of delivery that is not greater than the Option
Price of the Option Shares with respect to which such Option is to be exercised,
accompanied by stock powers relating to such certificates duly endorsed in blank
by the Optionee. Notwithstanding the foregoing, if the Company determines that
it is advisable to delay issuance of Option Shares pending (A) registration
under federal or state securities laws, or (B) receipt of an opinion
satisfactory to the Company that an appropriate exemption from registration is
available, the Board of Directors may refuse to permit the exercise of this
Option until either such event has occurred.
5. Adjustments or Changes in Capitalization. In the event
that, prior to the delivery by the Company of all of the Option Shares in
respect of which the Option is granted, there shall be a stock dividend, stock
split, recapitalization or other change in the number or class of issued and
outstanding equity securities of the Company resulting from a subdivision or
consolidation of the Company's Common Stock and/or other outstanding equity
security or a recapitalization or other capital adjustment affecting the
Company's Common Stock or an equity security of the Company which is effected
without receipt of consideration by the Company, the remaining number of Option
Shares (or class of shares) subject to the Option and the Option Price therefor
shall be adjusted in a manner determined by the Board of Directors so that the
adjusted number of Option Shares (or class of shares) and the adjusted Option
Price shall be the substantial
5
<PAGE>
equivalent of the remaining number of Option Shares subject to the Option and
Option Price thereof prior to such change. For purposes of this Section 5, no
adjustment shall be made as a result of the issuance of the Company's Common
Stock upon the conversion of other securities of the Company which are
convertible into such Stock.
6. Legal Requirements and Purchase for Investment. Unless the
Option Shares have been registered under the Act, the Optionee's right to
exercise this Option may be conditioned upon the Optionee's delivery of his
written representation to the Company that the Option Shares are being acquired
by him for his own investment and not with a view to resale or distribution.
Notwithstanding Section 4, if:
(a) the listing, registration, or qualification of
the Option Shares upon any securities exchange or under any federal or state
law, or
(b) the consent or approval of any governmental
regulatory body is necessary as a condition of or in connection with the
purchase of such Option Shares, the Company may defer exercise of this Option
unless and until such listing, registration, qualification, consent or approval
shall have been effected or obtained. If registration is considered unnecessary
by the Company or its counsel, the Company may permit exercise and cause a
legend to be placed on the Option Shares being issued calling attention to the
fact that they have been acquired for investment and have not been registered.
7. Administration. All questions of interpretation and
application of this Option shall be determined by the Committee (or if no
Committee has been designated, the Board), whose determination shall be final,
binding and conclusive, subject to the express provisions of the Plan.
6
<PAGE>
8. Notices. Any notice to be given to the Company shall be
addressed to the Treasurer of the Company at its principal executive office, and
any notice to be given to the Optionee shall be addressed to the Optionee at the
address then appearing on the personal records of the Company or the Affiliate
of the Company by which he is employed, or at such other address as either party
hereafter may designate in writing to the other. Any such notice shall be deemed
to have been duly given when deposited in the United States mail, addressed as
aforesaid, registered or certified mail, and with proper postage and
registration or certification fees prepaid.
9. No Continued Employment. Neither the grant of this Option
nor anything herein contained shall be construed to imply or to constitute (a)
evidence of any agreement, express or implied, on the part of the Company or an
Affiliate to retain the Optionee in the employ of the Company or any Affiliate
or (b) a limitation on the right of the Company or an Affiliate to terminate the
Optionee's employment, services, responsibilities, duties or authority to
represent the Company or any Affiliate at any time for any reason whatsoever.
10. Withholding of Taxes. Whenever the Company proposes or is
required to deliver or transfer Option Shares in connection with the exercise of
this Option, the Company shall have the right to (a) require the Optionee to
remit to the Company an amount sufficient to satisfy any federal, state and/or
local withholding tax requirements prior to the delivery or transfer of any
certificate or certificates for such Option Shares or (b) take whatever action
it deems necessary to protect its interests with respect to tax liabilities,
including, without limitation, withholding a portion of the Option Shares
otherwise deliverable pursuant to exercise of the Option.
