ACTAVA GROUP INC, 10-K/A, 1994-05-02

ACTAVA GROUP INC
10-K/A, 1994-05-02
PHOTOFINISHING LABORATORIES

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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 DECEMBER 31, 1993

[ ] 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 1-5706

THE ACTAVA GROUP INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 58-0971455
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4900 GEORGIA-PACIFIC CENTER, 30303
ATLANTA, GEORGIA (Zip Code)
(Address of principal Executive Offices)
</TABLE>

(404) 658-9000
(Registrant's telephone number, including area code)

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Certain information concerning the executive officers of the Company is set
forth in Part I of the Company's Annual Report on Form 10-K for the year ended
December 31, 1993, and is incorporated herein by reference.

The following is a brief description of the business experience for at
least the past five years of the current members of the Board of Directors of
the Company and former members of the Board of Directors who served in 1993.

JOHN E. ADERHOLD, age 68, is co-chairman of the Corporation of Olympic
Development in Atlanta ("CODA"). He has served as a director of the Company
since January 18, 1993. Mr. Aderhold served as vice-chairman of and a consultant
to Intermet Corporation (the foundry division) headquartered in Atlanta, Georgia
from March 1992 until he joined CODA in December 1992. From 1967 until joining
Intermet, Mr. Aderhold served as president, and in 1989 became chairman and
chief executive officer, of the Rayloc Division of Genuine Parts Company. He is
currently a director of Aaron Rents, Inc. and American Business Products. He is
chairman of the Company's Audit Committee and is a member of the Compensation
and Acquisition Advisory Committees.

MICHAEL E. CAHR, age 54, has served as Venture Group Manager for Allstate
Venture Capital, a division of Allstate Insurance Company, since 1987. He is
also a director of Triton, LifeCell Corporation, Optek Technologies, Inc., and
several privately owned companies. Mr. Cahr was nominated by Triton and elected
to the Board of Directors on March 15, 1994 pursuant to the Stockholder
Agreement.

JOHN M. DARDEN III, age 54, is chairman and chief executive officer of
Sands & Company, Inc. ("Sands"), a privately-held company in the food service
business and headquartered in Atlanta, Georgia. Mr. Darden joined Sands in 1961
and has served as chairman, president and chief executive officer since 1970. He
is chairman of the Company's Compensation Committee and is a member of the Audit
Committee, the Retirement Committee and the Acquisition Advisory Committee. Mr.
Darden has served as a director of the Company since March 16, 1992.

JOHN P. IMLAY, JR., age 57, is chairman of Dun & Bradstreet Software
Services, Inc., an application software company located in Atlanta, Georgia, and
has served in that capacity since 1990. Prior to that, he was Chairman of
Management Science America, a mainframe applications software company which he
founded in the 1960s. Mr. Imlay is also a director of the Atlanta Falcons, a
National Football League team, and The Gartner Group. Mr. Imlay is chairman of
the Company's Acquisition Advisory Committee and is a member of the Compensation
and Retirement Committees. Mr. Imlay has served as a director of the Company
since January 18, 1993.

CLARK A. JOHNSON, age 63, has been a director of the Company since April
27, 1990. He has served as chairman and chief executive officer of Pier 1
Imports, Inc. ("Pier 1 Imports"), a specialty retailer of decorative home
furnishings, since March 1984. Mr. Johnson is a director of Albertson's Inc.,
Anacomp, Inc., Heritage Media Corporation, InterTAN, Inc., and Pier 1 Imports,
Inc. He is chairman of the Company's Executive Committee and is a member of the
Nomination and Acquisition Advisory Committees.

ANTHONY F. KOPP, age 61, has been chief executive officer and president of
Newport Development Corporation since November, 1985. Newport Development
Corporation, located in Orlando, Florida, owns and operates mobile home parks in
the Orlando area and maintains an equipment leasing division. He was formerly
the president of Diners Club Credit Card Division from 1968 through 1971. He has
been a director of the Company since February, 1991 and is the Chairman of the
Company's Retirement Committee and is a member of the Audit Committee and the
Acquisition Advisory Committee.

RICHARD NEVINS, age 47, is president of Richard Nevins & Associates, a
financial advisory firm, and a Managing Director of Ambient Capital Group, Inc.,
a private investment bank. Mr. Nevins founded Richard Nevins & Associates in
January 1992 and began his affiliation with Ambient Capital in 1993. From 1990
until

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forming Richard Nevins & Associates, Mr. Nevins was a managing director at
Smith, Barney, Harris, Upham & Co., Inc. Before joining Smith, Barney, Mr.
Nevins was a managing director at Drexel Burnham Lambert Incorporated. Mr.
Nevins is a member of the Retirement Committee, the Nomination Committee, and
the Acquisition Advisory Committee. Mr. Nevins was nominated by Triton and
elected to the Board of Directors on July 19, 1993 pursuant to the Stockholder
Agreement.

JOHN D. PHILLIPS, age 51, was elected president and chief executive officer
of the Company on April 19, 1994. He was also elected to the Board of Directors
of the Company and to the Executive Committee on the same date. Mr. Phillips
served as chief executive officer of Resurgens Communications Group, Inc.
("Resurgens") from May 1989 until Resurgens was merged with Metromedia
Communications Corporation and LDDS Communications, Inc. in September 1993. Mr.
Phillips served as president and chief operating officer of Advanced
Telecommunications Corporation from June 1985 until October 1988. Mr. Phillips
and the Company are parties to an Employment Agreement containing the terms of
Mr. Phillips' employment by the Company.

