This excerpt taken from the EMAK DEF 14A filed Apr 25, 2008.
The purpose of the Plan is to attract and retain the services of experienced and knowledgeable independent directors of the Company for the benefit of the Company and its stockholders and to provide additional incentive for such directors to continue to work for the best interests of the Company and its stockholders through continuing ownership of its Common Stock.
Each director who is not, and has not been during the immediately preceding 12-month period, an employee of the Company or any subsidiary of the Company, is eligible to participate in the Plan, provided that such director is not separately compensated by the Company as a consultant and does not fail to attend (or otherwise participate in) more than two (2) board meetings.
An aggregate of 150,000 shares of Common Stock were originally reserved for issuance under the Plan. The Plan provides for the grant of incentive awards that may consist of stock options, restricted stock grants or RSUs. The Plan is administered by the Board of Directors, subject to its discretion to delegate administration of the Plan to a committee of the Board.
Awards are subject to such restrictions and conditions to the vesting of awards as the Board of Directors (or committee) deems appropriate, including, without limitation, that the non-employee director remain in the continuous service of the Company for a certain period; provided, however, that no award may vest prior to six months from its date of grant other than in connection with a participant’s death or disability.
All awards granted to date under the Plan have been in the form of RSUs that are subject to a restricted period expiring thirty (30) days following termination of the director’s service with the Company. Thus, all RSUs awarded are required to be retained by the director for so long as they serve on the Board. While the Board has discretion to make future awards with a different restricted period, the current intention is to assure equity ownership and alignment with shareholder interests by maintaining the policy that directors must retain all awards during their term of service with the Company.
This excerpt taken from the EMAK DEF 14A filed May 4, 2007.
At the 2006 Annual Meeting, the stockholders approved an amendment of the Certificate of Designation in connection with a transaction with Crown EMAK Partners LLC (Crown) whereby:
The form of amendment to the Certificate of Designation submitted to and approved by stockholders at the 2006 Annual Meeting inadvertently included the following provision (the Restriction):
Notwithstanding the foregoing, in no event shall the Conversion Price be adjusted pursuant to this paragraph 2(iii) to less than the current market price per share of Common Stock (determined as provided in paragraph 3(xii)) on the Exchange Date.
The Restriction was included in the Certificate of Designation during the period between December 30, 2004 and the 2005 Annual Meeting as a temporary measure in order to comply with Nasdaq rule limitations on equity transactions without stockholder approval. On December 30, 2004, the Company filed a Certificate of Designation, approved by the Board of Directors but not the stockholders, in connection with an Exchange Agreement with Crown whereby Crown received 25,000 shares of Series AA Stock in exchange for an equal number of Series A Stock with substantially the same rights and preferences, except that the Series AA Stock does not participate in cash dividends paid on Common Stock. The exchange was consummated in response to the potential impact of accounting rule changes pertaining to the treatment of cash dividend participating preferred stock. In order to avoid the impact of these rule changes, the exchange transaction had to be consummated prior to the end of fiscal 2004. Thus, the transaction was closed with the Restriction in place, and the Company thereafter sought and received stockholder approval of the exchange transaction and an amendment removing the Restriction at the 2005 Annual Meeting. The Restriction was subsequently removed from the Certificate of Designation.
The Company is now seeking stockholder approval to once again remove the Restriction, which was erroneously included in the amendment to the Certificate of Designation approved at the 2006 Annual Meeting as the result of a clerical error. In addition, the Company intends to fully restate the Certificate of Designation in order to provide one cohesive document for ease of reference.
A copy of the proposed amended and restated Certificate of Designation is attached as Addendum I to this proxy statement.