7
<PAGE>
11. Entire Agreement. This Option contains the entire
understanding between the Company and the Optionee with respect to the grant of
the Option to the Optionee, and supersedes all prior and contemporaneous
agreements and understandings, inducements or conditions, express or implied,
oral or written (including, without limitation, that certain Incentive Stock
Option Agreement, dated as of May 1, 1997, by and between the Company and the
Optionee), except as herein expressly contained.
IN WITNESS WHEREOF, the Company has granted this Option as of
the day and year first above written.
INMARK ENTERPRISES, INC.
By: __________________________
Name:
Title:
ACCEPTED BY:
8
<PAGE>
INMARK ENTERPRISES, INC.
AMENDED AND RESTATED STOCK OPTION
THIS AMENDED AND RESTATED STOCK OPTION (the "Option") is
granted as of May 1, 1997 by INMARK ENTERPRISES, INC., a Delaware corporation
(the "Company"), to JOHN P. BENFIELD (the "Optionee").
WITNESSETH:
1. Grant. The Company hereby grants to the Optionee an Option
to purchase on the terms and conditions hereinafter set forth all or any part of
an aggregate of 100,000 shares of the Company's Common Stock, par value $.001
(the "Option Shares") at the purchase price of $5.00 per share (the "Option
Price"). This Option is intended to be a "non-qualified stock option" and is not
intended to qualify as an "incentive stock option" within the meaning of Section
422A(b) of the Internal Revenue Code of 1986 (the "Code"). This Option is
granted pursuant to the Company's 1997 Executive Officer Stock Option Plan (the
"Plan").
2. Term.
(a) General Rule. The Option granted hereunder shall
be exercisable (i) on or after May 1, 1998 as to 33,334 of the 100,000 Option
Shares, (ii) on or after May 1, 1999 as to an additional 33,333 of the 100,000
Option Shares and (iii) on or after May 1, 2000 as to an additional 33,333 of
the 100,000 Option Shares, but in no case later than the termination date. The
termination date of the Option with respect to the Option Shares exercisable
hereunder
1
<PAGE>
shall be at 5:00 p.m., New York, New York local time on April 30, 2007 unless
sooner terminated under subsections 2(b), (c) or (d) below.
(b) Termination of Employment. If the employment of
the Optionee by the Company and its Affiliates (as defined below) should
terminate for any reason other than death or disability (within the meaning of
subsection 22(e)(3) of the Code), then the Option shall terminate three (3)
months from the date such employment terminates, but in no event later than the
termination date set forth in subsection 2(a). In the event the Optionee's
employment with the Company and its Affiliates terminates by reason of the
Optionee's death or disability (within the meaning of subsection 22(e)(3) of the
Code), then the Option shall terminate one (1) year from the date such
employment terminates, but in no event later than the termination date set forth
in subsection 2(a). For purposes of this Option, the term "Affiliate" shall mean
a corporation which is a parent corporation or a subsidiary corporation with
respect to the Company within the meaning of subsection 425(e) or (f) of the
Code.
(c) Certain Transactions. In the event of a Change
in Control (as defined in the Plan), the committee designated by the Board of
Directors of the Company (the "Board") to operate and administer the Plan (the
"Committee"), or if no Committee has been designated, the Board, may take
whatever action it deems necessary or desirable with respect to this Option
including, without limitation, accelerating the expiration or termination date
of the Option to a date no earlier than thirty (30) days after notice of such
acceleration is given to the Optionee. In addition to the foregoing, in the
event of a Change of Control, this Option shall become immediately exercisable
in full.
2
<PAGE>
(d) Forfeiture. If the Committee (or if no Committee
has been designated, the Board) makes a finding, after full consideration of the
facts, that the Optionee has breached his employment contract with the Company
or has been engaged in disloyalty to the Company or to an Affiliate, including,
without limitation, fraud, embezzlement, theft, commission of a felony, proven
dishonesty or disloyalty in the course of his employment or service, or has
disclosed trade secrets or confidential information of the Company or an
Affiliate, then in addition to immediate termination of the Option, the Optionee
shall forfeit all Option Shares for any exercised portion of the Option for
which the Company has not yet delivered the share certificates to the Optionee
upon refund by the Company of the Option Price paid by the Optionee. Further,
upon any purported exercise of this Option, the Board of Directors may withhold
delivery of share certificates pending the resolution of an inquiry that could
lead to a finding resulting in a forfeiture.
