UNAPIX ENTERTAINMENT INC, DEF 14A, 1996-08-08

UNAPIX ENTERTAINMENT INC
DEF 14A, 1996-08-08
MOTION PICTURE & VIDEO TAPE DISTRIBUTION

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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
[ X ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11c or Rule 14a-12

UNAPIX ENTERTAINMENT, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

Payment of Filing Fee (Check the appropriate box):

[ X ] $125 per Exchange Act 0-11 (c)(1)(ii), 14a-6(i)(1), 14a-6 (i)(2) or
Item 22 (2)(2) of Schedule 14A
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6 (i) (3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6 (i) (4) and
0-11

(1) Title of each class of securities to which transaction applies:
________________________________________________________________________________

(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________

(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
________________________________________________________________________________

(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________

(5) Total Fee paid:
________________________________________________________________________________

<PAGE>

[ ] 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 fee for which the offsetting fee was
previously paid. 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>

UNAPIX ENTERTAINMENT, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD SEPTEMBER 12, 1996

To Our Stockholders:

You are cordially invited to attend the Annual Meeting of Stockholders of
Unapix Entertainment, Inc. (the "Company") to be held on September 12, 1996 at
10:00 a.m. at the Company's offices, 200 Madison Avenue, 24th Floor, New York,
New York 10016, for the following purposes:

1. To elect three directors;

2. To approve, adopt and ratify an amendment to the Company's 1993 Stock
Option Plan; and

3. To transact such other business as may properly come before the
meeting or any adjournment of the meeting.

Only stockholders of record at the close of business on August 5, 1996 will
be entitled to notice of and to vote at the meeting.

Please sign, date and mail the enclosed proxy in the enclosed envelope,
which requires no postage if mailed in the United States, so that your shares
may be represented at the meeting.

By Order of the Board of Directors

David S. Lawi
Secretary

New York, New York
August 9, 1996

<PAGE>
UNAPIX ENTERTAINMENT, INC.
200 MADISON AVENUE
NEW YORK, NY 10016

--------------

PROXY STATEMENT

--------------

The accompanying proxy is solicited on behalf of the Board of Directors of
the Company for use at the Annual Meeting of Stockholders to be held on
September 12, 1996 and at any adjournment of the meeting. The proxy may be
revoked at any time before it is exercised by notice, in writing, to the
Secretary of the Company.

The Board of Directors has fixed the close of business on August 5, 1996 as
the record date for the meeting. On that date, the Company had outstanding
5,306,043 shares of common stock, $.01 par value ("Common Stock"), and 542,822
shares of Series A 8% Cumulative Convertible Preferred Stock ("Preferred Stock
A"). Only stockholders of record of Common Stock and Preferred Stock A at the
close of business on that date will be entitled to vote at the meeting or at any
adjournment of the meeting. Each such stockholder will be entitled to one vote
for each share of Common Stock or Preferred Stock A held and may vote in person
or by proxy authorized in writing. Except as required by law, Common Stock and
Preferred Stock A are required to vote as a single class on all matters
submitted to stockholder vote. Holders of the Company's Common Stock and
Preferred Stock A have no cumulative voting rights in the election of directors.

The principal executive offices of the Company are located at 200 Madison
Avenue, 24th Floor, New York, New York 10016.

This Proxy Statement is being mailed to stockholders of the Company on or
about August 9, 1996.

Unless otherwise specified, all figures contained in this Proxy Statement
have been adjusted to give effect to a 5% stock dividend payable on May 6, 1996
to stockholders of record of the Common Stock on April 22, 1996 (the Stock
Dividend").

ELECTION OF DIRECTORS

In 1993, the Company adopted a classified Board of Directors, which divided
the directors into three classes. At each annual meeting, the successors to the
class of directors whose term expires at that meeting are elected to serve a
three-year term and until their successors are elected and qualified.
Accordingly, the directors whose terms expire in 1996 are nominees for re-
election at the 1996 Annual Meeting of Stockholders to serve until the 1999
Annual Meeting

<PAGE>

of Stockholders, or until their successors are duly elected. The nominees named
by the Board of Directors to serve until the 1999 Annual Meeting of Stockholders
are Messrs. Herbert M. Pearlman, David S. Lawi and Martin D. Payson, who are
currently directors of the Company.

The persons named in the enclosed form of proxy have advised that, unless
contrary instructions are received, they intend to vote for the three nominees
named by the Board of Directors of the Company and listed below. If, by reason
of death or other unexpected occurrence, one or more of these nominees is not
available for election, the persons named in the form of proxy have advised that
they will vote for such substitute nominees as the Board of Directors of the
Company may propose.

The nominees and directors are presented below by class.

DIRECTORS OF TERMS AS
----------- --------
THE COMPANY DIRECTORS
----------- ---------
NAME AGE SINCE EXPIRES IN
- ---- --- ----- ----------

NOMINEES FOR DIRECTOR
Herbert M. Pearlman 63 1990 1996
David S. Lawi 61 1990 1996
Martin D. Payson* 60 1996 1996

OTHER DIRECTORS
Lawrence Bishop 51 1993 1997
Walter M. Craig, Jr. 42 1993 1997
David M. Fox 48 1992 1998
Scott Hanock 38 1990 1998
Robert Baruc 45 1995 1998
______________________________________________________
*Mr. Payson became a director of the Company on June 25, 1996.

PRINCIPAL OCCUPATION OVER THE PAST FIVE YEARS AND OTHER DIRECTORSHIPS OF
DIRECTORS.

HERBERT M. PEARLMAN. Mr. Pearlman has been the Company's Chairman of the Board
of Directors since July 1990. Mr. Pearlman was a co-founder of Telepictures
Corporation ("Telepictures"), a public company which, during Mr. Pearlman's
tenure, was engaged in marketing and distributing theatrical films and
television programs and which is now part of Time Warner Inc. From 1978 until
February 1986, Mr. Pearlman served in various senior level capacities with
Telepictures including as Chairman of the Board, Chairman of the Executive
Committee and as a Director. He is a co-founder of Seitel, Inc. ("Seitel"), a
New York Stock Exchange listed company engaged in the development and marketing
of a proprietary seismic data library to the oil and gas industry and has been
its Chairman of the Board since 1987. In addition, Mr. Pearlman is an officer
and a director of the following public companies: InterSystems, Inc.
("InterSystems"), an American Stock Exchange listed company, which is

<PAGE>

engaged in providing custom compounding services for resin producers and the
design, manufacture, sale and leasing of equipment for sampling, conveying,
elevating, weighing and cleaning a wide variety of products; Helm Resources,
Inc. ("Helm"), an American Stock Exchange listed company, which initiates,
develops, acquires and oversees the management of various business enterprises,
including companies in the fields of thermoplastic resins and agricultural and
industrial products; Cliff Engle, Ltd., a company which markets licensed apparel
("Cliff Engle"); ABC Dispensing Technologies, Inc., a company that designs and
manufactures dispensing equipment; and Teletrak Advanced Technology Systems,
Inc., which had been engaged in the development and marketing of propriety
software ('Teletrak").

DAVID S. LAWI. Mr. Lawi has been a Director of the Company since June 1990. He
has been the Company's Treasurer and Secretary since January 1993 and Chairman
of the Company's Executive Committee since December 1993. Mr. Lawi was a
Director and Chairman of the Finance Committee of TelePictures from May 1979
until February 1986. He is a director of Seitel and has been the Chairman of
its Executive Committee since March 1987. In addition, Mr. Lawi is an officer
and a director of the following public companies: InterSystems; Helm; Cliff
Engle; and Teletrak.

MARTIN D. PAYSON. Martin D. Payson has been a Director of the Company since
June 1996. From January 1990, when Time Inc. merged with Warner Communications,
Inc. ("Warner"), until December 1992, Mr. Payson was Vice Chairman of the Board
of Time Warner Inc. Prior to 1990 Mr. Payson held the position of office of the
President and General Counsel of Warner. He is currently a director of a number
of corporations, including the following which are publicly held: Renaissance
Communications Corp. (a New York Stock Exchange listed company); and Meridian
Sports Incorporated (a NASDAQ traded company). Mr. Payson is also actively
involved in a number of philanthropic organizations including holding the
following positions: Chairman of Maimonides Medical Center; a Trustee of Howard
University; a Director of The Jewish Theological Seminary; a Trustee of New York
University and NYU Law Center Foundation; Vice Chairman, Board of Administrators
of Tulane University; Director of the Jewish Museum of New York City; and a
Director of the NAACP Legal Defense and Educational Fund.

LAWRENCE BISHOP. Mr. Bishop was elected a Director of the Company in November
1993. Mr. Bishop has been an Executive Vice President of Gray, Seifert & Co.,
Inc., an investment banking firm, since 1987, and currently is a Director of
Synergistics, Inc.

WALTER M. CRAIG, JR. Mr. Craig was elected a Director of the Company in April
1993. He has been the President of The Mezzanine Financial Fund, L.P.
("Mezzanine "), an asset-based lender, since January 1991. Mezzanine provides
senior and subordinated debt financing to small and middle market enterprises.
He has been President of Professional Financial Services, Inc., a company that
factors accounts receivable, since February 1993. Since August 1992, Mr. Craig
has served as Executive Vice President and Chief Operating Officer of Helm.
Since September 1991, Mr. Craig has been President, Chief Executive Officer and
a Director of Cliff Engle.

<PAGE>

Since 1987, he has been a Director of Seitel. Since 1993 he has been a director
of Helm and InterSystems.

DAVID M. FOX. Mr. Fox has been the Company's President, Chief Executive Officer
and a Director since March 1992. From June 1991 until joining the Company, he
was the Chief Executive Officer of David Fox and Associates, a company which he
founded and which provided international programming consulting services and
acted as United States sales agent for producers worldwide. From 1981 until
June 1991, Mr. Fox served as Chief Executive Officer and head of Domestic
Syndication and Cable Television for Fox\Lorber Associates, Inc. ("Fox\Lorber"),
a corporation which he co-founded and which engaged in the worldwide
distribution of feature films, home video and television programs. From March
1990 to June 1991, Mr. Fox also served as a director of GAGA Communications, a
Japanese company engaged in home video and theatrical distribution. Prior to
founding Fox\Lorber, Mr. Fox was Eastern and Midwest Sales Manager for D.L.
Taffner Ltd., syndicator of, among other things, "Three's Company" and "The
Benny Hill Show."

