UNAPIX ENTERTAINMENT INC, PRE 14A, 1997-08-08

UNAPIX ENTERTAINMENT INC
PRE 14A, 1997-08-08
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:

[ X ] Preliminary proxy statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
[ ] 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 ] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11

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

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

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

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

(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):

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

(4) Proposed maximum aggregate value of transaction:

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

(5) Total Fee paid:

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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing 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:

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PRELIMINARY COPY

UNAPIX ENTERTAINMENT, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD OCTOBER 6, 1997

To Our Stockholders:

You are cordially invited to attend the Annual Meeting of Stockholders
of Unapix Entertainment, Inc. (the "Company") to be held on October 6, 1997
at 10:00 a.m. at the Friar's Club, 57 E. 55th Street, New York, New York
10022, for the following purposes:

1. To elect two directors;

2. To approve a proposed amendment to the Company's Certificate of
Incorporation to increase the authorized Common Stock;

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

4. 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 28, 1997
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 ____, 1997

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PRELIMINARY COPY

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
October 6, 1997 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 28,
1997 as the record date for the meeting. On that date, the Company had
outstanding _________________ shares of common stock, $.01 par value ("Common
Stock"), and 505,490 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 29, 1997.

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 1997 are
nominees for re-election at the 1997 Annual Meeting of Stockholders to serve
until the Annual Meeting of Stockholders in

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the year 2000, or until their successors are duly elected. The nominees
named by the Board of Directors to serve until the Annual Meeting of
Stockholders in the year 2000 are Messrs. Lawrence Bishop and Walter M.
Craig, Jr., 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 two
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.

DIRECTOR OF TERM AS
THE COMPANY DIRECTOR
NAME AGE SINCE EXPIRES IN
- ---- --- ----------- ----------
Nominees for Director
Lawrence Bishop 52 1993 1997
Walter M. Craig, Jr. 43 1993 1997

Other Directors
David M. Fox 48 1992 1998
Scott Hanock 39 1990 1998
Robert Baruc 46 1995 1998
Herbert M. Pearlman 64 1990 1999
David S. Lawi 62 1990 1999
Martin D. Payson 61 1996 1999

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

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

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

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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 also serves as Senior Vice
President of the Company and has been a Director of the Company since 1990.
Mr. Hanock was one of the original co-founders of the Company. Prior to
forming the Company in 1986, from 1983-1986, Mr. Hanock served as Director of
Worldwide Sales for Tatum Communications Inc., a Hollywood based company
which specialized in sports television production and international
distribution, most well known for the North American Pro-Ski tour and various
other ESPN and Prime Network series. Prior to 1983, Mr. Hanock's business
activities in the television industry were diversified in the areas of
program consulting and international sales for several production houses.

ROBERT BARUC. Mr. Baruc, has been a 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 ("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.

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 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

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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; 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. Mr. Lawi is also a
director of Intersystems and has been Chairman of its Executive Committee
since October 1986 and its secretary since March 1984. In addition, Mr. Lawi
is an officer and a director of Helm 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: Delta Financial Corporation (a New York Stock
Exchange listed company); Panavision, Inc. (a New York Stock Exchange listed
Company); and Meridian Sports Incorporated. 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.

COMMITTEES AND ATTENDANCE

During 1996, 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
1996. The purpose of the Executive Committee is to act on an interim basis
for the full Board. The Executive Committee is comprised of Messrs.
Pearlman, Fox, Lawi, Payson, Craig and Baruc. 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. The purpose of the Compensation Committee is to
advise management on the compensation of the Company's executive officers.
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 Plan." The Audit, Compensation and Stock Option Committees are
each comprised of Messrs. Payson, Bishop and Craig.

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OTHER EXECUTIVE OFFICERS

Other than Messrs. Pearlman, Fox, Lawi, Baruc and Hanock, who are also
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
- ---- --- --------

Robert G. Miller 36 Vice President, Executive
Vice President of the North
American Division

Timothy Smith 44 Vice President, Executive
Vice President of Production
of the North American Division

Daniel T. Murphy 58 Chief Financial Officer

Michael R. Epps 39 General Counsel

Steven P. Low 37 Chief Accounting Officer

ROBERT MILLER. Mr. Miller has been a Vice President of the Company since
September 1996 and he has been an Executive Vice President of the Company's
North American Division since February 1996. From July 1995 to February
1996, Mr. Miller was Vice President of International Television Distribution
for the National Football League. He was Vice President of Showtime Program
Enterprises, which is engaged in sales of all original productions of the
Showtime Channel, from February 1993 to July 1995. From October 1991 to
February 1993, he was Director of Event Sales and Management for Golden Gate
Productions.

TIMOTHY SMITH. Mr. Smith has been a Vice President of the Company since
September 1996 and he has been Executive Vice President of Production of the
Company's North American Division since February 1996. From May 1995 to
February 1996, he was General Manager of Programming and head of New Media
for IVN Communications, Inc., a company engaged in producing and distributing
tapes and home video and cable television programming. Mr. Smith was a
producer of The MacNeil/Lehrer Newshour from 1983 to 1995.

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.

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MICHAEL R. EPPS. Mr. Epps has been the General Counsel of the Company since
September 1995. 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.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

The following table sets forth, as of July 24, 1997, 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.

