<PAGE>
________________________________________________________________________________
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
_________________________
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 Section 240.14a-11(c)
or Section 240.14a-12
_________________________
ORION PICTURES CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
_________________________
ORION PICTURES CORPORATION
(NAME OF PERSON(S) FILING PROXY STATEMENT)
_________________________
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $125 FEE PAID WITH FILING OF PRELIMINARY MATERIAL
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
_________________________
(1) Title of each class of securities to which transaction applies:
____________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
____________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11.1
____________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
____________________________________________________________________________
__________
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
_________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. 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>
[Logo]
June 27, 1994
Dear Stockholder:
On behalf of the Board of Directors, I wish to extend a cordial invitation
to attend the Annual Meeting of Stockholders of Orion Pictures Corporation,
which will be held at 4:00 p.m., New York time, on July 26, 1994 in the
Concourse Level at 1285 Avenue of the Americas, New York, New York. I look
forward to greeting as many stockholders as possible at the Annual Meeting.
At the Annual Meeting, the stockholders will be asked to vote on the
election of nine directors, to ratify and approve the appointment by the Board
of Directors of the Company's independent auditors of the Company's consolidated
financial statements for the fiscal year ending February 28, 1995 and to
transact such other business as may properly come before such meeting or any
adjournment or adjournments thereof.
I hope that you will use this opportunity to take an active part in the
affairs of your Company by voting on the business to come before the Annual
Meeting either by executing and returning the enclosed proxy or by casting your
vote in person at the Annual Meeting.
It is important that your shares be represented at the Annual Meeting,
whether or not you are able to attend. Accordingly, you are urged to sign, date
and mail the enclosed proxy promptly. If you later decide to attend the Annual
Meeting, you may revoke your proxy and vote in person.
Thank you.
Sincerely,
LEONARD WHITE
LEONARD WHITE
President and Chief Executive Officer
<PAGE>
ORION PICTURES CORPORATION
1888 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA 90067
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 26, 1994
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of ORION
PICTURES CORPORATION (the 'Company') will be held on July 26, 1994 at 4:00 p.m.,
in the Concourse Level at 1285 Avenue of the Americas, New York, New York (the
'Annual Meeting'), for the following purposes:
1. To elect nine directors of the Company to serve until the Company's
next Annual Meeting of Stockholders or until their respective successors
have been duly elected and shall have qualified;
2. To ratify and approve the appointment of KPMG Peat Marwick by the
Board of Directors to be the independent auditors of the Company's
consolidated financial statements for the fiscal year ending February 28,
1995; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on June 24, 1994 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting and at any adjournment or adjournments thereof.
For the ten-day period immediately prior to the Annual Meeting, a list of
stockholders entitled to vote at the Annual Meeting will be available for
inspection at the offices of the Company, located at 1888 Century Park East, Los
Angeles, California, for such purposes as are set forth in the General
Corporation Law of the State of Delaware.
By Order of the Board of Directors
JOHN W. HESTER
Secretary
June 27, 1994
IMPORTANT
Whether or not you expect to attend the Annual Meeting in person, to assure
that your shares will be represented, please complete, date, sign and return the
enclosed proxy without delay in the enclosed envelope, which requires no
additional postage if mailed in the United States. Your proxy will be revocable,
either in writing or by voting in person at the Annual Meeting, at any time
prior to its exercise.
<PAGE>
ORION PICTURES CORPORATION
1888 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA 90067
---------------------------------
PROXY STATEMENT
---------------------------------
INTRODUCTION
This Proxy Statement is furnished by the Board of Directors of Orion
Pictures Corporation (the 'Company') in connection with the solicitation by the
Board of Directors of proxies to be voted at the Company's Annual Meeting of
Stockholders to be held on July 26, 1994 and at any adjournment or adjournments
thereof (the 'Annual Meeting'), for the purposes set forth in the accompanying
Notice of Annual Meeting of Stockholders. This Proxy Statement and the
accompanying form of proxy are first being mailed to stockholders on or about
June 27, 1994.
VOTING AT ANNUAL MEETING
GENERAL
The Board of Directors of the Company has fixed the close of business on
June 24, 1994 as the record date for the determination of stockholders entitled
to notice of and to vote at the Annual Meeting (the 'Record Date'). As of the
Record Date, there were issued and outstanding 20,000,000 shares of the
Company's Common Stock, $.25 par value (the 'Common Stock'). The holders of
record of shares of Common Stock on the Record Date entitled to be voted at the
Annual Meeting are entitled to cast one vote per share on each matter submitted
to a vote at the Annual Meeting. Accordingly, a total of 20,000,000 votes are
entitled to be cast on each matter submitted to a vote at the Annual Meeting. A
majority of such votes, present in person or represented by proxy at the Annual
Meeting, will constitute a quorum for the transaction of business at the Annual
Meeting.
PROXIES
Shares of Common Stock which are entitled to be voted at the Annual Meeting
and which are represented by properly executed proxies and received in time for
the Annual Meeting will be voted in accordance with the instructions indicated
on such proxies. If no instructions are indicated, such shares will be voted FOR
the election of each of the nominees for election as directors, FOR the
ratification and approval of the appointment by the Board of Directors of KPMG
Peat Marwick as independent auditors of the Company's consolidated financial
statements for the fiscal year ending February 28, 1995 and in the discretion of
the proxy holder as to any other matters which may properly come before the
Annual Meeting. A stockholder who has executed and returned a proxy may revoke
it at any time before it is voted at the Annual Meeting by executing and
returning a proxy bearing a later date, by giving written notice of revocation
to the Secretary of the Company bearing a date later than the proxy or by
attending the Annual Meeting and voting in person. Shares as to which a broker
indicates it has no discretion to vote and which are not voted and abstentions
will be considered not present at the Annual Meeting for purposes of determining
the presence of a quorum and as unvoted for approving the election of directors
and for approving the appointment of KPMG Peat Marwick as independent auditors.
The votes of stockholders present in person or represented by proxy at the
Annual Meeting will be tabulated by an inspector of elections appointed by the
Company. The inspector's duties include determining the number of shares
represented at the Annual Meeting, counting all votes and ballots and certifying
the determination of the number of shares represented and the outcome of the
balloting.
The Company will bear all the costs and expenses relating to the
solicitation of proxies, including the costs of preparing, printing and mailing
to stockholders this Proxy Statement and accompanying materials. In addition to
the solicitation of proxies by use of mails, the directors, officers and
employees of the Company, without additional compensation, may solicit proxies
personally or by telephone or telegram. Arrangements will be made with brokerage
firms, banks or other custodians, nominees and fiduciaries for the forwarding of
solicitation materials to the beneficial owners of the shares of Common
<PAGE>
<PAGE>
Stock held by such persons, and the Company will reimburse such brokerage firms,
banks, custodians, nominees and fiduciaries for reasonable out-of-pocket
expenses incurred by them in connection therewith.
VOTE REQUIRED
The affirmative vote of a plurality of the shares of Common Stock present
in person or represented by proxy at the Annual Meeting is required to elect the
nominees for election as directors of the Company at the Annual Meeting. The
affirmative vote of a majority of shares of Common Stock present in person or
represented by proxy at the Annual Meeting is required to ratify and approve the
appointment of KPMG Peat Marwick as independent auditors of the Company's
consolidated financial statements for the fiscal year ending February 28, 1995.
On the Record Date, Mr. John W. Kluge, through a trust affiliated with Mr.
