<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14 (a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [ X ]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11c or Rule 14a-12
UNAPIX ENTERTAINMENT, INC.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[ X ] 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;
(4) Proposed maximum aggregates value of transaction:
<PAGE>
(5) Total Fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing fee for which the
offsetting fee was previously paid. Identify the previous filing by
registration statement number, or the form or schedule and the date of
its filing.
(1) Amount Previously paid:___________________________________________
(2) Form, Schedule or Registration Statement No.:_____________________
(3) Filing Party:_____________________________________________________
(4) Date Filed:_______________________________________________________
<PAGE>
UNAPIX ENTERTAINMENT, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 19, 1998
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 19, 1998 at
10:00 a.m. at The Board Room of The American Stock Exchange, Inc., 13th Floor,
86 Trinity Place, New York, New York 10006-1881 for the following purposes:
1. To elect three directors;
2. To approve, adopt and ratify an amendment to the Company's 1993 Stock
Option Plan; and
3. To transact such other business as may properly come before the
meeting or any adjournment of the meeting.
Only stockholders of record at the close of business on September 9, 1998
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
September 18, 1998
<PAGE>
UNAPIX ENTERTAINMENT, INC.
200 MADISON AVENUE
NEW YORK, NY 10016
----------------
PROXY STATEMENT
----------------
The accompanying proxy is solicited on behalf of the Board of Directors of
the Company for use at the Annual Meeting of Stockholders to be held on October
19, 1998 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 September 9, 1998
as the record date for the meeting. On that date, the Company had outstanding
7,498,503 shares of common stock, $.01 par value ("Common Stock"), and 501,323
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 September 18, 1998.
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 1998 are nominees for
re-election at the 1998 Annual Meeting of Stockholders to serve until the Annual
Meeting of Stockholders in the year 2001, 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 2001 are Messrs. David M. Fox, Robert Baruc
and Scott Hanock, who are currently directors of the Company.
<PAGE>
The persons named in the enclosed form of proxy have advised that, unless
contrary instructions are received, they intend to vote for the three nominees
named by the Board of Directors of the Company and listed below. If, by reason
of death or other unexpected occurrence, one or more of these nominees is not
available for election, the persons named in the form of proxy have advised that
they will vote for such substitute nominees as the Board of Directors of the
Company may propose.
The nominees and directors are presented below by class.
DIRECTOR OF TERM AS
THE COMPANY DIRECTOR
NAME AGE SINCE EXPIRES IN
- ---- --- ----------- ----------
Nominees for Director
David M. Fox 50 1992 1998
Scott Hanock 40 1990 1998
Robert Baruc 47 1995 1998
OTHER DIRECTORS
Herbert M. Pearlman 65 1990 1999
David S. Lawi 62 1990 1999
Lawrence Bishop 53 1993 2000
Walter M. Craig, Jr. 44 1993 2000
- ----------------------------------------
PRINCIPAL OCCUPATION OVER THE PAST FIVE YEARS AND OTHER DIRECTORSHIPS OF
DIRECTORS
DAVID M. FOX. Mr. Fox has been the Company's Chief Executive Officer and a
Director since March 1992. He has been the Company's Vice Chairman of the Board
since June 1998, and he was the Company's President from March 1992 until June
1998. 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 Midwestern Sales Manager for D.L. Taffner Ltd., syndicator of, among
other programs, "Three's Company" and "The Benny Hill Show."
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<PAGE>
SCOTT HANOCK. Mr. Hanock has been Managing Director of International Sales and
Marketing of the Company since 1986. He has served in the Office of the
President since June 1998, and prior to that he was Senior Vice President of the
Company. Mr. Hanock has been a Director of the Company since 1990, and 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 served in the Office of the President since June 1998, and prior
to that he was an Executive Vice President of the Company, a position he held
since April 1994. He has been President and Chief Executive Officer of A Pix
Entertainment 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. Mr. Baruc is currently a director of General Bearing Corporation.
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 Capital Group, Inc.
("Helm"), an American Stock Exchange listed company, which finances, initiates,
develops, acquires and oversees the management of various business enterprises;
and Teletrak Advanced Technology Systems, Inc., which is currently inactive
("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
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<PAGE>
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 Chairman of its Executive Committee and is a director of
Teletrak.
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 and the Four M. Corporation.
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 Core Capital, 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.
COMMITTEES AND ATTENDANCE
During 1997, the Company's Board of Directors held six 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. The Audit Committee met once during 1997. None of the other
committees met separately from the entire Board during 1997. 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, Hanock 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. Bishop and Craig. Mr. Payson
had been a member of each of the Committees of the Company's Board of Directors
until August 24, 1998, which is the date he resigned from the Company's Board.
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
4
<PAGE>
officers of the Company together with certain biographical information for each
of them is set forth below:
NAME AGE POSITION
Paul Sullivan 51 Office of the President, President
of the Unapix/Miramar Division
David A. Dreilinger 50 Chief Operating Officer
Robert G. Miller 37 Executive Vice President of Television,
President of the North American Division
Timothy Smith 45 Executive Vice President of Production
Daniel T. Murphy 59 Chief Financial Officer
Cheryl Freeman 40 Vice President Finance, Accounting and
Operations/West Coast
Michael R. Epps 40 General Counsel
PAUL SULLIVAN. Mr. Sullivan has served in the Office of the President of the
Company since June 1998. He has been the President of the Company's
Unapix/Miramar Division since the Company's acquisition of Miramar Images, Inc.