- ----------------------------------------------------------------------------
Common Stock The High View Fund, L.P. 984,283 (3)(4) 14.3%
805 Third Avenue
New York, NY 10022

- ----------------------------------------------------------------------------
Common Stock The High View Fund 363,945 (4)(5) 5.8%
c/o Mees Pierson Fund
Services
(Bahamas) Limited
Windermere House
404 East Bay Street
P.O. Box SS 6238
Nassau, The Bahamas
- ----------------------------------------------------------------------------

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- ----------------------------------------------------------------------------
TITLE AMOUNT AND NATURE PERCENT
OF NAME AND ADDRESS OF OF BENEFICIAL OF
CLASS BENEFICIAL OWNER OWNERSHIP (1) CLASS
----- ------------------- ----------------- -------
- ----------------------------------------------------------------------------
Common Stock Legg Mason, Inc. 845,533(6) 12.4%
c/o Gray, Seifert & Co., Inc.
380 Madison Avenue
New York, NY 10017
- ----------------------------------------------------------------------------
Common Stock Strategic Growth 480,000(7) 7.4%
International, Inc.
111 Great Neck Road
Suite 606
Great Neck, New York 11021-
5402
- ----------------------------------------------------------------------------
Common Stock David S. Lawi 453,859(8) 7.3%
c/o Unapix Entertainment, Inc.
537 Steamboat Road
Greenwich, CT 06830
- ----------------------------------------------------------------------------
Common Stock AIM Overseas N.V. 315,000 5.3%
Luxembourg Information Systems
31, BD Prince Felix
L-1513 Luxembourg
- ----------------------------------------------------------------------------
Common Stock David M. Fox 442,960(9) 7.0%
c/o Unapix Entertainment, Inc.
200 Madison Avenue
New York, NY 10016
- ----------------------------------------------------------------------------
Common Stock Robert Baruc 339,999(10) 5.6%
c/o Unapix Entertainment, Inc.
200 Madison Avenue
New York, NY 10016
- ----------------------------------------------------------------------------
Preferred Stock* Legg Mason, Inc. 99,996(11) 19.8%
c/o Gray, Seifert & Co., Inc.
380 Madison Avenue
New York, NY 10017
- ----------------------------------------------------------------------------

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

* 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.

(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; 202,109
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 ("$19.05 Warrants"); 76,999 shares
issuable upon exercise of warrants having an exercise price of
$28.57 per share and that also expire

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in December 2000 ("$28.57 Warrants"); 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. These options have an exercise price
of $3.00 per share of Preferred Stock A and expire in January 1999.

(3) Includes the following: 638,889 shares of Common Stock issuable
upon conversion of $2,875,000 principal amount of notes due in
2003; and 250,000 shares issuable upon exercise of warrants,
having an exercise price of $6.00 per share, and expiring in June
2003 ("$6.00 Warrants").

(4) The sole general partner of The High View Fund, L.P. (the
"Partnership") is High View Capital Corporation ("HVCC"). The
investment manager of The High View Fund (the"Fund") is High View
Asset Management Corporation ("HVAM"). The sole holder of voting
stock of both HVCC and HVAM is Ernest P. Werlin. Mr. Werlin is a
director of HVCC and the sole director of HVAM. Mr. Werlin is
President and Treasurer of each of HVCC and HVAM. Peter J. Powers
became a director and an executive officer of HVCC during fiscal
year 1997. As a result of the foregoing relationships, it is
possible that the Partnership and the Fund could be deemed to
constitute a "group" for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934 , in which case the Partnership and
the Fund would be deemed to beneficially own 1,348,234 shares of
Common Stock constituting beneficial ownership of 18.8% of the
Company's Common Stock. In addition, Ernest P. Werlin individually
owns a total of 113,556 shares of the Company's Common Stock (which
figure includes 55,556 shares of Common Stock issuable upon
conversion of a $250,000 note due in 2003 and 25,000 shares
issuable upon exercise of $6.00 Warrants) and Mr. Powers
individually owns a total of 10,000 shares. Because of their
relationship to the Partnership and the Fund, HVCC, HVAM, Messrs.
Werlin and Powers could be deemed to have beneficial ownership of
the shares owned by such entities, or could be deemed to constitute
a group together with such entities. If Messrs. Werlin and Powers,
HVCC, HVAM and the Partnership and the Fund were deemed to
constitute a group, such a group would beneficially own an
aggregate of 1,471,790 shares of Common Stock constituting
beneficial ownership of 20.2% of the Company's Common Stock. Each
of the Partnership and the Fund, HVCC, HVAM and Messrs. Werlin and
Powers disclaims beneficial ownership of the shares owned by any
other person or entity and disclaims membership in a group.

(5) Includes the following: 194,445 shares of Common Stock issuable
upon conversion of $875,000 of notes due in 2003; and 125,000
shares issuable upon exercise of $6.00 Warrants.

(6) 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

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dispose of all such shares. The figure includes the following
shares of Common Stock: 5,250 shares of Common Stock issuable upon
exercise of Class B Warrants; 104,995 shares of Common Stock
issuable upon conversion of Preferred Stock A; 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 an aggregate principal amount of
$1, 000, 000 of notes due in 2003; and 100,000 shares of Common
Stock issuable upon exercise of $6.00 Warrants.