3. Transfers. This Option is not transferable by the Optionee
otherwise than by will or pursuant to the laws of descent and distribution in
the event of the Optionee's death, in which event the Option may be exercised by
the heirs or legal representatives of the Optionee. The Option may be exercised
during the lifetime of the Optionee only by the Optionee. Any attempt at
assignment, transfer, pledge or disposition of the Option contrary to the
provisions hereof or the levy of any execution, attachment or similar process
upon the Option shall be null and void and without effect. Any exercise of the
Option by a person other than the Optionee shall be accompanied by appropriate
proofs of the right of such person to exercise the Option.
4. Method of Exercise and Payment. When exercisable under
Section 2, the Option may be exercised by written notice, pursuant to Section 8,
to the Company's Treasurer
3
<PAGE>
specifying the number of Option Shares to be purchased and, unless the Option
Shares are covered by a then current registration statement or a Notification
under Regulation A under the Securities Act of 1933 (the "Act") and current
registrations under all applicable state securities laws, containing the
Optionee's acknowledgment, in form and substance satisfactory to the Company,
that the Optionee:
(a) is purchasing such Option Shares for investment
and not for distribution or resale (other than a distribution or resale which,
in the opinion of counsel satisfactory to the Company, may be made without
violating the registration provisions of the Act),
(b) has been advised and understands that (i) the
Option Shares have not been registered under the Act and are "restricted
securities" within the meaning of rule 144 under the Act and are subject to
restrictions on transfer and (ii) the Company is under no obligation to register
the Option Shares under the Act or to take any action which would make available
to the Optionee any exemption from such registration,
(c) has been advised and understands that such
Option Shares may not be transferred without compliance with all applicable
federal and state securities laws, and
(d) has been advised that an appropriate legend
referring to the foregoing restrictions on transfer may be endorsed on the
certificates representing the Option Shares. The notice shall be accompanied by
payment of the aggregate Option Price of the Option Shares being purchased (a)
in cash, (b) by certified check payable to the order of the Company, (c) by
shares of Common Stock of the Company held by the Optionee for at least one year
or (d) by a combination of the foregoing. Such exercise shall be effective upon
the actual receipt by the
4
<PAGE>
Company's Treasurer of such written notice and payment. If payment is made in
whole or in part in shares of the Common Stock, if so permitted by the Committee
(or if no Committee has been designated, the Board), then the Optionee shall
deliver to the Company certificates registered in the name of such Optionee
representing shares of Common Stock, legally and beneficially owned by such
Optionee, free of all liens, claims and encumbrances of every kind and having a
fair market value on the date of delivery that is not greater than the Option
Price of the Option Shares with respect to which such Option is to be exercised,
accompanied by stock powers relating to such certificates duly endorsed in blank
by the Optionee. Notwithstanding the foregoing, if the Company determines that
it is advisable to delay issuance of Option Shares pending (A) registration
under federal or state securities laws, or (B) receipt of an opinion
satisfactory to the Company that an appropriate exemption from registration is
available, the Board of Directors may refuse to permit the exercise of this
Option until either such event has occurred.
5. Adjustments or Changes in Capitalization. In the event
that, prior to the delivery by the Company of all of the Option Shares in
respect of which the Option is granted, there shall be a stock dividend, stock
split, recapitalization or other change in the number or class of issued and
outstanding equity securities of the Company resulting from a subdivision or
consolidation of the Company's Common Stock and/or other outstanding equity
security or a recapitalization or other capital adjustment affecting the
Company's Common Stock or an equity security of the Company which is effected
without receipt of consideration by the Company, the remaining number of Option
Shares (or class of shares) subject to the Option and the Option Price therefor
shall be adjusted in a manner determined by the Board of Directors so that the
adjusted number of Option Shares (or class of shares) and the adjusted Option
Price shall be the substantial
5
<PAGE>
equivalent of the remaining number of Option Shares subject to the Option and
Option Price thereof prior to such change. For purposes of this Section 5, no
adjustment shall be made as a result of the issuance of the Company's Common
Stock upon the conversion of other securities of the Company which are
convertible into such Stock.