CARL E. SANDERS, age 68, is engaged in the private practice of law as the
chairman of Troutman Sanders, Atlanta, Georgia. Mr. Sanders has been a director
of the Company since 1967, except for a one-year period from April 1970 to April
1971. He is a former Governor of the State of Georgia and is also a director of
Carmike Cinemas, Inc. and Healthdyne, Inc. Mr. Sanders is Chairman of the
Company's Nomination Committee and is a member of the Acquisition Advisory
Committee and the Executive Committee.

CHARLES R. SCOTT, age 66, was president and chief executive officer of the
Company from February 1991 until April 1994. He was also a director of the
Company from January 1989 to April 1994. From 1970 to February 1993, Mr. Scott
served as a director of Intermark, Inc. ("Intermark"), a diversified holding
company, and was chief executive officer of Intermark from 1970 to 1991. From
1987 until February 1993, Mr. Scott also served as chairman of the board of
Triton (which was an affiliate of Intermark from 1986 until 1993), and he was
president and chief executive officer of Triton from 1987 to 1991. Mr. Scott is
a director of the Bank of California and Pier 1 Imports, Inc.

Triton Group Ltd. ("Triton") owns approximately 24% of the outstanding
shares of the Company's Common Stock. The Company and Triton are parties to an
Amended and Restated Stockholder Agreement dated as of June 25, 1993 (the
"Stockholder Agreement") pursuant to which the Company and Triton agreed that
the Board of Directors of the Company shall consist of not more than nine
directors, two of whom shall be designated by Triton. Two of the individuals
currently serving on the Board of Directors were designated by Triton. They are
Richard Nevins, who was elected to the Board of Directors on July 19, 1993, and
Michael E. Cahr, who was elected to the Board of Directors on March 15, 1994. In
addition, under the Stockholder Agreement, Triton has agreed to vote in favor of
the Company's nominees for director as long as any amount remains outstanding
under the Triton Loan. See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."

Under a Shareholder Rights Agreement between the Company and Westinghouse
Electric Corporation, the Trustee of the Westinghouse Executive Pension Trust
Fund has agreed to vote the shares of Common Stock it holds (approximately 5.9%
of the outstanding Common Stock) in favor of the Company's nominees for
director. See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."

CERTAIN LEGAL PROCEEDINGS

On February 25, 1991, a lawsuit styled Virginia E. Abrams and Fuqua
Industries, Inc. v. J. B. Fuqua, et al., Civil Action No. 11974, was filed in
the Delaware Chancery Court. The named defendants are certain current and former
members of the Company's Board of Directors and certain former members of the
Board of Directors of Intermark. Intermark is a predecessor to Triton, which
currently owns approximately 25% of the outstanding shares of the Company's
Common Stock. The Company was named as a nominal defendant in this lawsuit. The
action was brought derivatively in the right of and on behalf of the Company and
purportedly was filed as a class action lawsuit on behalf of all holders of the
Company's Common Stock other than the defendants. The complaint alleges, among
other things, a long-standing pattern and practice by the defendants of misusing
and abusing their power as directors and insiders of the Company by manipulating
the affairs of the Company to the detriment of the Company's past and present
stockholders. The complaint seeks

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(i) monetary damages from the director defendants, including a joint and several
judgment for $15,700,000 for alleged improper profits obtained by Mr. J. B.
Fuqua in connection with the sale of his shares in the Company to Intermark;
(ii) injunctive relief against the Company, Intermark and its former directors,
including a prohibition against approving or entering into any business
combination with Intermark without specified approval; and (iii) costs of suit
and attorneys' fees.

As of March 4, 1991, two additional complaints, Behrens and Harris v. Fuqua
Industries, Inc., et al., Civil Action No. 11988, and Freberg and Lewis v. Fuqua
Industries, Inc., et al., Civil Action No. 11989, had been filed in the Delaware
Chancery Court by plaintiffs who allege that they are stockholders of the
Company. Each of these complaints purported to be brought on behalf of a class
of stockholders of the Company other than the named defendants. The named
defendants are the Company and certain of its current and former directors. The
complaints alleged, among other things, that members of the Company's Board of
Directors presently contemplate either a sale, a merger or other business
combination involving Intermark and the Company or one or more of its
subsidiaries or affiliates. The complaints sought costs of suit and attorneys'
fees and preliminary and permanent injunctive relief and other equitable
remedies, including an order requiring the director defendants to carry out
their fiduciary duties to the plaintiffs and other members of the class and to
take all appropriate steps to enhance the Company's value as a merger or
acquisition candidate.

On motion by the defendants in all three lawsuits, the Delaware Chancery
Court ordered the consolidation of the three suits in In re Fuqua Industries,
Inc. Shareholder Litigation, Civil Action No. 11974, on May 1, 1991. The action
continues to be in the discovery stage.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES AND EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission and the New York Stock Exchange initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors and greater than 10%
stockholders are required by Securities and Exchange Commission regulation to
furnish the Company with copies of all Section 16(a) forms they file. To the
Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, all Section 16(a) filing requirements applicable to the Company's
officers, directors and greater than 10% beneficial owners were complied with by
such persons during the fiscal year ended December 31, 1993, except that Mr.
Aderhold failed to file a timely Form 4 Report with respect to his purchase of
1,000 shares of the Company's Common Stock in December 1993.