Kluge (the 'Kluge Trust') and Metromedia Company, a general partnership
('Metromedia') of which the Kluge Trust is a general partner, owned 4,020,000
and 7,195,325 shares of Common Stock, respectively. Metromedia and Mr. Kluge as
Trustee have advised the Company that they will vote their shares of Common
Stock (aggregating 11,215,325 shares and representing approximately 56.08% of
the combined voting power of Common Stock outstanding as of the Record Date) in
favor of the election of the nominees for election as directors and in favor of
the Board's appointment of KPMG Peat Marwick as independent auditors of the
Company's consolidated financial statements for the fiscal year ending February
28, 1995. See 'ELECTION OF DIRECTORS.' Thus, the election of the nominees and
the appointment of KPMG Peat Marwick is assured. See 'PRINCIPAL STOCKHOLDERS OF
THE COMPANY.'
PRINCIPAL STOCKHOLDERS OF THE COMPANY
The following table sets forth, as of the Record Date, certain information
regarding each person known to the Company to own beneficially (as such term is
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
'Exchange Act')) more than 5% of the outstanding Common Stock. In accordance
with the rules promulgated by the Securities and Exchange Commission, such
ownership includes shares currently owned as well as shares which the named
person has the right to acquire beneficial ownership of within 60 days,
including, but not limited to, shares which the named person has the right to
acquire through the exercise of any option, warrant or right, or through the
conversion of a security. Accordingly, more than one person may be deemed to be
a beneficial owner of the same securities.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF PERCENTAGE
COMMON STOCK OF COMMON
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) STOCK
- - - - - --------------------------------------------------------------------------- --------------------- ------------
<S> <C> <C>
John W. Kluge, Stuart Subotnick and Metromedia Company 11,215,325(2) 56.08%
One Meadowlands Plaza
E. Rutherford, N.J. 07073
</TABLE>
- - - - - ------------
(1) Unless otherwise indicated by footnote, the named individuals have sole
voting and investment power with respect to the shares of Common Stock
beneficially owned.
(2) Metromedia is owned and controlled by John W. Kluge and Stuart Subotnick,
each of whom is a director of the Company. The amount set forth in the table
above includes 4,020,000 shares of Common Stock owned directly by the Kluge
Trust; the balance is owned by Mr. Kluge beneficially through Metromedia.
- - - - - ----------------------------------------------------------
To the best knowledge of the Company, except as set forth above, no person
owns beneficially more than 5% of any class of the Common Stock.
The following table sets forth beneficial ownership of the Company's Common
Stock as of the Record Date with respect to (i) each director of the Company,
(ii) each executive officer named in the
2
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<PAGE>
Summary Compensation Table under 'Executive Compensation,' and (iii) as to all
directors and executive officers as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF PERCENTAGE
COMMON STOCK OF COMMON
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) STOCK
- - - - - --------------------------------------------------------------------------- --------------------- ------------
<S> <C> <C>
Susan Blodgett............................................................. 4 (2)
Herbert N. Dorfman......................................................... -- --
John W. Hester............................................................. -- --
Joseph D. Indelli.......................................................... -- --
John W. Kluge.............................................................. 11,215,325(3) 56.08%
Silvia Kessel.............................................................. -- --
Joel R. Packer............................................................. 5,000 (2)
Michael I. Sovern.......................................................... -- --
Raymond L. Steele.......................................................... 1,000 (2)
Stuart Subotnick........................................................... 7,195,325(4) 35.98%
Arnold L. Wadler........................................................... -- --
Stephen Wertheimer......................................................... 3,000 (2)
Leonard White.............................................................. -- --
All Directors and Executive Officers as a group (17 persons)............... 11,224,329 56.12%
</TABLE>
- - - - - ------------
(1) Unless otherwise indicated by footnote, the named individuals have sole
voting and investment power with respect to the shares of Common Stock
beneficially owned.
(2) Less than 1%.
(3) Represents 7,195,325 shares beneficially owned through Metromedia, and
4,020,000 shares of Common Stock owned directly by Mr. Kluge.
(4) Represents 7,195,325 shares beneficially owned through Metromedia.
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
On and after December 11, 1991 (the 'Filing Date'), the Company and certain
of its subsidiaries filed voluntary bankruptcy petitions under Chapter 11 of the
United States Bankruptcy Code. The United States Bankruptcy Court for the
Southern District of New York confirmed the Company's Modified Third Amended
Joint Consolidated Plan of Reorganization (the 'Plan') on October 20, 1992 (the
'Confirmation Date'), and the Plan was consummated on November 5, 1992 (the
'Effective Date'). Metromedia, the Company's majority shareholder prior to the
Effective Date, was a co-proponent of the Plan with the Company. Each of Silvia
Kessel and Leonard White, nominees for election as directors, served as
executive officers of the Company on the Filing Date.
Pursuant to the Plan, the Company's By-laws were amended and restated to
fix the maximum number of directors constituting the entire Board of Directors
at 12. The Company's Amended and Restated By-laws also provide that until
November 5, 1997 the Company must designate the following three individuals (or
persons designated by a majority of the following three individuals) who are not
affiliated with Metromedia as representatives of the Company's unsecured
creditors to the Company's Board of Directors: Stephen Wertheimer, Raymond L.
Steele and Joel R. Packer (the 'Non-Metromedia Directors'). In addition, the
Plan requires that in each election of directors, as long as Metromedia and its
affiliates own a majority of the shares of Common Stock, Metromedia will vote,
or cause to be voted, all such shares of Common Stock held by Metromedia and its
affiliates in favor of the Non-Metromedia Directors, thereby assuring the
election of each Non-Metromedia Director. See 'VOTING AT ANNUAL MEETING -- Vote
Required.'
The following table sets forth certain information with respect to the
persons nominated by the Board of Directors for election as directors of the
Company at the Annual Meeting. The Company's Board of Directors currently
consists of nine members. Upon consummation of the Plan, each of the
3
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<PAGE>
nominees set forth below were elected as directors of the Company and
accordingly each nominee currently serves as a director of the Company.
The Board of Directors knows of no reason why any of its nominees will be
unable or will refuse to accept election. If any nominee becomes unable or
refuses to accept election, the Board of Directors will either reduce the number
of directors to be elected or select a substitute nominee. If a substitute
nominee is selected, proxies will be voted in favor of such nominee.
<TABLE>
<CAPTION>
DIRECTOR
NAME, PRINCIPAL OCCUPATIONS FOR PAST FIVE YEARS AND CERTAIN DIRECTORSHIPS(1) AGE SINCE
- - - - - ------------------------------------------------------------------------------------------------- --- --------
<S> <C> <C>
Silvia Kessel ................................................................................... 43 1991
Executive Vice President of the Company since January 1993; Senior Vice President of the
Company from June 1991 to November 1992; Senior Vice President of Metromedia Company since
January 1994; President of Kluge & Company from January 1994; Managing Director of Kluge &
Company (and its predecessor) from April 1990 to January 1994; Vice President of Metromedia
Company from 1988 to April 1990; Assistant Vice President of Metromedia Company from 1985 to
1988. Director of LDDS Communications, Inc.
John W. Kluge ................................................................................... 79 1986
Chairman of the Board of the Company since 1992; Chairman and President of Metromedia Company
and its predecessor-in-interest, Metromedia, Inc. for over five years. Director of The Bear
Stearns Companies, Inc., LDDS Communications, Inc. and Occidental Petroleum Corporation.
Joel R. Packer .................................................................................. 51 1992
Private investor since 1989; Chairman and Chief Executive Officer of Graphic Scanning Corp.
from 1987 to 1989. Director of Presidential Life Insurance Co.