SCOTT HANOCK. Mr. Hanock has been Managing Director of International Sales and
Marketing of the Company since 1986. He has been Director of the Company since
1990. From 1983 to 1986, Mr. Hanock was Director of Sales and Marketing for
Tatum Communications, Inc., a company which markets sports and documentary
programming for television.

ROBERT BARUC. Mr. Baruc, has been Director of the Company since November 1995.
He has been an Executive Vice President of the Company since April 1994. He has
been President and Chief Executive Officer of A Pix Entertainment, Inc. ("A
Pix") since August 1993. From December 1992 to August 1993, Mr. Baruc was
President of Triboro Entertainment Group, a company engaged principally in home
video distribution. From January 1991 to December 1992, Mr. Baruc primarily
acted as a film and marketing consultant. Mr. Baruc was President of Academy
Entertainment, a home video distribution company, from June 1986 to January
1991.

COMMITTEES AND ATTENDANCE

During 1995, the Company's Board of Directors held three full meetings.
Except for Mr. Hanock, each of the Company's incumbent directors attended at
least 75% of the total number of meetings of the Board of Directors and of the
committees on which he served. The Board of Directors has an Executive
Committee, a Compensation Committee, an Audit Committee and a Stock Option
Committee. The Board of Directors does not currently have a Nominating
Committee. None of the committees met separately from the entire Board during
1995. The Executive Committee is comprised of Messrs. Lawi, Craig and Fox. The
function of the Executive Committee is to act on an interim basis for the full
Board. During 1995, the Compensation Committee consisted of Messrs. Craig and
Werblin. The function of the Compensation Committee is to advise management on
the compensation of the Company's executive officers. The Stock Option
Committee during 1995 consisted of Messrs. Bishop and Werblin. The function of
the Stock Option Committee is to administer the Company's 1993 Stock Option Plan
described below under "Amendment to the Company's 1993 Stock Option

<PAGE>

Plan." During 1995, the Audit Committee consisted of Messrs. Craig and Werblin.
The functions of the Audit Committee are to select the independent accountants
of the Company, to review with them the Company's financial statements, to
review the Company's financial systems and controls and to oversee other matters
relating to the integrity of the Company's finances and financial statements as
the Committee may consider appropriate. Mr. Werblin resigned as a director of
the Company on July 1, 1996.

OTHER EXECUTIVE OFFICERS

Other than Messrs. Pearlman, Fox, Lawi, Baruc and Hanock, who are also
directors, or nominees to be directors, of the Company and for whom biographical
information is provided above, the names of the executive officers of the
Company together with certain biographical information for each of them is set
forth below:

NAME AGE POSITION
- ---- --- --------

Daniel T. Murphy 57 Chief Financial Officer

Michael R. Epps 38 General Counsel

Steven P. Low 36 Chief Accounting Officer

DANIEL T. MURPHY. Mr. Murphy has been Chief Financial Officer of the Company
since September 1995. He has been an Executive Vice President and Chief
Financial Officer of InterSystems since July 1985. He has been a director of
InterSystems since 1986. Since May 1984, he has been a Vice President and the
Chief Financial Officer of Helm. In 1988, he was elected a director of
Teletrak.

MICHAEL R. EPPS. Mr. Epps has been the General Counsel of the Company since
September 1995. He is a Vice President of Helm and from July 1992 until July
1995, he was General Counsel of Helm. He was Associate General Counsel of Helm
from September 1990 until July 1992. Prior to joining Helm, Mr. Epps was
engaged in the private practice of law.

STEVEN P. LOW. Mr. Low has been the principal accounting officer of the Company
since May 1993. Prior to that time, and since September 1982, he was employed
by the national accounting firm of Ernst & Young, most recently as a senior
manager.

<PAGE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

The following table sets forth, as August 1, 1996, information regarding the
stock holdings of each person known to the Company to own beneficially more than
5% of any class of outstanding voting securities of the Company.

<PAGE>

Title Amount and Nature Percent
of Name and Address of of Beneficial of
Class Beneficial Owner Ownership (1) Class
----- ------------------ ----------------- -------
- --------------------------------------------------------------------------------
Common Stock Robert Baruc 339,999(7) 6.1%
c/o Unapix Entertainment, Inc.
200 Madison Avenue
New York, NY 10016
- --------------------------------------------------------------------------------
Preferred Stock* Legg Mason, Inc. 104,995 (8) 19.2%
c/o Gray, Seifert & Co., Inc.
380 Madison Avenue
New York, NY 10017
- --------------------------------------------------------------------------------
Preferred Stock* Herbert M. Pearlman 79,999 (9) 13.8%
c/o Unapix Entertainment, Inc.
537 Steamboat Road
Greenwich, CT 06830
- --------------------------------------------------------------------------------
Preferred Stock* Tradewind Fund 50,000 9.2%
c/o Harbor Capital Management
2701 Summer Street
Suite 200
Stanford, CT
- --------------------------------------------------------------------------------
Preferred Stock* Martin & Velia Bramante 38,334 7.0%
45 Peninsula Road
Belvedere, CA 94920
- --------------------------------------------------------------------------------
Preferred Stock* David S. Lawi 34,166 (10) 6.1%
c/o Unapix Entertainment, Inc.
537 Steamboat Road
Greenwich, CT 06830
- --------------------------------------------------------------------------------
Preferred Stock* Information Age Partners L.P.
18 Sidney Lanier Lane
Greenwich, CT 06831 33,333 6.1%
- --------------------------------------------------------------------------------
- --------------------------
* Shares set forth are shares of the Company's Series A 8% Cumulative
Convertible Preferred Stock ("Preferred Stock A"). Each share is
convertible into 1.05 shares of Common Stock. Holders of Preferred Stock A,
voting together with holders of Common Stock and not as a separate class,
are entitled to one vote with respect to each share of Preferred Stock A.
Each share of Preferred Stock A has a liquidation preference of $3.00 plus
accumulated and unpaid dividends and is entitled to semi-annual dividends
of $.12.

<PAGE>

(1) Except as otherwise indicated, each named holder has, to the best of
the Company's knowledge, sole voting and investment power with
respect to the shares indicated.

(2) Includes the following shares of Common Stock: 47,248 shares that
are issuable upon conversion of Preferred Stock A; 97,999 shares
that are issuable upon exercise of Class B redeemable common stock
purchase warrants ("Class B Warrants"), each having an exercise
price of $4.28 per share and expiring on June 22, 1998; 148,051
shares that are issuable upon exercise of options having an exercise
price of $2.86 per share and that expire in December 2003 ("Earnings
Options"); 76,999 shares issuable upon exercise of warrants having
an exercise price of $19.05 per share and that expire in December
2000 (a "$19.05 Warrant"); 76,999 shares issuable upon exercise of
warrants having an exercise price of $28.57 per share and that also
expire in December 2000 (a "$28.57 Warrant"); and 36,750 shares
which are issuable upon exercise of options to purchase Preferred
Stock A ("Preferred Stock Options") and the subsequent conversion of
such shares of Preferred Stock A. The Preferred Stock Options have
an exercise price of $3.00 per share of Preferred Stock A and expire
in January 1999.

(3) Legg Mason, Inc. is a parent holding company of Gray, Seifert & Co.,
Inc. ("Gray Seifert"). All such shares are owned by customers of
Gray Seifert, however, through agreements with such customers, Gray
Seifert has discretionary power to vote and dispose of all such
shares. The figure includes the following shares of Common Stock:
21,000 shares of Common Stock issuable upon exercise of Class B
Warrants; 104,995 shares of Common Stock issuable upon conversion of
Preferred Stock A; and 410,054 shares of Common Stock issuable upon
exercise of warrants, each of which is exercisable into a share of
Common Stock at a price of $3.70 per share and expires on December
31, 2001; 222,222 shares of Common Stock issuable upon conversion of
10% Convertible Subordinated Notes due June 30, 2003 having a
conversion price of $4.50 per share; and 100,000 shares of Common
Stock issuable upon exercise of warrants, each of which is
exercisable into a share of Common Stock at a price of $6.00 per
share and expires on June 30, 2003.

(4) Includes the following shares of Common Stock: 17,499 shares that
are issuable upon conversion of Preferred Stock A; 41,125 shares
that are issuable upon exercise of Class B Warrants; 74,026 shares
that are issuable upon exercise of Earnings Options; 12,250 shares
that are issuable upon exercise of $19.05 Warrants; 12,250 shares
that are issuable upon exercise of $28.57 Warrants; and

<PAGE>

18,375 shares that are issuable upon exercise of Preferred Stock
Options and the subsequent conversion of shares of Preferred Stock A
underlying such options.

(5) Includes the following shares of Common Stock: 95,537 shares
issuable upon exercise of options having an exercise price of $1.10
per share and expiring six months after the end of Mr. Fox's
employment term; 26,250 shares that are issuable upon exercise of
Class B Warrants; 111,037 shares issuable upon exercise of Earnings
Options; 24,937 shares that are issuable upon exercise of $19.05
Warrants; 24,937 shares that are issuable upon exercise of $28.57
Warrants; and 17,499 shares issuable upon conversion of Preferred
Stock A. Also includes the following as to which Mr. Fox disclaims
beneficial ownership: 10,237 shares owned by Mr. Fox's wife; 1,312
shares that are issuable upon exercise of $19.05 Warrants and 1,312
shares that are issuable upon exercise of $28.57 Warrants that are
also owned Mr. Fox's wife; and 15,750 shares owned by Mr. Fox's wife
as trustee for his children.

(6) Consists of the following: (i) 300,000 shares that are issuable
upon exercise of options having an exercise price of $3.875 per
share and expiring in June 2001; and (ii) 100,000 shares that are
issuable upon exercise of options also having an exercise price of
$3.875 per share, but which will expire in June 1997 unless all of
the Class B Warrants have been exercised prior to that time, in
which case the 100,000 options will expire in June 2001.

(7) Includes the following shares of Common Stock: 8,749 shares issuable
upon conversion of Preferred Stock A; 52,500 shares issuable upon
exercise of options having an exercise price of $2.86 per share and
expiring August 2003; 200,000 shares issuable upon the merger of A
Pix with and into the Company, which the Company expects to complete
in the next 60 days; 26,250 shares that are issuable upon exercise
of $19.05 Warrants; and 26,250 shares that are issuable upon
exercise of $28.57 Warrants.

(8) Consists of shares of Preferred Stock A that are owned by customers
of Gray Seifert; however, through agreements with such customers,
Gray Seifert has discretionary power to vote and dispose of all such
shares. Legg Mason, Inc. is a parent holding company of Gray,
Seifert & Co., Inc.