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ITEM 11. EXECUTIVE COMPENSATION.

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

The following table shows, for the fiscal years ending December 31, 1993,
1992 and 1991, the cash compensation paid by the Company and its subsidiaries,
as well as certain other compensation paid or accrued for those years, to each
of the executive officers of the Company in all capacities in which they serve:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------
AWARDS
ANNUAL COMPENSATION -----------------
---------------------------------------------- NUMBER OF PAYOUTS
NAME AND OTHER SECURITIES -----------
PRINCIPAL ANNUAL UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY ($) BONUS ($) COMPENSATION (1) STOCK OPTIONS PAYOUTS ($) COMPENSATION ($)(2)
- - --------- ---- ---------- --------- ------------------- ----------------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles 1993 $624,984 $93,750 -- 45,500 -0- $36,968
R. 1992 $624,984 $75,000 -- 40,000 -0- $20,853
Scott(3) 1991(4) $566,090 $52,083 -- -0- -0- --
Former
President
and Chief
Executive
Officer
Frederick 1993 $269,783 $41,250 -- 19,100 -0- $ 4,390
B. 1992 $257,797 $44,625 -- 20,000 -0- $ 4,344
Beilstein, 1991(4) $146,794 $20,833 -- 15,000 -0- --
III
Senior
Vice
President --
Treasurer
and Chief
Financial
Officer
Walter M. 1993(5) $110,048 $16,875 -- 20,000 -0- $41,312
Grant
Senior
Vice
President
and
General
Counsel
Paul N. 1993 $147,600 $12,300 -- -0- -0- $ 4,860
Kiel(6) 1992 $147,600 $12,300 -- -0- -0- $ 4,860
Former 1991 $147,600 $12,867 -- 1,000 -0- --
Vice
President -- Legal
and
Secretary
Michael 1993 $143,750 $22,500 -- 10,900 -0- $ 2,700
A. 1992 $116,249 $18,000 -- 10,000 -0- $ 2,700
Lustig(7) 1991 $ 79,249 $ 6,666 -- 4,000 -0- --
Former
Vice
President --
Corporate
Development
</TABLE>

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(1) The Company provides perquisites and other personal benefits to the
executive officers of the Company. The value of the perquisites and
benefits provided to each executive officer during 1992 and 1993 did not
exceed the lesser of $50,000 or 10% of such officer's salary plus annual
bonus. The value of these benefits for fiscal years prior to 1992 is not
required to be disclosed under the rules promulgated by the Securities and
Exchange Commission.
(2) The amounts in this column include (i) premium payments paid by the Company
in 1992 and 1993 on behalf of its executive officers under life insurance
policies owned by the executive officers, and (ii) relocation allowances of
$15,845 and $40,000 provided by the Company to Mr. Scott and Mr. Grant,
respectively, in 1993. "All Other Compensation" for fiscal years prior to
1992 is not required to be disclosed under the proxy rules promulgated by
the Securities and Exchange Commission. The Company made premium payments
of $12,180, $4,200, $4,860 and $2,700 in each of the years 1992 and 1993 on
behalf of Messrs. Scott, Beilstein, Kiel and Lustig, respectively, and
premium payments of $1,312 in 1993 on behalf of Mr. Grant under the
Company's group universal life insurance program. Under this program, the
Company's executive officers each own $500,000 of universal life insurance
on which the Company pays the premiums. The cash surrender value of these
policies as of December 31, 1993 was $26,848 for Mr. Scott, $9,012 for Mr.
Beilstein, $23,191 for Mr. Kiel, $7,362 for Mr. Lustig, and $815 for Mr.
Grant. In addition, the Company made premium payments of $8,673 and $144 in
1992 and $10,950 and $190 in 1993 on behalf of Messrs. Scott and Beilstein,
respectively, under additional term life insurance policies

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providing death benefits of $1,100,000 and $100,000, respectively, payable
to the designated beneficiaries of Messrs. Scott and Beilstein.
(3) Mr. Scott served as president and chief executive officer of the Company
from February 1991 until April 19, 1994. He resigned as president and chief
executive officer and as a director of the Company on April 19, 1994 but
will continue as a senior officer of the Company at his current salary
until December 31, 1994. After December 31, 1994, Mr. Scott will serve as a
consultant to the Company for a period of two years pursuant to the
Post-Employment Consulting Agreement between the Company and Mr. Scott. See
"POST-EMPLOYMENT CONSULTING AGREEMENTS."
(4) The amounts shown for 1991 reflect less than a full year of compensation for
Messrs. Scott and Beilstein, who were employed by the Company on February
6, 1991 and May 30, 1991, respectively.
(5) The amounts shown for 1993 reflect less than a full year of compensation for
Mr. Grant, who was employed by the Company on July 6, 1993.
(6) Mr. Kiel ceased performing policy-making functions for the Company when Mr.
Grant was employed as Senior Vice President and General Counsel of the
Company in July 1993. The amounts shown in the Summary Compensation Table
for Mr. Kiel include all compensation earned by him during 1993, including
compensation earned after he ceased to perform policy-making functions. Mr.
Kiel's employment with the Company was terminated in March 1994 in
connection with a reduction in force in the Company's corporate
headquarters. Mr. Kiel asserted that he was entitled to compensation under
his severance agreement with the Company, which provided for certain
payments if he was terminated within three years of a "change in control"
as defined in the severance agreement. The Company disputed this claim and
settled with Mr. Kiel by agreeing to make a lump sum payment equal to one
year's salary ($147,600) and by entering into a one-year consulting
agreement with Mr. Kiel providing for additional payments of $60,000 in
exchange for legal services to be provided to the Company by Mr. Kiel.
(7) Mr. Lustig ceased to be an executive officer of the Company when he became
Executive Vice President and Chief Financial Officer of Diversified
Products Corporation, a wholly owned subsidiary of the Company, in November
1993. The amounts shown in the Summary Compensation Table for Mr. Lustig
include all compensation earned by him during 1993, including compensation
earned after he ceased to be an executive officer of the Company.

STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

The following table contains information concerning the grant of stock
options and tandem limited stock appreciation rights ("SARs") under the
Company's 1989 Stock Option Plan during the fiscal year ended December 31, 1993:

OPTION AND SAR GRANTS IN LAST FISCAL YEAR

POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM
- - ----------------------------------------------------------------------------------- ------------------------
(C)
% OF TOTAL
OPTIONS/
(B) SARS (D)
OPTIONS/ GRANTED TO EXERCISE
SARS EMPLOYEES OR BASE (E)
GRANTED IN FISCAL PRICE EXPIRATION (F) (G)
(A) #(1) YEAR (S/SH) DATE 5%($)(2) 10%($)(2)
------- ------------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Charles R. Scott.................. 45,500 48% $13.75 3/31/03 -0- $279,370
Frederick B. Beilstein, III....... 19,100 20% $13.75 3/31/03 -0- $117,274
Walter M. Grant................... 20,000 21% $8.875 7/19/03 $ 89,100 $232,300
Paul N. Kiel...................... -0- -- -- -- -0- -0-
Michael A. Lustig................. 10,900 11% $13.75 3/31/03 -0- $ 66,926
</TABLE>

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(1) The options for Messrs. Scott, Beilstein and Lustig were granted on March
31, 1993, and the options for Mr. Grant were granted on July 19, 1993. The
exercise price of each option was equal to the market price on the date of
grant. Each option becomes exercisable in cumulative increments of 25% of
the total

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number of shares subject to the option six months from the date of grant
and on the first, second, and third anniversaries of the date of grant. The
options each have a term of ten years from the date of grant and are not
transferrable otherwise than by will or the laws of descent and
distribution. Except as provided in each of the option agreements, the
options may not be exercised unless the optionee continues to be employed
by the Company or one of its affiliates or subsidiaries. In the event of
the termination of employment of any of the optionees that is either (i)
for "cause" (as defined in each of the option agreements) or (ii) voluntary
on the part of such optionee and without the written consent of the
Company, any options granted to such optionee, to the extent not
theretofore exercised, shall forthwith terminate. In addition, Mr. Scott's
options will become immediately and fully exercisable for a period of seven
months (but not to exceed ten years from the date of grant) in the event of
Mr. Scott's (i) retirement, (ii) termination other than a voluntary
termination or termination for "cause", as described above, or (iii) death.
See POST-EMPLOYMENT CONSULTING AGREEMENTS." The purchase price of the
shares subject to these options may be paid (i) in cash, (ii) by check
payable to the Company, (iii) through the surrender of previously owned
stock of the Company, or (iv) by surrendering a portion of any such option
equal to the difference between the fair market value of the stock and the
option exercise price. The optionees may also elect to have a portion of
the shares subject to any such option withheld by the Company to pay any
income tax withholding payable by the Company in connection with any option
exercise.
(2) The total value of all outstanding shares of Common Stock of the Company,
based on the last sale price on the New York Stock Exchange on April 29,
1994 of $8.50, was $155,251,446. If the Common Stock appreciates at the 5%
and 10% compounded annual rates assumed in the table, the value of the
Company's Common Stock held by all stockholders will increase by
$84,566,376 and $208,036,938, respectively, by the expiration date of these
options. There can be no assurance that such increases in value will occur.

OPTION AND SAR EXERCISES AND HOLDINGS

The following table sets forth information with respect to the named
executive officers concerning the exercise of options or SARs during the last
fiscal year and the number of unexercised options and SARs held as of the end of
the fiscal year.
FY End Value -- $7.50

AGGREGATED OPTION AND SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION AND SAR VALUES

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN
NUMBER OF UNEXERCISED THE MONEY
VALUE REALIZED OPTIONS/SARS AT FISCAL YEAR OPTIONS/SARS AT FISCAL
(MARKET PRICE AT END(#) YEAR END($)
SHARES ACQUIRED EXERCISE LESS --------------------------- -------------------------
NAME ON EXERCISE(#) EXERCISE PRICE) EXERCISABLE UNEXERCISED EXERCISABLE UNEXERCISED
- - --------------------------- --------------- ---------------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Charles R. Scott........... -0- -0- 31,375 54,125 -0- -0-
Frederick B. Beilstein,
III...................... -0- -0- 22,275 31,825 -0- -0-
Walter M. Grant............ -0- -0- -0- 20,000 -0- -0-
Paul N. Kiel............... -0- -0- 500 500 -0- -0-
Michael A. Lustig.......... -0- -0- 14,725 15,175 -0- -0-
</TABLE>

PENSION PLANS

The following table shows the estimated pension benefits payable to a
covered participant at normal retirement age under the Company's qualified
defined benefit pension plan and nonqualified supplemental pension plan based on
remuneration that is covered under the plans and based on the participant's
years of service with the Company and its subsidiaries. The Company's
nonqualified supplemental pension plan provides benefits that would otherwise be
denied participants by reason of certain Internal Revenue Code

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<PAGE> 8

limitations on qualified plan benefits and provides certain other supplemental
pension benefits to certain of the Company's management and highly compensated
employees.

