<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 15, 1996
REGISTRATION NO. 333-15479
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
AMENDMENT NO. 1
FORM S-3/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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EQUITY MARKETING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3534145
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
131 SOUTH RODEO DRIVE
BEVERLY HILLS, CALIFORNIA 90212
(310) 887-4300
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------
DONALD A. KURZ
PRESIDENT AND CO-CHIEF EXECUTIVE OFFICER
EQUITY MARKETING, INC.
131 SOUTH RODEO DRIVE
BEVERLY HILLS, CALIFORNIA 90212
(310) 887-4300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------
Copies of all communications, including all communications sent to the agent
for service, should be sent to:
MERRILL M. KRAINES, ESQ.
FULBRIGHT & JAWORSKI L.L.P.
666 FIFTH AVENUE
NEW YORK, NEW YORK 10103
TELEPHONE: (212) 318-3261
TELECOPIER: (212) 752-5958
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box: [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: [x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]___________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
<TABLE>
<CAPTION>
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CALCULATION OF REGISTRATION FEE
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Title of Each Class of Amount of Shares Proposed Maximum Offering Proposed Maximum Aggregate Amount of
Securities to be Registered to be Registered Price Per Share Offering Price Registration Fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par
value per share 175,000 $8.10(1) $1,417,500(1) $429.55(2)
- -----------------------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par
value per share 175,000 $22.57(2) $3,949,750(3) $1,196.89
===================================================================================================================================
</TABLE>
(1) Maximum amount which may be received upon exercise of warrants.
(2) Registration fees in the aggregate amount of $1,499.11 were paid by
the Registrant with respect to $174,500 shares upon its initial filing
of the Registration Statement on November 4, 1996
(3) Pursuant to Rule 457(c), the proposed maximum offering price per share
and proposed maximum aggregate offering price have been calculated on
the basis of the average of the high and low sale prices of the Common
Stock as reported on the Nasdaq National Market on November 11, 1996.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
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<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
PROSPECTUS
SUBJECT TO COMPLETION, NOVEMBER 15, 1996
175,000 Shares
EQUITY MARKETING, INC.
COMMON STOCK
This Prospectus relates to 175,000 shares (the "Shares") of Common
Stock, par value $0.001 per share (the "Common Stock"), of Equity Marketing,
Inc. (the "Company") reserved for issuance upon the exercise of certain
warrants granted by the Company (the "Warrants"). The Shares will be offered
and sold by the Company to the holders of such Warrants (the "Selling
Stockholders") upon exercise of the Warrants. The Company will receive certain
proceeds upon exercise of the Warrants, which proceeds will be used for general
working capital purposes. The Company will not receive proceeds from the sale
of the Shares. The Company estimates that the expenses of this offering will
be approximately $25,000, all of which, other than commissions or discounts
paid to brokers and dealers, will be paid by the Company.
The Shares may be offered from time to time by the Selling
Stockholders (and their donees and pledgees) through ordinary brokerage
transactions, in negotiated transactions or otherwise, at market prices
prevailing at the time of sale or at negotiated prices. There can be no
assurances that any of the Warrants will be exercised, or that any of the
Shares will be sold. See "Plan of Distribution."
All Selling Stockholders may be deemed to be "Underwriters" as defined
in the Securities Act of 1933, as amended (the "Securities Act"). If any
broker-dealers are used to effect sales, any commissions paid to broker-dealers
and, if broker-dealers purchase any of the Shares as principals, any profits
received by such broker-dealers on the resale of the Shares, may be deemed to
be underwriting discounts or commissions under the Securities Act. In
addition, any profits realized by the Selling Stockholders may be deemed to be
underwriting commissions. All costs, expenses and fees in connection with the
registration of the Shares will be borne by the Company. Brokerage
commissions, if any, attributable to the sale of the Shares will be borne by
the Selling Stockholders (or their donees).
The Company's Common Stock is traded on the Nasdaq National Market
under the symbol "EMAK." On November 12, 1996, the last sale price of the
Common Stock, as reported by the Nasdaq National Market, was $22.63 per share.