6. Legal Requirements and Purchase for Investment. Unless the
Option Shares have been registered under the Act, the Optionee's right to
exercise this Option may be conditioned upon the Optionee's delivery of his
written representation to the Company that the Option Shares are being acquired
by him for his own investment and not with a view to resale or distribution.
Notwithstanding Section 4, if:
(a) the listing, registration, or qualification of
the Option Shares upon any securities exchange or under any federal or state
law, or
(b) the consent or approval of any governmental
regulatory body is necessary as a condition of or in connection with the
purchase of such Option Shares, the Company may defer exercise of this Option
unless and until such listing, registration, qualification, consent or approval
shall have been effected or obtained. If registration is considered unnecessary
by the Company or its counsel, the Company may permit exercise and cause a
legend to be placed on the Option Shares being issued calling attention to the
fact that they have been acquired for investment and have not been registered.
7. Administration. All questions of interpretation and
application of this Option shall be determined by the Committee (or if no
Committee has been designated, the Board), whose determination shall be final,
binding and conclusive, subject to the express provisions of the Plan.
6
<PAGE>
8. Notices. Any notice to be given to the Company shall be
addressed to the Treasurer of the Company at its principal executive office, and
any notice to be given to the Optionee shall be addressed to the Optionee at the
address then appearing on the personal records of the Company or the Affiliate
of the Company by which he is employed, or at such other address as either party
hereafter may designate in writing to the other. Any such notice shall be deemed
to have been duly given when deposited in the United States mail, addressed as
aforesaid, registered or certified mail, and with proper postage and
registration or certification fees prepaid.
9. No Continued Employment. Neither the grant of this Option
nor anything herein contained shall be construed to imply or to constitute (a)
evidence of any agreement, express or implied, on the part of the Company or an
Affiliate to retain the Optionee in the employ of the Company or any Affiliate
or (b) a limitation on the right of the Company or an Affiliate to terminate the
Optionee's employment, services, responsibilities, duties or authority to
represent the Company or any Affiliate at any time for any reason whatsoever.
10. Withholding of Taxes. Whenever the Company proposes or is
required to deliver or transfer Option Shares in connection with the exercise of
this Option, the Company shall have the right to (a) require the Optionee to
remit to the Company an amount sufficient to satisfy any federal, state and/or
local withholding tax requirements prior to the delivery or transfer of any
certificate or certificates for such Option Shares or (b) take whatever action
it deems necessary to protect its interests with respect to tax liabilities,
including, without limitation, withholding a portion of the Option Shares
otherwise deliverable pursuant to exercise of the Option.
7
<PAGE>
11. Entire Agreement. This Option contains the entire
understanding between the Company and the Optionee with respect to the grant of
the Option to the Optionee, and supersedes all prior and contemporaneous
agreements and understandings, inducements or conditions, express or implied,
oral or written (including, without limitation, that certain Incentive Stock
Option Agreement, dated as of May 1, 1997, by and between the Company and the
Optionee), except as herein expressly contained.
IN WITNESS WHEREOF, the Company has granted this Option as of
the day and year first above written.
INMARK ENTERPRISES, INC.
By: __________________________
Name:
Title:
ACCEPTED BY:
8
<PAGE>
INMARK ENTERPRISES, INC.
AMENDED AND RESTATED STOCK OPTION
THIS AMENDED AND RESTATED STOCK OPTION (the "Option") is
granted as of May 1, 1997 by INMARK ENTERPRISES, INC., a Delaware corporation
(the "Company"), to DONALD A. BERNARD (the "Optionee").
WITNESSETH:
1. Grant. The Company hereby grants to the Optionee an Option
to purchase on the terms and conditions hereinafter set forth all or any part of
an aggregate of 100,000 shares of the Company's Common Stock, par value $.001
(the "Option Shares") at the purchase price of $5.00 per share (the "Option
Price"). This Option is intended to be a "non-qualified stock option" and is not
intended to qualify as an "incentive stock option" within the meaning of Section
422A(b) of the Internal Revenue Code of 1986 (the "Code"). This Option is
granted pursuant to the Company's 1997 Executive Officer Stock Option Plan (the
"Plan").