("Miramar") in March 1997. Mr. Sullivan was President of Miramar since he
founded it in 1985. Before founding Miramar, Mr. Sullivan was employed in
various capacities in the music industry, including as a radio disc jockey and
as Vice President/General Manager of a small retail music company.
DAVID A. DREILINGER. Mr. Dreilinger has been the Company's Chief Operating
Officer since May 1998. From February 1997 until May 1998, he was a consultant
providing business and legal services to international and domestic
broadcasters, producers, authors and executives. He was a member of the Board
of Directors and Senior Vice President of Business and Legal Affairs of BBC
Worldwide Americas, Inc. from January 1995 until February 1997. From August
1985 until December 1994, he was Vice President, Business and Legal Affairs of
D.L. Taffner Ltd. ("Taffner"). Prior to his employment by Taffner, Mr.
Dreilinger was Executive Vice President of Business and Legal Affairs for the
Almi Group and Vice President, General Counsel and Secretary of Viacom
International, Inc.
ROBERT MILLER. Mr. Miller has been the Company's Executive Vice President of
Television and President of the Company's North American Division since June
1998. Prior to that he was Vice President of the Company (a position he held
since September 1996) and an Executive Vice
5
<PAGE>
President of the North American Division (a position he held 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 the Company's Executive Vice President of
Production since June 1998. He was a Vice President of the Company from
September 1996 until his appointment as the Company's Executive Vice President
of Production. He also served as Executive Vice President of Production of the
Company's North American Division from February 1996 until such appointment.
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.
CHERYL FREEMAN. Ms. Freeman has been Vice President of Finance, Accounting and
Operations/West Coast since May 1998. From July 1993 until May 1998, she was
Chief Financial Officer of Celebrity Home Entertainment, Inc. and Celebrity
Duplicating Services, Inc. Ms. Freeman was Vice President of Finance of LIVE
Entertainment, Inc. from March 1991 to July 1993.
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.
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of August 31, 1998, 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.
Title Amount and Nature
of Name and Address of of Beneficial Percent of
Class Beneficial Owner Ownership (1) Class
- ----------- ------------------- ----------------- ----------
Common Stock Herbert M. Pearlman 1,318,149 (2) 16.3%
c/o Unapix Entertainment, Inc.
537 Steamboat Road
Greenwich, Connecticut 06830
Common Stock The High View Fund, L.P. 767,534 (3)(4) 9.3%
805 Third Avenue
New York, NY 10022.
Common Stock Legg Mason, Inc. 891,979 (5) 10.7%
c/o Gray, Seifert & Co., Inc.
380 Madison Avenue
New York, NY 10017
Common Stock Forest Investment Management 671,053 (6) 8.2%
53 Forest Avenue
Old Greenwich, Connecticut 06870
Common Stock Strategic Growth International, Inc. 570,000 (7) 7.07%
111 Great Neck Road
Suite 606
Great Neck, New York 11021-5402
Common Stock David S. Lawi
c/o Unapix Entertainment, Inc. 504,965 (8) 6.6%
537 Steamboat Road
Greenwich, Connecticut 06830
Common Stock David M. Fox 403,220 (9) 5.2%
c/o Unapix Entertainment, Inc.
200 Madison Avenue
New York, NY 10016
7
<PAGE>
Title Amount and Nature
of Name and Address of of Beneficial Percent of
Class Beneficial Owner Ownership (1) Class
- ----------- ------------------- ----------------- ----------
Preferred Stock* Legg Mason, Inc. 99,996 (10) 20.0%
c/o Gray, Seifert & Co., Inc.
380 Madison Avenue
New York, NY 10017
Preferred Stock* Herbert M. Pearlman 79,999 (11) 14.9%
c/o Unapix Entertainment, Inc.
537 Steamboat Road
Greenwich, Connecticut 06830
Preferred Stock* Tradewind Fund 50,000 10.0%
c/o Harbor Capital Management
2701 Summer Street
Suite 200
Stanford, Connecticut
Preferred Stock* Martin & Velia Bramante 38,334 7.6%
45 Peninsula Road
Belvedere, CA 94920
Preferred Stock* David S. Lawi 34,166 (12) 6.6%
c/o Unapix Entertainment, Inc.
93 Mason Street
Greenwich, Connecticut 06830
- -----------------------
* 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; 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
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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 in
December 2000 ("$28.57 Warrants"); 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); 6,344 shares
that are issuable upon exercise of options having an exercise price of
$4.50 per share and expiring March 2007 ("March 2007 Options"); 84,211
shares issuable upon conversion of $400,000 principal amount of notes
due in June 2003 (the "June 2003 Notes"); and 50,000 shares issuable
upon exercise of common stock purchase warrants that are issuable upon
conversion of the June 2003 Notes (the "June 2003 Warrants"), each
such warrant having an exercise price of $6.00 per share and expiring
June 2003. Also includes 1,000 shares owned by Mr. Pearlman's wife as
to which Mr. Pearlman disclaims beneficial ownership.