PENSION PLAN TABLE

YEARS OF SERVICE

<TABLE>
<CAPTION>
REMUNERATION 15 20 25 30 40 OR MORE
- - ------------ -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
$125,000 $ 37,500 $ 50,000 $ 56,250 $ 62,500 $ 75,000
150,000 45,000 60,000 67,500 75,000 90,000
175,000 52,500 70,000 78,750 87,500 105,000
200,000 60,000 80,000 90,000 100,000 120,000
225,000 67,500 90,000 101,250 112,500 135,000
250,000 75,000 100,000 112,500 125,000 150,000
300,000 90,000 120,000 135,000 150,000 180,000
400,000 120,000 160,000 180,000 200,000 240,000
450,000 135,000 180,000 202,500 225,000 270,000
500,000 150,000 200,000 225,000 250,000 300,000
600,000 180,000 240,000 270,000 300,000 360,000
700,000 210,000 280,000 315,000 350,000 420,000
800,000 240,000 320,000 360,000 400,000 480,000
900,000 270,000 360,000 405,000 450,000 540,000
</TABLE>

A participant's compensation covered by the Company's pension plan and
supplemental pension plan is his or her average annual compensation for the five
calendar plan years during the last ten years of the participant's career for
which such average is the highest or, in the case of a participant who has been
employed for less than five full calendar years, the period of his or her
employment with the Company and its subsidiaries ("covered compensation"). A
participant's covered compensation generally means the total taxable
compensation required to be reported on the participant's Form W-2 for income
tax purposes, except that this amount is annualized for periods covering less
than a full calendar year. This amount for the named executive officers as of
the end of the last calendar year is: Mr. Scott: $694,614; Mr. Beilstein:
$300,648; Mr. Grant: $230,512; Mr. Kiel: $164,250; Mr. Lustig: $174,950. The
estimated years of service for each named executive as of March 1, 1994 is as
follows: Mr. Scott: three years; Mr. Beilstein: two years; Mr. Kiel: 25 years;
Mr. Lustig: 14 years; Mr. Grant: zero years. Benefits shown are computed as a
straight life annuity beginning at age 62. Generally, a participant earns
retirement benefits at the rate of 2% of his covered compensation for the first
20 years of service and 1% for each additional 20 years of service. In 1992, the
supplemental pension plan was amended to provide that participants over the age
of 62 who have not otherwise reached the maximum benefit would earn benefits at
the rate of 5% of covered compensation for each year of service after age 62.
Participants become vested in their retirement benefits after completing at
least five years of service or attaining age 50 or upon retirement after age 62
with at least one year of service. Based on these provisions and the number of
years of service completed, the annual vested retirement benefit for each named
executive as of March 1, 1994 was as follows: Mr. Scott: $108,612; Mr.
Beilstein: none; Mr. Kiel: $68,724; Mr. Lustig: $30,857; and Mr. Grant: none. A
participant's covered compensation for purposes of the pension plan differs from
compensation reported in the Summary Compensation Table (the "Table") in that
(i) covered compensation includes certain taxable employee benefits not required
to be reported in the Table, and (ii) covered compensation includes all
compensation received by the executive during the year (regardless of when it
was earned), whereas the Table includes only compensation earned during the
year.

COMPENSATION OF DIRECTORS

In 1993, each director of the Company who was not employed by the Company
received a monthly retainer of $2,000 plus $1,200 for each meeting of the Board
of Directors which he attended in person and $500 for each meeting of the Board
of Directors in which he participated by conference telephone call.

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<PAGE> 9

Chairmen of committees of the Board of Directors are paid an additional fee of
$2,500 per year. Members of committees of the Board of Directors are paid $500
for each meeting attended if held in conjunction with a meeting of the full
Board of Directors or $1,200 if held separately. Directors are also reimbursed
for their expenses in attending meetings and engaging in other business
activities for the Company.

In March 1994, the Board of Directors eliminated the monthly cash retainer
previously paid to all non-employee directors of the Company. In lieu of the
monthly cash retainer, each director who is not employed by the Company will
receive 300 shares of the Company's Common Stock for each month of service as a
director. This arrangement is subject to stockholder approval and will be
submitted to the stockholders for approval at the 1995 Annual Meeting of
Stockholders. No shares will be issued to the directors until stockholder
approval is obtained. Meeting fees will continue to be paid in cash at the same
rate as in 1993.

Directors who are not employees of the Company also are entitled to receive
options to purchase shares of the Company's Common Stock under the 1991
Non-Employee Director Stock Option Plan (the "Director Plan"). Certain
amendments to the Director Plan were approved at the 1993 Annual Meeting of
Stockholders. As amended, the Director Plan provides that:

(1) Each non-employee director of the Company on August 3, 1992 was
granted an option to purchase 10,000 shares of Common Stock at an exercise
price of $11.875, the closing price of the Common Stock on the trading day
immediately preceding the date of grant. Options granted to these directors
became fully vested as to all 10,000 shares upon approval of the amendments
to the Director Plan at the 1993 Annual Meeting of Stockholders.