Michael I. Sovern ............................................................................... 62 1987
President Emeritus and Chancellor Kent professor of law at Columbia University since July 1993;
President of Columbia University from 1980 to July 1993. Director of American Telephone and
Telegraph Company, Chemical Banking Corporation and its subsidiary, Chemical Bank and
Warner-Lambert Corp.
Raymond L. Steele ............................................................................... 59 1992
Retired since 1993; Executive Vice President of Pacholder Associates, Inc., a provider of
investment management and other financial advisory services from 1990 to 1993; from June 1989
to April 1990, consultant to Nickert Group, a Pizza Hut franchisee; from January 1988 to June
1989 consultant to and partner of Towne Properties, Ltd., a real estate developer; from 1984 to
January 1988, Vice President, Trust Officer and Chief Investment Officer of Provident Bank of
Cincinnati, Ohio. Director of Emerson Radio Corp., Pharmhouse, Inc. and Modernfold, Inc.
Stuart Subotnick ................................................................................ 52 1986
Vice Chairman of the Board of the Company since November 1992; Executive Vice President of
Metromedia Company and its predecessor-in-interest, Metromedia, Inc., for over five years.
Director of Carnival Cruise Lines, Inc. and LDDS Communications, Inc.
Arnold L. Wadler ................................................................................ 50 1991
Senior Vice President, Secretary and General Counsel of Metromedia Company and its
predecessor-in-interest, Metromedia, Inc., for over five years.
Stephen Wertheimer .............................................................................. 43 1992
Private investor since 1991; Managing Director, Group Head of Investment Banking-Asia, of
PaineWebber Incorporated from 1988 to 1991. Director of AMS, Inc., Greenwich Fine Arts, Inc.
and Savin Corp.
Leonard White ................................................................................... 55 1992
President and Chief Executive Officer of the Company since November 1992; Interim President and
Chief Executive Officer of the Company from March 1992 until November, 1992; Chairman of the
Board and Chief Executive Officer of Orion Home Entertainment Corporation ('OHEC'), a
subsidiary of the Company, since 1991; President and Chief Operating Officer of Orion Home
Video, division of OHEC from March, 1987 until March, 1991.
</TABLE>
- - - - - ------------
(1) Unless otherwise indicated, nominees and directors have been employed in the
current principal occupations set forth under their names for at least the
past five years. Mr. White is also a director and/or officer of certain of
the Company's subsidiaries.
4
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<PAGE>
ADDITIONAL INFORMATION REGARDING THE COMPANY'S BOARD OF DIRECTORS
The Company's Board of Directors met five times during the fiscal year
ended February 28, 1994. The Company's Board of Directors has standing Executive
and Audit Committees, the members of each of which are elected by the Board of
Directors at its annual meeting. Pursuant to the Company's Amended and Restated
By-laws, one of the Non-Metromedia Directors must serve on the Company's
Executive Committee. The Board of Directors does not have standing compensation
or nominating committees. The Executive Committee has served as a nominating
committee of the Board of Directors and will consider stockholder suggestions
for nominees for director. Suggestions for the Executive Committee's
consideration may be submitted to the Secretary of the Company at the address
set forth on the accompanying Notice of Annual Meeting of Stockholders.
During the fiscal year ended February 28, 1994, the Executive Committee
consisted of Messrs. Kluge (Chairman), Subotnick and Wertheimer. To the extent
permitted by law, the Executive Committee exercises the authority of the Board
of Directors between meetings of the Board. The Executive Committee did not meet
during the past fiscal year.
The Audit Committee, the members of which were Messrs. Subotnick
(Chairman), Wertheimer and Sovern, met four times during the fiscal year ended
February 28, 1994. The Audit Committee reviews and monitors the Company's
internal financial controls, monitors the Company's independent auditors, makes
recommendations to the Board of Directors regarding the retention of such
auditors for audit and non-audit services, reviews the fees of such auditors and
receives and reviews the reports of such auditors.
During the fiscal year ended February 28, 1994, each of the Directors
attended at least 75% of the aggregate number of the meetings of the Board of
Directors and the Committees of which such director was a member (held during
the period for which such director served) except for Mr. Kluge and Mr. Sovern.
The Company paid each of the Non-Metromedia Directors and Mr. Sovern
$15,000 per year for such directors' services on the Board of Directors and its
Committees and $1,000 per meeting of the Board of Directors attended by such
directors. The Company also paid each of the Non-Metromedia Directors and Mr.
Sovern $750 per meeting of a Committee of the Board of Directors attended by
each such director who is a member of such Committee. None of the Directors
affiliated with the Company or Metromedia received compensation for their
services on the Board of Directors of the Company. All directors not affiliated
with Metromedia are reimbursed by the Company for their out-of-pocket expenses
incurred in attending such meetings.
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and beneficial owners of more than 10% of the Company's
Common Stock to file reports of ownership and changes of ownership with the
Securities and Exchange Commission and Nasdaq. The Company believes that during
the fiscal year ended February 28, 1994, all filing requirements applicable to
its directors, executive officers and beneficial owners of more than 10% of the
Company's Common Stock have been complied with, except that a Statement of
Changes in Beneficial Ownership of Securities on Form 4 reporting one
transaction was filed late by Joel R. Packer, due solely to an administrative
error on the part of the Company.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth information on
compensation awarded to, earned by or paid to the Chief Executive Officer and
the four other most highly compensated executive officers during the fiscal
years ended February 28, 1994, February 28, 1993 and February 29, 1992 for
services rendered in all capacities to the Company and its subsidiaries.
5
<PAGE>
<PAGE>
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION(6)
- - - - - ----------------------------------------------- ---- -------- -------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Leonard White(2) .............................. 1994 $425,004 $ 0 $ 202,106(5) $ 500
President and Chief Executive Officer 1993 425,004 570,166(4) 872,246(5) 500
1992 -- -- -- --
John W. Hester ................................ 1994 216,538 30,000(4) 138,770(5) 500
Executive Vice President, General Counsel and 1993 182,692 71,166(4) 100,974(5) 500
Secretary 1992 157,634 0 0 500
Susan Blodgett(3) ............................. 1994 182,000 0 52,871(5) 500
Senior Vice President, Marketing, Orion 1993 128,000 2,500 500 500
Pictures Distribution Corporation 1992 -- -- -- --
Joseph D. Indelli(3) .......................... 1994 213,077 22,500 0 500
Executive Vice President, Domestic Television 1993 210,000 0 0 500
Distribution, Orion Television Entertainment 1992 -- -- -- --
Herbert N. Dorfman(3) ......................... 1994 165,077 11,504 61,105(5) 500
Senior Vice President, Orion Home Video 1993 65,285 13,288 4,971 15,403
1992 -- -- -- --
</TABLE>
- - - - - ------------
(1) The columns designated by the Securities and Exchange Commission ('SEC') for
the reporting of certain long-term compensation, including awards of
restricted stock, stock appreciation rights, long term incentive plan
payouts and stock options, have been eliminated as no such awards or payouts
were made or options granted during the period covered by the table.
(2) Although Mr. White was employed by OHEC for the fiscal year ended February
29, 1992, Mr. White was not the Chief Executive Officer of the Company
during such period. Accordingly, pursuant to applicable rules promulgated by
the SEC, no compensation information is required to be disclosed about Mr.
White's compensation in respect of such fiscal year.
(3) Messrs. Indelli and Dorfman and Ms. Blodgett, although employed by the
Company for the fiscal year ended February 29, 1992, were appointed as
executive officers of the Company on March 1, 1992 (in the case of Mr.