(3) Consists of the following: 529,334 shares of Common Stock issuable
upon conversion of $2,382,000 principal amount of notes due in June
2003; and 238,200 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") and certain other
entities that beneficially own shares of the Company's common stock 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 also
an executive officer of each of HVCC and HVAM. Peter J. Powers is a
director and an executive officer of HVCC and is an executive officer
of HVAM. Ernest P. Werlin individually beneficially owns a total of
93,556 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). Peter Powers individually owns a total of 10,000 shares of
Common Stock. The Fund beneficially owns 322,223 shares of Common
Stock (consisting of 222,223 shares issuable upon conversion of
$1,000,000 of notes due in 2003, and 100,000 shares issuable upon
exercise of $6.00 Warrants). In addition, HVCC is (i) the general
partner of The High View Fund II, L.P. ("Partnership II"), the
beneficial owner of 118,578 shares of the Company's Common Stock
(consisting of 81,778 shares issuable upon conversion of $368,000
principal amount of notes due in June 2003, and 36,800 shares issuable
upon exercise of $6.00 Warrants) and (ii) the investment manager of
The High View SSFI Fund, LDC. (the "SSFI Fund"), the beneficial owner
of 83,882 shares of Common Stock (consisting of 52,632 shares issuable
upon conversion of $250,000 principal amount
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of notes due in June 2003, and 31,250 shares issuable upon exercise of
$6.00 Warrants). Because of their relationship to the Partnership and
the Fund, HVCC, HVAM, Partnership II, the SSFI Fund and 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, the Partnership, Partnership II, SSFI Fund and the Fund were
deemed to constitute a group, such a group would beneficially own an
aggregate of 1,395,773 shares of Common Stock constituting beneficial
ownership of 15.7% of the Company's Common Stock. Each of the
Partnership, the Fund, Partnership II, the SSFI 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) Legg Mason, Inc. is a parent holding company of Gray, Seifert & Co.,
Inc. ("Gray Seifert"). All such shares are owned by customers of Gray
Seifert, however, through agreements with such customers, Gray Seifert
has discretionary power to vote and dispose of all such shares. The
figure includes the following shares of Common Stock: 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; 100,000 shares of Common Stock
issuable upon exercise of $6.00 Warrants; 26,316 shares of Common
Stock issuable upon conversion of $125,000 principal amount of June
2003 Notes; and 15,625 shares issuable upon exercise of June 2003
Warrants.
(6) Consists of 421,053 shares issuable upon conversion of $2,000,000
principal amount of June 2003 Notes owned by various funds managed by
Forest Investment Management and 250,000 shares issuable upon exercise
of June 2003 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) 270,000 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 581,000 shares of Common Stock constituting beneficial
ownership of 7.2% 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; 101,056 shares that are
issuable upon exercise of
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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; 18,375 shares that are issuable upon exercise of
Preferred Stock Options and the subsequent conversion of shares
underlying such options; 6,344 shares that are issuable upon exercise
of March 2007 Options; 21,053 shares issuable upon conversion of
$100,000 principal amount of notes due in June 2003; and 12,500 shares
issuable upon exercise of $6.00 Warrants.
(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;
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; 13,123
shares issuable upon conversion of Preferred Stock A and 6,344 shares
that are issuable upon exercise of March 2007 Options. 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.
(10) 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.
(11) Includes 35,000 shares of Preferred Stock A which are issuable upon
exercise of Preferred Stock Options.
(12) Includes 17,500 shares of Preferred Stock A which are issuable upon
exercise of Preferred Stock Options.
SECURITY OWNERSHIP OF MANAGEMENT
11
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The following table sets forth, as of August 31, 1998, information
concerning the beneficial ownership of each class of equity securities by each
director, nominee, Named Executive Officer (as defined in "Executive
Compensation"), and by all executive officers and directors as a group.
SHARES AND PERCENT OF COMMON STOCK OR
PREFERRED STOCK A - OWNED BENEFICIALLY AS
OF AUGUST 31, 1998 (1)
-----------------------------------------
COMMON PERCENT PREFERRED PERCENT
NAME STOCK OF CLASS STOCK (2) OF CLASS
- ---- ------ -------- --------- --------
Herbert M. Pearlman 1,318,149 (3) 16.3% 79,999(4) 14.9%
David S. Lawi 504,965 (5) 6.6% 34,166(6) 6.6%
David M. Fox 403,220 (7) 5.2% 13,123 2.6%
Scott Hanock 248,342 (8) 3.3% 8,333 1.7%
Robert Baruc 346,343 (9) 4.6% 8,333 1.7%
Lawrence Bishop 251,823(10) 3.3% --- ---
Walter M. Craig, Jr. 58,152(11) * --- ---
Robert Miller 137,094(12) 1.8% --- ---
All directors and
executive officers as
a group (14 persons) 3,497,415(13) 37.2% 153,953(14) 27.8%
- ----------------------
* 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; 202,109 shares that are
issuable upon exercise of Earnings Options; 76,999 shares issuable
upon exercise of $19.05 Warrants; 76,999
12
<PAGE>
shares issuable upon exercise of $28.57 Warrants; 36,750 shares which
are issuable upon exercise of Preferred Stock Options and the
subsequent conversion of the underlying shares of Preferred Stock A;
6,344 shares that are issuable upon exercise of March 2007 Options;
84,211 shares issuable upon conversion of $400,000 principal amount of
June 2003 Notes; and 50,000 shares issuable upon exercise of June 2003
Warrants. Also includes 1,000 shares owned by Mr. Pearlman's wife as
to which Mr. Pearlman disclaims beneficial ownership.
(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; 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; 18,375 shares that are
issuable upon exercise of Preferred Stock Options and the subsequent
conversion of shares underlying such options; 6,344 shares that are
issuable upon exercise of March 2007 Options; 21,053 shares issuable
upon conversion of $100,000 principal amount of notes due in June
2003; and 12,500 shares issuable upon exercise of $6.00 Warrants.
(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;
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; 13,123
shares issuable upon conversion of Preferred Stock A and 6,344 shares
that are issuable upon exercise of March 2007 Options. 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.
(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; 26,250 shares that are issuable upon
exercise of $28.57 Warrants; and 6,344 shares that are issuable upon
exercise of March 2007 Options.