SEE "RISK FACTORS", WHICH BEGINS ON PAGE 4 OF THIS PROSPECTUS,
FOR CERTAIN INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS NOVEMBER ___, 1996
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information filed with the Commission
may be inspected and copied at the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Midwest Regional
Office of the Commission located at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511 and at 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at prescribed rates by writing to the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition,
copies of such reports, proxy statements, and other information concerning the
Company may also be inspected and copied at the library of the Nasdaq National
Market, 1735 K Street, N.W., Washington, D.C. 20006. The Commission maintains
a World Wide Web site on the Internet at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission.
This Prospectus constitutes a part of a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock, reference is
hereby made to the Registration Statement. Statements contained herein
concerning the provisions of any document are not necessarily complete, and in
each instance reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which are on file with the Commission (File
No. 23346), are incorporated in this Prospectus by reference and made a part
hereof:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1995;
(b) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996, June 30, 1996 and September 30, 1996;
(c) The Company's Current Report on Form 8-K dated October 2,
1996, containing information with respect to the Company's acquisition of EPI
Group Limited; and
(d) The description of the Company's Common Stock contained in
Item 1 of the Company's Registration Statement on Form 8-A dated January 27,
1994.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the respective
dates of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for all purposes to the extent that a statement
contained in this Prospectus or any other subsequently filed document that is
also incorporated by reference herein modifies or supersedes such statement.
Any such statements so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. These documents are available upon
request from: Equity Marketing,
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Inc., 131 South Rodeo Drive, Beverly Hills, California 90212, Attention:
Kenneth M. Fisher, Senior Vice President, telephone (310) 887-4300. The
Company undertakes to provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the foregoing documents incorporated by reference herein, other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents.
THE COMPANY
Equity Marketing, Inc. designs, develops, produces, markets and
distributes a wide variety of custom toy, gift and other products based upon
characters from popular entertainment properties licensed by major television
and motion picture studios. The Company's products include character
figurines, action vehicles, plush toys, dolls, beverage containers, fashion
accessories and other toy and novelty items. The Company sells its products
domestically and internationally to fast-food restaurant chains, toy and gift
distributors and retailers, and other consumer products companies. Products of
the promotions division of the Company, Equity Promotions, are utilized
primarily in promotional campaigns implemented by its domestic fast-food
restaurant and consumer products customers, which include Burger King
Corporation ("Burger King"), Buena Vista Home Video, Inc. and Blockbuster
Videos Inc., as well as international consumer product companies such as
Kellogg Company. Equity Toys, the toy division of the Company, designs and
produces custom toys and gifts based on licensed characters for direct sale to
major mass market and specialty market retailers such as Toys "R" Us, Inc.,
Walmart Stores, Inc., Kaybee Toy Stores, Inc. and Musicland Stores Corp., and
direct sale to various international distributors worldwide. In September
1996, the Company acquired EPI Group Limited ("EPI Group"). See "Recent
Developments." EPI Group operates in two primary business areas. In
promotions, EPI Group has established a relationship with the Shell Oil
Products Company as a promotional products designer/supplier with particular
focus on Shell's motor sports activities. In its retail business, EPI Group
has focused on nature-related toys, activity kits and other products through
its "Friends of..." brand, including the Friends of the Ocean, Friends of the
Forest and others. These products are distributed through specialty
retailers, including PetSmart and Natural Wonders, catalogs, zoos and museums.
The Company provides its promotions customers with a wide range of
design, product development and manufacturing services. These services include
evaluating entertainment properties to determine license availability and
suitability for a particular promotion and assisting customers with product
concept development and in procuring character licenses and product
authorizations. The Company is responsible for all phases of production,
including creative design and engineering, licensor approval, contract
manufacturing, quality control, independent safety testing, packaging and, in
most instances, shipping.