Indelli), on November 5, 1992 (in the case of Ms. Blodgett) and on December
14, 1992 (in the case of Mr. Dorfman). The blanks opposite Messrs. Dorfman's
and Indelli's and Ms. Blodgett's name (for the fiscal year ended February
29, 1992) indicate that for no portion of fiscal 1992 were such officers
executive officers of the Company and, accordingly, no compensation
information is required to be disclosed.
(4) The bonus earned by Mr. White for the fiscal year ended February 28, 1993
consisted of $425,000 payable pursuant to an employment agreement and
$145,166 payable as an incentive bonus pursuant to an annual incentive bonus
plan approved by the Company's Board of Directors. See 'Board of Directors
Report on Compensation.' The bonus earned by Mr. Hester for the fiscal year
ended February 28, 1994 consisted of a transition bonus of $30,000 and for
the fiscal year ended February 28, 1993 consisted of a stay bonus of $60,000
and an incentive bonus of $11,166 earned by Mr. Hester pursuant to an annual
incentive bonus plan approved by the Company's Board of Directors. See
'Board of Directors Report on Compensation.'
(5) In connection with the consolidation of the Company's operations to Los
Angeles, Messrs. White, Hester and Dorfman and Ms. Blodgett were required to
relocate from the New York metropolitan area to Los Angeles and the Company
agreed to reimburse each of the foregoing for certain of their relocation
costs. The Company also agreed to reimburse both Mr. White and Mr. Hester
for the difference between the tax basis in their respective homes and the
market value of the homes as appraised by a third party relocation company.
In addition, the Company agreed to reimburse each of Mr. White and Mr.
Hester for the amount of taxes payable by each of them on account of the
(footnotes continued on next page)
6
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<PAGE>
(footnotes continued from previous page)
foregoing relocation payment. The difference between the tax basis and the
market value of Messrs. White and Hester's homes and the tax reimbursement
for the foregoing totalled $795,235 for Mr. White (during 1993) and $88,181
($83,200 in 1993 and the remainder in 1994) for Mr. Hester. The Company has
paid certain relocation, closing and other related costs incurred in
connection with the purchase by Messrs. White, Hester and Dorfman and Ms.
Blodgett of residences in the Los Angeles metropolitan area, including a
reimbursement for tax payments by such individuals on such amounts, which
amounts totalled $279,117 ($202,106 in 1994 and $77,011 in 1993) for Mr.
White, $151,563 ($133,789 in 1994 and the remainder in 1993) for Mr. Hester,
$61,105 (in 1994) for Mr. Dorfman and $52,871 (in 1994) for Ms. Blodgett.
(6) These amounts represent the maximum contributions ($500) by the Company to
the named executive officers pursuant to the Orion Pictures Corporation
Thrift Savings/Profit Sharing Plan (the 'Thrift Plan'), except in the case
of Mr. Dorfman which amount includes $14,903 of severance pursuant to a
prior employment agreement.
EMPLOYMENT AGREEMENTS
EMPLOYMENT AGREEMENT WITH LEONARD WHITE
Mr. White is party to an Employment Agreement dated December 1992 with the
Company and OHEC providing for his employment as President and Chief Executive
Officer of the Company effective January 2, 1993 and continuing until February
29, 1996. The agreement provides that in the event the Company's Board of
Directors appoints a new President and Chief Executive Officer of the Company,
Mr. White will serve as an Executive Vice President of the Company and as
Chairman and Chief Executive Officer of OHEC.
Pursuant to the agreement, Mr. White is entitled to receive, as long as he
serves as President and Chief Executive Officer of the Company, a base salary of
$425,000 per year from January 2, 1993 through February 28, 1994, $450,000 for
the fiscal year ended February 28, 1995 and $475,000 for the fiscal year ended
February 29, 1996. In the event a new President and Chief Executive Officer of
the Company is appointed, Mr. White's base salary for service as an Executive
Vice President of the Company and Chairman and Chief Executive Officer of OHEC
would be $360,000, $385,000 and $410,000 per year, respectively, for the same
periods. During the term of the agreement, Mr. White participates in the
Company's annual incentive bonus plan and is eligible to receive a bonus for
each fiscal year in accordance with the terms of the bonus plan. In addition, in
the event the Company were to grant stock options to an employee holding a
position equivalent or equal to that of Mr. White, Mr. White would be entitled
to receive at least the same number of options as any such employee received on
substantially the same terms. Pursuant to the agreement, the Company agreed to
pay Mr. White an amount equal to the difference between Mr. White's
undepreciated tax basis, including amounts spent on permanent improvements to
his New York metropolitan area home, and the relocation offer made for such
residence by the Company's relocation company. In addition, the Company agreed
to reimburse Mr. White for the amount of taxes payable by him on account of the
foregoing relocation payment. Mr. White is also entitled to participate in all
of the Company's employee benefit plans and programs, other than severance and
vacation, on the same basis as other officers of the Company.
If the Company terminates Mr. White's employment for 'Cause' (as defined in
the agreement) or because of his death or disability or if Mr. White terminates
the agreement other than for 'Good Reason' (as defined in the agreement), no
further payments are due under the agreement except with respect to compensation
and other benefits earned prior to the date of termination. In the event the
Company terminates the agreement other than for Cause or in the event Mr. White
terminates the agreement for Good Reason, Mr. White is entitled to receive the
greater of (i) his base salary throughout the remaining term of the agreement
and (ii) the amount of severance to which Mr. White would be entitled under the
Company's severance policies in effect as of January 2, 1993, determined at the
salary level in effect (the 'Severance Amount') as of the date of his
termination. Pursuant to the agreement, Mr. White has no obligation to mitigate
such amounts. In the event the agreement expires
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on February 29, 1996 and is not renewed or replaced by the Company and Mr.
White, the Company must pay Mr. White the greater of (i) his base salary then in
effect for six months and (ii) the Severance Amount as of the date of the
non-renewal.
EMPLOYMENT AGREEMENT WITH JOHN W. HESTER
Mr. Hester is party to an Employment Agreement dated December 1992 with the
Company providing for his employment as Executive Vice President, General
Counsel and Secretary of the Company effective as of January 2, 1993 and
continuing through February 29, 1996. Pursuant to the agreement, Mr. Hester is
entitled to receive, as his base salary, $200,000 per year from January 2, 1993
through June 30, 1993, $225,000 per year from July 1, 1993 through February 28,
1995 and $250,000 per year from March 1, 1995 through February 29, 1996. During
the term of the agreement, Mr. Hester will participate in the Company's annual
incentive bonus plan and is eligible to receive a bonus for each fiscal year in
accordance with the terms of such plan. Mr. Hester is also entitled to
participate in all the Company's employee benefit plans and programs other than
severance on the same basis as other officers of the Company. In addition, the
Company paid Mr. Hester an amount equal to the difference between Mr. Hester's
undepreciated tax basis, including amounts spent on permanent improvements to
his New York metropolitan area home, and the relocation offer made for such
residence by the Company's relocation company. In addition, the Company
reimbursed Mr. Hester for the amount of taxes payable by him on account of the
foregoing relocation payment.
If the Company terminates the agreement for 'Cause' (as defined in the
agreement) or because of his death or disability or if Mr. Hester terminates the
agreement other than for 'Good Reason' (as defined in the agreement) no further
payments are due under the agreement except with respect to compensation earned
prior to the date of termination. In the event the Company terminates the
agreement other than for Cause or in the event Mr. Hester terminates the
agreement for Good Reason, Mr. Hester is entitled to receive the greater of (i)
his base salary throughout the term of the agreement and (ii) the amount of
severance to which Mr. Hester would be entitled under the Company's severance
policy in effect as of January 2, 1993, determined at the salary level in effect
as of the date of his termination. In the event the agreement expires on
February 29, 1996 and is not renewed or replaced by the Company and Mr. Hester,
the Company must pay Mr. Hester the amount of severance to which Mr. Hester
would be entitled under the Company's severance policy in effect as of January
2, 1993, determined at the salary level in effect as of the date of the
non-renewal.