(9) Includes 35,000 shares of Preferred Stock A which are issuable upon
exercise of Preferred Stock Options.

(10 ) Includes 17,500 shares of Preferred Stock A which are issuable upon
exercise of Preferred Stock Options.

<PAGE>

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth, as of August 1, 1996, information
concerning the beneficial ownership of each class of equity securities by each
director, nominee, Named Executive Officer (as defined in "Executive
Compensation"), and by all executive officers and directors as a group.

SHARES AND PERCENT OF COMMON STOCK OR
PREFERRED STOCK A - OWNED BENEFICIALLY AS
OF AUGUST 1, 1996 (1)
-------------------------------------------------
<TABLE>
<CAPTION>
Name Common Stock Percent Preferred Percent
of Class Stock (2) of Class
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Herbert M. Pearlman 1,071,592 (3) 18.5% 79,999 (4) 13.8%
- -------------------------------------------------------------------------------------------------
David S. Lawi 405,983 (5) 7.4% 34,166 (6) 6.1%
- -------------------------------------------------------------------------------------------------
David M. Fox 402,404 (7) 7.2% 16,666 3.1%
- -------------------------------------------------------------------------------------------------
Scott Hanock 223,974 (8) 4.1% 8,333 1.3%
- -------------------------------------------------------------------------------------------------
Walter M. Craig, Jr. 63,222 (9) 1.2% --- ---
- -------------------------------------------------------------------------------------------------
Lawrence Bishop 110,250 (10) 2.1% --- ---
- -------------------------------------------------------------------------------------------------
Robert Baruc 339,999 (11) 6.1% 8,333 1.5%
- -------------------------------------------------------------------------------------------------
Martin D. Payson 97,221 (12) 1.8% --- ---
- -------------------------------------------------------------------------------------------------
All directors and executive 2,899,865 (13) 41.1% 159,496 (14) ---
officers as a group (11 persons)
- -------------------------------------------------------------------------------------------------
- -----------------------------
</TABLE>
* Less than 1%

(1) Except as otherwise indicated, each named holder has, to the best of
the Company's knowledge, sole voting and investment power with
respect to the shares indicated.

(2) Shares set forth are shares of the Company's Series A 8% Cumulative
Convertible Preferred Stock ("Preferred Stock A"). Each share is
convertible into 1.05 shares of Common Stock. Holders of Preferred
Stock A, voting together with holders of Common Stock and not as a
separate class, are entitled to one vote with respect to each share
of Preferred Stock A. Each share of Preferred Stock A has a
liquidation preference of $3.00 plus accumulated and unpaid
dividends and is entitled to semi-annual dividends of $.12.

<PAGE>

(3) Includes the following shares of Common Stock: 47,248 shares that
are issuable upon conversion of Preferred Stock A; 97,999 shares
that are issuable upon exercise of Class B Warrants; 148,051 shares
that are issuable upon exercise of Earnings Options; 76,999 shares
that are issuable upon exercise of $19.05 Warrants; 76,999 shares
that are issuable upon exercise of $28.57 Warrants; and 36,750
shares which are issuable upon exercise of Preferred Stock Options
and the subsequent conversion of the underlying shares of Preferred
Stock A.

(4) Includes 35,000 shares of Preferred Stock A which are issuable upon
exercise of Preferred Stock Options.

(5) Includes the following shares of Common Stock: 17,499 shares that
are issuable upon conversion of Preferred Stock A; 41,125 shares
that are issuable upon exercise of Class B Warrants; 74,026 shares
that are issuable upon exercise of Earnings Options; 12,250 shares
that are issuable upon exercise of $19.05 Warrants; 12,250 shares
that are issuable upon exercise of $28.57 Warrants; and 18,375
shares that are issuable upon exercise of stock options.

(6) Includes 17,500 shares of Preferred Stock A which are issuable upon
exercise of Preferred Stock Options.

(7) Includes the following shares of Common Stock: 95,537 shares
issuable upon exercise of options having an exercise price of $1.10
per share and expiring six months after the end of Mr. Fox's
employment term; 26,250 shares that are issuable upon exercise of
Class B Warrants; 111,037 shares issuable upon exercise of Earnings
Options; 24,937 shares that are issuable upon exercise of $19.05
Warrants; 24,937 shares that are issuable upon exercise of $28.57
Warrants; and 17,499 shares issuable upon conversion of Preferred
Stock A. Also includes the following as to which Mr. Fox disclaims
beneficial ownership: 10,237 shares owned by Mr. Fox's wife; 1,312
shares that are issuable upon exercise of $19.05 Warrants and 1,312
shares that are issuable upon exercise of $28.57 Warrants that are
also owned Mr. Fox's wife; and 15,750 shares owned by Mr. Fox's wife
as trustee for his children.

(8) Includes the following shares of Common Stock: 25,821 shares
issuable upon exercise of options having an exercise price of $1.29
per share and expiring in May 1997; 2,892 shares issuable upon
exercise of options having an exercise price of $1.66 per share and
expiring in May 1997; 826 shares issuable upon exercise of options
having an exercise price of $1.21 per share and expiring in May
1997; 8,749 shares issuable upon conversion of Preferred Stock A;
49,350 shares issuable upon exercise of Earnings Options; 26,250
shares that are issuable upon exercise of $19.05 Warrants; and
26,250 shares that are issuable upon exercise of $28.57 Warrants.

<PAGE>

(9) Includes 19,740 shares of Common Stock issuable upon exercise of
Earnings Options; 10,500 shares that are issuable upon exercise of
$19.05 Warrants; and 10,500 shares that are issuable upon exercise
of $28.57 Warrants.

(10) Includes 31,500 shares of Common Stock owned by a partnership of
which Mr. Bishop is a general partner; 26,250 shares that are
issuable upon exercise of $19.05 Warrants; and 26,250 shares that
are issuable upon exercise of $28.57 Warrants.

(11) Includes the following shares of Common Stock: 8,749 shares issuable
upon conversion of Preferred Stock A; 52,500 shares issuable upon
exercise of options having an exercise price of $2.86 per share and
expiring August 2003; 200,000 shares issuable upon the merger of A
Pix with and into the Company, which the Company expects to complete
in the next 60 days; 26,250 shares that are issuable upon exercise
of $19.05 Warrants; and 26,250 shares that are issuable upon
exercise of $28.57 Warrants.

(12) Consists of 55,555 shares issuable upon conversion of a $250,000
note due on June 30, 2003; 25,000 shares issuable upon exercise of
warrants, having an exercise price of $6.00 per share, and expiring
on June 30, 2003; and 16,666 shares issuable upon exercise of
options, having an exercise price of $4.00 per share, and expiring
on June 5, 2006.

(13) Includes all shares described in footnotes (3), (5), (7), (8), (9),
(10), (11) and (12) above as well as the following shares of Common
Stock: 12,598 shares issuable upon conversion of shares of Preferred
Stock A; 54,077 shares issuable upon exercise of options having an
exercise price of $2.86 per share; 1,050 shares that are issuable
upon exercise of options having an exercise price of $5.00 per
share; and 1,575 shares that are issuable upon exercise of Class B
Warrants.

(14) Includes all shares described in footnotes (4) and (6) above.

SECTION 16 COMPLIANCE

Based upon a review of Forms 3, 4 and 5, and amendments thereto furnished
to the Company pursuant to Rule 16a-3(e) during, and with respect to its most
recent fiscal year, and written representations furnished to the Company, it
appears that all such reports required to be filed pursuant to Section 16 of the
Securities Exchange Act of 1934, as amended, were filed on a timely basis.

<PAGE>

EXECUTIVE COMPENSATION

Set forth below is certain information with respect to cash and noncash
compensation awarded, paid or accrued by the Company to its Chief Executive
Officer and each other person who was an executive officer whose salary and
bonus exceeded $100,000 during 1995 (collectively, the "Named Executive
Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Name ---------------------------------------------------------
and Principal Salary Bonus Shares of All Other
Position Year Common Compensation
Stock
Underlying
Options
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
David M. Fox 1995 $173,954 $ 21,697 --- ---
- -------------------------------------------------------------------------------------
President, CEO 1994 168,071 --- --- ---
- -------------------------------------------------------------------------------------
1993 162,696 --- 253,274 ---
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Scott Hanock 1995 145,200 30,437 --- $10,000(1)
- -------------------------------------------------------------------------------------
Managing
Director 1994 117,810 7,500 --- $ 6,180(1)
- -------------------------------------------------------------------------------------
1993 108,000 --- 100,000 ---
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Robert Baruc 1995 149,040 24,000 --- ---
- -------------------------------------------------------------------------------------
Executive Vice
President 1994 144,000 24,000 --- ---
- -------------------------------------------------------------------------------------

</TABLE>
(1) Pursuant to Mr. Hanock's employment agreement the amount set forth has
been deposited into a Rabbi Trust account for Mr. Hanock's benefit. The
amount is payable to Mr. Hanock (or his beneficiary) out of such trust
over a five-year period commencing on the earlier of his death or upon
his reaching the age of 65 years. The amounts deposited were calculated
based upon pre-tax profits for 1994 and 1995.

<PAGE>

AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES

The following table sets forth aggregated option exercises in the last
year, the number of unexercised options and fiscal year-end values of in-the-
money options for the Named Executive Officers.

<TABLE>
<CAPTION>
Number of Unexer- Value of Unexercised
cised Options at In-the Money Options at
Number of Fiscal Year-End Fiscal Year-End (1)
Shares --------------- -------------------
Acquired --------------------------------------------------------
on Value Unexer- Unexer-
Name Exercise Realized Exercisable cisable Exercisable cisable
- ---- -------- -------- ----------- ------- ----------- -------
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David M. Fox --- --- 206,574 (2) 125,212 $660,173 $298,125
- ----------------------------------------------------------------------------------------------------------
Scott Hanock --- --- 78,890 (2) 55,650 $233,245 $132,500
- ----------------------------------------------------------------------------------------------------------
Robert Baruc --- --- 52,500 $125,000 $ 0
- ----------------------------------------------------------------------------------------------------------

</TABLE>

(1) Represents the difference between $5.225, the closing price of the
Company's Common Stock on December 29, 1995 (the last trading day of
1995) as reported by the American Stock Exchange, and the exercise
price of the option, multiplied by the number of options for each
respective person named.