(7) 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) 180,000 shares that are
issuable upon exercise of warrants having an exercise price of
$4.50 per share and expiring in December 2001. Richard Cooper is
the Chairman of Strategic Growth International, Inc. ("Strategic
Growth") and owns 50% of its common stock. Mr. Cooper individually
owns 11,000 shares of the Company's Common Stock. Because of his
relationship to Strategic Growth he may be deemed to own, in
addition to such 11,000 shares, the shares beneficially owned by
Strategic Growth. Accordingly, he may be deemed to own 491,000
shares of Common Stock, constituting beneficial ownership of 7.6%
of the Company's Common Stock. Stanley Altschuler is the President
of Strategic Growth and owns 50% of its common stock. Mr.
Altschuler individually owns 39,500 Class B Warrants. Because of

Mr. Altschuler's relationship to Strategic Growth he may be deemed
to own, in addition to such 39,500 warrants, the shares
beneficially owned by Strategic Growth. Accordingly, he may be
deemed to own 519,500 shares of Common Stock constituting
beneficial ownership of 8.0% of the Company's Common Stock.

(8) Includes the following shares of Common Stock: 17,500 shares that
are issuable upon conversion of Preferred Stock A; 41,126 shares
that are issuable upon exercise of Class B Warrants; 101,056 shares
that are issuable upon exercise of Earnings Options; 12,251 shares
that are issuable upon exercise of $19.05 Warrants; 12,251 shares
that are issuable upon exercise of $28.57 Warrants; and 18,375
shares that are issuable upon exercise of Preferred Stock Options
and the subsequent conversion of shares underlying such options.

(9) 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; 151,593 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

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shares that are issuable upon exercise of $28.57 Warrants that are
also owned by Mr. Fox's wife; and 15,750 shares owned by Mr. Fox's
wife as trustee for his children.

(10) 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; 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) 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.

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

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

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth, as of July 24, 1997, 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 JULY 24, 1997 (1)

- -------------------------------------------------------------------------
COMMON PERCENT PREFERRED PERCENT
NAME STOCK OF CLASS STOCK (2) OF CLASS
- -------------------------------------------------------------------------
Herbert M. Pearlman 1,173,282(3) 18.0% 79,999(4) 14.8%
- -------------------------------------------------------------------------
David S. Lawi 453,859(5) 7.3% 34,166(6) 6.5%
- -------------------------------------------------------------------------
David M. Fox 442,960(7) 7.0% 16,666 3.3%
- -------------------------------------------------------------------------
Scott Hancock 241,999(8) 4.0% 8,333 1.7%
- -------------------------------------------------------------------------
Robert Baruc 339,999(9) 5.6% 8,333 1.7%
- -------------------------------------------------------------------------

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- -------------------------------------------------------------------------
Martin D. Payson 113,887(10) 1.9% --- ---
- -------------------------------------------------------------------------
Lawrence Bishop 124,750(11) 2.1% --- ---
- -------------------------------------------------------------------------
Walter M. Craig, Jr. 59,932(12) 1.0% --- ---
- -------------------------------------------------------------------------
Robert Miller 97,250(13) 1.6% --- ---
- -------------------------------------------------------------------------
Timothy Smith 20,334(14) * --- ---
- -------------------------------------------------------------------------
All directors 3,282,504(15) 42.0% 159,496(16) 28.6%
and executive
officers as a group
- -------------------------------------------------------------------------

- ----------------------
* 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.

(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; 202,109 shares
that are issuable upon exercise of Earnings Options; 76,999 shares
issuable upon exercise of $19.05 Warrants; 76,999 shares 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: 17,500 shares that
are issuable upon conversion of Preferred Stock A; 41,126 shares
that are issuable upon exercise of Class B Warrants; 101,056 shares
that are issuable upon exercise of Earnings Options; 12,251 shares
that are issuable upon exercise of $19.05 Warrants; 12,251 shares
that are issuable upon exercise of $28.57 Warrants; and 18,375
shares that are

12
<PAGE>
issuable upon exercise of Preferred Stock Options and the subsequent
conversion of shares underlying such 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; 151,593 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 by 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: 8,749 shares issuable
upon conversion of Preferred Stock A; 67,375 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.

(9) 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; 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.

(10) 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
$6.00 Warrants; and 33,332 shares issuable upon exercise of options,
having an exercise price of $4.00 per share, and expiring on June 5,
2006.

(11) Includes 31,500 shares of Common Stock and 15,750 shares of Common
Stock that are issuable upon exercise of Class B Warrants 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.

(12) Includes 26,950 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.

13
<PAGE>

(13) Includes 78,750 shares issuable upon exercise of options having an
exercise price of $4.29 per share and expiring in June 2001 and
16,500 shares issuable upon exercise of options having an exercise
price of $4.44 per share and expiring in March 2002.

(14) Includes 8,334 shares issuable upon exercise of options having an
exercise price of $4.00 per share and expiring in June 2001, and
10,000 shares issuable upon exercise of options having an exercise
price of $4.50 per share and expiring June 2002.

(15) Includes all shares described in footnotes (3), (5), (7), (8), (9),
(10), (11), (12), (13) and (14) above as well as the following
shares of Common Stock: 12,598 shares issuable upon conversion of
shares of Preferred Stock A; 72,346 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; 1,575 shares that are issuable upon exercise of
Class B Warrants; 36,750 shares that are issuable upon exercise of
$19.05 Warrants; 36,750 shares that are issuable upon exercise of
$28.57 Warrants; and 10,000 options having an exercise price of
$4.56 per share.