The Company's products generally are based upon characters from
entertainment properties licensed by major television and motion picture
studios and other licensors. The licensed properties from which the Company
has developed or is developing products include Looney Tunes, Mighty Morphin
Power Rangers, Casper, The Flintstones, The Simpsons, Teenage Mutant Ninja
Turtles, Home Alone, Babar and The Walt Disney Company's ("Disney") The
Hunchback of Notre Dame, The Lion King, Toy Story, Pocahontas, Aladdin,
Gargoyles, The Little Mermaid, and Beauty and the Beast. Licenses for
characters upon which the Company's promotional products are based are
generally obtained directly by the Company's customers from licensors,
including Warner Bros. Inc. ("Warner Bros."), Disney, Saban Entertainment,
Inc., Twentieth Century Fox, and MCA Inc. In contrast, Equity Toys generally
obtains licenses directly from licensors. In 1994, the Company obtained an
exclusive design and manufacturing license to produce plush toys, figurines and
bendables for Warner Bros. Looney Tunes characters for substantially all
markets outside the U.S. and Canada. In 1995, the Company obtained the U.S.
mass market licenses to design, manufacture, and distribute toys associated
with the 1996 Olympics mascot "Izzy", and U.S. and Canada mass market licenses
for Big Feats Entertainment's "Wishbone", a children's television program
broadcast on the Public Broadcasting System, and Carlo Collodi's "Pinocchio", a
New Line Productions, Inc./Savoy
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Pictures, Inc. and The Kushner-Locke Company film. In August 1996, the Company
obtained the United States mass market and specialty market license to design,
manufacture and distribute toys based upon MCA/Universal's video The Land
Before Time and the United States gift and specialty market license to design,
manufacture and distribute toys based upon Universal Pictures' and Amblin
Entertainment's production of The Lost World: Jurassic Park. In October 1996,
the Company signed a multi-year, worldwide license agreement which entitles the
Company to design, manufacture and distribute a wide range of toys based upon
characters from Kratt's Creatures, a PBS television show. The above properties
are trademarks of their respective proprietors.
The Company believes its competitive advantage is its creative
interpretation of popular licensed characters and its ability to translate
these creative concepts quickly into high quality, low cost products with high
perceived value. The Company generally develops and produces its promotions
products in response to specific customer orders. These customers generally
give the Company short lead times and require strict compliance with delivery
schedules to coincide with motion picture or television program releases.
The Company was incorporated in December 1987 as a New York
corporation and reorganized as a Delaware corporation in June 1995. The
Company's principal executive offices are located at 131 South Rodeo Drive,
Beverly Hills, California 90212 and its telephone number is (310) 887-4300.
Unless the context indicates otherwise, Equity Marketing, Inc. and its
subsidiaries are referred to herein collectively as the "Company."
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating the Company and its
business before purchasing the shares of Common Stock offered hereby. This
Prospectus contains, in addition to historical information, forward-looking
statements that involve risks and uncertainties. The Company's actual results
could differ materially. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below, as well as
those discussed elsewhere in this Prospectus.
Dependence on and Relationship with Key Customer. A single customer,
Burger King Corporation ("Burger King"), accounted for approximately 68% of the
Company's revenues in the year ended December 31, 1995 and approximately 71% of
the Company's revenues in the nine months ended September 30, 1996. Burger
King has no contractual commitment to continue to do business with the Company,
and there can be no assurance that it will do so in the future. In addition,
Burger King may have the ability to negotiate discounts from or effect product
returns to the Company. The termination or significant reduction by Burger
King of its business with the Company would have a material adverse effect upon
the Company.
Need for Continual New Product Development; Reliance on Limited Number
of Product Orders. A substantial portion of the Company's revenues during any
given year has historically been derived from a relatively limited number of
promotional programs by its fast-food customers, which promotions are in effect
for only a limited period of time and generally are not repeated. Thus, the
Company must continually develop and sell new products for utilization in new
promotional programs. Similarly, the cancellation or premature termination of
one or more promotional programs or a significant change in promotional
practices within the fast-food restaurant industry could have a material
adverse effect upon the Company. Moreover, since many retail toys are
successfully marketed for only one or two years, the success of the Company's
retail toy business is dependent in large part on its ability to develop and
market new products associated with new entertainment properties. There can be
no assurance that any new retail product line will be successful. Similarly,
the cancellation or premature termination of a retail product line could have a
material adverse effect upon the Company. In addition, there can be no
assurance that the Company or its customers will be able to secure licenses for
additional entertainment properties on which to base its promotional and retail
toy products or that, if secured, such licenses will result in successful
products.