(2) 111,037 of the options reflected as exercisable by Mr. Fox and
49,350 of the options reflected as exercisable by Mr. Hanock are
options, having an exercise price of $2.86 per share, that
originally were not exercisable until June 2003. However, pursuant
to their original terms, the options would become exercisable at an
earlier date upon the Company's attaining certain levels of
earnings before taxes ("EBT") during 1994, 1995 and 1996. In
accordance with their original terms, (i) if the Company had EBT of
at least $650,000 for 1994, then one-third of each holder's options
would become exercisable, (ii) if the Company has EBT for 1995 of
at least $1,350,000, then an additional one-third of each holder's
options becomes exercisable; and if the Company's EBT for 1996
exceeds $2,000,000 then the final one-third of each holder's options
becomes exercisable. The options to become exercisable following a
particular benchmark year become exercisable on a pro-rata basis if
at least 50% of the earnings have been attained. The EBT benchmark
is cumulative through 1996 if the Company does not achieve any of
the prior years' goals. EBT for 1994 and 1995 was $309,000 and
$950,000, respectively. The Company, in 1995, authorized a certain
adjustment to the formula to determine the number of such options
that would become exercisable based upon 1994 financial results.
The adjustment took into account

<PAGE>

the start-up costs of A Pix that were expended in their entirety
during 1994. As a result of this adjustment, approximately 71% of
the total number of options that could have become immediately
exercisable, pursuant to the options' original terms, if EBT for
1994 had been at least $650,000, did become so exercisable.

COMPENSATION OF DIRECTORS

The Company reimburses travel and other expenses incurred by its directors
in connection with attending Board of Director's meetings. Mr. Payson, who
became a director of the Company in June 1996, has been granted options to
purchase 50,000 shares of Common Stock in connection with his serving as a
director. The options expire on June 5, 2006 and have an exercise price of
$4.00 per share, which was the market value of the Company's Common Stock on
that date. Options to purchase 16,666 shares are currently exercisable.
Options to purchase 16,667 shares will become exercisable on each of June 6,
1997 and June 6, 1998, subject to Mr. Payson's continuing to serve as a
director. Other than Mr. Payson, directors have not been compensated for
services they render in their capacity as directors.

EMPLOYMENT AGREEMENTS

EMPLOYMENT CONTRACTS WITH NAMED EXECUTIVE OFFICERS

David Fox is employed under an agreement expiring December 31, 2000,
pursuant to which he has been and shall be paid an annual salary of $174,000,
$200,000, $225,000 and $250,000 for 1995, 1996, 1997 and 1998, respectively,
with a further increase in 1999 and 2000 based on the consumer price index. Mr.
Fox is also entitled to receive an annual bonus equal to three percent of the
Company's pre-tax profits in excess of $650,000 for 1996, four percent of
pre-tax profits in excess of $650,000 for 1997, and four percent of pre-tax
profits for each subsequent year of the agreement. For 1995 and 1996, the
Company has agreed to pay Mr. Fox an additional bonus (the "Sales Bonus") equal
to 1% of all of the Company's sales (on a consolidated basis) exceeding
$20,000,000 in 1995 and $25,000,000 in 1996, so long as the Company's pre-tax
profits are at least equal to 5% of its sales. If pre-tax profit is less than
5% of sales for the year, then Mr. Fox will be entitled to a bonus that is
proportionately reduced to the extent pre-tax profit is under the 5% threshold
but still exceeds 2.5% of the Company's sales. Mr. Fox will not receive any
such bonus if pre-tax profit is not at least 2.5% of the Company's sales for the
year. In no event will the Sales Bonus exceed $100,000 for either year. For
1996 and 1997, Mr. Fox is to receive a minimum annual bonus (whether or not
required by the various bonus formulae) of $25,000. Mr. Fox has received an
advance against the Sale Bonus and other bonus amounts which may be earned under
the agreement of $25,000. During 1996, Mr. Fox will also receive $600 a month
to defray operating expenses of a second office.

Scott Hanock is employed under a contract expiring December 31, 2000, under
which Mr. Hanock has been and shall be paid an annual salary of $143,000,
$160,000, $175,000, $190,000 and $200,000 for 1995, 1996, 1997, 1998 and 1999
respectively, with a further increase in 2000 based on the consumer price index.
Mr. Hanock is also entitled to receive an

<PAGE>

annual bonus equal to two percent of the Company's annual pre-tax profits in
excess of $650,000. For 1995 and 1996, the Company has agreed to pay Mr. Hanock
an additional bonus equal to 1% of the amount by which Unapix International
Division's ("UID") sales for such year exceeds $3,000,000 and the 1995 sales
amount, respectively. Additionally, for 1996 Mr. Hanock will receive a bonus
equal to one-half percent of all Company sales in the United States of products
sold or acquired as a result of the efforts of a UID employee. Under the terms
of Mr. Hanock's employment agreement, the Company will deposit to a Rabbi Trust
account ("Trust"), the beneficiary of which is Mr. Hanock, an annual payment
equivalent to 2% of the Company's first $500,000 in pre-tax profits, with such
amounts to be payable to Mr. Hanock (or his beneficiary) out of the Trust over a
five-year period commencing on the earlier of his death or upon his reaching the
age of 65 years.

Robert Baruc, an Executive Vice President of the Company and the President
and Chief Executive Officer of A Pix, is currently employed under an agreement
having a term expiring on December 31, 2000, which is automatically renewed for
successive four-year periods unless the Company or Mr. Baruc elects to
terminate. Under his Agreement, Mr. Baruc is entitled to receive a base salary
that is currently $195,000 per year, and which will increase to $220,000 and
$245,000 per year for 1997 and 1998, respectively, with a further increase in
1999 and 2000 based on the consumer price index Mr. Baruc is also entitled to
receive an annual bonus equal to 2.25% of the Company's pre-tax profits in
excess of $650,000 for 1996, 3% of pre-tax profits in excess of $650,000 for
1997, and 3% of pre-tax profits for each subsequent year of the agreement. For
each fiscal year during his employment term that A Pix's sales for such year
have increased by more than 25% of its sales for the immediately preceding year,
Mr. Baruc is entitled to receive a bonus equal to 1% of such excess, so long as
the Company's pre-tax profits are at least equal to 5% of its sales. If the
Company's pre-tax profit is less than 5% of its sales for the year, then Mr.
Baruc shall be entitled to a bonus that is proportionately reduced to the extent
pre-tax profit is under the 5% threshold but still exceeds 2.5% of the Company's
sales. Mr. Baruc will not receive any such bonus if the Company's pre-tax
profit is not at least 2.5% of its sales for the year. In no event will such
sales bonus exceed $100,000 with respect to any particular year. Pursuant to
his employment agreement, Mr. Baruc received 52,500 employee common stock
purchase options, exercisable at $2.86 per share, all of which have vested. In
addition, pursuant to his employment agreement Mr. Baruc was issued 9.5% of the
outstanding capital stock of A Pix.

OTHER EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS

The Company also has entered into five-year employment agreements,
effective as of June 23, 1993, with Herbert Pearlman and David Lawi, who will be
required to devote such amount of time as they, in their discretion, deem
necessary for the performance of their duties. Mr. Pearlman's employment
agreement provides for an annual salary equal to five percent of the Company's
annual earnings before taxes ("EBT"). Mr. Pearlman will receive additional
salary equal to $25,000, $50,000, $75,000 and $100,000 after the Company's EBT
has exceeded $650,000, $1,350,000, $1,750,000 and $2,000,000 respectively. Mr.
Lawi's employment agreement provides for an annual salary equal to two and
one-half percent of EBT. Mr. Lawi

<PAGE>

will receive additional salary equal to $12,500, $25,000, $37,500 and $50,000
after the Company's EBT has exceeded $650,000, $1,350,000 $1,750,000 and
$2,000,000 respectively. Each employment agreement provides for severance
payments of two years of annual salary (payable over two years) if the Contract
is not renewed at the end of its term.

In January 1994, the Company granted options to purchase the Company's
Preferred Stock A to Messrs. Pearlman and Lawi. These options are exercisable at
$3.00 per share of Preferred Stock A, vest immediately and expire five years
from the date of issuance. Mr. Pearlman was granted 35,000 of such options and
Mr. Lawi was granted 17,500 of such options. The Board also granted Messrs.
Pearlman and Lawi 35,000 and 17,500 Class B redeemable common stock purchase
warrants, respectively.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In December 1993 and January 1994 the Company agreed to develop a joint
venture for the purpose of funding the acquisition by A Pix of the distribution
rights to independently produced films. The initial investors were Messrs.
Pearlman and Lawi and investors who are customers of Gray, Seifert & Co., Inc.
("Gray Seifert"), an investment advisory firm of which Mr. Bishop, a director of
the Company, is an Executive Vice President. Messrs. Pearlman and Lawi
invested $100,000 and $50,000, respectively, and customers of Gray Seifert
invested an aggregate of $200,000. The funds were invested under an arrangement
providing for: (i) the venture's having a term of three years; (ii) the
venture's recoupment of 110% of its investment in any one film from the first
dollars of gross receipts; (iii) the venture's receipt of up to 20% of the net
profits of each film in which it invests; (iv) roll-over of the venture's
receipts into other films; and (v) any shortfall of investment in a film to be
paid in shares of Common Stock of the Company issued at market or, if market is
less than $2.85 a share, at the lower of $2.85 or 125% of market. The initial
investments were fully utilized to acquire film distribution rights. Each
investor is entitled to receive 1,050 Class B Warrants for every $10,000
invested. Consequently, Messrs. Pearlman and Lawi have received 10,500 and
5,250 Class B Warrants, respectively, in connection with their investments.
Customers of Gray Seifert are entitled to receive an aggregate of 21,000 Class B
Warrants with respect to their investment.

From January through May 1994, the Company privately placed 735,820 shares
of Preferred Stock A for approximately $2,207,000, at a price of $3.00 per
share. Messrs. Pearlman, Lawi, Fox, Werblin, Hanock and Baruc (all of whom are
executive officers or directors of the Company), purchased 44,999, 16,666,
16,666, 16,666, 8,333 and 8,333 shares of Preferred Stock A, respectively, in
the private placement. Messrs. Fox, Hanock and Baruc acquired their shares by
delivering promissory notes providing for annual payments of principal, maturing
in five years and bearing interest at 9% per annum. The notes are secured by a
pledge of the purchased shares. Mr. Pearlman paid approximately $75,000 in cash
of the $134,997 purchase price for his shares and approximately $60,000 by
set-off against indebtedness of the Company owed to him with respect to prior
loans extended (during 1992 and 1993) to the Company. Messrs Lawi and Werblin
paid cash for their shares. In addition, investors who are

<PAGE>

customers of Gray Seifert purchased an aggregate of approximately 100,000 shares
of Preferred Stock A in such private placement.