2. Term.
(a) General Rule. The Option granted hereunder shall
be exercisable (i) on or after May 1, 1998 as to 33,334 of the 100,000 Option
Shares, (ii) on or after May 1, 1999 as to an additional 33,333 of the 100,000
Option Shares and (iii) on or after May 1, 2000 as to an additional 33,333 of
the 100,000 Option Shares, but in no case later than the termination date. The
termination date of the Option with respect to the Option Shares exercisable
hereunder
1
<PAGE>
shall be at 5:00 p.m., New York, New York local time on April 30, 2007 unless
sooner terminated under subsections 2(b), (c) or (d) below.
(b) Termination of Employment. If the employment of
the Optionee by the Company and its Affiliates (as defined below) should
terminate for any reason other than death or disability (within the meaning of
subsection 22(e)(3) of the Code), then the Option shall terminate three (3)
months from the date such employment terminates, but in no event later than the
termination date set forth in subsection 2(a). In the event the Optionee's
employment with the Company and its Affiliates terminates by reason of the
Optionee's death or disability (within the meaning of subsection 22(e)(3) of the
Code), then the Option shall terminate one (1) year from the date such
employment terminates, but in no event later than the termination date set forth
in subsection 2(a). For purposes of this Option, the term "Affiliate" shall mean
a corporation which is a parent corporation or a subsidiary corporation with
respect to the Company within the meaning of subsection 425(e) or (f) of the
Code.
(c) Certain Transactions. In the event of a Change
in Control (as defined in the Plan), the committee designated by the Board of
Directors of the Company (the "Board") to operate and administer the Plan (the
"Committee"), or if no Committee has been designated, the Board, may take
whatever action it deems necessary or desirable with respect to this Option
including, without limitation, accelerating the expiration or termination date
of the Option to a date no earlier than thirty (30) days after notice of such
acceleration is given to the Optionee. In addition to the foregoing, in the
event of a Change of Control, this Option shall become immediately exercisable
in full.
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(d) Forfeiture. If the Committee (or if no Committee
has been designated, the Board) makes a finding, after full consideration of the
facts, that the Optionee has breached his employment contract with the Company
or has been engaged in disloyalty to the Company or to an Affiliate, including,
without limitation, fraud, embezzlement, theft, commission of a felony, proven
dishonesty or disloyalty in the course of his employment or service, or has
disclosed trade secrets or confidential information of the Company or an
Affiliate, then in addition to immediate termination of the Option, the Optionee
shall forfeit all Option Shares for any exercised portion of the Option for
which the Company has not yet delivered the share certificates to the Optionee
upon refund by the Company of the Option Price paid by the Optionee. Further,
upon any purported exercise of this Option, the Board of Directors may withhold
delivery of share certificates pending the resolution of an inquiry that could
lead to a finding resulting in a forfeiture.
3. Transfers. This Option is not transferable by the Optionee
otherwise than by will or pursuant to the laws of descent and distribution in
the event of the Optionee's death, in which event the Option may be exercised by
the heirs or legal representatives of the Optionee. The Option may be exercised
during the lifetime of the Optionee only by the Optionee. Any attempt at
assignment, transfer, pledge or disposition of the Option contrary to the
provisions hereof or the levy of any execution, attachment or similar process
upon the Option shall be null and void and without effect. Any exercise of the
Option by a person other than the Optionee shall be accompanied by appropriate
proofs of the right of such person to exercise the Option.