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Expansion of Business; Need to Finance Production. The Company's
business strategy provides for further diversification of the Company's core
domestic promotions business into international markets and the further
development of the Company's retail toy business. In order to implement this
strategy, the Company will be required to finance manufacturing and receivables
and in certain instances to assume the related risk of temporarily maintaining
inventory. There can be no assurance that the expansion of the Company's
business will be successfully implemented.
Risks Related to Acquisitions. The Company's planned expansion and
growth may require further acquisitions of complementary businesses and/or
assets. There can be no assurance that suitable acquisition candidates will be
located, that acquisitions can be consummated or that acquired companies can be
successfully integrated into the Company's operations. The Company recently
acquired EPI Group. See "Recent Developments -- Acquisition of EPI Group
Limited." The successful integration of EPI Group and any other acquired
businesses will be important to the Company's future financial performance.
The anticipated benefits from any acquisitions may not be achieved unless the
operations of the acquired businesses are successfully combined with those of
the Company in a timely manner. The process of integrating EPI Group or any
other acquired businesses could cause the interruption of, or a loss of
momentum in, the activities of some or all of these businesses, which could
have a material adverse effect on the Company's operations and financial
results. There can be no assurance that the Company will succeed in making
further acquisitions or realize any of the anticipated benefits from its
acquisitions. The acquisition of businesses or assets that result in
significant integration costs and inefficiencies, could also adversely affect
the Company's profitability. The Company expects to finance new acquisitions
from a combination of funds from operations and the issuance of debt and/or
equity securities. Depending on the number, size and timing of such
transactions, the Company may in the future require additional financing in
order to continue to make acquisitions. There is no assurance that such
additional financing, if any, will be available to the Company on acceptable
terms or at all.
Reliance on Foreign Manufacturers. During 1995, the Company derived
approximately 96% of its sales from products produced for the Company by
manufacturing facilities located in the Far East. The Company's reliance on
foreign manufacturers is subject to a number of risks, including transportation
delays and interruptions, political and economic disruptions, the imposition of
tariffs, quotas and other import or export controls and changes in governmental
policies. In 1995, approximately 84% of the Company's products were produced
for the Company by manufacturing facilities located in China. China currently
enjoys "most favored nation" trading status with the United States. No
assurance can be given that China will continue to enjoy most favored nation
status in the future. Any legislation by the United States government revoking
or placing further conditions on China's most favored nation status would, if
enacted, have a material adverse effect on the Company.
Risks of Latin American Operations. The Company is attempting to
expand its presence in Mexico and other Latin American countries. Since
December 1994, Mexico has experienced an economic crisis characterized by
exchange rate instability and devaluation, increased inflation, high domestic
interest rates, negative economic growth, reduced consumer purchasing and high
unemployment. As a result, the Company's sales in Mexico have declined from
approximately 9% of 1995 sales to approximately 1% of sales for the nine months
ended September 30, 1996. Continued adverse economic conditions in Mexico or
other Latin American countries could have a continuing adverse effect upon the
Company's plans to expand sales in that region.
Seasonality; Quarter-to-Quarter Variations. The marketing strategies
of fast-food restaurant chains and other consumer product companies often
result in a concentration of media-based promotions during the summer months
and the winter holiday season. Additionally, dates of the specific promotional
programs in which the Company participates may vary from year to year. The
Company's financial results for a particular quarter may not be indicative of
results for an entire year and the Company's revenues and/or expenses may vary
from quarter to quarter.
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Potential for Product Liability Claims. Products that have been or may
be developed or sold by the Company may expose the Company to potential
liability from claims by end-users of such products. There can be no assurance
that such claims will not arise in the future based on past, present or future
products which are designed, developed or sold by the Company. The Company
currently maintains product liability insurance coverage in an amount it
believes adequate. There can be no assurance that the Company will be able to
maintain such coverage or obtain additional coverage on acceptable terms, or
that such insurance will provide adequate coverage against any potential
claims.
Foreign Currency Fluctuation; Risk of Exchange Rate Controls. The
Company's sales to foreign customers may be affected by fluctuations in
currency exchange rates, which could adversely affect the prices the Company
can charge foreign customers for its products. In addition, the imposition of
restrictive exchange controls could adversely affect the Company's ability to
convert revenues into U.S. Dollars.