In August 1994, the Company obtained a $300,000 six month credit facility
from The Mezzanine Financial Fund, L.P. ("Mezzanine"), a limited partnership of
which Messrs. Pearlman and Lawi are officers, directors and principal
stockholders of the general partner. Walter M. Craig, Jr., a director of the
Company, is also an officer and director of the general partner of Mezzanine.
In addition, Messrs. Pearlman and Lawi are executive officers, directors and
principal stockholders of Helm Resources, Inc. ("Helm"), which presently owns
approximately 9% of the limited partnership interests of Mezzanine. Mr. Craig
is an officer and director of Helm. Outstanding amounts of principal under the
facility were charged interest at 2% per month. As consideration for
Mezzanine's entering into the facility, it received 1,050 Class B Warrants for
every $100,000, or part thereof, of the average loan balance outstanding during
each month. The Company issued 10,991 of such warrants to Mezzanine as a result
of amounts that were outstanding under the loan. The Company repaid the loan in
December 1994 and in connection therewith issued an additional 5,250 Class B
Warrants to Mezzanine, as a prepayment fee. The Company granted Mezzanine
certain registration rights with respect to the Class B Warrants it received and
the shares of common stock issuable upon exercise thereof.

From December 1994 through the second quarter of 1995 the Company received
total proceeds of $3,025,000 from customers of Gray Seifert in a private
placement of units of Variable Rate Senior Subordinated Notes ("Variable Rate
Notes") and Common Stock purchase warrants ("Private Placement Warrants") . The
purchase price of a unit was equal to the principal amount of the note included
therein. The Variable Rate Notes are due on December 31, 2001 and bear interest
at a rate of 10% per annum for the first three years and at 3% over the prime
rate for the remaining four years, provided, however, that the rate does not
fall below 8% or exceed 12% per annum. Mandatory repayment of 10% of the
original principal amount will commence at the end of the 4th year, followed by
15% of the original amount at the end of years 5 and 6. The Variable Rate Notes
are subordinated to indebtedness of the Company incurred to a bank or other
financial institution. For a limited period of time, after the third year of
the term, a noteholder will be permitted to convert up to 50% of his note into
shares of the Company's Common Stock at a price per share equal to the greater
of (i) the then average Market Price per share, as defined, over the last 60
trading days of 1997 or (ii) $3.00. The Company may redeem all or a portion of
the Variable Rate Notes at any time after December 31, 1997 at a premium over
the principal amount of the notes of 6%, which declines annually at the rate of
2% until January 1, 2001, after which the redemption price will be the principal
amount of the notes. For each 10,000 of Variable Notes acquired, each purchaser
received 1,355 Private Placement Warrants. Each such warrant entitles the
holder thereof to purchase one share of Common Stock at an exercise price of
$3.70 per share and expires on December 31, 2001. The holders of the Private
Placement Warrants are entitled to certain registration rights with respect to
the shares issuable upon exercise thereof.

During 1994, and 1995 and to date in 1996, management of Helm has provided
various administrative, managerial, financial, legal and accounting services to
the Company. The

<PAGE>

Company paid Helm $116,000 and $310,000 for such services rendered in 1994 and
1995, respectively, and has paid Helm $121,000 for such services through June
30, 1996.

In April 1995, the Company's Board of Directors authorized a stock purchase
plan, which permitted certain of the Company's employees, officers, directors
and consultants (and to a limited extent members of their immediate family) to
purchase units ("Units") in a private placement. Each Unit consisted of the
following: (i) 1.05 shares of Common Stock; (ii) 1.05 Common Stock purchase
warrants, each entitling the holder, at any time on or after August 1, 1996 (the
"Initial Exercise Date"), to purchase one share of Common Stock at a price of
$19.05 per share and expiring on December 31, 2000 (a "$19.05 Warrant"); and
(iii) 1.05 Common Stock purchase warrants, each entitling the holder, at any
time on or after the Initial Exercise Date, to purchase one share of Common
Stock at a price of $28.57 per share and also expiring on December 31, 2000 (a
"$28.57 Warrant") (collectively, the $19.05 Warrants and the $28.57 Warrants are
referred to as the "Warrants"). The Warrants are redeemable by the Company (at
a price of $.024 per Warrant) at any time after the closing sales price of the
Common Stock (as reported by the principal securities exchange on which the
Common Stock is traded) has been at least 125% of the then effective exercise
price of the Warrants (currently $23.81 for the $19.05 Warrants and $35.71 for
the $28.57 Warrants) for a period of 20 consecutive business days during a
period that the shares issuable upon exercise of the Warrants have been
registered for sale under the Securities Act of 1933. The purchase price of
each Unit was $4.00. Purchasers of Units are entitled to certain registration
rights with respect to the securities comprising the Units.

Pursuant to the plan, participants were permitted to acquire Units by
paying 5% of the total price upon purchase, and delivering a promissory note (a
"Note") for the remaining 95% of the price. Each Note provides for the annual
payment of 5% of the total purchase price, commencing in 1996, with a balloon
payment of the remaining unpaid principal amount of the Note (i.e. 50% of the
total purchase price) payable on a specified date in 2005 (the "Maturity Date").
Interest accrues on each Note at a rate of 6% per annum, which is payable on the
last day of each year throughout the term of the Note, with all remaining
accrued and unpaid interest due on the Maturity Date. 95% of the Units that
each participant acquired under the plan were pledged to the Company as security
for such participant's Note. Such Units may be released to the participant as
the Note is paid under certain circumstances. Participants are permitted to
make payments under their Notes by delivering shares of Common Stock that they
own, including pledged shares, which are credited against amounts owed under
their Notes at the fair market value thereof.

Messrs. Pearlman, Fox, Lawi, Craig, Bishop, Baruc, Murphy, Low and Epps
purchased 73,333, 25,000, 11,667, 10,000, 25,000, 25,000, 12,500, 12,500 and
10,000 Units pursuant to such plan, respectively. Mr. Lawi's son and daughter
each purchased 12,500 Units.

In June 1995 the Company and A Pix entered into a credit facility (the
"Facility") with Atlantic Bank of New York (the "Bank") providing for revolving
loans totaling up to $2,500,000. Mr. Pearlman and Mezzanine are contingently
liable to pay outstanding amounts under the

<PAGE>

Facility up to $300,000 in the aggregate. In consideration of its financial
accommodation, Mezzanine is entitled to receive 7,875 Class B Warrants for every
year that its accommodation is in effect and $500 per month during the term of
the accommodation and during which amounts are outstanding under the Facility.
The Company and A Pix are obligated to repay any sums that Mezzanine may be
required to pay to the Bank, and in order to secure this obligation, the Company
and A Pix have granted Mezzanine a security interest in substantially all of
their assets, which is subordinated to the Bank's security interest.

In September 1995 the Company extended an offer to its officers, directors
and certain consultants pursuant to which they could exercise any of the
Company's Class A Warrants then owned by them by borrowing the then exercise
price of $3.30 per share from the Company (such exercise price has not been
adjusted to reflect the Stock Dividend). Outstanding amounts of principal of
such loans bear interest at 6.2% per annum. Payment of principal and interest
is due on December 31, 2000, or if earlier, on the date the shares purchased
upon exercise (the "Underlying Shares") are sold. The loans are secured by a
security interest in the Underlying Shares. In the event of non-payment, the
Company's recourse is limited to exercising its rights with respect to such
security interest. Messrs. Pearlman, Fox and Lawi exercised, 102,780, 23,979
and 24,651 Class A Warrants, respectively, pursuant to the Company's offer.

In May 1996, the Company sold a Unit of the Company's securities to Martin
D. Payson's IRA in a private placement. The Unit consisted of the following: a
$250,000 principal amount 10% Convertible Subordinated Note of the Company due
June 30, 2003 (a "Note"), which is convertible into shares of Common Stock at a
price of $4.50 per share; and warrants ("Warrants") to purchase 25,000 shares of
Common Stock at an exercise price of $6.00 per share, expiring on June 30, 2003.
Mr. Payson's IRA paid $237,500 for the Unit. Mr. Payson became a director of
the Company on June 25, 1996. In July 1996, the Company sold a total of four
Units to customers of Gray Seifert in the same private placement for an
aggregate purchase price of $1,000,000.

In June 1996, the Company's Board of Directors authorized the merger of A
Pix Entertainment, Inc. ("A Pix") into the Company. The Company owns 90.5% of
the capital stock of A Pix, the balance is held by Robert Baruc, the President
of A Pix and an Executive Vice President and Director of the Company. Pursuant
to the terms of the merger, Mr. Baruc will receive 200,000 shares of Common
Stock in exchange for his A Pix interest. The valuation is based upon the
recent growth and profitability of A Pix. The Company plans to complete the
merger as soon as practicable.

Also in June 1996, the Company entered into an agreement with Strategic
Growth, Inc. ("Strategic Growth"), an investor relations firm, pursuant to which
the Company retained Strategic Growth to provide investor relations services to
the Company. The term of the Agreement is for one year, commencing on June 4,
1996. In consideration of Strategic Growth's services the Company will pay
Strategic Growth a monthly retainer of $8,000. In addition the Company is
obligated to issue to Strategic Growth 300,000 common stock purchase options.
Each option entitles the holder to purchase one share of Common Stock at a price
of $3.875,

<PAGE>

which was the market price as of the date of the Agreement. The options will
have a term of five years. The Company is also obligated to issue an additional
one hundred thousand options to Strategic Growth which will expire within one
year unless all of the Company's Class B Warrants have been exercised prior to
that time. If all the Class B Warrants are exercised during the one year
period, the 100,000 options will have the same term as the other 300,000
options.

The Class B Warrants currently have an exercise price of $4.28 per share.
In order for the Company to redeem the Class B Warrants, the closing high bid
price of the Common Stock on each of 20 consecutive trading days (or such lesser
number of days with the consent of the underwriter from the Company's initial
public offering, but not less than 10 consecutive trading days) ending on the
third business day prior to the date on which notice of redemption is given
must have been at least $5.71 per share.

The shares issuable upon exercise of the options issued to Strategic
Growth will have certain registration rights.

AMENDMENT TO THE COMPANY'S 1993 STOCK OPTION PLAN

In 1993, the Company adopted the 1993 Stock Option Plan (the "Plan"). The
purpose of the Plan is to promote the interests of the Company and its
stockholders by helping the Company and its subsidiaries attract, retain,
motivate, and reward key employees and consultants, including officers and
directors of the Company.