(2) Each person who becomes a non-employee director of the Company
after August 3, 1992 will receive an option for 10,000 shares of Common
Stock on the day he is elected as a director at an exercise price equal to
the closing price of the Common Stock on the trading day preceding his
election. Options granted to these directors become fully vested and are
exercisable as to all 10,000 shares on March 31 in the year after the date
the director is elected if the Company has net income for the year in which
the director is elected or earnings equal to or better than budgeted
results for such year. In 1993, options were granted under the Director
Plan to each of Messrs. Aderhold, Imlay and Nevins, but all of these
options have expired because the Company in 1993 did not have net income or
earnings equal to or better than budgeted results for 1993.

Options granted under the Director Plan have a term of ten years, and the
Director Plan itself terminates ten years after the initial grant date under the
Plan, or on June 27, 2001.

The following table shows the amount of options held by directors of the
Company under the Director Plan as of April 29, 1994:

<TABLE>
<CAPTION>
NUMBER OF SHARES
SUBJECT TO
NAME AND POSITION OPTIONS
------------------------------------------------------------------- -----------------
<S> <C>
Michael E. Cahr.................................................... 10,000(1)
Director
Director John M. Darden, III....................................... 10,000(2)
Director
Clark A. Johnson................................................... 10,000(2)
Director
Anthony F. Kopp.................................................... 10,000(2)
Director
Carl E. Sanders.................................................... 10,000(2)
Director
Non-Employee Director Group........................................ 50,000
</TABLE>

- - ---------------

(1) Mr. Cahr was elected as a director on March 15, 1994, and the options
granted to him are exercisable at $6.75 per share. These options vest and
become fully exercisable on March 31, 1995, assuming the Company has net
income or earnings equal to or greater than budgeted results for 1994.

8
<PAGE> 10

(2) These options are exercisable at $11.875 per share.

During the first quarter of 1992, the Company implemented a group medical
plan for directors which provides medical coverage at group premium rates to
active directors electing such coverage and to a director who upon retirement
either has participated in the plan for the entire period that the individual
has been a director since March 1, 1992 or has participated in the plan for the
three consecutive years immediately prior to the individual's retirement as a
director. The medical plan currently pays for 100% of a director's single
coverage premium and between 25% and 50% of the dependent coverage premium.

AGREEMENTS WITH JOHN D. PHILLIPS

On April 19, 1994, Mr. Phillips was elected president and chief executive
officer of the Company. He was also elected to the Board of Directors of the
Company. Mr. Phillips succeeds Mr. Scott, who had served as the Company's
president and chief executive officer since 1991. At the same time, Renaissance
Partners, an investment partnership in which Mr. Phillips serves as a general
partner, purchased from the Company 700,000 shares of the Company's Common Stock
for $4,462,500, representing a price of $6.375 per share. This price represents
the last sale price of the Company's Common Stock on the New York Stock Exchange
on April 11, 1994, the day before the Company announced that it had received a
proposal from Mr. Phillips. The Company has entered into a Registration Rights
Agreement with Renaissance Partners pursuant to which the Company has agreed to
register with the Securities and Exchange Commission the 700,000 shares of
Common Stock purchased by Renaissance Partners.

Mr. Phillips and the Company are parties to an Employment Agreement dated
April 19, 1994 under which the Company agreed to employ Mr. Phillips as its
chief executive officer until December 31, 1996. The Employment Agreement
provides that Mr. Phillips will be entitled to receive a base salary at an
annual rate of $625,000 per year, which is the same base salary received by Mr.
Scott during his term as president and chief executive officer of the Company.
Mr. Phillips also is entitled to participate in the Company's Senior Officer
Bonus Plan and to receive other benefits provided by the Company to its senior
corporate officers. Both the Company and Mr. Phillips have the right to
terminate the Employment Agreement at any time. If the Company terminates the
Employment Agreement without cause (as defined in the Employment Agreement),
then the Company will be required to continue to pay Mr. Phillips' base salary
and other benefits through December 31, 1996. If the Company terminates the
Employment Agreement with cause or if Mr. Phillips terminates the Employment
Agreement, then Mr. Phillips will be entitled to receive his base salary and
other benefits only through the date of termination.

In connection with his employment, Mr. Phillips also received from the
Company an option (the "Option") to purchase 300,000 shares of the Company's
Common Stock at a price of $6.375 per share. The option may be exercised at any
time until the Option terminates on April 18, 2001. Mr. Phillips has the right
to transfer the Option in whole or in part at any time. The Company has entered
into a Registration Rights Agreement with Mr. Phillips pursuant to which the
Company has agreed to register with the Securities and Exchange Commission any
shares purchased upon exercise of the Option.