13
<PAGE>
(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; 26,250 shares that are issuable upon exercise of
$28.57 Warrants; and 6,344 shares that are issuable upon exercise of
March 2007 Options.
(10) Includes 46,250 shares of Common Stock owned by a partnership of which
Mr. Bishop is a general partner (the "Partnership"); 26,250 shares
that are issuable upon exercise of $19.05 Warrants; 26,250 shares
that are issuable upon exercise of $28.57 Warrants; 78,948 shares of
Common Stock issuable upon conversion of $375,000 principal amount of
June 2003 Notes owned by the Partnership; and 46,875 shares issuable
upon exercise of June 2003 Warrants that are issuable upon conversion
of the June 2003 Notes owned by the Partnership.
(11) 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.
(12) Includes 78,750 shares issuable upon exercise of options having an
exercise price of $4.29 per share and expiring in June 2001; 16,500
shares issuable upon exercise of options having an exercise price of
$4.44 per share and expiring in March 2002; 6,344 shares that are
issuable upon exercise of March 2007 Options; and 33,500 shares
issuable upon exercise of options having an exercise price of $4.44
per share and expiring in March 2003.
(13) Includes all shares described in footnotes (3), (5), (7), (8), (9),
(10), (11), and (12) above as well as the following shares of Common
Stock: 10,498 shares issuable upon conversion of shares of Preferred
Stock A; 30,316 shares issuable upon exercise of options having an
exercise price of $2.86 per share; 23,625 shares that are issuable
upon exercise of $19.05 Warrants; 23,625 shares that are issuable upon
exercise of $28.57 Warrants; 21,146 shares that are issuable upon
exercise of March 2007 Options; 10,000 options having an exercise
price of $4.56 per share expiring February 2007; 20,000 shares
issuable upon exercise of options having an exercise price of $4.56
per share and expiring January 2008; 16,667 shares issuable upon
exercise of options having an exercise price of $4.00 per share and
expiring in June 2001; 10,000 shares that are issuable upon exercise
of options having an exercise price of $4.50 per share and expiring
June 2002; and 25,000 share options that are issuable upon exercise of
options having an exercise price of $4.81 per share and expiring in
November 2002.
(14) Includes all shares described in footnotes (4) and (6) above.
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<PAGE>
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 the transfer of 7,515 shares of the Company's common
stock effectuated in November 1997; Timothy Smith, an executive officer of the
Company, failed to timely report the disposition of 1,000 shares of the
Company's common stock in April 1997; The High View Fund, L.P., High View
Capital Corporation , High View Asset Management Corporation, The High View Fund
II, L.P., The High View Fund, Ernest P. Werlin and Peter J. Powers, who because
of their relationship to each other could be deemed part of a group owning more
than ten percent of the Company's common stock, failed to timely report the
disposition of an aggregate of 24,000 shares of the Company's common stock
effectuated in December 1997.
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
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<PAGE>
highly paid executive officers, who were executive officers as of December 31,
1997 (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------------
Annual Long-Term
Compensation Compensation
Shares of
Other Common
Name Annual Stock
and Principal Compen- Underlying All Other
Position Year Salary Bonus sation Options Compensation
- ------------------------ ------ ---------- ----------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Herbert M. Pearlman 1997 $105,750 $126,250 --- 12,000 $50,577 (1)
Chairman of the Board 1996 25,750 47,600 --- --- 50,577 (1)
1995 25,000 52,615 --- ---
- ------------------------ ------ ---------- ----------- ------------ ------------ --------------
David M. Fox 1997 225,000 $ 75,000 --- 12,000 ---
President, CEO 1996 200,000 25,000 --- --- ---
1995 173,954 21,697 --- --- ---
- ------------------------ ------ ---------- ----------- ------------ ------------ --------------
Scott Hanock 1997 190,000 71,250 --- 12,000 ---
Managing Director 1996 160,000 12,000 --- --- ---
1995 145,200 30,437 --- --- $10,000 (2)
- ------------------------ ------ ---------- ----------- ------------ ------------ --------------
Robert Baruc 1997 220,000 56,250 --- 12,000 ---
Executive Vice President 1996 195,000 7,000 --- --- ---
1995 149,040 24,000 --- --- ---
- ------------------------ ------ ---------- ----------- ------------ ------------ --------------
Robert Miller 1997 140,080 27,700 --- 41,002 ---
Vice President 1996 118,000 15,750 --- 95,250 ---
- ------------------------ ------ ---------- ----------- ------------ ------------ --------------
</TABLE>
(1) Consists of life insurance premiums.
(2) 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
16
<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.
STOCK OPTIONS
The following two tables provide information on stock option grants made
to the Named Executive Officers in 1997, options exercised during 1997, and
options outstanding on December 31, 1997.