Under the Plan, the Company may grant to eligible individuals stock options
to purchase the Company's Common Stock. Both non-qualified options
("Non-Qualified Options") and options intended to qualify as "Incentive" stock
options ("Qualified Options") under Section 422 of the Internal Revenue Code
(the "Code") may be granted under the Plan (collectively, Non-Qualified and
Qualified Options are referred to as "Options"). Officers, directors, and
employees of, and consultants to, the Company (or a subsidiary thereof, within
the meaning of Section 424 (f) of the Code), are eligible to receive Options
under the Plan. The Company has approximately 61 employees, as well as three
non-employee directors. The Company also currently has two consultants who
would be considered for grants under the Plan.

The Plan is administered by either the Company's Board of Directors or the
Stock Option Committee of the Board of Directors (the "Committee"). Subject to
the provisions of the Plan, the Board or the Committee has the authority to
determine the individuals to whom Options are to be granted, the time or times
Options are to be granted, the number of shares to be covered by each Option and
the terms and provisions of each Option, including the vesting thereof. An
aggregate of 367,500 shares of Common Stock is currently reserved for issuance
under the Plan.

Under the Plan, the exercise price of Options shall be no less than the
fair market value of the Common Stock on the date of grant. However, at no time
may the exercise price of a Qualified Option granted to an individual (a
"Principal Stockholder") owning more than 10% of the total combined voting power
of all classes of stock of the Company, or any of its subsidiaries or of a
parent, be less than 110% of the fair market value of the shares of Common Stock
on the date of grant. Options may be granted for terms not exceeding ten years
from the date of grant, except for Qualified Options which are granted to
Principal Stockholders which may be granted

<PAGE>

for terms not exceeding five years from the date of grant. No Qualified Options
may be granted after April 23, 2003.

In the event of any merger, reorganization, consolidation,
recapitalization, dividend (other that a cash dividend), stock split, reverse
stock split, or other change in corporate structure affecting the Common Stock,
such substitution or adjustment will be made in the aggregate number of shares
reserved for issuance under the Plan and in the number and exercise price of
Shares subject to outstanding Options granted under the Plan as may be
determined to be appropriate in order to prevent dilution or enlargement of
rights.

The grant of an option, whether it is a Qualified Option or a Non-Qualified
Option, has no tax effect on the Company or on the optionee.

An optionee will not realize taxable compensation income as a result of the
exercise of a Qualified Option if the optionee holds the shares acquired until
at least one year after exercise or, if later, until two years after the date of
grant of the option. The amount by which the fair market value of the shares
exceeds the option price at the time of exercise generally is treated as an
adjustment to income for purposes of the alternative minimum tax. If an
optionee acquires stock through the exercise of a Qualified Option under the
Plan and subsequently sells the stock after holding the stock for the period
described above, the excess of the sale price of the stock over the option
exercise price will be taxed as capital gain. The gain will not be treated as
compensation income except when the holding period requirements discussed above
are not satisfied. A Qualified Option does not entitle the Company to an income
tax deduction except to the extent that an optionee realizes compensation
income.

When an optionee exercises a Non-Qualified Option, the optionee will
realize taxable compensation income at that time equal to the excess of the fair
market value of the stock on the date of exercise over the option price. An
optionee will generally have a basis in stock acquired through the exercise of a
Non-Qualified Option under the Plan equal to the fair market value of the stock
on the date of exercise. If the optionee subsequently sells the stock, the gain
which is the difference between the sale price and the basis will be taxed as
long-term or short-term capital gain, depending on the holding period of the
stock. Any compensation income realized by an optionee upon exercise of a
Non-Qualified Option will be allowable to the Company as a deduction at the time
it is realized by the optionee.

The Company has granted Options to purchase a total of 425,071 shares of
Common Stock under the Plan at exercise prices ranging from $2.86 per share to
$5.00 per share. Of such options: Options to purchase 52,500 shares at an
exercise price of $2.86 per share and expiring in August 2003 were granted to
Robert Baruc, a Director and an Executive Vice President of the Company; Options
to purchase 78,750 shares of Common Stock were granted to Robert Miller,
Executive Vice President of Sales of the North American Division, at an exercise
price of $4.29 per share and expiring on June 30, 2001; Options to purchase
50,000 shares of Common Stock were granted to Martin D. Payson, a Director of
the Company, at an exercise price of $4.00 per share and expiring on June 5,
2006; Options to purchase 40,425

<PAGE>

shares of Common Stock were granted to Lise Romanoff, formerly Senior Vice
President of International Co-Production and Development for the Company's
Unapix International Division, 26,250 of which have an exercise price of $2.86
per share, 13,125 of which have an exercise price of $3.93 per share, 1,050 of
which have an exercise price of $5.00 per share, and all of which expire on
December 31, 1996; Options to purchase 43,050 shares of Common Stock were
granted to Steven Low, the Company's Chief Accounting Officer, of which 26,250
have an exercise price of $2.86 per share and expire on June 30, 1999 ("June
1999 Options"), Options to purchase 15,750 shares have an exercise price of
$2.86 per share and expire in 2003 and 2004, and 1,050 Options have an exercise
price of $5.00 per share and expire on December 31, 2000 ("December 2000
Options"); and Options to purchase a total of 160,346 shares of Common Stock
were granted to other employees of the Company, 97,809 of which were June 1999
Options, 15,750 of which were Options having an exercise price of $3.93 per
share and expiring on December 31, 1999 ("December 1999 Options"), 21,787 of
which were December 2000 Options, and 25,000 of which have an exercise price of
$4.00 per share and expire on June 30, 2001 (the "June 2001 Options").

The June 1999 Options are exercisable on January 1,1999 and the December
1999 Options are exercisable on July 1, 1999. All such options may be exercised
at an earlier date upon the attainment of certain earnings or sales goals. All
of the December 2000 Options are currently exercisable. The June 2001 Options
and Mr. Payson's Options become exercisable in three equal consecutive annual
increments, subject to the holder's continuing to provide services to the
Company.

Currently, all of Mr. Baruc's, Ms. Romanoff's and Mr. Miller's Options and
38,172 and 16,666 of Messrs. Low's and Payson's Options, respectively, are
exercisable. An additional 117,652 of the Options held by other employees are
also exercisable.

The grant of 57,571 of Mr. Miller's Options are subject to the approval of
the amendment to the Plan proposed hereby.

The closing sales price of the Company's Common Stock, as reported by the
American Stock Exchange, on August 2, 1996, was $4.125.

The Board of Directors has adopted an amendment to the Plan, subject to
stockholder approval at the meeting, increasing the number of shares authorized
to be issued upon exercise of Options granted under the Plan from 367,500 to
600,000 shares.

The approval of the proposal to amend the Plan requires the affirmative
vote of the holders of a majority of the shares of Common Stock and Preferred
Stock A, voting together as a single class, present in person or represented by
proxy and entitled to vote at the Meeting.

THE BOARD OF DIRECTORS RECOMMENDS ADOPTION, APPROVAL AND RATIFICATION OF
THE AMENDMENT BY THE STOCKHOLDERS AT THE MEETING.

<PAGE>

VOTING ON THE PROPOSALS

With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect. With respect to the proposal to amend the Plan,
abstentions may be specified and will be counted as present for purposes of the
item on which the abstention is noted. Accordingly, since the amendment to the
Plan requires the approval of a majority of the outstanding voting shares,
present in person or represented by proxy at the Meeting and entitled to vote,
abstentions will have the effect of a negative vote. Broker non-votes are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business, but will have no effect on the outcome of the election
of director or the proposal to amend the Plan.

PROPOSALS BY STOCKHOLDERS

Proposals that stockholders wish to include in the Company's proxy
statement and form of proxy for presentation at the next Annual Meeting of
Shareholders must be received by the Company at 200 Madison Avenue, New York,
New York 10016, Attention David S. Lawi, prior to April 12, 1997.

INDEPENDENT AUDITORS

The Board of Directors has selected Richard A. Eisner & Company, LLP
("Richard Eisner & Co.") as independent auditors for the Company for the year
ending December 31, 1996. Richard Eisner & Co. have served as independent
auditors for the Company since 1994. The Company has been advised that
representatives of Richard Eisner & Co. will attend the Annual Meeting of
Stockholders, will have an opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions.

In November 1994, The Company changed its independent accounting firm, from
Shulman, Jacobson & Co., which audited the Company's financial statements for
the year ended December 31, 1993, to Richard Eisner & Co. The report of the
Company's former auditors on its financial statements for 1993 contained no
adverse opinions or disclaimers of opinions and was not qualified or modified as
to uncertainty, audit scope or accounting principles. In addition, during 1993
there were no disagreements with the auditors on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which if not resolved to the satisfaction of the accountants would
have caused them to make reference in connection with their reports to the
subject matter of the disagreement.

<PAGE>

MISCELLANEOUS

The Board of Directors knows of no other matters that are to be brought
before the meeting. However, if any other matters do come before the meeting,
the persons named on the enclosed form of proxy or their substitutes will vote
in accordance with their judgement on those matters.

The cost of solicitation of proxies, including expenses in connection with
preparing, assembling and mailing this proxy statement, will be borne by the
Company. The solicitation will be made by mail and may also be made by officers
or regular employees of the Company personally or by telephone or telegram. The
Company may reimburse brokers, custodians and nominees for their expenses in
sending proxies and proxy materials to beneficial owners.

New York, New York
August 9, 1996

25
<PAGE>

UNAPIX ENTERTAINMENT, INC.

1993 STOCK OPTION PLAN

SECTION 1. PURPOSE; DEFINITIONS.

1.1 PURPOSE. The purpose of the Unapix Entertainment, Inc. (the
"Company") 1993 Stock Option Plan (the "Plan") is to enable the Company to offer
to its key employees, officers, directors and consultants whose past, present
and/or potential contributions to the Company have been, are or will be
important to the success of the Company, an opportunity to acquire a proprietary
interest in the Company.

1.2 DEFINITIONS. For purposes of the Plan, the following terms shall
be defined as set forth below:

(a) "Agreement" means the agreement between the Company and the
Holder setting forth the terms and conditions of an award under the Plan.

(b) "Board" means the Board of Directors of the Company.

(c) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto and the regulations promulgated
thereunder.

(d) "Committee" means the Stock Option Committee of the Board or
any other committee of the Board which the Board may designate to administer the
Plan or any portion thereof. If no Committee is so designated, then all
references in this Plan to "Committee" shall mean the Board.