Additional Payments to Former Shareholder. In the event of certain
corporate transactions or certain sales of shares by the Company's principal
shareholders, Donald A. Kurz and Stephen P. Robeck, prior to September 27,
2001, the Company will be obligated to make additional payments to a former
shareholder. Any such payments would be calculated as a percentage of the
price received by the Company or by Messrs. Kurz and Robeck, as the case may
be, and consequently could be substantial. However, Messrs. Kurz and Robeck
have agreed to reimburse the Company for any payments due as a result of sales
of their respective shares.
Control by Present Shareholders. Donald A. Kurz and Stephen P.
Robeck, who are directors and Co-Chief Executive Officers of the Company,
beneficially own approximately 28% and 26%, respectively, of the outstanding
Common Stock and together are in a position to elect all of the Company's
officers and directors and thereby to control the policies and operations of
the Company.
Dependence Upon Key Employees. The Company's business is dependent to
a substantial extent upon its Co-Chief Executive Officers Donald A. Kurz and
Stephen P. Robeck. The loss of the services of Mr. Kurz and Mr. Robeck could
have a material adverse effect upon the Company. The Company has entered into
three year employment agreements with both Mr. Kurz and Mr. Robeck which expire
February 2, 1997 containing non-competition provisions, and the Company carries
$1,000,000 of insurance on the life of each of them.
Competition. The domestic and international promotions and retail toy
and gift businesses are highly competitive. The Company's competitors include
companies which have significantly greater financial and marketing resources
than the Company. There can be no assurance that the Company will be able to
compete effectively against such companies.
Dividend Policy. For the foreseeable future, the Company expects to
retain earnings to finance the expansion and development of its business. Any
future payment of dividends will be within the discretion of the Company's
Board of Directors, which is controlled by the Company's principal
shareholders, and will depend, among other factors, on the earnings, capital
requirements and operating and financial condition of the Company.
Possible Adverse Impact of Issuance of Preferred Stock. The Board of
Directors of the Company has authority to issue up to 1,000,000 shares of
Preferred Stock, and to fix the rights, preferences, privileges and
restrictions of those shares without any further vote or action by the
shareholders. The potential issuance of Preferred Stock may have the effect of
delaying, deferring or preventing a change in control of the Company, may
discourage bids for the Common Stock at a premium over the market price of the
Common Stock and may adversely affect the market price of, and the voting and
other rights of, the holders of Common Stock. The Company currently has no
plans to issue shares of Preferred Stock.
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RECENT DEVELOPMENTS
Acquisition of EPI Group Limited. On September 18, 1996, the Company
acquired EPI Group Limited, a Delaware corporation, through the purchase of all
of the issued and outstanding common stock of EPI Group from the individual
stockholders of EPI Group in exchange for $2,891,851 in cash plus potential
additional cash consideration based upon the results of operations of the EPI
Group during the three-year period ending December 31, 1999 as set forth in the
Stock Purchase Agreement, dated as of September 18, 1996, by and among Equity
Marketing, Inc. and the stockholders of EPI Group. The funds used for the
acquisition were provided by the Company's cash reserves on hand. The
operations of EPI Group currently are located in Southport, Connecticut.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common
Stock by the Selling Stockholders. The Company will receive proceeds from the
exercise of the Warrants; if all Warrants are exercised these proceeds will
total $1,417,500 before deducting expenses payable by the Company, which are
estimated at $25,000. The net proceeds will be used by the Company for general
working capital purposes.
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<PAGE> 9
SELLING STOCKHOLDERS
The following table sets forth certain information as of October 10,
1996 (except as otherwise indicated) and as adjusted to reflect the sale of the
Common Stock in the offering, as to the security ownership of the Selling
Stockholders. Except as set forth below, none of the Selling Stockholders has
had a material relationship with the Company or any of its predecessors or
affiliates within the past three years.