STOCK OPTIONS GRANTS IN 1997
- --------------------------------------------------------------------------------
Number of Percent of total
securities options
underlying granted Exercise
options to employees price Expiration
Name granted in 1997 per share Date
- ---------------------- ------------- -------------- ----------- --------------
Herbert M. Pearlman 12,000 (1) 1.9% $4.50 3/31/2007
- ---------------------- ------------- -------------- ----------- --------------
David M. Fox 12,000 (1) 1.9% $4.50 3/31/2007
- ---------------------- ------------- -------------- ----------- --------------
Scott Hanock 12,000 (1) 1.9% $4.50 3/31/2007
- ---------------------- ------------- -------------- ----------- --------------
Robert Baruc 12,000 (1) 1.9% $4.50 3/31/2007
- ---------------------- ------------- -------------- ----------- --------------
Robert Miller 12,000 (1) 1.9% $4.50 3/31/2007
- ---------------------- ------------- -------------- ----------- --------------
Robert Miller 33,500(2)(3) 4.6% $4.44 3/31/2003
- ---------------------- ------------- -------------- ----------- --------------
(1) These options were not exercisable until October 1, 2006 unless the Company
had pre-tax profits of at least $1,500,000 during 1997. If pre-tax
earnings for 1997 equaled or exceeded $3,000,000, then all of the options
would have become exercisable. If the Company's pre-tax earnings for 1997
were between $1,500,000 and $3,000,000, then the options were to become
exercisable proportionately, based upon the extent pre-tax earnings
exceeded the $1,500,000 threshold. The Company's pre-tax profit for 1997
was $2,293,000. Accordingly, 6,344 of the options are currently
exercisable.
(2) These options became exercisable on the date of grant.
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<PAGE>
(3) These options were issued in April 1998 but were earned, pursuant to Mr.
Miller's employment contract, based upon the distribution fees and
commissions of the Company's North American Division accrued for 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth aggregated option exercises in the last
year, the number of unexercised options and fiscal year-end values of
in-the-money options for the Named Executive Officers.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Number of Unexercised In-the Money
Shares Options at Fiscal Year-End Options at Fiscal Year-End(1)
Acquired on Value -------------------------- -----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------- -------------- ----------- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Herbert M. Pearlman --- --- 245,203 118,548 $272,299 $128,697
- ------------------- -------------- ----------- ----------- ------------- ----------- --------------
David M. Fox --- --- 253,474 90,312 449,873 96,509
- ------------------- -------------- ----------- ----------- ------------- ----------- --------------
Scott Hanock 29,539 $91,971(2) 73,719 43,282 76,808 42,894
- ------------------- -------------- ----------- ----------- ------------- ----------- --------------
Robert Baruc --- --- 58,844 5,656 59,850 ---
- ------------------- -------------- ----------- ----------- ------------- ----------- --------------
Robert Miller --- --- 101,594(3) 5,656 --- ---
- ------------------- -------------- ----------- ----------- ------------- ----------- --------------
</TABLE>
(1) Represents the difference between $4.00, the closing sales price of the
Company's Common Stock on December 31, 1997, 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) Represents the difference between (i) $4.4375, the closing sales price of
the Company's Common Stock on May 29, 1997, the date Mr. Hanock exercised
his options, multiplied by the number of shares acquired upon exercise and
(ii) the aggregate price paid for the shares upon exercise of the options.
(3) Does not include 33,500 options that were issued to Mr. Miller in 1998
based upon the distribution fees and commissions of the Company's North
American Division that were accrued for 1997.
18
<PAGE>
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 and resigned as a director in August
1998, 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 in November 1998 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. 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
Herbert M. Pearlman is currently employed under an agreement that commenced
on June 23, 1998 and expires on December 31, 2000, pursuant to which he is and
will be paid a salary from the commencement date of such contract through the
remainder of 1998 at an annual rate of $200,000. For each of 1999 and the year
2000, Mr. Pearlman's salary will increase by the same percentage that the
Company's pre-tax profits for the immediately preceding year increased over the
pre-tax profits for the year before that, but in no event will Mr. Pearlman's
salary ever exceed Mr. Fox's salary. Mr. Pearlman is also entitled to receive
an annual bonus equal to 5% of the Company's first $7,500,000 pre-tax profits
for each year of his contract (including with respect to the entire 1998
calendar year), and 2.5% of all pre-tax profits for each such year in excess of
$7,500,000.
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 and a bonus equal to four percent
of pre-tax profits in excess of $650,000 for 1997. He is entitled to receive a
bonus equal to four percent of the Company's pre-tax profits for each subsequent
year of the agreement. However, after pre-tax profits have exceeded $7,500,000
with respect to any particular year, Mr. Fox has agreed that the remaining
amount of his bonus, if any, for that year will be calculated based upon two
percent of the Company's remaining pre-tax profits. For 1996 and 1997, Mr. Fox
was entitled to be paid a minimum annual bonus of $25,000.
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
19
<PAGE>
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 was entitled to receive an annual
bonus 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.
However, after pre-tax profits have exceeded $7,500,000 with respect to any
particular year, Mr. Hanock has agreed that the remaining amount of his bonus,
if any, for that year will be based upon the greater of (i) 1.5% of the
Company's remaining pre-tax profits or (ii) 2% of UID's remaining 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. In no event will the amount of Mr. Hanock's bonus with respect
to any particular year be less than 75% of Mr. Fox's bonus for that year.
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,
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 and a
bonus equal to 3% of pre-tax profits in excess of $650,000 for 1997. He is
entitled to receive a bonus equal to 3% of the Company's pre-tax profits for
each subsequent year of the agreement. Similar to Messrs. Fox and Hanock, Mr.
Baruc has agreed that after pre-tax profits have exceeded $7,500,000 with
respect to any particular year, the remaining amount of his bonus, if any, for
that year will be based upon 1.5% of the Company's remaining pre-tax profits.
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 an additional 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
20
<PAGE>
to be increased based upon the consumer price index (resulting in a salary of
$140,080 for 1997 and a salary of $144,000 for 1998). 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 and 33,500
such options in March 1997 and 1998 based upon the NAD Fees for 1996 and 1997,
respectively.