POST-EMPLOYMENT CONSULTING AGREEMENTS

The Company has entered into Post-Employment Consulting Agreements with
each of Messrs. Scott, Beilstein, Lustig, and Grant. These agreements provide
that if an executive's employment with the Company is terminated by the Company
(other than a termination for cause) or if the executive's employment is
terminated by the executive for "good reason", then the Company will retain the
executive as a consultant for a period of two years following the date of
termination of his employment. An executive may terminate his employment for
"good reason" in the event of (i) a reduction in his base salary or benefits
other than an across-the-board reduction involving similarly situated employees,
(ii) the relocation of his full-time office to a location greater than 50 miles
from the Company's current corporate office, or (iii) a reduction in his
corporate title. The agreements provide that the Company, in exchange for the
executive's post-employment consulting services, will pay a monthly consulting
fee to the executive in an amount equal to the executive's monthly base salary
at the time of the termination of his employment. The agreements also provide
for the

9
<PAGE> 11

continuation of certain medical and other employee benefits during the two-year
consulting period. The consulting payments to which a terminated executive is
otherwise entitled under the agreements will be reduced in the event the
terminated executive has "earned income" (as defined in the agreements) or
retirement income under the Company's Retirement Plan during the two-year
consulting period.

Mr. Scott resigned as president and chief executive officer and as a
director of the Company on April 19, 1994 but will continue to serve as a senior
officer of the Company at his current salary until December 31, 1994. After
December 31, 1994, Mr. Scott will serve as a consultant to the Company for a
period of two years under his Post-Employment Consulting Agreement with the
Company. On April 19, 1994, the Board of Directors, subject to legal review,
agreed to extend the period during which Mr. Scott may exercise the stock
options previously granted to him by the Company through the expiration date of
Mr. Scott's Post-Employment Consulting Agreement with the Company. See "STOCK
OPTION AND STOCK APPRECIATION RIGHTS."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT.

OWNERSHIP OF COMPANY STOCK BY CERTAIN HOLDERS

The following table sets forth, as of the close of business on April 29,
1994, information as to those stockholders known to the Company to be the
beneficial owners of more than 5% of the outstanding shares of the Company's
Common Stock (based solely upon filings by each of such stockholders with the
Securities and Exchange Commission on Schedule 13D or Schedule 13G):

<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
OWNED ON APRIL
NAME AND ADDRESS 29, 1994 PERCENT OF CLASS
- - ----------------------------------------------------------- ----------------- ----------------
<S> <C> <C>
Triton Group Ltd.(1)....................................... 4,413,598 24.1%
550 West C
18th Floor
San Diego, California 92101
Franklin Resources, Inc.(2)................................ 1,424,000 7.7%
177 Mariners Island Boulevard
San Mateo, California 94404
Mellon Bank, as Trustee of................................. 1,090,909 5.9%
the Westinghouse Executive
Pension Trust Fund(3)
11 Stanwix Street
Pittsburgh, Pennsylvania 15222
John D. Phillips(4)........................................ 1,000,000 5.3%
945 E. Paces Ferry Road
Suite 2210, Resurgens Plaza
Atlanta, Georgia 30326
</TABLE>

- - ---------------

(1) Mr. Nevins serves as a financial advisor to Triton, and Mr. Cahr serves as a
director of Triton. Messrs. Nevins and Cahr were designated by Triton to
fill the two positions on the Company's Board of Directors that Triton is
entitled to fill under the Stockholder Agreement. See also "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS." Mr. Nevins and Mr. Cahr disclaim
beneficial ownership of the Common Stock owned by Triton.
(2) Franklin Resources, Inc. ("Franklin") is a holding company for investment
adviser companies registered under the Investment Advisors Act of 1940. In
a Schedule 13G dated February 3, 1994, Franklin stated that its investment
advisory client, Templeton Funds, Inc., owned as of December 31, 1993, more
than 5% of the outstanding shares of the Company's Common Stock.
(3) Westinghouse Electric Corporation ("Westinghouse") acquired these shares on
June 8, 1993 in connection with the acquisition by the Company of
substantially all of the assets of Diversified Products

10
<PAGE> 12

Corporation. According to a Schedule 13D filed by Westinghouse, the shares
were transferred to the Trustee of the Westinghouse Executive Pension Trust
Fund (the "Trustee") on August 31, 1993. See "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS."
(4) John D. Phillips was elected president, chief executive officer and a
director of the Company on April 19, 1994. See "AGREEMENTS WITH JOHN D.
PHILLIPS." The shares shown in the table as beneficially owned by Mr.
Phillips include 700,000 shares owned by Renaissance Partners, a Georgia
general partnership in which Mr. Phillips is a general partner, and 300,000
shares subject to purchase by Mr. Phillips within the next 60 days pursuant
to the exercise of a stock option. See "AGREEMENTS WITH JOHN D. PHILLIPS."
Mr. Phillips disclaims beneficial ownership of the shares owned by
Renaissance Partners except to the extent of his interest in Renaissance
Partners.

Intermark (which was merged into Triton on June 25, 1993) originally
acquired more than 5% of the outstanding shares of the Company's Common Stock in
1989. In an amended Schedule 13D, dated February 26, 1991, Intermark stated in
part the following in respect to its purchase of the Company's Common Stock:

"Intermark's purpose in acquiring and holding, through Triton, shares
of [Actava] Common Stock is to further its ultimate objective of acquiring
voting control of [Actava]. Intermark has not formulated any specific plan
or proposal in this regard, and . . . there can be no assurance that any
such plan or proposal will be developed or as to the term(s) or the timing
of any such plan or proposal."