EMPLOYMENT AGREEMENT WITH HERBERT N. DORFMAN
Mr. Dorfman is party to an Employment Agreement dated December 1992 with
the Company providing for his employment as Senior Vice President of Orion Home
Video effective as of January 2, 1993 and continuing through February 29, 1996.
Pursuant to the agreement, Mr. Dorfman is entitled to receive, as his base
salary, $162,000 per year during the term of the agreement plus certain
commission payments payable upon achievement of various sales thresholds. Mr.
Dorfman is also entitled to participate in all the Company's employee benefit
plans and programs other than severance on the same basis as other officers of
the Company. In the event of termination of Mr. Dorfman's Employment Agreement
for 'Cause' (as defined in the Agreement), or because of his death, the Company
shall pay to Mr. Dorfman any base salary earned but not paid to Mr. Dorfman
prior to the effective date of such termination. In the event the Company
terminates Mr. Dorfman's Employment Agreement other than for Cause or because of
his death or disability, the Company shall pay to Mr. Dorfman the greater of (a)
continuation of his salary for the number of months remaining in the term of his
agreement immediately prior to such termination, taking into account scheduled
salary increases, or (b) the amount of severance to which Mr. Dorfman would be
entitled under the Company's severance policies in effect as of January 2, 1993,
determined at the salary level in effect as of the date of his termination. In
the event Mr. Dorfman's Employment Agreement expires on February 29, 1996 and
the Company has not, prior to such expiration, made an offer in good faith to
extend Mr. Dorfman's employment on substantially similar terms, the Company
shall pay Mr. Dorfman the amount of severance to which he would be entitled
under the Company's severance policies in effect as of January 2, 1993. In
addition, the Company agreed to reimburse Mr. Dorfman for all reasonable
expenses incurred in connection with his
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relocation to the greater Los Angeles metropolitan area, including expenses
incurred in connection with his purchase of a residence, in accordance with and
subject to the terms of the Company's relocation policy.
EMPLOYMENT AGREEMENT WITH SUSAN BLODGETT
Ms. Blodgett is party to an Employment Agreement dated December 1992 with
the Company, OHEC and OPDC which provides for her employment as Senior Vice
President -- Marketing of OHEC and OPDC effective as of January 2, 1993 and
continuing through February 29, 1996. Pursuant to the agreement, Ms. Blodgett is
entitled to receive, as her base salary, $182,000 per year from January 2, 1993
through February 28, 1994, $192,000 per year from March 1, 1994 through February
28, 1995 and $202,000 per year from March 1, 1995 through February 29, 1996.
During the term of the agreement, Ms. Blodgett will participate in the Company's
annual incentive bonus plan and is eligible to receive a bonus for each fiscal
year in accordance with the terms of such plan. Ms. Blodgett is also entitled to
participate in all the Company's employee benefit plans and programs other than
severance on the same basis as other officers of the Company. In the event of
termination of Ms. Blodgett's Employment Agreement for 'Cause' (as defined in
the Agreement), or because of her death, the Company shall pay to Ms. Blodgett
any base salary earned but not paid to Ms. Blodgett prior to the effective date
of such termination. In the event the Company terminates Ms. Blodgett's
Employment Agreement other than for Cause or because of her death or disability,
the Company shall pay to Ms. Blodgett the greater of (a) continuation of her
salary for the number of months remaining in the term of her agreement
immediately prior to such termination, taking into account scheduled salary
increases or (b) the amount of severance to which Ms. Blodgett would be entitled
under the Company's severance policies in effect as of January 2, 1993,
determining the salary level in effect as of the date of her termination. In the
event Ms. Blodgett's Employment Agreement expires on February 29, 1996 and the
Company has not, prior to such expiration, made an offer in good faith to extend
Ms. Blodgett's employment on substantially similar terms, the Company shall pay
Ms. Blodgett the amount of severance to which she would be entitled under the
Company's severance policies in effect as of January 2, 1993. In addition, the
Company agreed to reimburse Ms. Blodgett for all reasonable expenses incurred in
connection with her relocation to the greater Los Angeles metropolitan area,
including expenses incurred in connection with her purchase of a residence, in
accordance with and subject to the terms of the Company's relocation policy.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company does not currently have a standing Compensation Committee and,
accordingly, compensation decisions regarding the Chief Executive Officer and
other executive officers are made by the entire Board of Directors. Leonard
White, President and Chief Executive Officer of the Company, is a member of the
Board of Directors of the Company, but Mr. White does not participate in the
Board's discussions regarding his compensation. Silvia Kessel, Executive Vice
President of the Company, is a member of the Board of Directors and is also
affiliated with Metromedia. The Company reimburses Metromedia for the portion of
Ms. Kessel's salary which is allocable to her service as an Executive Vice
President of the Company. For the fiscal year ended February 28, 1994, this
amounted to $95,000. Ms. Kessel participates in the Board of Directors decisions
on executive compensation.
Four of the members of the Board of Directors (Messrs. Kluge, Subotnick and
Wadler and Ms. Kessel) are affiliated with Metromedia. Metromedia and certain of
its affiliates and the Company are parties to a number of agreements described
below.
RELATIONSHIPS PRIOR TO THE CHAPTER 11 FILING
Prior to the Effective Date, Metromedia and its general partners owned
approximately 68.4% of the outstanding shares of the Old Common Stock. In
addition, the Company and MetMermaids, a joint venture and an affiliate of
Metromedia, had entered into an agreement (the 'MetMermaids Agreement'), dated
November 28, 1990, pursuant to which MetMermaids purchased an interest in
'MERMAIDS,' a feature-length motion picture released by the Company on December
14, 1990, in
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exchange for approximately $23 million. Under the MetMermaids Agreement,
MetMermaids was entitled to receive a specified portion of the gross receipts
derived by the Company from the distribution, exploitation, and exhibition of
'MERMAIDS.' The portion of gross receipts was to be determined by allocating and
paying out the gross receipts in accordance with a formula set out in the
MetMermaids Agreement. Pursuant to this formula, if MetMermaids did not recover
its original investment plus a return thereon of 13% per annum from its share of
the 'MERMAIDS' proceeds, MetMermaids was entitled to receive advances against
its future interest in 'MERMAIDS' from certain proceeds derived from the
distribution of 'THE SILENCE OF THE LAMBS,' a feature-length motion picture
released by the Company on February 14, 1991.
AGREEMENTS ENTERED INTO IN CONNECTION WITH THE PLAN
Metromedia was a co-proponent with the Company of the Plan. In addition,
pursuant to a Stock Purchase Agreement, dated as of September 18, 1992, as
amended, among the Company, Metromedia and Mr. Kluge, Metromedia and Mr. Kluge
contributed to the Company (a) MetMermaids' rights under the MetMermaids
Agreement (the 'MetMermaids Rights'), (b) $15 million in cash and (c) the Bank
Guarantee (as defined below) in return for an aggregate of 10,020,000 shares of
Common Stock. Under the terms of the MetMermaids Agreement, the amount that
would have been payable to MetMermaids on account of the MetMermaids Rights at
October 1992 was approximately $29 million.