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. Such
investments are sometimes hereinafter referred to as "Film Acquisition
Investments". Pending the execution of formal agreements, the $500,400 was
treated as demand loans. The oral agreement with respect to the joint venture
provided 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 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. Messrs. Pearlman and Lawi,
the Bishop Partnership and the Gray Seifert customer received 10,500, 5,250,
15,570 and 5,250 Class B Warrants, respectively, in connection with their
investments.
In February 1998, Mr. Pearlman, the Bishop Partnership and the customer of
Gray Seifert rolled-over their Film Acquisition Investments into an investment
in 10% Convertible Subordinated Notes due June 30, 2003 (the "June 2003 Notes").
The June 2003 Notes are convertible at any time prior to maturity, unless
previously redeemed or repurchased, into shares of the Company's
21
<PAGE>
Common Stock at a conversion price of $4.75 per share. In addition, for every
$1,000 principal amount of the June 2003 Notes that is converted, the holders
will receive warrants to purchase 125 shares of Common Stock at an exercise
price of $6.00 per share, expiring June 30, 2003 (the "June 2003 Warrants"). If
a holder of the June 2003 Notes converts prior to September 1, 1999 (the first
date that at the Company's option it could redeem the notes), the holder will
also receive an amount equal to 75% of the interest that would have accrued on
the notes, had they not been converted, from the date of conversion through
September 1, 1999. The exercise price of the June 2003 Warrants may be reset on
each of September 1, 1998 and March 1, 1999 if the "market price" (as defined)
of the Company's Common Stock is less than $4.75 on either such date, but not
less than $5.25 with respect to the September 1, 1998 reset and not less than
$4.75 with respect to the March 1, 1999 reset. The value of Mr. Pearlman's Film
Acquisition Investment was approximately $400,000 on the date he exchanged it
for an equivalent principal amount of Notes. The Bishop Partnership's and the
Gray Seifert customer's Film Acquisition Investments had an aggregate value of
approximately $500,000 on the date they exchanged them for an equivalent
principal amount of Notes. At the same time that Mr. Pearlman, the Bishop
Partnership and the Gray Seifert customer rolled-over their Film Acquisition
Investments, the Company redeemed Mr. Lawi's Film Acquisition Investment, which
had a value of approximately $200,000 on the date of redemption, in exchange for
a $200,000 principal amount promissory note, bearing interest at a rate of 10%
per annum and payable on demand.
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. 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. 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
22
<PAGE>
the notes. For each 10,000 of Variable Notes acquired, each purchaser received
1,355 Private Placement Warrants. Each such warrant entitles the holder thereof
to purchase one share of Common Stock at an exercise price of $3.70 per share
and expires on December 31, 2001. The holders of the Private Placement Warrants
are entitled to certain registration rights with respect to the shares issuable
upon exercise thereof.
During 1996, 1997 and to date in 1998, management of Helm has provided
various administrative, managerial, financial, legal and accounting services to
the Company. The Company paid Helm $182,000 and $132,000 for such services
rendered in 1996 and 1997, respectively.
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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Messrs. Pearlman, Fox, Lawi, Craig, Bishop, Baruc, Murphy and Epps and
Steven P. Low (the former Chief Accounting Officer of the Company) 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
April 1998, Mr. Fox obtained the release of the Company's security interest in
his 23,979 Underlying Shares by replacing the non-recourse loan with a full
recourse loan bearing interest at 6.2% per annum and secured by a pledge of
9,381 shares of Common Stock.
In July 1996, the Company sold a total of four Units of its securities to
customers of Gray Seifert in a private placement for an aggregate purchase price
of $1,000,000. Each 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.
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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 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. An additional 100,000
option were issued to Strategic Growth in connection with the exercise of the
Company's Class B Warrants. Such 100,000 options have the same terms as the
other 300,000 options. The shares issuable upon exercise of the options granted
to Strategic Growth have certain registration rights.
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 270,000
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 1.5 Units and the Fund
purchased another 1.5 Units 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 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. In
February 1998 the Highview SSFI Fund LDC ("Highview SSFI") purchased $250,000
principal amount of notes due June 30, 2003. The notes
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were identical to the June 2003 Notes, except that the conversion price of $4.75
per share is subject to reset on September 1, 1998 and March 1, 1999 to 110% of
the then current market price of the common stock but not less than $4.00 and
$3.50, respectively, and the exercise price ($6.00 per share) of the warrants
issuable upon conversion of such notes is not subject to reset as is the case
with the June 2003 Warrants. The investment manager of Highview SSFI is HVCC.
See "Security Ownership of Certain Beneficial Owners and Management."
In December 1997 and January 1998, the Company obtained short term loans
from Mezzanine Financial Corp. ("Mezzanine"; such loan being referred to as the
"Mezzanine Loan") and also from Messrs. Pearlman and Lawi (the "Pearlman and
Lawi Loans"). Collectively, the Mezzanine Loan and the Pearlman and Lawi Loans
are referred to as the "Short Term Loans". Mezzanine is a wholly-owned
subsidiary of Helm Capital Group, Inc. ("Helm"). Messrs. Pearlman and Lawi are
officers, directors and stockholders of the Company and Helm. In addition,
Walter M. Craig, Jr., a director of the Company, is also an officer, director
and stockholder of Helm and Daniel T. Murphy, the Company's Chief Financial
Officer, is a stockholder of Helm and its Chief Financial Officer. The loans
were extended in order to enable the Company to fund program acquisitions in
accordance with its current expansion plans pending the completion of a private
placement of convertible notes due June 30, 2003. The Company usually charges
interest of between 1.25% and 1.5% per month on the advances it extends to
producers in connection with program acquisitions.