4. Method of Exercise and Payment. When exercisable under
Section 2, the Option may be exercised by written notice, pursuant to Section 8,
to the Company's Treasurer
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specifying the number of Option Shares to be purchased and, unless the Option
Shares are covered by a then current registration statement or a Notification
under Regulation A under the Securities Act of 1933 (the "Act") and current
registrations under all applicable state securities laws, containing the
Optionee's acknowledgment, in form and substance satisfactory to the Company,
that the Optionee:
(a) is purchasing such Option Shares for investment
and not for distribution or resale (other than a distribution or resale which,
in the opinion of counsel satisfactory to the Company, may be made without
violating the registration provisions of the Act),
(b) has been advised and understands that (i) the
Option Shares have not been registered under the Act and are "restricted
securities" within the meaning of rule 144 under the Act and are subject to
restrictions on transfer and (ii) the Company is under no obligation to register
the Option Shares under the Act or to take any action which would make available
to the Optionee any exemption from such registration,
(c) has been advised and understands that such
Option Shares may not be transferred without compliance with all applicable
federal and state securities laws, and
(d) has been advised that an appropriate legend
referring to the foregoing restrictions on transfer may be endorsed on the
certificates representing the Option Shares. The notice shall be accompanied by
payment of the aggregate Option Price of the Option Shares being purchased (a)
in cash, (b) by certified check payable to the order of the Company, (c) by
shares of Common Stock of the Company held by the Optionee for at least one year
or (d) by a combination of the foregoing. Such exercise shall be effective upon
the actual receipt by the
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Company's Treasurer of such written notice and payment. If payment is made in
whole or in part in shares of the Common Stock, if so permitted by the Committee
(or if no Committee has been designated, the Board), then the Optionee shall
deliver to the Company certificates registered in the name of such Optionee
representing shares of Common Stock, legally and beneficially owned by such
Optionee, free of all liens, claims and encumbrances of every kind and having a
fair market value on the date of delivery that is not greater than the Option
Price of the Option Shares with respect to which such Option is to be exercised,
accompanied by stock powers relating to such certificates duly endorsed in blank
by the Optionee. Notwithstanding the foregoing, if the Company determines that
it is advisable to delay issuance of Option Shares pending (A) registration
under federal or state securities laws, or (B) receipt of an opinion
satisfactory to the Company that an appropriate exemption from registration is
available, the Board of Directors may refuse to permit the exercise of this
Option until either such event has occurred.
5. Adjustments or Changes in Capitalization. In the event
that, prior to the delivery by the Company of all of the Option Shares in
respect of which the Option is granted, there shall be a stock dividend, stock
split, recapitalization or other change in the number or class of issued and
outstanding equity securities of the Company resulting from a subdivision or
consolidation of the Company's Common Stock and/or other outstanding equity
security or a recapitalization or other capital adjustment affecting the
Company's Common Stock or an equity security of the Company which is effected
without receipt of consideration by the Company, the remaining number of Option
Shares (or class of shares) subject to the Option and the Option Price therefor
shall be adjusted in a manner determined by the Board of Directors so that the
adjusted number of Option Shares (or class of shares) and the adjusted Option
Price shall be the substantial
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equivalent of the remaining number of Option Shares subject to the Option and
Option Price thereof prior to such change. For purposes of this Section 5, no
adjustment shall be made as a result of the issuance of the Company's Common
Stock upon the conversion of other securities of the Company which are
convertible into such Stock.
6. Legal Requirements and Purchase for Investment. Unless the
Option Shares have been registered under the Act, the Optionee's right to
exercise this Option may be conditioned upon the Optionee's delivery of his
written representation to the Company that the Option Shares are being acquired
by him for his own investment and not with a view to resale or distribution.
Notwithstanding Section 4, if:
(a) the listing, registration, or qualification of
the Option Shares upon any securities exchange or under any federal or state
law, or
(b) the consent or approval of any governmental
regulatory body is necessary as a condition of or in connection with the
purchase of such Option Shares, the Company may defer exercise of this Option
unless and until such listing, registration, qualification, consent or approval
shall have been effected or obtained. If registration is considered unnecessary
by the Company or its counsel, the Company may permit exercise and cause a
legend to be placed on the Option Shares being issued calling attention to the
fact that they have been acquired for investment and have not been registered.
7. Administration. All questions of interpretation and
application of this Option shall be determined by the Committee (or if no
Committee has been designated, the Board), whose determination shall be final,
binding and conclusive, subject to the express provisions of the Plan.
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8. Notices. Any notice to be given to the Company shall be
addressed to the Treasurer of the Company at its principal executive office, and
any notice to be given to the Optionee shall be addressed to the Optionee at the
address then appearing on the personal records of the Company or the Affiliate
of the Company by which he is employed, or at such other address as either party
hereafter may designate in writing to the other. Any such notice shall be deemed
to have been duly given when deposited in the United States mail, addressed as
aforesaid, registered or certified mail, and with proper postage and
registration or certification fees prepaid.