(e) "Common Stock" means the Common Stock of the Company, par
value $.01 per share.

(f) "Company" means Unapix Entertainment, Inc., a corporation
organized under the laws of the State of Delaware.

(g) "Disability" means disability as determined under procedures
established by the Committee for purposes of the Plan.

(h) "Effective Date" means the date set forth in Section 7.

(i) "Fair Market Value", unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder, means, as
of any given date: (i) if the Common Stock is listed on a national securities
exchange, quoted on the NASDAQ National Market System or quoted on the NASDAQ
Small Cap Market, the last sale price of the Common Stock on the last preceding
day

<PAGE>

on which the Common Stock was traded, as reported by the exchange or NASDAQ, as
the case may be; (ii) if the Common Stock is not listed on a national securities
exchange or quoted on the NASDAQ National Market System or NASDAQ Small Cap
Market, but is traded in the over-the-counter market, the average of the high
bid and low asked prices for the Common Stock on the last preceding day for
which such quotations are reported by a service providing such quotations (e.g.,
National Quotation Bureau, Inc.); and (iii) if the fair market value of the
Common Stock cannot be determined pursuant to clause (i) or (ii) above, such
price as the Committee shall determine, in good faith.

(j) "Family Group Member" shall mean the spouse, sibling or
lineal descendant of the Holder or a trust established for any such person.

(k) "Holder" means a person who has received an award under the
Plan.

(l) "Incentive Stock Option" means any Stock Option intended to
be and designated as an "incentive stock option" within the meaning of Section
422 of the Code.

(m) "Non-Qualified Stock Option" means any Stock Option that is
not an Incentive Stock Option.

(n) "Normal Retirement" means retirement from active employment
with the Company or any Subsidiary on or after age 65.

(o) "Parent" means any present or future parent corporation of
the Company, as such term is defined in Section 424(e) of the Code.

(p) "Plan" means the Unapix Entertainment, Inc. 1993 Stock Option
Plan, as hereinafter amended from time to time.

(q) "Stock" means the Common Stock of the Company, par value
$.01 per share.

(r) "Stock Option" or "Option" means any option to purchase
shares of Stock which is granted pursuant to the Plan.

(s) "Subsidiary" means any present or future subsidiary
corporation of the Company, as such term is defined in Section 424(f) of the
Code.

SECTION 2. ADMINISTRATION.

2.1 COMMITTEE MEMBERSHIP. The Plan shall be administered by the
Board or a Committee. Committee members shall serve for such term as the Board
may in each case determine, and shall be subject to removal at any time by the
Board. It is the intent of the Board that the Plan qualify under Rule 16b-3
promulgated under

<PAGE>

the Securities Exchange Act of 1934. To that end, unless otherwise determined
by the Board, each committee member shall be a disinterested person (i.e., a
director who is not, during the one year prior to service as an administrator of
the plan, or during such service, granted or awarded equity securities of the
Company pursuant to the Plan or any other plan of the Company or its affiliates
as provided by Rule 16b-3).

2.2 POWERS OF COMMITTEE. The Committee shall have full authority,
subject to Section 4.1 hereof, to grant Stock Options pursuant to the terms of
the Plan. For purposes of illustration and not of limitation, the Committee
shall have the authority (subject to the express provisions of this Plan):

(a) to select the officers, key employees, directors and
consultants of the Company or any Subsidiary to whom Stock Options may from time
to time be granted hereunder;

(b) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Stock Option granted hereunder (including, but not
limited to, number of shares, share price, any restrictions or limitations, and
any vesting, exchange, surrender, cancellation, acceleration, termination,
exercise or forfeiture provisions, as the Committee shall determine);

(c) to determine any specified performance goals or such other
factors or criteria which need to be attained for the vesting of an award
granted hereunder;

(d) to permit a Holder to elect to defer a payment under the
Plan under such rules and procedures as the Committee may establish, including
the crediting of interest on deferred amounts denominated in cash and of
dividend equivalents on deferred amounts denominated in Stock;

(e) to determine the extent and circumstances under which Stock
and other amounts payable with respect to an award hereunder shall be deferred
which may be either automatic or at the election of the Holder; and

(f) to substitute (i) new Stock Options for previously granted
Stock Options, which previously granted Stock Options have higher option
exercise prices and/or contain other less favorable terms.

2.3 INTERPRETATION OF PLAN.

(a) COMMITTEE AUTHORITY. Subject to Section 6 hereof, the
Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any award issued under the Plan (and to determine the form and
substance of all Agreements relating thereto), and to otherwise supervise the

<PAGE>

administration of the Plan. Subject to Section 10 hereof, all decisions made by
the Committee pursuant to the provisions of the Plan shall be made in the
Committee's sole discretion and shall be final and binding upon all persons,
including the Company, its Subsidiaries and Holders.

(b) INCENTIVE STOCK OPTIONS. Anything in the Plan to the
contrary notwithstanding, no term or provision of the Plan relating to Incentive
Stock Options or any Agreement providing for Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code, or, without the consent of the Holder(s) affected, to disqualify
any Incentive Stock Option under such Section 422.

SECTION 3. STOCK SUBJECT TO PLAN.

3.1 NUMBER OF SHARES. The total number of shares of Common Stock
reserved and available for distribution under the Plan shall be 600,000 shares.
Shares of Stock under the Plan may consist, in whole or in part, of authorized
and unissued shares or treasury shares. If any shares of Stock that have been
optioned cease to be subject to a Stock Option granted hereunder are forfeited
or any such award otherwise terminates without a payment being made to the
Holder in the form of Stock, such shares shall again be available for
distribution in connection with future grants and awards under the Plan. Only
net shares issued upon a stock-for-stock exercise (including stock used for
withholding taxes) shall be counted against the number of shares available under
the Plan.

3.2 ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC. In the event of
any merger, reorganization, consolidation, recapitalization, dividend (other
than a cash dividend), stock split, reverse stock split, or other change in
corporate structure affecting the Stock, such substitution or adjustment shall
be made in the aggregate number of shares reserved for issuance under the Plan
and in the number and exercise price of shares subject to outstanding Options
granted under the Plan as may be determined to be appropriate by the Committee
in order to prevent dilution or enlargement of rights, provided that the number
of shares subject to any award shall always be a whole number.

SECTION 4. ELIGIBILITY.

4.1 GENERAL. Awards may be made or granted to key employees,
officers, directors and consultants who are deemed to have rendered or to be
able to render significant services to the Company or its Subsidiaries and who
are deemed to have contributed or to have the potential to contribute to the
success of the Company. No Incentive Stock Option shall be granted to any
person who is not an employee of the Company or a Subsidiary at the time of
grant.

<PAGE>

4.2 GRANT OF OPTIONS TO OFFICERS AND DIRECTORS. The granting of
options to officers and directors of the Company shall be determined by a
committee of two or more directors, of which all members shall be disinterested
persons, as described in Section 2.1 hereof.

SECTION 5. STOCK OPTIONS.

5.1. GRANT AND EXERCISE. Stock Options granted under the Plan may be
of two types: (i) Incentive Stock Options and (ii) NonQualified Stock Options.
Any Stock Option granted under the Plan shall contain such terms, not
inconsistent with this Plan, or with respect to Incentive Stock Options, the
Code, as the Committee may from time to time approve. The Committee shall have
the authority to grant Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options and may be granted alone or in addition to other
awards granted under the Plan. To the extent that any Stock Option intended to
qualify as an Incentive Stock Option does not so qualify, it shall constitute a
separate Non-Qualified Stock Option. An Incentive Stock Option may only be
granted within the ten year period commencing from the Effective Date and may
only be exercised within ten years of the date of grant (or five years in the
case of an Incentive Stock Option granted to an optionee ("10% Stockholder")
who, at the time of grant, owns Stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or a Parent or
Subsidiary.

5.2. TERMS AND CONDITIONS. Stock Options granted under the Plan shall
be subject to the following terms and conditions:

(a) EXERCISE PRICE. The exercise price per share of Stock
purchasable under a Stock Option shall be determined by the Committee at the
time of grant and may be less than 100% of the Fair Market Value of the Stock at
the time of grant; provided, however, that the exercise price of an Incentive
Stock Option shall not be less than 100% of the Fair Market Value of the Stock
at the time of grant (110%, in the case of 10% Holder).

(b) OPTION TERM. Subject to the limitations contained in
Section 5.1, the term of each Stock Option shall be fixed by the Committee.

(c) EXERCISABILITY. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined by
the Committee. If the Committee provides, in its discretion, that any Stock
Option is exercisable only in installments, i.e., that it vests over time, the
Committee may waive such installment exercise provisions at any time at or after
the time of grant in whole or in part, based upon such factors as the Committee
shall determine.

(d) METHOD OF EXERCISE. Subject to whatever installment,
exercise and waiting period provisions are applicable in a particular case,
Stock Options may be exercised in whole or in part at any time during the term
of the Option, by giving written

<PAGE>

notice of exercise to the Company specifying the number of shares of Stock to be
purchased. Such notice shall be accompanied by payment in full of the purchase
price, which shall be in cash or, unless otherwise provided in the Agreement, in
shares of Stock or, partly in cash and partly in such Stock, or such other means
which the Committee determines are consistent with the Plan's purpose and
applicable law. Cash payments shall be made by wire transfer, certified or bank
check or personal check, in each case payable to the order of the Company;
provided, however, that the Company shall not be required to deliver
certificates for shares of Stock with respect to which an Option is exercised
until the Company has confirmed the receipt of good and available funds in
payment of the purchase price thereof. Payments in the form of Stock shall be
valued at the Fair Market Value of a share of Stock on the date prior to the
date of exercise. Such payments shall be made by delivery of stock certificates
in negotiable form which are effective to transfer good and valid title thereto
to the Company, free of any liens or encumbrances. A Holder shall have none of
the rights of a stockholder with respect to the shares subject to the Option
until such shares shall be transferred to the Holder upon the exercise of the
Option.

(e) TRANSFERABILITY. No Stock Option shall be transferable by
the Holder, otherwise than by will or by the laws of descent and distribution,
and all Stock Options shall be exercisable, during the Holder's lifetime, only
by the Holder; provided however that, notwithstanding anything to the contrary
contained herein, the Committee may in its sole discretion allow a Non-Incentive
Stock Option to be transferred to a Family Group Member.