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

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING 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, except for the following: Walter M. Craig, Jr., a director of
the Company, failed to timely report a transfer of 3,500 shares of the
Company's common stock effectuated in June 1996; Lawrence Bishop, a director
of the Company, failed to timely report the acquisition from the Company of
5,000 and 10,000 of the Company's Class B common stock purchase warrants in
January and May 1994, respectively; The High View Fund, L.P. (the
"Partnership"), which became the beneficial owner of more than ten percent of
the Company's common stock in October 1996, as well as The High View Fund
(the "Fund"), High View Capital Corporation ("HVCC"), High View Asset
Management Corporation ("HVAM") Ernest P. Werlin and Andrew M. Brown, who
because of their relationship to the Partnership at such time could have been
deemed to be part of a group owning more than ten percent of the Company's
common stock, failed to timely file an initial report on Form 3 reporting
their holdings in the Company's securities; and the Partnership and the Fund
each failed to timely report the purchase of 20,000 shares of the Company's
common stock effected by each of them in November 1996 [See "Security Ownership
of Certain Beneficial Owners and Management" for a description of the
relationship among the Partnership, the Fund, HVCC, HVAM and Mr. Werlin].

14
<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 its four other most highly paid executive officers, who were
executive officers as of December 31, 1996 (collectively, the "Named
Executive Officers").

SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------
ANNUAL LONG-TERM
NAME COMPENSATION COMPENSATION ALL OTHER
AND PRINCIPAL YEAR SALARY BONUS OTHER SHARES OF COMPENSATION
POSITION ANNUAL COMMON
COMPEN- STOCK
SATION UNDERLYING
OPTIONS
<S> <C> <C> <C> <C> <C> <C>

- -----------------------------------------------------------------------------------------
David M. Fox 1996 $200,000 $25,000 --- --- ---
- -----------------------------------------------------------------------------------------
President, CEO 1995 173,954 21,697 --- --- ---
- -----------------------------------------------------------------------------------------
1994 168,071 --- --- --- ---
- -----------------------------------------------------------------------------------------
Scott Hancock 1996 160,000 12,000 --- --- ---
- -----------------------------------------------------------------------------------------
Managing 1995 145,200 30,437 --- --- $10,000(1)
Director
- -----------------------------------------------------------------------------------------
1994 117,810 7,500 --- --- 6,180 (1)
- -----------------------------------------------------------------------------------------
Robert Baruc 1996 195,000 7,000 --- --- ---
- -----------------------------------------------------------------------------------------
Executive 1995 149,040 24,000 --- --- ---
Vice President
- -----------------------------------------------------------------------------------------
1994 144,000 24,000 --- --- ---
- -----------------------------------------------------------------------------------------
Robert Miller 1996 118,000 15,570 --- 95,250 ---
Vice President
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Timothy Smith 1996 118,000 --- $18,000 25,000 ---
Vice President (2)
- -----------------------------------------------------------------------------------------
</TABLE>

(1) Pursuant to Mr. Hanock's employment agreement the amount set forth was
deposited into a Rabbi Trust account for Mr. Hanock's benefit. The
amount was payable to Mr. Hanock (or his beneficiary) out of such trust
over a five-year period commencing on the earlier of his

15
<PAGE>

death or upon his reaching the age of 65 years. The amounts deposited
were calculated based upon pre-tax profits for 1994 and 1995. During 1996
all amounts deposited in the Rabbi Trust account were disbursed to
Mr. Hanock. Commencing with such year, the Company is no longer obligated
to deposit any funds into a Rabbi Trust account for Mr. Hanock's benefit.

(2) Amount consists of relocation expenses paid by the Company in connection
with the commencement of Mr. Smith's employment.

STOCK OPTIONS

The following two tables provide information on stock option grants
made to the Named Executive Officers in 1996, options exercised during 1996,
and options outstanding on December 31, 1996.

Stock Options Grants in 1996
- ----------------------------------------------------------------------------------------------
Number of Percent of total
securities options granted
underlying to employees Exercise price
Name options granted in 1996 per share Expiration
Date
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
David M. Fox --- --- --- ---
- ----------------------------------------------------------------------------------------------
Scott Hanock --- --- --- ---
- ----------------------------------------------------------------------------------------------
Robert Baruc --- --- --- ---
- ----------------------------------------------------------------------------------------------
Robert Miller 78,750 (1) 65.5% $4.29 6/30/2001
- ----------------------------------------------------------------------------------------------
Robert Miller 16,500 (2) 13.7% $4.44 3/11/2002
- ----------------------------------------------------------------------------------------------
Timothy Smith 25,000 (3) 20.8% $4.00 6/30/2001
- ----------------------------------------------------------------------------------------------
</TABLE>

1 These options became exercisable on the date of grant.

2 These options were issued in March 1997 but were earned based upon the
distribution fees and commissions of the Company's North American Division
accrued for 1996.

3 These options were not immediately exercisable. 8,334 of the options
became exercisable on May 6, 1997 and 8,333 options will become exercisable
on each of May 6, 1998 and May 6, 1999. However, all such options will
become immediately exercisable if (i) the Company sells all or substantially
all of its assets or (ii) merges into or consolidates with another
corporation or sells

<PAGE>

shares of capital stock, and in connection with such transaction there is a
change in the composition of a majority of the Company's directors.

