________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
FORM 10-K/A
AMENDMENT NO. 1
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year ended February 28, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 1-5979
ORION PICTURES CORPORATION
(Exact name of registrant as specified in its Charter)
DELAWARE 13-1680528
(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) identification No.)
1888 CENTURY PARK EAST, LOS ANGELES, CALIFORNIA 90067
(Address and zip code of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(310) 282-0550
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON
STOCK - $.25 Par Value
<PAGE>
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Certain information concerning the executive officers of Orion
Pictures Corporation (the "Company") is set forth in Part I of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1995 and is incorporated herein by reference.
MEMBERS OF THE BOARD OF DIRECTORS
The following is a brief description of the business experience
for at least the past five years of current members of the Board of
Directors of the Company:
Name, Principal Occupations for Past Director
Five Years and Certain Directorships 1/ Age Since
- --------------------------------------- ----- ---------
Silvia Kessel 44 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 WorldCom, Inc. (formerly known
as LDDS Communications, Inc.)
- ----------------------------------------
1/ Unless otherwise indicated, 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.
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John W. Kluge 80 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., WorldCom, Inc. (formerly known
as LDDS Communications, Inc.) and Occidential
Petroleum Corporation.
Joel R. Packer 52 1992
Private investor since 1989.
Michael I. Sovern 63 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 60 1992
Retired. From August 1990 until September 1993,
Executive Vice President of Pacholder Associates,
Inc., a company providing investment banking
services to institutional clients. From June
1989 to June 1990, consultant to The Nickert
Group, a Pizza Hut franchisee. Director of
Pharmhouse, Inc., Emerson Radio Corp. and
Modernfold, Inc.
Stuart Subotnick 53 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
WorldCom, Inc. (formerly known as LDDS
Communications, Inc.)
Arnold L. Wadler 51 1991
Senior Vice President, Secretary and General
Counsel of Metromedia Company and its
predecessor-in-interest, Metromedia, Inc., for
over five years.
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Stephen N. Wertheimer 44 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.,
Merry-Go-Round Enterprises Inc.
Leonard White 56 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.
CERTAIN LEGAL PROCEEDINGS
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
Filing Date, was a co-proponent of the Plan with the Company. Each of
Silvia Kessel and Leonard White, current directors of the Company, served
as executive officers of the Company on the Filing Date.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES AND EXCHANGE ACT OF 1934
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 (the "Common Stock") to file reports of
ownership and changes of ownership with the Securities and Exchange
Commission and the Nasdaq National Market of the National Association of
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Securities Dealers, Inc. ("NASDAQ/NMS"). The Company believes that
during the fiscal year ended February 28, 1995, 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.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER 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, 1995, February 28, 1994 and
February 28, 1993 for services rendered in all capacities to the Company
and its subsidiaries.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE (1)
ANNUAL COMPENSATION
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS OTHER ANNUAL ALL OTHER
ENDED COMPENSATION COMPENSATION(4)
<S> <C> <C> <C> <C> <C>
Leonard White 1995 $450,000 $ 0 $ 28,524(3) $ 500
President and Chief Executive Officer 1994 425,004 0 202,106(3) 500
1993 425,004 570,166(2) 872,246(3) 500
John W. Hester 1995 225,000 0 5,376(3) 500
Executive Vice President, General Counsel and 1994 216,538 30,000(2) 138,770(3) 500
Secretary 1993 182,692 71,166(2) 100,974(3) 500
Joseph D. Indelli 1995 233,077 22,500 0 500
Executive Vice President, Domestic Television 1994 213,077 22,500 0 500
Distribution, Orion Television Entertainment 1993 210,000 0 0 500
Diane Keating(5) 1995 204,923 22,500 0 500
Former President, Orion Pictures International 1994 180,000 31,800 0 500
1993 157,019 30,000 0 500
Susan Blodgett 1995 191,962 0 33,383(3) 500
Senior Vice President, Marketing, Orion Pictures 1994 182,000 0 52,871(3) 500
Distribution Corporation 1993 128,000 2,500 500 500
</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) 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. 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.