<TABLE>
<CAPTION>
SHARES OF COMMON SHARES OF
STOCK COMMON STOCK
BENEFICIALLY BENEFICIALLY
OWNED PRIOR SHARES OWNED AFTER
TO OFFERING (1) BEING SOLD (2) OFFERING (3)
--------------- -------------- -------------
<S> <C> <C> <C>
Matthew Balk 6,215 6,215 0
John R. Clarke 500 500 0
William P. Dioguardi 1,238 1,238 0
Menik Diwela 500 500 0
Hank Fichtner 500 500 0
Paul Fitzgerald 580 580 0
Philip M. Getter 7,000 7,000 0
Anthony Guzzi 72 72 0
Michael Loew 5,005 5,005 0
Paul T. Mannion, Jr. 500 500 0
Dennis B. McAlpine 7,000 7,000 0
Douglas J. Palmieri 500 500 0
Dan Purjes 95,908 95,908 0
Lawrence R. Rice 14,993 14,993 0
Charles Roden 5,912 5,912 0
Averell Satloff 1,625 1,625 0
Peter Sheib 17,168 17,168 0
Mary Vitullo 72 72 0
Scott Weisman 10,212 9,712 500
</TABLE>
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1. Includes shares issuable upon exercise of Warrants.
2. Consists of shares issuable upon exercise of Warrants and assumes
sale of all Shares registered hereby.
3. Assumes sale of all Shares registered hereby.
Transactions Involving Selling Stockholders. The Selling Stockholders
are employees or former employees of, and include controlling persons of,
Josephthal Lyon & Ross Incorporated, the representative of the underwriters for
the February 1994 initial public offering of the Company's Common Stock and a
market maker for the Company's Common Stock.
In February 1994, the Company entered into a Representative's Warrant
Agreement with Josephthal Lyon & Ross Incorporated providing for the issuance
to Josephthal Lyon & Ross Incorporated, or its designees, of warrants to
purchase 175,000 shares of Common Stock
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<PAGE> 10
and also providing certain registration rights with respect to the shares
issuable upon exercise of the Warrants. The Warrants were issued to the
Selling Stockholders as designees of Josephthal Lyon & Ross Incorporated and
the Shares offered hereby are being registered pursuant to such registration
rights.
Josephthal Lyon & Ross Incorporated is defending an action in the
Supreme Court of the State of New York, New York County, on behalf of the
Company and has agreed to indemnify the Company and each of its officers and
directors from and against any and all damages resulting from a final
non-appealable judgment against the Company in such litigation. The action
relates to a claim for a "finders fee" relating to the Company's initial public
offering. The complaint sought a fee of "not less than 4% of the cash and 150
basis points in stock warrants based upon the stock sold in the Offering." The
complaint has been dismissed except for a single claim for quantum meruit.
PLAN OF DISTRIBUTION
The Company is registering the Shares on behalf of the Selling
Stockholders. The Company will not receive any proceeds from any sales of the
Shares but will receive the proceeds from the exercise of Warrants, which
proceeds, if any, will be used for general working capital purposes. All
costs, expenses and fees in connection with the registration of the Shares
offered hereby will be borne by the Company. Brokerage commissions, if any,
attributable to the sale of Shares will be borne by the Selling Stockholders
(or their donees or pledgees).
The decision to exercise Warrants is within the sole discretion of the
holders thereof. There can be no assurances that any of the Warrants will be
exercised.
The decision to offer and sell the Shares, and the timing and amount
of any offers or sales that are made, is and will be within the sole discretion
of the Selling Stockholders. Sales of Shares may be effected from time to time
in transactions (which may include block transactions) on the Nasdaq National
Market, in negotiated transactions, or a combination of such methods of sale,
at fixed prices which may be changed, at market prices prevailing at the time
of sale, or at negotiated prices. The Selling Stockholders have advised the
Company that they have not entered into any agreements, understandings or
arrangements with any underwriters or broker-dealers regarding the sale of
their securities. The Selling Stockholders may effect such transactions by
selling Common Stock directly to purchasers or to or through broker-dealers
which may act as agents or principals. Such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders and/or the purchasers of Common Stock for whom such
broker-dealers may act as agents or to whom they sell as principals, or both
(which compensation as to a particular broker-dealer might be in excess of
customary commissions). The Selling Stockholders and any broker-dealers that
act in connection with the sale of the Common Stock might be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act and
any commission received by them and any profit on the resale of the shares of
Common Stock as principal might be deemed to be underwriting discounts and
commissions under the Securities Act. The Selling Stockholders may agree to
indemnify any agent, dealer or broker-dealer that participates in transactions
involving sales of the shares against certain liabilities, including
liabilities arising under the Securities Act. Liabilities under the federal
securities laws cannot be waived.