The Mezzanine Loan was in the amount of $750,000 with a maturity date of
December 31, 1998. Interest accrued at an annual rate of 15%. Mezzanine also
received 12,500 common stock purchase warrants ("Mezzanine Warrants"). Each
Mezzanine Warrant has a term expiring on June 30, 2003 and entitles the holder
to purchase one share of Common Stock at an exercise price of $6.00 per share.
Mezzanine was granted a security interest in substantially all of the Company's
assets to secure the facility.
The Pearlman and Lawi Loans were demand loans in the aggregate amount of
$250,000; $150,000 of which was extended by Mr. Pearlman and $100,000 of which
was extended by Mr. Lawi. Outstanding amounts under the Pearlman and Lawi Loans
accrued interest at the rate of 1% per month.
The Company repaid, without premium or penalty, the Short Term Loans in
full in February 1998; $900,000 principal amount of Short Term Loans was repaid
in cash from the proceeds of the private placement of notes completed during
that month, and $100,000 principal amount of the Mezzanine Loan was retired by
the Company's exchanging $100,000 principal amount of June 2003 Notes for such
amount.
In June 1998, the Company extended an offer to its officers and directors
pursuant to which they could exercise any of the Company's Class B Warrants then
owned by them by borrowing 90% of the exercise price thereof. Each Class B
Warrant entitled the holder to purchase 1.05 shares of Common Stock for $4.50.
Outstanding amounts of principal of such loans bear interest at 4.5% per annum
(which is payable annually). Principal is to be repaid in five consecutive
annual installments,
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the first four of which will each be in an amount equal to 10% of the aggregate
exercise price of the Class B Warrants with respect to which the loan was
extended and the last of which will be in an amount equal to the remaining
outstanding balance. Messrs. Pearlman, Fox, Lawi and Low exercised 80,834,
25,000, 39,166, and 1,500 Class B Warrants, respectively, pursuant to the
Company's offer.
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 96 employees, as well as three
non-employee directors. The Company also currently has three 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 875,000 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
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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 879,163 shares of
Common Stock under the Plan at exercise prices ranging from $2.86 per share to
$6.375 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 128,750 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, 16,500 of which have an exercise price of $4.44 per share and
expire on March 11, 2002 and 33,500 of which have an exercise price of $4.44 per
share and expire on March 31, 2003; Options to purchase 50,000 shares of Common
Stock were granted to Martin D. Payson, a former Director of the Company, at an
exercise price of $4.00 per share and which currently expire in November 1998;
Options to purchase 130,000 shares were granted to other executive officers of
the Company of which options to purchase 10,000 shares of Common Stock have an
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exercise price of $4.56 per share and expire in February 2002, Options to
purchase 25,000 shares have an exercise price of $4.00 per share and expire in
June 2001, Options to purchase 10,000 shares have an exercise price of $4.50 per
share and expire in June 2002, Options to purchase 60,000 shares have an
exercise price of $4.56 per share and expire in January 2008 ("January 2008
Options"), and Options to purchase 25,000 shares have an exercise price of $4.81
per share and expire in November 2002. Options to purchase 110,000 and 90,000
shares of common stock were granted to James Coane, the President of the
Company's West Coast Production Unit, and Michael Fleiss, the Vice President of
the Company's West Coast Production Unit, respectively, half of which have an
exercise price of $5.375 (the "$5.375 Options") and half of which have an
exercise price of $6.375 (the "$6.375 Options") and all of which expire in June
2008; and Options to purchase a total of 317,913 shares of Common Stock were
granted to other employees of the Company, 144,375 of which are options which
have an exercise price of $2.86 per share and expire on June 30, 1999 ("June
1999 Options"), 13,125 of which are Options which have an exercise price of
$3.93 per share and expire on December 31, 1999, 12,038 of which are Options
which have an exercise price of $5.00 per share and expire on December 31, 2000
("December 2000 Options"), 10,000 of which are Options which have an exercise
price of $4.375 per share and expire on March 16, 2007, 2,625 of which are
Options which have an exercise price of $3.81 per share and expired on September
30, 1997, 15,750 of which are Options which have an exercise price of $2.86 per
share and expire in 2003 and 2004, 105,000 of which are January 2008 Options,
and 15,000 of which have an exercise price of $5.125 per share and expire in
June 2008.
Currently, all of Messrs. Baruc's, Miller's and Payson's Options are
exercisable. Of the Options held by other executive officers, 81,667 are
currently exercisable, 8,333 will become exercisable in May 1999, 20,000 will
become exercisable in January 1999 and another 20,000 will become exercisable in
January 2000. None of Messrs. Coane's and Fleiss' Options are currently
exercisable. One-third of the aggregate of one hundred thousand $5.375 Options
granted to them will become exercisable on June 2 of each of the years 1999,
2000 and 2001. The $6.375 Options will not become exercisable until December
2007, subject to earlier exercisability if their operations achieve certain
earnings goals. 230,142 of the Options held by other employees are also
currently exercisable.
The grant of 4,163 of Mr. Coane's $6.375 Options are subject to the
approval of the amendment to the Plan proposed hereby.
Of the total Options to purchase 879,163 shares of Common Stock that were
granted under the Plan, Options to purchase a total of 68,250 shares have been
exercised to date.
The closing sales price of the Company's Common Stock, as reported by the
American Stock Exchange, on, September 9, 1998, was $2.1875.
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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 875,000 to
1,225,000 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.