(3) In connection with the consolidation of the Company's operations to Los
Angeles, Messrs. White and Hester and Ms. Blodgett were required to
relocate from the New York metropolitan area to Los Angeles and the
Company agreed to
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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 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 and Hester 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 $307,641 ($28,524 in 1995, $202,106 in 1994 and
$77,011 in 1993) for Mr. White, $156,939 ($5,376 in 1995, $133,789 in
1994 and 17,774 in 1993) for Mr. Hester, and $86,254 ($33,383 in 1995
and $52,871 in 1994) for Ms. Blodgett.
(4) Represents the Company's 401-K contribution of $500 annually.
(5) Ms. Keating's employment with the Company was terminated effective
March 31, 1995 and she received an aggregate of $89,875 from the Company
in connection therewith during the Company's current fiscal year which
began March 1, 1995. See "EMPLOYMENT AGREEMENTS - Employment and
Termination Agreement with Diane Keating" below.
COMPENSATION OF DIRECTORS
During the fiscal year ended February 28, 1995, the Company paid
each of Messrs. Packer, Steele and Wertheimer (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.
On March 2, 1995, the Company's Board of Directors formed a
special committee (the "Orion Special Committee") to consider the terms
of the proposed Agreement and Plan of Merger among The Actava Group Inc.,
the Company, MCEG Sterling Incorporated, and Metromedia International
Telecommunications, Inc. (the "Merger Agreement") and make a
recommendation to the full Board of Directors of the Company regarding
the Merger Agreement. The Orion Special Committee was formed because the
Company's Board of Directors is composed of a majority of persons who are
affiliated with Metromedia and because of the Board of Directors' view
that in light of the nature of certain of the transactions contemplated
by the Merger Agreement, the Company's directors affiliated with
Metromedia could be viewed as having an interest in the transactions
contemplated by the Merger Agreement in addition to the interests of the
Company's shareholders generally. The members of the Orion Special
Committee are Michael I. Sovern, Joel R. Packer and Raymond L. Steele,
each of whom the Company considers an independent director.
Messrs. Packer and Steele were two of
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the three Non-Metromedia Directors. The third Non-Metromedia Director,
Stephen N. Wertheimer, elected not to serve on the Orion Special
Committee because he is involved in active negotiations
with Metromedia on a matter unrelated to the Company and to
Mr. Wertheimer's duties as a director of the Company. Mr. Steele has
approached representatives of Metromedia regarding their interest in
making an investment in several potential transactions. Metromedia has
declined to participate or has not yet taken action with respect to each
such potential transaction. In light of the lack of any substantive
discussions between Metromedia and Mr. Steele regarding these
transactions, Mr. Steele and the Company's Board of Directors determined
that Mr. Steele could serve on the Orion Special Committee.
Mr. Sovern was selected as Chairman of the Orion Special Committee
and the Orion Special Committee met seven times. On May 5, 1995, the
Orion Special Committee unanimously recommended that the full Board of
Directors of the Company approve the Merger Agreement. Each member of
the Orion Special Committee received a fee of $20,000 for service on the
Orion Special Committee and received per meeting fees of $1,000 totalling
$27,000 for Mr. Sovern, $26,000 for Mr. Packer and $26,000 for
Mr. Steele.
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
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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 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
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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 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
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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.
If the Company terminates the 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,
determined at the salary level in effect as of the date of the non-
renewal. 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.
EMPLOYMENT AND TERMINATION AGREEMENTS WITH DIANE KEATING
Ms. Keating was party to an Employment Agreement dated July 1993
with the Company providing for her employment as President of the
Company's Orion Pictures International division effective as of July 1,
1993 and continuing through February 28, 1995. Pursuant to the
agreement, Ms. Keating was entitled to receive, as her base salary,
$195,000 per year. During the term of the agreement, Ms. Keating
participated in the Company's annual incentive bonus plan and was
eligible to receive a bonus for each fiscal year in accordance with the
terms of such plan. Ms. Keating was 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.
Ms. Keating's Employment Agreement with the Company expired by its
terms effective February 28, 1995.