Because the Selling Stockholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, the Selling
Stockholders will be subject to prospectus delivery requirements under the
Securities Act.
The Selling Stockholders, any selling broker or dealer and any
"affiliated purchasers" may be subject to Rule 10b-6 under the Exchange Act,
which Rule, with certain exceptions, prohibits any such person from bidding for
or purchasing any security which is the subject of a distribution until the
participation of such person in that distribution is completed. In addition,
Rule 10b-7 under the Exchange Act prohibits any "stabilizing bid" or
"stabilizing
9
<PAGE> 11
purchase" for the purpose of pegging, fixing or stabilizing the price of Common
Stock in connection with this offering.
Accordingly, unless granted an exemption by the Commission from Rule
10b-6 under the Exchange Act or unless otherwise permitted under Rule 10b-6A,
the Selling Stockholders will not be permitted to engage in any stabilization
activity in connection with the Company's securities, and will not be permitted
to bid for or purchase any securities of the Company or to attempt to induce
any person to purchase any of the Company's securities other than as permitted
under the Exchange Act. Selling Stockholders who may be "affiliated
purchasers" as defined in Rule 10b-6 have been advised that they must
coordinate their sales with each other for purposes of Rule 10b-6. Josephthal
Lyon & Ross Incorporated has advised the Company that it may seek to comply
with Rule 10b-6A with respect to transactions in the Company's Common Stock
during the distribution of the Shares and will suspend market making
activities in the Company's Common Stock during any period in which such
activities would be prohibited under the Exchange Act.
The Selling Stockholders may be entitled under agreements entered into
with the Company to indemnification against liabilities under the Securities
Act, the Exchange Act or otherwise.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Common Stock
offered hereby have been passed upon for the Company by Fulbright & Jaworski
L.L.P. A partner of Fulbright & Jaworski L.L.P. serves as a director and as
Secretary of the Company and holds options to purchase 30,000 shares of Common
Stock.
EXPERTS
The audited consolidated financial statements of Equity Marketing,
Inc. and subsidiaries as of December 31, 1995 and 1994 and for each of the
years in the three-year period ended December 31, 1995, incorporated by
reference in this Prospectus and elsewhere in the Registration Statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving such reports.
10
<PAGE> 12
============================================================================
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE COMMON STOCK OFFERED HEREBY, NOR DOES IT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO
MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
______________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain
Documents by Reference . . . . . . . . . . . . . . . . . . . . . . . . 2
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
============================================================================
============================================================================
175,000
Shares
EQUITY MARKETING, INC.
Common Stock
PROSPECTUS
November __, 1996
============================================================================
<PAGE> 13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemized statement of the estimated amounts of all
expenses payable by the Registrant in connection with the registration of the
Shares:
<TABLE>
<S> <C>
Registration Fee - Securities and Exchange Commission . . . . . . . . . . . . . $ 1,626.44
Legal and accounting fees and expenses . . . . . . . . . . . . . . . . . . . . . 15,000.00
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,373.56
-----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,000.00
===========
</TABLE>
- ---------------------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under the Delaware General Corporation Law (the "DGCL"), a corporation
may include provisions in its certificate of incorporation that will relieve
its directors of monetary liability for breaches of their fiduciary duty to the
corporation, except under certain circumstances, including a breach of the
director's duty of loyalty, acts or omissions of the director not in good faith
or which involve intentional misconduct or a knowing violation of law, the
approval of an improper payment of a dividend or an improper purchase by the
corporation of stock or any transaction from which the director derived an
improper personal benefit. The Company's Certificate of Incorporation provides
that the Company's directors are not liable to the Company or its stockholders
for monetary damages for breach of their fiduciary duty, subject to the
described exceptions specified by the DGCL.
Section 145 of the DGCL grants to the Company the power to indemnify
each officer and director of the Company against liabilities and expenses
incurred by reason of the fact that he is or was an officer or director of the
Company if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The Company's Certificate of Incorporation and By-laws, as
amended, provide for indemnification of each officer and director of the
Company to the fullest extent permitted by the DGCL. In addition, the Company
has entered into indemnity agreements with its directors and officers, a form
of which is included as Exhibit 10.16 to the Company's Registration Statement
on Form S-1, No. 33-67778, effective February 1, 1994.