Prior to the Effective Date, Metromedia and Mr. Kluge delivered a guarantee
(the 'Bank Guarantee') to the Company's lenders (the 'Banks') under the
Company's senior secured credit facility (the 'Credit Agreement'). The Bank
Guarantee provides generally that, to the extent the Company has not paid the
Banks, the guarantors under the Bank Guarantee will be obliged to pay to the
Banks: (i) $85 million (less principal payments made to the Banks prior to the
Effective Date) on the first anniversary of the Confirmation Date, $80 million
on the second anniversary thereof, and approximately $64.2 million on the third
anniversary thereof; (ii) quarterly interest payments under the Credit
Agreement; (iii) the following payments (subject to certain adjustments in the
timing of such payments for partial draws) with respect to the Company's
reimbursement obligations under the Credit Agreement in respect of a letter of
credit issued in favor of an affiliate of Sony Pictures Entertainment, Inc.
('Sony'): $26 million on the first anniversary of the Confirmation Date, $24
million on the second anniversary thereof, $20 million on the third anniversary
thereof, and the amount of any draw under the letter of credit if such draw
would not have been permitted under the letter of credit outstanding prior to
the Effective Date, in each case together with interest and fees relating
thereto; and (iv) legal fees and expenses incurred in connection with the
enforcement of the Bank Guarantee. The Bank Guarantee provides that the Banks
may not accelerate the obligations under the Credit Agreement or take any action
to foreclose on any assets of the Company unless and until the guarantors under
the Bank Guarantee shall have failed to make any payment due under the Bank
Guarantee. If, in violation of that requirement, the Banks instead first proceed
against the Company or its assets, the Bank Guarantee thereupon will terminate.
In connection with the delivery by Metromedia and Mr. Kluge of the Bank
Guarantee, the Company entered into a Reimbursement Agreement dated as of
October 20, 1992 which provides, among other things, that if Metromedia or Mr.
Kluge has performed under the Bank Guarantee or made cure payments to Sony under
the agreement between the Company and Sony, that portion of the Company's cash
flow that would have been distributed to the Banks pursuant to the Plan will
instead be paid to Metromedia and Mr. Kluge to reimburse them for payments made
to the Banks and/or Sony until Metromedia and Mr. Kluge are reimbursed in full;
provided, however, that neither Metromedia nor Mr. Kluge may receive
reimbursement under the Reimbursement Agreement or receive the Banks' and/or
Sony's portion of the Company's cash flow payable under the Plan until the Banks
and/or Sony have been paid in full. The Reimbursement Agreement contains a
number of customary affirmative covenants, including, but not limited to,
delivery of certain financial and other information, maintenance of existence
and compliance with certain agreements. The Reimbursement Agreement also
contains various negative covenants which, among other things, generally
restrict the ability of the Company and each of its subsidiaries (i) to incur
indebtedness other than certain permitted indebtedness specified in the
Reimbursement Agreement, (ii) to incur liens, (iii) to undertake a fundamental
change in its
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corporate structure or business or to dispose of all or substantially all of its
assets, (iv) to sell or otherwise dispose of certain of its assets or to exploit
its assets other than in the ordinary course of business, (v) to pay dividends
or make other distributions on or redeem its capital stock, (vi) to modify the
provisions of certain agreements and (vii) to enter into certain transactions
with affiliates. The Reimbursement Agreement also contains customary events of
default which, upon occurrence, permit Metromedia and Mr. Kluge (after the Banks
and Sony have been paid in full) to declare all amounts owing under the
Reimbursement Agreement to be immediately due and payable. The Reimbursement
Agreement also provides, however that as long as one or both of Metromedia and
Mr. Kluge 'control' (as defined in the Reimbursement Agreement) the Company,
neither may enforce any of the affirmative or negative covenants set forth in
the Reimbursement Agreement, and breach of any of such covenants will not give
rise to an event of default thereunder.
MISCELLANEOUS RELATIONSHIPS
Since the Effective Date, Metromedia, through its affiliates, has provided
the Company and its affiliates with non-recourse financing to acquire certain
additional theatrical and home video product, as described below.
The Company and MetProductions, Inc. ('MetProductions'), an affiliate of
Metromedia, entered into an agreement pursuant to which MetProductions loaned to
the Company $1,129,000 (the 'Boxing Helena Loan') to fund the printing and
advertising costs associated with the domestic distribution in all media of the
film 'BOXING HELENA.' The Boxing Helena Loan and accrued and unpaid interest
thereon (at the rate of 10% per annum) was payable out of the gross receipts of
the film (less certain distribution expenses) and the distribution fee payable
to the Company by the licensor of the film. The Boxing Helena Loan was secured
by a first priority lien granted to MetProductions on the Company's rights in
the license agreement pursuant to which it acquired the distribution rights in
the film. The Company has repaid the Boxing Helena Loan in full.
MetProductions and the Company are also parties to an agreement pursuant to
which MetProductions made a non-recourse loan in the amount of $1,005,000 (the
'Me and the Kid Loan') to the Company to fund the printing and advertising costs
associated with the domestic distribution in all media of the film 'ME AND THE
KID.' The Me and the Kid Loan and accrued and unpaid interest thereon (at the
rate of 10% per annum) is payable out of the gross receipts of the film (less
certain distribution expenses) and the distribution fee payable to the Company
by the licensor of the film to the Company. The Me and the Kid Loan is secured
by a first priority lien granted to MetProductions on the Company's rights in
the license agreement pursuant to which it acquired the distribution rights in
the film. The entire amount of the Me and the Kid Loan is outstanding.
MetProductions and the Company are parties to an agreement pursuant to
which MetProductions has agreed to lend the Company up to $750,000 (of which
$11,000 has been lent) (the 'Nostradamas Loan') to fund the print and
advertising costs associated with the domestic distribution in all media of the
film 'NOSTRADAMAS.' The Nostradamas Loan and accrued and unpaid interest thereon
(at the rate of 10% per annum) is payable out of the gross receipts of the film
(less certain distribution expenses) and the distribution fee payable to the
Company by the licensor of the film to the Company. The Nostradamas Loan is
secured by a first priority lien granted to MetProductions on the Company's
rights in the license agreement pursuant to which it acquired the distribution
rights in the film.
The Company and MetProductions are parties to an agreement pursuant to
which MetProductions has agreed to lend the Company up to $1,500,000 (of which
$500,000 has been lent) (the 'Robocop Loan') to acquire the domestic home video
distribution rights in the television movie 'ROBOCOP, The Fourth Directive' (the
'Picture') and the series based thereon. The Robocop Loan and all accrued and
unpaid interest thereon (at the rate of 10% per annum) is payable out of the
gross proceeds of the Picture (less certain distribution expenses). The Robocop
Loan is secured by a first priority lien granted to MetProductions in the
Company's right, title and interest in the Distribution Agreement between the
Company and Skyvision Entertainment, Inc.
OHEC and MetProductions are parties to an agreement pursuant to which
MetProductions has agreed to lend OHEC certain amounts where the cumulative
amount outstanding cannot exceed
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$600,000 during Year 1 (November 1, 1993 through December 31, 1994); $700,000 in
Year 2 (January 1, 1995 through December 31, 1995) and $800,000 during Year 3
(January 1, 1996 through December 31, 1997) (the 'Fox Lorber Loan') to provide
to Fox Lorber Home Video ('FLHV') an acquisition fund (the 'Acquisition Fund')
to be used to acquire full-length theatrical motion pictures (the 'Acquisition
Fund Product'). MetProduction has lent approximately $550,000 of its commitment.
The Lorber Loan and all accrued interest thereon is payable out of the gross
receipts to which OHEC is entitled from the Acquisition Fund Product (less any
expenses incurred by OHEC). The Fox Lorber Loan is secured by a first priority
lien on and security interest granted to MetProductions in OHEC's right, title
and interest in the Fox Lorber Agreement.