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.

- -----------------------------------------------------------------------------------------------
Number of Unexer- Value of Unexercised
Number cised Options In-the Money
of Shares at Fiscal Year-End Options at Fiscal Year-End (1)
Acquired --------------------------------------------------------
on Value
Name Exercise Realized Unexer- Unexer-
Exercisable cisable Exercisable cisable
<S> <C> <C> <C> <C> <C> <C>

- -----------------------------------------------------------------------------------------------
David M. Fox --- --- 247,130 84,656 $480,764 $107,090
- -----------------------------------------------------------------------------------------------
Scott Hanock --- --- 96,915 37,625 167,971 47,596
- -----------------------------------------------------------------------------------------------
Robert Baruc --- --- 52,500 --- 66,413 ---
- -----------------------------------------------------------------------------------------------
Robert Miller --- --- 78,750(2) --- --- ---
- -----------------------------------------------------------------------------------------------
Timothy Smith --- --- --- 25,000 --- 3 ,125
- -----------------------------------------------------------------------------------------------
</TABLE>

(1) Represents the difference between $4.125, the closing sales price of the
Company's Common Stock on December 31, 1996, 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) Does not include 16,500 options that were issued to Mr. Miller in 1997
based upon the distribution fees and commissions of the Company's North
American Division that were accrued for 1996.

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 1996, was granted options to
purchase 50,000 shares of Common Stock in connection with his serving as a
director. The options, which were granted in June 1996, 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 the date the Board authorized the
grant. Options to purchase 16,666 shares were

17
<PAGE>

immediately exercisable. Options to purchase 16,667 shares became
exercisable on June 6, 1997 and options to purchase another 16,667 shares
will become exercisable on 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
$200,000, $225,000 and $250,000 for 1996, 1997 and 1998, respectively, with a
further increase in 1999 and 2000 based on the consumer price index. Mr. Fox
was 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. He is entitled to
receive a bonus equal to 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 1996, the Company 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 $25,000,000 , subject to certain
earnings thresholds . For 1996 and 1997, Mr. Fox has been and will be paid a
minimum annual bonus (whether or not required by the various bonus formulae)
of $25,000. Mr. Fox has received an advance against the Sales Bonus and
other bonus amounts which may be earned under the agreement of $25,000.
During 1996, pursuant to his employment agreement, Mr. Fox also received $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
$160,000, $190,000, $200,000 and $220,000 for 1996, 1997, 1998 and 1999
respectively, with a further increase in 2000 based on the consumer price
index. Mr. Hanock was entitled to receive an annual bonus equal to 2% of the
Company's annual pre-tax profits in excess of $650,000 for 1996. For 1997,
Mr. Hanock is entitled to receive an annual bonus of 2% of the Company's
first $500,000 of pre-tax profits plus an amount equal to the greater of (i)
3% of the Company's pre-tax profits in excess of $650,000 for such year or
(ii) 4% of the pre-tax profits of the Unapix International Division ("UID")
for such year. For 1998 and each subsequent year, the Company will pay Mr.
Hanock an annual bonus equal to the greater of (i) 3% of the Company's
pre-tax profits or (ii) 4% of UID's pre-tax profits. The Company also has
agreed to pay Mr. Hanock an additional bonus, for each year of his
employment period, equal to 1% of the amount by which sales of UID for each
such year exceeded its sales for the prior year. Additionally, he is entitled
to 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.

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 has been and
is entitled to be paid an annual salary of $195,000, $220,000 and $245,000
for 1996, 1997 and 1998,

<PAGE>

respectively, with a further increase in 1999 and 2000 based upon the
consumer price index. Mr. Baruc was 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. He is entitled to receive a bonus equal to 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 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. If any options to purchase
shares of the Company's common stock are granted to Mr. Fox after January 1,
1996, Mr. Baruc is entitled to receive a grant of options equal to 75% of the
amount granted to Mr. Fox and having substantially identical terms.

Robert Miller is employed under an agreement having a term expiring in
February 1999. Under the terms of the Agreement Mr. Miller was paid a salary
at an annual rate of $136,000 for 1996. Commencing January 1, 1997 and for
each year that he is employed, Mr. Miller's salary is to be increased based
upon the consumer price index (resulting in a salary of $140,080 for 1997).
Under his agreement Mr. Miller is entitled to receive a bonus equal to 2.5%
of all sales commissions or distribution fees received by the Company's North
American Division ("NAD Fees") plus 2.5% of all NAD Fees generated from sales
with respect to which he was the principal salesperson. Mr. Miller is paid
an advance of such bonus of $1,500 per month. In connection with his
employment agreement, Mr. Miller was granted 78,750 common stock purchase
options having an exercise price of $4.29 per share, all of which are
currently exercisable. In addition, the Company has committed to issue an
additional aggregate amount of 75,000 common stock purchase options to Mr.
Miller subject to the North American Division's attaining certain levels of
NAD Fees for the years 1996, 1997 and 1998. The exercise price of each
such additional option will be equal to the then current market price of the
Company's common stock on the date of such option's issuance and will have a
term of five years. Mr. Miller was issued 16,500 such options in March 1997
based upon the NAD Fees for 1996. Such options have an exercise price of
$4.44 per share and expire in March 2002.