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Thereupon, Ms. Keating and the Company entered into a Termination
Agreement dated March 1995. The Termination Agreement provided
that Ms. Keating would continue her employment as President
of the Company's Orion Pictures International division
at her then-current rate of compensation until a date which was
the earlier of: (a) the election, by the Company or Ms. Keating, to
terminate her employment, or (b) August 31, 1995. Under the Termination
Agreement, Ms. Keating was eligible to receive: (i) the amount of
severance to which she would be entitled under the Company's severance
policies, (ii) all amounts to which she was entitled pursuant to the
Company's Annual Bonus Plan for fiscal 1995, (iii) payment for accrued
and unused vacation, and (iv) an additional bonus of $10,000 for each
full calendar month of her continued employment with the Company through
August 31, 1995.
Ms. Keating elected to terminate her employment effective
March 31, 1995 and in full satisfaction of the terms of the Termination
Agreement, she was paid $89,875 by the Company in March, 1995.
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,
1995, 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 Company's old
common stock. In
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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 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
the Bank Guarantee to the Company's lenders (the "Banks") under the
Company's senior secured credit facility (the "Third Restated 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 Third
Restated 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 Third
Restated Credit Agreement in respect of a letter of credit issued in
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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 Third
Restated 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 the Reimbursement Agreement (the
"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 Net 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 Net 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 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
<PAGE>
Page 14
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 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. As of June 8, 1995, $775,000 of the Me and the Kid Loan is
outstanding.
<PAGE>
Page 15
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 $347,000 has been lent and is outstanding as of June
8, 1995) (the "Nostradamus Loan") to fund the print and advertising costs
associated with the domestic distribution in all media of the film
"NOSTRADAMUS." The Nostradamus 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 Nostradamus 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.
MetProductions and the Company are parties to an agreement
pursuant to which MetProductions has agreed to lend the Company up to
$775,000 (of which $615,00O has been lent and is outstanding as of June
8, 1995 (the "Bar Girls Loan") to fund the print and advertising costs
associated with and an advance to the producer to acquire the domestic
distribution in all media of the film "BAR GIRLS." The Bar Girls 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 Bar Girls 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.
MetProductions and the Company are parties to an agreement
pursuant to which MetProductions has agreed to lend the Company up to
$250,000 (of which $250,000 has been lent and is outstanding as of
June 8, 1995) (the "Playmaker Loan") to fund an advance to the producer
in order to acquire the domestic distribution rights in all media of the
film "PLAYMAKER." The Playmaker 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 Playmaker 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 $981,000 has been lent and is outstanding as of June
8, 1995 (the "Robocop Loan") to acquire the domestic home video
<PAGE>
Page 16
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.
MetProductions and the Company are parties to an agreement
pursuant to which MetProductions has agreed to lend the Company up to
$1,050,000 (of which $133,000 has been lent and is outstanding as of June
8, 1995) (the "Jeffrey Loan") to fund the print and advertising costs
associated with and as an advance to the producer of such film to acquire
the domestic distribution in all media of the film "JEFFREY." The Jeffrey
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 Jeffrey 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.
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 $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, 1996) (the "Fox Lorber Loan") to provide to Fox
Lorber Home Video an acquisition fund to be used to acquire full-length
theatrical motion pictures (the "Acquisition Fund Product"). At June 8,
1995, $61,500 of MetProduction's commitment was outstanding. The Fox
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 five animated children's films from Castle Communications.
MetProductions has loaned all of its commitment and the
<PAGE>
Page 17
entire amount is outstanding as of June 8, 1995. 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
formed a partnership to fund the production or acquisition of film
product. MetProductions has contributed to the partnership approximately
$2,435,000 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"), of which "DEAD ON"
has been released.
OHEC and MetProductions are parties to an agreement pursuant to
which MetProductions has agreed to lend OHEC up to $1,000,000 (the
"Streamline Loan") to fund the acquisition of domestic home video
distribution rights by OHEC to certain animated films from Streamline
Entertainment. As of June 8, 1995, $650,000 was outstanding under the
Streamline Loan. The Streamline 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 Streamline 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 Streamline Communications.