OHEC and MetProductions are parties to an agreement pursuant to which
MetProductions has agreed to lend OHEC up to $500,000 (the 'Castle Loan') to
fund the acquisition of domestic home video distribution rights by OHEC to 5
animated children films from Castle Communications. MetProductions has loaned
$100,000 of its commitment. The Castle Loan and all accrued interest thereon is
payable out of the gross receipts to which OHEC is entitled from the animated
films (less any expenses incurred by OHEC). The Castle Loan is secured by a
first priority lien on and security interest granted to MetProductions in OHEC's
right, title and interest in the Distribution Agreement between OHEC and Castle
Communications.
In addition, an affiliate of the Company and MetProductions have reached an
agreement in principle pursuant to which they will form a partnership to fund
the production or acquisition of film product. MetProductions has contributed to
the partnership approximately $2,250,000 which the partnership utilized to fund
a portion of the production budgets for two films intended for initial
distribution in the home video market ('DEAD ON' and 'ILLEGAL IN BLUE'), one of
which has been released and the other of which has yet to be so released.
Mr. Kluge beneficially owns more than 10% of the common stock of Image
Investors Co., a Delaware corporation. Image Investors owns approximately 40% of
the common stock of Image Entertainment, Inc. ('Image'). OHEC was a party to an
output license agreement with Image which terminated on December 31, 1992
pursuant to which OHEC granted to Image the rights to manufacture, market and
sell on laserdiscs for private in-home use certain feature length programs
released by the Company on videocassette for a period of three years from the
date of first release by Image on laserdisc in consideration of a royalty
payment payable with respect to each program. At the end of the fiscal year
ended February 28, 1994, Image was indebted to the Company in the amount of
approximately $114,000 under the agreement. The Company, OHEC and Image are
currently negotiating and finalizing the terms of a new output agreement.
The Company is a customer of LDDS Metromedia Communications ('LDDS'), which
provides long distance telephone services to the Company. Mr. Kluge is Chairman
of the Board of LDDS and Mr. Subotnick and Ms. Kessel serve on LDDS' Board of
Directors. Metromedia owns approximately 19% of the fully diluted common stock
of LDDS. For the fiscal year ended February 28, 1994 the Company paid $101,305
to LLDS.
BOARD OF DIRECTORS REPORT ON COMPENSATION
The Company does not have a standing Compensation Committee and
accordingly, decisions regarding the compensation of the Chief Executive Officer
and the other executive officers are made by the entire Board of Directors. Mr.
White, President and Chief Executive Officer of the Company, does not
participate in discussions regarding the Chief Executive Officer's compensation.
Silvia Kessel, Executive Vice President of the Company, is a member of the Board
of Directors and participates in decisions on executive compensation.
Some of the compensation and benefit arrangements referred to in the text
and the table set forth above were entered into before the Company and certain
of its subsidiaries emerged from Chapter 11 proceedings on the Effective Date.
Various compensation arrangements entered into by the Board of Directors during
the Chapter 11 proceedings were affirmed by the U.S. Bankruptcy Court for the
Southern District of New York in connection with the Company's reorganization.
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The Board of Directors fixes the annual salary of the Chief Executive
Officer of the Company and, in consultation with the Chief Executive Officer of
the Company, fixes the annual salary of the executive officers and other
officers of the Company and the officers of each subsidiary of the Company,
subject in each case to any employment agreement or other contract between the
Company or a subsidiary thereof and any such officer. In addition, the Board of
Directors has the authority to cause the payment of bonuses or other
supplemental compensation by the Company to the Chief Executive Officer of the
Company and, in consultation with the Chief Executive Officer of the Company, to
cause the payment of bonuses or other supplemental compensation to any other
officer of the Company or any subsidiary thereof. The Company does not currently
have a stock option plan for executive officers. Prior to the Effective Date the
Company had three stock option plans, but pursuant to the Plan all such plans
and the options outstanding at the Effective Date pursuant to such plans were
canceled.
In general, the Board of Directors seeks to link the compensation paid to
the executive officers of the Company to the performance of the executive
officer as well as that of the Company. The compensation of an executive officer
of the Company includes cash compensation consisting of base salary plus bonuses
and participation in certain benefit plans generally available to employees of
the Company such as health insurance. Specifically, the indicators of corporate
performance most heavily relied upon by the Company in making such decisions are
the levels of operating cash flow and operating expenses accomplished by the
Board of Directors of the Company during certain designated periods and the
individual efforts and achievements of each executive officer during a
particular period in reaching such levels. The Board of Directors in conjunction
with the Chief Executive Officer also places particular emphasis on the
Company's ability to meet certain cash flow thresholds set forth in the
Company's Plan.
In addition, however, as a result of the consolidation of the Company's
operations and the layoffs of a substantial number of the Company's employees
both prior to the Effective Date and since such date, the Board of Directors
recognized that the successful reorganization of the Company in the Chapter 11
proceedings and the subsequent implementation of the Plan required the
concentrated efforts of the remaining executive officers of the Company.
Accordingly, in order to alleviate concerns about job security and to ensure
productivity, the Company adopted a written policy governing the payment of stay
bonuses and transition bonuses to key employees of the Company which would
reward such employees for continued service during the period involving the
negotiations of the Plan and in the period following the Effective Date. Such
bonuses were payable to the Company's employees, including executive officers,
in lump sum payments provided such officer remained employed by the Company for
the designated period. During fiscal 1994, certain key employees including
certain of the named executive officers received transition bonuses ranging from
$10,000 to $30,000 as they remained employed by the Company through October 1,
1993.
In order to provide the appropriate incentives to ensure the accomplishment
of the performance and financial objectives upon which the Plan was predicated,
the Board of Directors has authorized the payment of incentive bonuses for
certain key officers of the Company including the Chief Executive Officer and
certain of the named executive officers based upon the successful accomplishment
by the Company of certain performance goals for the Company which were set forth
in the Plan. Specifically, the Board of Directors authorized the payment of
annual bonuses to certain key executive officers including the Chief Executive
Officer and the named executive officers pursuant to an incentive bonus plan
which annually awards bonuses based upon the Company's actual net cash flow in a
given fiscal year (or portion of a fiscal year) versus the projected net cash
flow for such period as set forth in the Plan. Based upon the targets
established by the Board of Directors for the Company's net cash flow and
operating results from the Effective Date until February 28, 1994, the Chief
Executive Officer of the Company and most of its key executive officers did not
receive incentive bonuses in fiscal 1994. Based upon such incentives, one named
executive and several other key officers earned incentive bonuses ranging from
$22,500 to $31,800.
During the 1994 fiscal year, the Company was a party to employment
agreements with all of its named executive officers, except for Mr. Indelli.
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The Chief Executive Officer's salary for fiscal 1994 was established
pursuant to an Employment Agreement with Mr. White effective through December
31, 1996. As noted above, Mr. White did not earn an incentive bonus in
accordance with the terms of the incentive formula established by the Board of
Directors.
By the Board of Directors:
JOHN W. KLUGE, Chairman
SILVIA KESSEL
JOEL R. PACKER
MICHAEL I. SOVERN
RAYMOND L. STEELE
STUART SUBOTNICK
ARNOLD L. WADLER
STEPHEN WERTHEIMER
LEONARD WHITE
PERFORMANCE GRAPH
The following graph sets forth the Company's total stockholder return as
compared to the Standard & Poors 500 Index and the Standard & Poors
Entertainment Index for the period from November 5, 1992, when the Plan was
consummated and the Company's Common Stock was registered under the Exchange
Act, became issuable pursuant to the Plan and began trading on a when-issued
basis on the Nasdaq National Market System, through the last day of the
Company's last completed fiscal year, February 28, 1994. The total stockholder
return assumes $100 invested at the beginning of the period in the Company's
Common Stock, the Standard & Poors 500 Index and the Standard & Poors
Entertainment Index. It also assumes reinvestment of all dividends.