Timothy Smith is employed under an agreement having a term expiring in
February 1998, which will be automatically extended for an additional year
unless either the Company or Mr. Smith elects to terminate. Mr. Smith was
paid a salary at an annual rate of $135,000 for 1996. Commencing January 1,
1997 and for each year that he is employed, Mr. Smith's salary is to be
increased based upon the consumer price index (resulting in a salary of
$139,050 for 1997). Under his agreement Mr. Smith is entitled to receive a
bonus equal to 5% of the profits achieved by the Company (during the time he
is employed by the Company and for six months thereafter) from programs that
it produces which Mr. Smith developed and with respect to which he is the
principal employee of the Company to oversee production. In connection
with his employment agreement,

19
<PAGE>

Mr. Smith was granted 25,000 common stock purchase options having an exercise
price of $4.00 per share. One-third of the options became exercisable on May
6, 1997 and one-third of the options will become exercisable on each of May
6, 1998 and 1999. In addition, the Company has committed to issue an
additional 25,000 common stock purchase options to Mr. Smith at such time,
during his term of employment, that he has developed, and been the principal
employee of the Company to have overseen the production of, at least 18
television programs for the Company and all of the programs developed and so
overseen by him, on a cumulative basis, have resulted in a profit to the
Company. The additional options will have an exercise price equal to $.125
above the market price of the Company's common stock on the date such options
are issued and will have a term of five years.

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 are
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 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.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In December 1993 the Company agreed to develop a joint venture for the
purpose of funding the acquisition by A Pix Entertainment of the distribution
rights to independently produced films. The initial investors were: Messrs.
Pearlman and Lawi, who are executive officers and directors of the Company;
a partnership of which Mr. Bishop, a director of the Company, is the general
partner (the "Bishop Partnership"); and an investor who is a customer of
Gray, Seifert & Co., Inc. ("Gray Seifert"), an investment advisory firm of
which Mr. Bishop is an Executive Vice President. In December 1993 and the
first and second quarters of 1994 Messrs. Pearlman and Lawi, the Bishop
Partnership and the customer of Gray Seifert invested $100,000, $50,000,
$150,000 and $50,000, respectively . In January 1996 and 1997, Mr. Pearlman
invested approximately another $53,000 and $47,600, respectively, and Mr.
Lawi invested approximately another $26,000 and $23,800, respectively.
Until formal agreements are signed the $500,400 is treated as demand loans.
The oral agreement with respect to the joint venture provides for the
following: (i) a term to be determined; (ii) the venture's recoupment of
110% of its investment in any one film from the first dollars of gross

20
<PAGE>

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. As of December 31,
1996, after giving effect to the reinvestment of all joint venture proceeds
from A Pix Entertainment films into additional films, the total amount of
the joint venture's investment in the Company, on an accrual basis, was
approximately $927,000. Messrs. Pearlman and Lawi , the Bishop Partnership
and the Gray Seifert customer received 10,500, 5,250, 15,750 and 5,250 Class
B Warrants, respectively, in connection with their investments.

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, Hanock and Baruc (all of whom are
executive officers or directors of the Company), purchased 44,999, 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. In addition, investors who are customers of Gray Seifert purchased
an aggregate of approximately 100,000 shares of Preferred Stock A in such
private placement.

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) $2.86. 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.

21
<PAGE>

The holders of the Private Placement Warrants are entitled to certain
registration rights with respect to the shares issuable upon exercise thereof.

During 1995, 1996 and to date in 1997, management of Helm has provided
various administrative, managerial, financial, legal and accounting services
to the Company. The Company paid Helm $310,000 and $182,000 for such
services rendered in 1995 and 1996, respectively, and has paid Helm
approximately $46,000 for such services through June 30, 1997. The amount
paid was equal to Helm's direct out-of-pocket expenses of providing such
services.

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 the Company's common stock,
$.01 par value per share ("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.

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<PAGE>

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 Entertainment entered into a credit
facility (the "Atlantic Facility") with Atlantic Bank of New York (the
"Bank") providing for revolving loans totaling up to $2,500,000. Mr.
Pearlman and The Mezzanine Financial Fund, L.P. ("Mezzanine") were
contingently liable to pay outstanding amounts under the Atlantic Facility up
to $300,000 in the aggregate. Messrs. Pearlman and Lawi are officers,
directors and principal stockholders 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 owns
approximately 9% of the limited partnership interests of Mezzanine. Mr.
Craig is an officer and director of Helm. In consideration of its financial
accommodation, Mezzanine was entitled to receive 7,875 Class B Warrants for
every year that its accommodation was in effect and $500 per month during the
term of the accommodation and during which amounts were outstanding under the
Atlantic Facility. The Company and A Pix Entertainment were obligated to
repay any sums that Mezzanine was required to pay to the Bank, and in order
to secure this obligation, the Company and A Pix Entertainment granted
Mezzanine a security interest in substantially all of their assets, which was
subordinated to the Bank's security interest. In May 1997 the Company
replaced the Atlantic Facility with a new credit facility with Imperial Bank
(the "Imperial Facility"). Proceeds from the Imperial Facility were used to
repay the Atlantic Facility in full.