9. No Continued Employment. Neither the grant of this Option
nor anything herein contained shall be construed to imply or to constitute (a)
evidence of any agreement, express or implied, on the part of the Company or an
Affiliate to retain the Optionee in the employ of the Company or any Affiliate
or (b) a limitation on the right of the Company or an Affiliate to terminate the
Optionee's employment, services, responsibilities, duties or authority to
represent the Company or any Affiliate at any time for any reason whatsoever.
10. Withholding of Taxes. Whenever the Company proposes or is
required to deliver or transfer Option Shares in connection with the exercise of
this Option, the Company shall have the right to (a) require the Optionee to
remit to the Company an amount sufficient to satisfy any federal, state and/or
local withholding tax requirements prior to the delivery or transfer of any
certificate or certificates for such Option Shares or (b) take whatever action
it deems necessary to protect its interests with respect to tax liabilities,
including, without limitation, withholding a portion of the Option Shares
otherwise deliverable pursuant to exercise of the Option.
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11. Entire Agreement. This Option contains the entire
understanding between the Company and the Optionee with respect to the grant of
the Option to the Optionee, and supersedes all prior and contemporaneous
agreements and understandings, inducements or conditions, express or implied,
oral or written (including, without limitation, that certain Incentive Stock
Option Agreement, dated as of May 1, 1997, by and between the Company and the
Optionee), except as herein expressly contained.
IN WITNESS WHEREOF, the Company has granted this Option as of
the day and year first above written.
INMARK ENTERPRISES, INC.
By: __________________________
Name:
Title:
ACCEPTED BY:
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PROXY INMARK ENTERPRISES, INC.
415 Northern Boulevard, Great Neck, New York 11021
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - SEPTEMBER 14, 1999
The undersigned hereby appoints John P. Benfield and Donald A. Bernard,
or either of them, as Proxy or Proxies of the undersigned with full power of
substitution to attend and to represent the undersigned at the Annual Meeting of
Stockholders of Inmark Enterprises, Inc. (the "Company") to be held on September
14, 1999, and at any adjournments thereof, and to vote thereat the number of
shares of stock of the Company the undersigned would be entitled to vote if
personally present, in accordance with the instructions set forth on this proxy
card. Any proxy heretofore given by the undersigned with respect to such stock
is hereby revoked.
Dated:____________________________________________________, 1999
__________________________________________________________________
__________________________________________________________________
Please sign exactly as name appears above. For joint
accounts, each joint owner must sign. Please give full
title if signing in a representative capacity.
[ ] PLEASE CHECK IF YOU PLAN TO ATTEND THE MEETING
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE
1. ELECTION OF DIRECTORS.
NOMINEES: Paul A. Amershadian, John P. Benfield, Donald A. Bernard,
Herbert M. Gardner, Joseph S. Hellman, Thomas E. Lachenman and
Brian Murphy.
[ ] FOR ALL nominees listed above.
[ ] FOR ALL nominees listed above EXCEPT: ___________________________.
(Instruction: To withhold authority to vote on any individual nominee,
write the name above.)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above.
2. AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION CHANGING
THE COMPANY'S NAME TO COACTIVE MARKETING GROUP, INC.
[ ] FOR the amendment to the Certificate of Incorporation.
[ ] AGAINST the amendment to the Certificate of Incorporation.
[ ] ABSTAIN
3. AMENDMENT OF THE COMPANY'S 1992 STOCK OPTION PLAN (THE "1992 PLAN").
[ ] FOR the amendment to the 1992 Plan.
[ ] AGAINST the amendment to the 1992 Plan.
[ ] ABSTAIN
4. APPROVAL AND RATIFICATION ON A RETROACTIVE BASIS OF THE COMPANY'S 1997
EXECUTIVE OFFICER STOCK OPTION PLAN (THE "1997 PLAN").
[ ] FOR the approval and ratification on a retroactive basis of the
1997 Plan.
[ ] AGAINST the approval and ratification on a retroactive basis of
the 1997 Plan.
[ ] ABSTAIN
5. ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
If no specification is made, this proxy will be voted FOR Proposals 1, 2, 3
and 4 listed above.