MetProductions and the Company have reached an agreement in
principle pursuant to which MetProductions has agreed to lend the Company
up to $2,487,424 (of which $17,700 has been lent and is outstanding as of
June 8, 1995) (the "War Zone Loan") to fund the pre-production and
production financing associated with the film "WAR ZONE." The War Zone
Loan and accrued and unpaid interest (at the rate of 10% per annum) is
payable out of the gross receipts to which Orion is entitled pursuant to
the production agreement relating to the film (less certain distribution
expenses). The War Zone Loan is secured by a first priority lien granted
to MetProductions on the Company's rights in the film (domestic) pursuant
to the production agreement relating to the film.
MetProductions and the Company have reached an agreement in
principle pursuant to which MetProductions has agreed to lend the Company
up to $724,000 (of which $5,000 has been lent and is outstanding as of
June 8, 1995) (the "Theremin Loan") to fund the printing and advertising
costs
<PAGE>
Page 18
and certain advances associated with the domestic distribution in
all media of the film "THEREMIN." The Theremin 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 Orion by the licensor of the film. The
Theremin 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.
MetProductions and the Company have reached an agreement in
principle pursuant to which MetProductions has agreed to lend the Company
up to $550,000 (none of which has been lent and is outstanding as of
June 8, 1995) (the "Dangerous Loan") to provide certain advances of home
video sales with respect to the film "THE DANGEROUS." The Dangerous 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 Orion by the licensor of
the film. The Dangerous Loan is secured by a first priority lien granted
to MetProductions on the Company's rights in the film. The terms of the
Dangerous Loan have not been finalized and are subject to change.
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, 1995, Image was indebted to the Company in the amount
of approximately $1.1 million 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 WorldCom, Inc. (formerly known as
LDDS Communications, Inc.) ("WorldCom"), which provides long distance
telephone services to the Company. Mr. Kluge is Chairman of the Board of
WorldCom and the Company and Mr. Subotnick, the Executive Vice President
and Vice Chairman of the Board of the Company is a Director of WorldCom
and Silvia Kessel, an Executive Vice President and Director of the
Company and a Senior Vice President of Metromedia serves on WorldCom's
Board of Directors. Metromedia owns approximately 16% of the fully diluted
<PAGE>
Page 19
common stock of WorldCom. For the fiscal year ended February 28,
1995 the Company paid $174,000 to WorldCom.
During the fiscal year ended February 28, 1995, the Company
received $89,000 from Metromedia Steakhouses Company, L.P. for sales of
videocassettes. The Company also reimburses Metromedia $95,000 annually
for the services of Silvia Kessel, a Senior Vice President of Metromedia
who also serves as Executive Vice President of the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
OWNERSHIP OF COMPANY STOCK BY CERTAIN HOLDERS
The following table sets forth, as of February 28, 1995, 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 shares of Common Stock. In accordance with the rules
promulgated by the SEC, 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>
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES OF PERCENTAGE OF
COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED (1)
<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 a
trust affiliated with Mr. Kluge; the balance is owned by Mr. Kluge and
Mr. Subotnick 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.
<PAGE>
Page 20
OWNERSHIP OF COMPANY STOCK BY DIRECTORS AND OFFICERS
The following table sets forth beneficial ownership of the
Company's Common Stock as of February 28, 1995 with respect to (i) each
director of the Company, (ii) each executive officer named in the Summary
Compensation Table under "Executive Compensation," and (iii) as to all
directors and executive officers as a group.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER NUMBER OF SHARES OF PERCENTAGE OF
COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED (1)
<S> <C> <C>
Susan Blodgett 4 (2)
John W. Hester -- --
Joseph D. Indelli -- --
Diane Keating -- --
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 (16 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 the Kluge Trust.
(4) Represents 7,195,325 shares beneficially owned through Metromedia.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN RELATIONSHIPS BETWEEN COMPANY AND DIRECTORS
Metromedia and certain of its affiliates and the Company are
parties to a number of agreements. See "COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION" above.
<PAGE>
Page 21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the registrant has duly caused this
report to be signed on behalf of the undersigned, thereunto duly
authorized.
ORION PICTURES CORPORATION
By: /S/ CYNTHIA A. FRIEDMAN
-------------------------
Cynthia A. Friedman
Senior Vice President and Chief Financial
Officer
Date: June 28, 1995