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
exercise price of $3.14 per share from the Company . 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 an
IRA of Martin D. Payson, a director of the Company, in a private placement.
The Unit consisted of the following: a $250,000 principal amount 10%
Convertible Subordinated Note of the Company due 2003, which is convertible
into shares of Common Stock at a price of $4.50 per share; and twenty five
thousand $6.00 Warrants. 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 August 1996 the Company effectuated the merger of A Pix Entertainment
with and into the Company under Delaware Law. Robert Baruc, the President of
A Pix Entertainment and an Executive Vice President and Director of the
Company, was the owner of 9.5% of the capital stock

23
<PAGE>

of A Pix Entertainment and received 200,000 shares of the Company's Common
Stock with respect to the merger. The valuation was based upon the recent
growth and profitability of A Pix Entertainment. The Company owned 90.5% of
the capital stock of A Pix Entertainment prior to the merger.

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. Strategic Growth is currently the beneficial owner
of over 5% of the Company's common stock, but did not own such percentage of
shares at the time the agreement was entered into. The term of the Agreement
was originally one year, commencing on June 4, 1996, which has subsequently
been extended for an additional two year period. In consideration of
Strategic Growth's services, the Company pays Strategic Growth a monthly
retainer of $8,000 . In addition, the Company granted 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, which was the market
price as of the date of the Agreement. The options have a term of five
years. The Company is also obligated to issue an additional 100,000 options
to Strategic Growth if all of the Company's Class B Warrants have been
exercised prior to June 3, 1998. If all the Class B Warrants are exercised
prior to such date, the 100,000 options will have the same term as the other
300,000 options. The shares issuable upon exercise of the options granted to
Strategic Growth will have certain registration rights.

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.

During the fourth quarter of 1996 and the first and second quarters of
1997, the Company paid a total of $337,500 and issued an aggregate of 240,000
common stock purchase warrants, each having an exercise price of $4.50 per
share and expiring in December 2001, to Strategic Growth as a finder's fee
in connection with private placements of the Company's securities.
Securities that were sold consisted of units ("Units"), each priced at
$250,000 and comprised of : (i) a $250,000 principal amount 10% Convertible
Subordinated Note due in 2003 convertible into the Company's common stock at
a price of $4.50 per share; and (ii) twenty-five thousand $6.00 Warrants.

During the fourth quarter of 1996, The High View Fund, L.P. (the
"Partnership") purchased a total of eight Units and The High View Fund (the
"Fund") purchased a total of four Units , for an aggregate purchase price of
$3,000,000. As a result of such purchases, the Partnership and the Fund
became beneficial owners of over 5% of the Company's common stock. During
the second quarter of 1997, the Partnership purchased another two Units and
the Fund purchased another one Unit for an aggregate purchase price of
$750,000. The sole general partner of the Partnership is High View Capital
Corporation ("HVCC"). The investment manager of the Fund is High View Asset

24
<PAGE>

Management Corporation ("HVAM"). The sole holder of voting stock of both
HVCC and HVAM is Ernest P. Werlin. Mr. Werlin is a director of HVCC and the
sole director of HVAM; he is also the President and Treasurer of both HVCC
and HVAM. Mr. Werlin purchased one Unit in January 1997 for a purchase price
of $250,000. See "Security Ownership of Certain Beneficial Owners and
Management."

25
<PAGE>

AMENDMENT TO CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED COMMON STOCK

The Board of Directors has voted to recommend that the stockholders
authorize amendment to the Company's Certificate of Incorporation to increase
the number of authorized shares of Common Stock from 20,000,000 shares to
40,000,000 shares. The proposed amendment is set forth in Exhibit A. If the
amendment is approved, these shares may be issued from time to time by the
Board of Directors. It is not expected that further authorization from the
stockholders will be solicited for the issuance of any such shares of Common
Stock, except to the extent such authorization is required by law or by the
rules of the American Stock Exchange. Stockholders do not have preemptive
rights, and the proposed amendment would not create any preemptive rights.

The Board of Directors recommends that the number of authorized shares
of Common Stock be increased to 40,000,000 shares. The Company currently has
20,000,000 shares of Common Stock authorized and, as of July 24, 1997, had
5,980,934 shares outstanding, 2,578,900 shares in the aggregate reserved for
issuance under the Company's stock option plans and other outstanding stock
options (which does not include the 275,000 additional shares that
stockholders are being requested to approve for issuance under the Company's
1993 Stock Option Plan), an additional 4,293,000 shares reserved for issuance
pursuant to the Common Stock purchase warrants, an additional 2,907,500
shares reserved for issuance upon conversion of convertible debentures and
530,765 shares reserved for issuance upon conversion of the Company's Series
A 8% Convertible Preferred Stock. Accordingly, as of July 24, 1997, only
3,708,901 shares of Common Stock were authorized and not outstanding or
reserved for issuance.

The Company has no plans, understandings or negotiations underway at
this time for the issuance of any unissued and unreserved shares.
Nevertheless, the Board believes that it is desirable to have sufficient
number of shares of Common Stock available, as the occasion may arise, for
possible future financings and acquisitions transactions, stock dividends or
splits, stock issuances pursuant to employee benefit plans and other proper
corporate purposes and accordingly recommends the proposed increase. Having
such additional shares available for issuance in the future would give the
Company greater flexibility by allowing shares to be issued without incurring
the delay and expense of a special stockholder's meeting.