(f) TERMINATION BY REASON OF DEATH. If a Holder's employment by
the Company or a Subsidiary terminates by reason of death, any Stock Option held
by such Holder, unless otherwise determined by the Committee at the time of
grant and set forth in the Agreement, shall be fully vested and may thereafter
be exercised by the legal representative of the estate or by the legatee of the
Holder under the will of the Holder, for a period of one year (or such other
greater or lesser period as the Committee may specify at grant) from the date of
such death or until the expiration of the stated term of such Stock Option,
whichever period is the shorter.

(g) TERMINATION BY REASON OF DISABILITY. If a Holder's
employment by the Company or any Subsidiary terminates by reason of Disability,
any Stock Option held by such Holder, unless otherwise determined by the
Committee at the time of grant and set forth in the Agreement, shall be fully
vested and may thereafter be exercised by the Holder for a period of one year
(or such other lesser period as the Committee may specify at the time of grant)
from the date of such termination of employment or until the expiration of the
stated term of such Stock Option, whichever period is the shorter.

(h) OTHER TERMINATION. Subject to the provisions of Section 8
below and unless otherwise determined by the Committee

<PAGE>

at the time of grant and set forth in the Agreement, if a Holder is an employee
of the Company or a Subsidiary at the time of grant and if such are Holder's
employment by the Company or any Subsidiary terminates for any reason other than
death or Disability, the Stock Option shall thereupon automatically terminate,
except that if the Holder's employment is terminated by the Company or a
Subsidiary without cause or due to Normal Retirement, then the portion of such
Stock Option which has vested on the date of the termination of employment may
be exercised for the lesser of three months after termination of employment or
the balance of such Stock Option's term.

(i) ADDITIONAL INCENTIVE STOCK OPTION LIMITATION. In the case
of an Incentive Stock Option, the amount of aggregate Fair Market Value of Stock
(determined at the time of grant of the Option) with respect to which Incentive
Stock Options are exercisable for the first time by a Holder during any calendar
year (under all such plans of the Company and its Parent and Subsidiary) shall
not exceed $100,000.

(j) BUYOUT AND SETTLEMENT PROVISIONS. The Committee may at any
time offer to buy out a Stock Option previously granted, based upon such terms
and conditions as the Committee shall establish and communicate to the Holder at
the time that such offer is made.

(k) STOCK OPTION AGREEMENT. Each grant of a Stock Option shall
be confirmed by, and shall be subject to the terms of, the Agreement executed by
the Company and the Holder.

(l) HOLDING PERIOD. All shares of Stock received by a Holder
upon exercise of an Option granted hereunder shall be non-transferable by the
Holder until at least six months has elapsed from the date of the granting of
such Option.

SECTION 6. AMENDMENTS AND TERMINATION.

The Board (but not the Committee) may at any time amend, alter,
suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuance shall be made which would impair the rights of a Holder under any
Agreement theretofore entered into hereunder, without his consent.

SECTION 7. TERM OF PLAN.

7.1 EFFECTIVE DATE. The Plan shall be effective as of April 23,
1993 ("Effective Date"), subject to the approval of the Plan by the stockholders
of the Company within one year after the Effective Date. Any awards granted
under the Plan prior to such approval shall be effective when made (unless
otherwise specified by the Committee at the time of grant), but shall be
conditioned upon, and subject to, such approval of the Plan by the Company's
stockholders. If the Plan shall not be so approved, all awards granted
thereunder shall be of no effect and any Stock received by

<PAGE>

a Holder upon the exercise of an award shall be deemed forfeited and the Holder
shall return the Stock to the Company.

7.2 TERMINATION DATE. Unless terminated by the Board, this Plan
shall continue to remain effective until such time no further awards may be
granted and all awards granted under the Plan are no longer outstanding.
Notwithstanding the foregoing, grants of Incentive Stock Options may only be
made during the ten year period following the Effective Date.

SECTION 8. GENERAL PROVISIONS.

8.1 WRITTEN AGREEMENTS. Each award granted under the Plan shall be
confirmed by, and shall be subject to the terms of the Agreement executed by the
Company and the Holder. The Committee may terminate any award made under the
Plan if the Agreement relating thereto is not executed and returned to the
Company within 60 days after the Agreement has been delivered to the Holder for
his or her execution.

8.2 UNFUNDED STATUS OF PLAN. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Holder by the Company, nothing contained herein shall
give any such Holder any rights that are greater than those of a general
creditor of the Company.

8.3 EMPLOYEES.

(a) ENGAGING IN COMPETITION WITH THE COMPANY. In the event an
employee Holder terminates his employment with the Company or a Subsidiary for
any reason whatsoever, and within eighteen (18) months after the date thereof
accepts employment with any competitor of, or otherwise engages in competition
with, the Company, the Committee, in its sole discretion, may require such
Holder to return to the Company the economic value of any award which was
realized or obtained (measured at the date of exercise) by such Holder at any
time during the period beginning on that date which is six months prior to the
date of such Holder's termination of employment with the Company.

(b) TERMINATION FOR CAUSE. The Committee may, in the event an
employee is terminated for cause, annul any award granted under this Plan to
such employee and in such event the Committee, in its sole discretion, may
require such Holder to return to the Company the economic value of any award
which was realized or obtained (measured at the date of exercise) by such Holder
at any time during the period beginning on that date which is six months prior
to the date of such Holder's termination of employment with the Company.

(c) NO RIGHT OF EMPLOYMENT. Nothing contained in the Plan or in
any award hereunder shall be deemed to confer upon any employee of the Company
or any Subsidiary any right to continued employment with the Company or any
Subsidiary, nor shall

<PAGE>

it interfere in any way with the right of the Company or any Subsidiary to
terminate the employment of any of its employees at any time.

8.4 INVESTMENT REPRESENTATIONS. The Committee may require each
person acquiring shares of Stock pursuant to a Stock Option or other award under
the Plan to represent to and agree with the Company in writing that the Holder
is acquiring the shares for investment without a view to distribution thereof.

8.5 ADDITIONAL INCENTIVE ARRANGEMENTS. Nothing contained in the Plan
shall prevent the Board from adopting such other or additional incentive
arrangements as it may deem desirable, including, but not limited to, the
granting of stock options and the awarding of stock and cash otherwise than
under the Plan; and such arrangements may be either generally applicable or
applicable only in specific cases.

8.6 WITHHOLDING TAXES. Not later than the date as of which an amount
first becomes includible in the gross income of the Holder for Federal income
tax purposes with respect to any option or other award under the Plan, the
Holder shall pay to the Company, or make arrangements satisfactory to the
Committee regarding the payment of, any Federal, state and local taxes of any
kind required by law to be withheld or paid with respect to such amount. If
permitted by the Committee, tax withholding or payment obligations may be
settled with Common Stock, including Common Stock that is part of the award that
gives rise to the withholding requirement. The obligations of the Company under
the Plan shall be conditional upon such payment or arrangements and the Company
or the Holder's employer (if not the Company) shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind
otherwise due to the Holder from the Company or any Subsidiary.

8.7 GOVERNING LAW. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of Delaware (without regard to choice of law provisions).

8.8 OTHER BENEFIT PLANS. Any award granted under the Plan shall not
be deemed compensation for purposes of computing benefits under any retirement
plan of the Company or any Subsidiary and shall not affect any benefits under
any other benefit plan now or subsequently in effect under which the
availability or amount of benefits is related to the level of compensation
(unless required by specific reference in any such other plan to awards under
this Plan).

8.9 NON-TRANSFERABILITY. Except as otherwise expressly provided in
the Plan, no right or benefit under the Plan may be alienated, sold, assigned,
hypothecated, pledged, exchanged, transferred, encumbranced or charged, and any
attempt to alienate, sell, assign, hypothecate, pledge, exchange, transfer,
encumber or charge the same shall be void.

<PAGE>

8.10 APPLICABLE LAWS. The obligations of the Company with respect to
all Stock Options and awards under the Plan shall be subject to (i) all
applicable laws, rules and regulations and such approvals by any governmental
agencies as may be required, including, without limitation, the effectiveness of
a registration statement under the Securities Act of 1933, as amended, and (ii)
the rules and regulations of any securities exchange on which the Stock may be
listed.

8.11 CONFLICTS. If any of the terms or provisions of the Plan
conflict with the requirements of with respect to Incentive Stock Options,
Section 422A of the Code, then such terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of said Section
422A of the Code. Additionally, if this Plan does not contain any provision
required to be included herein under Section 422A of the Code, such provision
shall be deemed to be incorporated herein with the same force and effect as if
such provision had been set out at length herein.

8.12 NON-REGISTERED STOCK. The shares of Stock being distributed
under this Plan have not been registered under the Securities Act of 1933, as
amended (the "1933 Act"), or any applicable state or foreign securities laws and
the Company has no obligation to any Holder to register the Stock or to assist
the Holder in obtaining an exemption from the various registration requirements,
or to list the Stock on a national securities exchange.
<PAGE>

UNAPIX ENTERTAINMENT, INC.

FORM OF PROXY

The undersigned hereby appoints HERBERT M. PEARLMAN, DAVID M. FOX and DAVID
S. LAWI, and each of them with full power of substitution, proxies to vote all
shares of common stock or preferred stock of Unapix Entertainment, Inc. (the
"Company") owned by the undersigned at the Annual Meeting of Stockholders on
September 12, 1996 and at any adjournment thereof on the items of business set
forth on the reverse and on such other business as may properly come before the
meeting.

(TO BE SIGNED ON REVERSE SIDE)

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- ----- PLEASE MARK YOUR NOMINEES:
X VOTES AS IN THIS Herbert M. Pearlman
- ----- EXAMPLE. David S. Lawi
Martin D. Payson

FOR WITHHOLD
AUTHORITY

1. ELECTION of ----- -----
all nominees
as directors ----- -----
until their
successors shall be
duly elected.

TO WITHOLD AUTHORITY TO VOTE FOR ANY
SPECIFIC NOMINEE(S), PRINT NAME(S), BELOW

________________________________________

2. PROPOSAL to approve, adopt and ratify
an amendment to the Company's 1993
Stock Option Plan.

FOR AGAINST ABSTAIN

----- ----- -----

This proxy is solicited on behalf of the Board of Directors. If the
undersigned fails to specify how the proxy is to be voted, it will be voted FOR
the election of the Nominees and FOR the Proposals.

_________________________(L.S.)_________________________(L.S.) DATE________1996
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER

NOTE: (Please sign your name exactly as it appears on the proxy. When
signing as attorney, agent, executor, administrator, trustee, guardian
or corporate officer, please give full title as such. Each joint
owner should sign the proxy).