[PERFORMANCE GRAPH]
11/5/92 2/28/93 2/28/94
------- ------- -------
Orion Common Stock 100.0 120.000 270.000
S&P 500 Index 100.0 106.913 115.837
S&P Entertainment Index 100.0 111.469 127.128
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is a party to a number of agreements and arrangements with
Metromedia and affiliates of Metromedia. See 'Compensation Committee Interlocks
and Insider Participation.'
RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed the firm of KPMG Peat
Marwick, independent auditors, to examine the consolidated financial statements
of the Company and its subsidiaries for the fiscal year ending February 28,
1995, subject to ratification by the stockholders.
On March 3, 1993, the Board of Directors of the Company approved the
engagement of KMPG Peat Marwick as its independent auditors for the fiscal year
ended February 28, 1993 to replace Ernst & Young, who was dismissed as auditors
of the Company effective March 3, 1993. Ernst & Young, or its predecessor, acted
as independent auditors for the Company for the previous nine fiscal years.
In connection with the audit of the Company's financial statements for the
fiscal years ended February 28, 1991, February 29, 1992, and in the subsequent
interim period, there did not exist any disagreements between the Company and
Ernst & Young on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure which, if not resolved to
the satisfaction of Ernst & Young, would have caused Ernst & Young to have
referred to the subject matter of disagreement in its report. Ernst & Young's
report on the Company's financial statements for the fiscal year ended February
29, 1992 stated that there was substantial doubt about the Company's ability to
continue as a going concern. There were no 'reportable events' as described in
Item 304(a)(1)(v) of Regulation S-K.
Prior to the engagement of KPMG Peat Marwick, no member of that firm was
consulted by the Company (i) for the purpose of obtaining a written report or
oral advice with regard to the application of accounting principles to a
specified transaction of the Company, either completed or proposed, (ii)
regarding an inquiry as to the type of audit opinion that may be rendered on the
Company's financial statements or (iii) regarding any matter that was the
subject of a disagreement with Ernst & Young or which constituted a reportable
event pursuant to Item 304(a)(1)(v) of Regulation S-K.
A partner of KPMG Peat Marwick is expected to be present at the Annual
Meeting and to be provided with an opportunity to make a statement if such
partner desires to do so and to be available to respond to appropriate questions
from stockholders.
If the stockholders do not ratify the appointment of KPMG Peat Marwick as
the Company's independent auditors for the forthcoming fiscal year, such
appointment will be reconsidered by the Audit Committee and the Board of
Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION
OF THE APPOINTMENT OF KPMG PEAT MARWICK AS THE INDEPENDENT AUDITORS OF THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING FEBRUARY
28, 1995.
ANNUAL REPORT; INCORPORATION BY REFERENCE
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED FEBRUARY
28, 1994 (WHICH CONTAINS THE COMPANY'S AUDITED CONSOLIDATED FINANCIAL
STATEMENTS) IS BEING MAILED TO STOCKHOLDERS TOGETHER WITH THIS PROXY STATEMENT
AND IS INCORPORATED HEREIN BY REFERENCE. TO THE EXTENT THIS PROXY STATEMENT HAS
BEEN OR WILL BE SPECIFICALLY INCORPORATED BY REFERENCE INTO ANY FILING BY THE
COMPANY UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED, THE SECTIONS OF THE PROXY STATEMENT ENTITLED
'COMPENSATION COMMITTEE REPORT ON COMPENSATION' AND 'PERFORMANCE GRAPH' SHALL
NOT BE DEEMED TO BE SO INCORPORATED UNLESS SPECIFICALLY OTHERWISE PROVIDED IN
ANY SUCH FILING.
15
<PAGE>
<PAGE>
STOCKHOLDER PROPOSALS FOR 1995
ANNUAL MEETING OF STOCKHOLDERS
Stockholders who wish to have their proposals considered for inclusion in
the proxy materials for the Company's 1995 Annual Meeting of Stockholders must
deliver such proposals in writing to the Secretary of the Company at the
Company's principal executive offices no later than March 28, 1995.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors of the
Company is not aware of any matters that will be presented for action at the
Annual Meeting other than those described above. Should other business properly
be brought before the Annual Meeting, it is intended that the accompanying proxy
will be voted thereon in the discretion of the persons named as proxies.
By Order of the Board of Directors
JOHN W. HESTER
Secretary
June 27, 1994
16
<PAGE>
APPENDIX
Graphic and Image Information:
Performance Graph on Page 14 of N&PS.
<PAGE>
<PAGE>
ORION PICTURES CORPORATION
PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS, JULY 26, 1994 AT 4:00 P.M.
The undersigned shareholder of Orion Pictures Corporation (the 'Company')
hereby appoints Leonard White and Silvia Kessel and each of them, as attorneys
and proxies, each with power of substitution and revocation, to represent the
undersigned at the Annual Meeting of Shareholders of Orion Pictures Corporation
to be held in the Concourse Level at 1285 Avenue of the Americas, New York, New
York on July 26, 1994 at 4:00 P.M., and at any adjournment or postponement
thereof, with authority to vote all shares held or owned by the undersigned in
accordance with the directions indicated herein.
Receipt of the Notice of Annual Meeting of Shareholders dated June 27, 1994,
the Proxy Statement furnished herewith, and a copy of the Annual Report to
Shareholders for the year ended February 28, 1994 is hereby acknowledged.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR ITEMS 1 AND 2 AND PURSUANT TO ITEM 3.
(Continued and to be signed on the reverse side)
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' ITEMS 1 AND 2.
ITEM 1. Election of Directors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE NOMINEES LISTED BELOW.
FOR all nominees listed on the right (except as marked to the contrary hereon).
[ ]
WITHHOLD AUTHORITY to vote for all nominees listed to the right.
[ ]
NOMINEES: JOHN W. KLUGE, SILVIA KESSEL, JOEL R. PACKER, MICHAEL I. SOVERN,
RAYMOND L. STEELE, STUART SUBOTNICK, ARNOLD L. WADLER, STEPHEN WERTHEIMER,
AND LEONARD WHITE. (Instructions: To withhold authority to vote for any
individual nominee write that nominee's name in the space provided below.)
- - - - - ----------------------------------------------
ITEM 2. Ratification of the selection of KPMG Peat Marwick as independent
auditors of Orion Pictures Corporation for the fiscal year ended February 28,
1995.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
ITEM 3. In their discretion, the Proxies are authorized to vote upon such
other business as may properly be presented to the meeting or any adjournment
thereof.
P
R
O
X
Y
DATED:_________________________, 1994
_____________________________________
(SIGNATURE)
_____________________________________
(SIGNATURE IF HELD JOINTLY)
THE SIGNATURE SHOULD AGREE WITH THE NAME ON YOUR STOCK CERTIFICATE.
IF ACTING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, ETC.,
YOU SHOULD SO INDICATE WHEN SIGNING. IF THE SIGNER IS A CORPORATION,
PLEASE SIGN THE FULL CORPORATE NAME BY DULY AUTHORIZED OFFICER. IF SHARES
ARE HELD JOINTLY, EACH SHAREHOLDER SHOULD SIGN.