Section 145 of the DGCL also empowers the Company to purchase and
maintain insurance on behalf of any person who is or was an officer or director
of the Company against liability asserted against or incurred by him in any
such capacity, whether or not the Company would have the power to indemnify
such officer or director against such liability under the provisions of Section
145. The Company has purchased and maintains a directors' and officers'
liability policy for such purposes.
II-1
<PAGE> 14
ITEM 16. EXHIBITS.
<TABLE>
<S> <C> <C>
3.1 - Certificate of Incorporation.*
3.2 - By-laws.*
5 - Opinion of Fulbright & Jaworski L.L.P.**
10 - Representative's Warrant Agreement, dated as of February 9, 1994, between the Company and Josephthal Lyon & Ross
Incorporated.*
23.1 - Consent of Arthur Andersen LLP.**
23.2 - Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5).**
24 - Power of Attorney***
</TABLE>
- -------------------------------
* Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 1995.
** Filed herewith.
*** Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment of this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the registration
statement of any material change to such information in the registration
statement;
Provided, however, that paragraphs (a)(l)(i) and (a)(l)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 15
above, or otherwise, the registrant has been informed that
II-2
<PAGE> 15
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe it
meets all of the requirements for filing on Form S-3 and has duly caused this
amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Beverly Hills, State of
California on November 14, 1996.
EQUITY MARKETING, INC.
By: /s/ STEPHEN P. ROBECK
-----------------------------
Stephen P. Robeck
Chairman and Co-Chief
Executive Officer
By: /s/ DONALD A. KURZ
-----------------------------
Donald A. Kurz
President and Co-Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Stephen P. Robeck Chairman, Co-Chief
- --------------------------- Executive Officer and Director
(Stephen P. Robeck) (Principal Executive Officer) November 14, 1996
/s/ Donald A. Kurz President, Co-Chief
- ---------------------------- Executive Officer and Director
(Donald A. Kurz) (Principal Executive Officer) November 14, 1996
/s/ Lawrence Elins* Director November 14, 1996
- -----------------------------
(Lawrence Elins)
/s/ Merrill M. Kraines Director November 14, 1996
- --------------------------
(Merrill M. Kraines)
/s/ Bruce Raben* Director November 14, 1996
- ----------------------------
(Bruce Raben)
/s/ Kenneth M. Fisher Senior Vice President and
- -------------------------- Chief Financial Officer (Principal
(Kenneth M. Fisher) Financial and Accounting Officer) November 14, 1996
*By /s/ Donald A. Kurtz
-----------------------
Attorney-in-fact
</TABLE>
<PAGE> 1
EXHIBIT 5
[FULBRIGHT & JAWORSKI L.L.P. LETTERHEAD]
November 13, 1996
Equity Marketing, Inc.
131 South Rodeo Drive
Beverly Hills, California 90212
Ladies and Gentlemen:
We refer to the Registration Statement on Form S-3 (the "Registration
Statement") to be filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act"), on behalf of Equity Marketing,
Inc. (the "Company"), relating to 175,000 shares of the Company's Common
Stock, $.001 par value per share (the "Shares"), to be issued upon exercise
of certain warrants.
As counsel for the Company, we have examined such corporate records,
other documents, and such questions of law as we have considered necessary
or appropriate for the purposes of this opinion and, upon the basis of such
examination, advise you that in our opinion all necessary corporate proceedings
by the Company have been duly taken to authorize the issuance of the Shares and
that the Shares, when issued and paid for in accordance with the terms of the
warrants, will be duly authorized, validly issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Interests of Named Experts and Counsel" in the Registration Statement. This
consent is not to be construed as an admission that we are a person whose
consent is required to be filed with the Registration Statement under the
provisions of the Act.
Very truly yours,
FULBRIGHT & JAWORSKI L.L.P.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
February 9, 1996 included in Equity Marketing, Inc.'s Form 10-K for the year
ended December 31, 1995 and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Los Angeles, California
November 12, 1996