VOTING ON THE PROPOSALS
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect. With respect to the proposal to amend the Plan,
abstentions may be specified and will be counted as present for purposes of the
item on which the abstention is noted. Accordingly, since the amendment to the
Plan requires the approval of a majority of the outstanding voting shares,
present in person or represented by proxy at the Meeting and entitled to vote,
abstentions will have the effect of a negative vote. Broker non-votes are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business, but 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 May 21, 1999. The Company
will be allowed to have discretionary voting authority on any proposal that is
to be presented at next year's annual meeting, unless it receives notice of
such proposal by no later than August 4, 1999.
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, 1998. 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
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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
September 18, 1998
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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 Option 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.
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To that end, unless otherwise determined by the Board, each committee member
shall be a disinterested person (i.e., a director who is not, during the one
year prior to service as an administrator of the plan, or during such service,
granted or awarded equity securities of the Company pursuant to the Plan or any
other plan of the Company or its affiliates as provided by Rule 16b-3) .
2.2 POWERS OF COMMITTEE. The Committee shall have full authority,
subject to Section 4.1 hereof, to grant Stock Options pursuant to the terms of
the Plan. For purposes of illustration and not of limitation, the Committee
shall have the authority (subject to the express provisions of this Plan).
(a) to select the officers, key employees, directors and
consultants of the Company or any Subsidiary to whom Stock Options may from time
to time be granted hereunder;
(b) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Stock Option granted hereunder (including, but not
limited to, number of shares, share price, any restrictions or limitations, and
any vesting, exchange, surrender, cancellation, acceleration, termination,
exercise or forfeiture provisions, as the Committee shall determine);
(c) to determine any specified performance goals or such other
factors or criteria which need to be attained for the vesting of an award
granted hereunder;
(d) to permit a Holder to elect to defer a payment under the
Plan under such rules and procedures as the Committee may establish, including
the crediting of interest on deferred amounts denominated in cash and of
dividend equivalents on deferred amounts denominated in Stock;
(e) to determine the extent and circumstances under which Stock
and other amounts payable with respect to an award hereunder shall be deferred
which may be either automatic or at the election of the Holder; and
(f) to substitute (i) new Stock Options for previously granted
Stock Options, which previously granted Stock Options have higher option
exercise prices and/or contain other less favorable terms.
2.3 INTERPRETATION OF PLAN.
(a) COMMITTEE AUTHORITY. Subject to Section 6 hereof, the
Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any award issued under the Plan (and to determine the form and
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<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 1,225,000
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.
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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
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provided in the Agreement, in shares of Stock or, partly in cash and partly in
such Stock, or such other means which the Committee determines are consistent
with the Plan's purpose and applicable law. Cash payments shall be made by wire
transfer, certified or bank check or personal check, in each case payable to the
order of the Company; provided, however, that the Company shall not be required
to deliver certificates for shares of Stock with respect to which an Option is
exercised until the Company has confirmed the receipt of good and available
funds in payment of the purchase price thereof. Payments in the form of Stock
shall be valued at the Fair Market Value of a share of Stock on the date prior
to the date of exercise. Such payments shall be made by delivery of stock
certificates in negotiable form which are effective to transfer good and valid
title thereto to the Company, free of any liens or encumbrances. A Holder shall
have none of the rights of a stockholder with respect to the shares subject to
the Option until such shares shall be transferred to the Holder upon the
exercise of the Option.
(e) TRANSFERABILITY. No Stock Option shall be transferable by
the Holder, otherwise than by will or by the laws of descent and distribution,
and all Stock Options shall be exercisable, during the Holder's lifetime, only
by the Holder; provided however that, notwithstanding anything to the contrary
contained herein, the Committee may in its sole discretion allow a Non-Incentive
Stock Option to be transferred to a Family Group Member.
(f) TERMINATION BY REASON OF DEATH. If a Holder's employment by
the Company or a Subsidiary terminates by reason of death, any Stock Option held
by such Holder, unless otherwise determined by the Committee at the time of
grant and set forth in the Agreement, shall be fully vested and may thereafter
be exercised by the legal representative of the estate or by the legatee of the
Holder under the will of the Holder, for a period of one year (or such other
greater or lesser period as the Committee may specify at grant) from the date of
such death or until the expiration of the stated term of such Stock Option,
whichever period is the shorter.
(g) TERMINATION BY REASON OF DISABILITY. If a Holder's
employment by the Company or any Subsidiary terminates by reason of Disability,
any Stock Option held by such Holder, unless otherwise determined by the
Committee at the time of grant and set forth in the Agreement, shall be fully
vested and may thereafter be exercised by the Holder for a period of one year
(or such other lesser period as the Committee may specify at the time of grant)
from the date of such termination of employment or until the expiration of the
stated term of such Stock Option, whichever period is the shorter.
(h) OTHER TERMINATION. Subject to the provisions of Section 8
below and unless otherwise determined by the Committee 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
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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.
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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
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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 422A of the Code, then such terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of said Section
422A of the Code. Additionally, if this Plan does not contain any provision
required to be included herein under Section 422A of the Code, such provision
shall be
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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.
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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 19, 1998 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>
/x/ PLEASE MARK YOUR NOMINEES:
VOTES AS IN THIS David M. Fox
example. Scott Hanock
Robert Baruc
FOR WITHHOLD AUTHORITY
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 NAMES BELOW
- --------------------------------------------------------------------------------
2. Proposal to approve, adopt and ratify an amendment to the
Company's 1993 Stock Option Plan
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IF THE
UNDERSIGNED FAILS TO SPECIFY HOW THE PROXY IS TO BE VOTED, IT WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES AND FOR THE PROPOSALS.
________________________(L.S.)________________________(L.S.) DATE _________ 1998
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).