Although the Board has no present intention of doing so, shares of
unauthorized and unissued Common Stock could be issued in one or more
transactions that could have the effect of making a takeover of the Company
more difficult and deterring an offer for the Company at a substantial
premium over the current market price of the Company's Common Stock. The
amendment has not been proposed as an anti-takeover provision, and the
Company is not aware of any attempt by a third party to acquire control of
the Company.

26
<PAGE>

The proposal to amend the Company's Certificate of Incorporation
requires the approval of a majority of the outstanding voting shares and a
majority of the outstanding shares of Common Stock voting separately as a
class.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO INCREASE
THE AUTHORIZED COMMON STOCK.

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 70 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 600,000 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 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 than a cash dividend), stock split, reverse
stock split, or other change in corporate structure

27
<PAGE>

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 506,225 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 95,250 shares of Common Stock were granted to Robert
Miller, a Vice President of the Company and Executive Vice President of the
North American Division, 78,750 of which have an exercise price of $4.29 per
share and expire on June 30, 2001 and 16,500 of which have an exercise price
of $4.44 per share and expire on March 11, 2002; 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 a total of 35,000 shares of Common Stock were
granted to Timothy Smith, a Vice President of the Company and Executive Vice
President of Production of the North American Division, 25,000 of which have
an exercise price of $4.00 per share and expire in June

28
<PAGE>

2001 and 10,000 of which have an exercise price of $4.50 per share and expire
in June 2002; Options to purchase 53,050 shares of Common Stock were granted
to other executive officers of the Company, 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, 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 10,000 shares of Common Stock have an exercise price of
$4.56 per share and expire in February 2002; Options to purchase 50,000
shares of Common Stock were granted to Bruce H. Lucker, Executive Vice
President of the Company's Unapix/Miramar division, all of which have an
exercise price of $4.50 per share and expire in June 2007; and Options to
purchase a total of 170,425 shares of Common Stock were granted to other
employees of the Company, 133,125 of which were June 1999 Options, 13,125 of
which were Options which have an exercise price of $3.93 per share and expire
on December 31, 1999, 11,550 of which were December 2000 Options, 10,000 of
which have an exercise price of $4.375 per share and expire on March 16, 2007
and 2,625 of which have an exercise price of $3.81 per share and expire on
September 30, 1997.

Currently, all of Messrs. Baruc's and Miller's and 33,332 and 18,334 of
Messrs. Payson's and Smith's Options, respectively, are exercisable. All of
the Options held by the other executive officers of the Company are currently
exercisable. None of Mr. Lucker's options are currently exercisable, and
such options will not be exercisable until January 2007 unless certain
earnings thresholds are achieved during 1998 and 1999. 160,425 of the
Options held by other employees are also currently exercisable.

Of the total Options to purchase 506,225 shares of Common Stock that
were granted under the Plan, Options to purchase a total of 80,625 shares
have been exercised to date.

The closing sales price of the Company's Common Stock, as reported by
the American Stock Exchange, on August 5, 1997, was $4.875.

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
600,000 to 875,000 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.

29
<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 Company's
Certificate of Incorporation and 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, and
the amendment to the Certificate of Incorporation requires a majority of the
outstanding voting shares (and a majority of the outstanding shares of common
stock voting separately), 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 they are not
counted for purposes of determining whether the proposal has been approved.

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 June 7, 1998.

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, 1997. 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.

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, or by professional proxy solicitors acting on behalf of the
Company. 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 _____, 1997

<PAGE>

EXHIBIT A

If the proposal to increase the authorized shares of Common Stock is
approved, paragraph Fourth of the Company's Certificate of Incorporation will
be amended in its entirety to read as follows:

"The aggregate number of shares which the Corporation shall have
authority to issue is forty-three million (43,000,000), consisting of
forty million (40,000,000) shares of common stock and three million
(3,000,000) shares of preferred stock, and the par value of each share
is $.01. The Board of Directors may authorize the issuance from time to
time of the preferred stock in one or more series and with such
designations, preferences, relative, participating, optional and other
special rights, and qualifications, limitations or restrictions (which
may differ with respect to each series) as the Board may fix by
resolution."

<PAGE>

ANNEX A

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 0ption Plan (the "Plan") is to enable the Company to offer
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 on which the Common Stock was traded, as reported by the

<PAGE>

exchange or NASDAQ, as the case may be; (ii) if the Common Stock is not listed
an 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.

(1) "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" of "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 the Securities Exchange Act of 1934.

<PAGE>

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 Authoritv. 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

<PAGE>

substance of all Agreements relating thereto) , and to otherwise supervise the
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 875,000 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) Non-Qualified 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 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

<PAGE>

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 f 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 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

<PAGE>

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 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.

<PAGE>

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 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

<PAGE>

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.

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 an 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 4 22A 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

<PAGE>

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>

PRELIMINARY COPY

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 October 6, 1997 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)

<PAGE>

A X Please mark your
-------- votes as in this
example.

WITHHOLD
FOR AUTHORITY NOMINEES: Lawrence Bishop
Walter M. Craig, Jr.

1. ELECTION of ----- ----------

all nominees
as directors
until their
successors shall be duly elected.

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

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

FOR AGAINST ABSTAIN

2. PROPOSAL to amend the Company's
Certificate of Incorporation to ---- -------- ---------
increase the authorized common
stock.

FOR AGAINST ABSTAIN

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

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 1997
- ------------------------ ------------------------ ---------
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).