On July 22, 1993, Triton amended its Schedule 13D to report that it had
acquired an additional 75,000 shares of Common Stock, increasing its ownership
to 4,413,598 shares (25.03% of the shares then outstanding). In its amended
Schedule 13D, Triton stated in part:

"Subject to applicable legal requirements and the factors referred to
below, Triton may purchase from time to time, in open market or
privately-negotiated transactions, additional shares of Actava Common
Stock. In determining whether to purchase additional shares of Common
Stock, and in formulating any other plan or proposal with respect to
Actava, Triton intends to consider various factors, including Actava's
financial condition, business and prospects, other developments concerning
Actava, price levels of Actava Common Stock, other opportunities available
to Triton, developments with respect to Triton's business and general
economic and stock market conditions. In this regard, the recent decline in
the market price of Actava's Common Stock is a matter of concern to Triton,
but also was viewed by Triton as an opportunity to increase its ownership
level in Actava to at least 25%. In addition, depending upon, among other
things, the matters referred to above, Triton may determine to dispose of
all or a portion of its shares of Actava Common Stock.

Triton desires to work with Actava's Board of Directors and management
in an effort to realize value for all of Actava's shareholders. Thus far,
however, Actava has been unwilling to work with Triton on such an effort,
and there can be no assurances that Actava will be willing to do so in the
future."

On August 2, 1993, Triton again amended its Schedule 13D to report that it
had retained an investment banking firm to advise Triton with regard to its
interest in the Company and alternatives available to Triton to maximize value
from its ownership of the Company's Common Stock. On December 7, 1993, Triton
stated in a further amendment to its Schedule 13D:

"Triton has retained Patricoff & Co. Capital Corp. as its financial
adviser to advise Triton as to its 25% stake in Actava and alternatives
available to Triton to maximize value from the Actava holdings."

11
<PAGE> 13

OWNERSHIP OF COMPANY STOCK BY DIRECTORS AND OFFICERS

The members of the Company's Board of Directors and all directors and
executive officers of the Company as a group have beneficial ownership of the
number of shares of Common Stock indicated in the following table and its
footnotes. Unless otherwise indicated in the footnotes, each such individual has
sole voting and investment power with respect to the shares set forth in the
table.

<TABLE>
<CAPTION>
COMMON STOCK PERCENT
BENEFICIALLY OWNED ON OF
NAME APRIL 29, 1994 CLASS
- - --------------------------------------------------------------- --------------------- -------
<S> <C> <C>
John E. Aderhold............................................... 6,280 *
Michael E. Cahr(1)............................................. -0-
John M. Darden, III(2)......................................... 13,000 *
John P. Imlay, Jr.............................................. 10,000 *
Clark A. Johnson(2)............................................ 11,000 *
Anthony F. Kopp(2)............................................. 13,500 *
Richard Nevins(1).............................................. 1,000 *
John D. Phillips(3)............................................ 1,000,000 5.3%
Carl E. Sanders(2)(4)(5)....................................... 31,497 *
Charles R. Scott(2)(5)......................................... 108,085 *
Frederick B. Beilstein, III(2)................................. 65,800 *
Walter M. Grant(2)(5).......................................... 8,386 *
Paul N. Kiel(2)(5)............................................. 8,681 *
Michael A. Lustig(2)(5)........................................ 28,609 *
Directors and Officers as a
Group (14 persons)(5)(6)..................................... 1,305,838 6.9%
</TABLE>

- - ---------------

* Less than one percent.
(1) Excludes shares owned by Triton (which is the beneficial owner of
approximately 24% of the outstanding shares of the Company's Common Stock).
Mr. Cahr and Mr. Nevins were designated by Triton to fill the two positions
on the Company's Board of Directors that Triton is entitled to fill under
the Stockholder Agreement. See "OWNERSHIP OF COMPANY STOCK BY CERTAIN
HOLDERS" and "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."
(2) Includes shares subject to purchase within the next 60 days under the
Company's 1989 Stock Option Plan and under the 1991 Non-Employee Director
Stock Option Plan.
(3) Includes 700,000 shares owned by Renaissance Partners, a Georgia general
partnership in which Mr. Phillips is a general partner, and 300,000 shares
subject to purchase by Mr. Phillips within the next 60 days pursuant to the
exercise of a stock option. See "AGREEMENTS WITH JOHN D. PHILLIPS." Mr.
Phillips disclaims beneficial ownership of the shares owned by Renaissance
Partners except to the extent of his interest in Renaissance Partners.
(4) In addition, Mr. Sanders beneficially owns $25,000 face amount (less than
1%) of the Company's 6 1/2% Convertible Subordinated Debentures due in
2002, which are convertible into Common Stock at a conversion price of
$41 5/8 per share.
(5) Includes shares allocated to the individual employee's accounts under the
Employees Stock Purchase Plan as of January 31, 1994.
(6) The number of shares shown for directors and executive officers as a group
includes an aggregate of 455,250 shares which are subject to purchase by
members of the group within the next 60 days pursuant to the exercise of
stock options.

12
<PAGE> 14

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

CERTAIN RELATIONSHIPS BETWEEN THE COMPANY AND DIRECTORS

Mr. Sanders is Chairman of Troutman Sanders, a law firm which provides
legal services to the Company. During 1993, the Company paid approximately
$785,000 to Troutman Sanders for legal services. Triton reimbursed the Company
for approximately $332,500 of this amount as required by the provisions of the
Loan Agreement between the Company and Triton. See "RELATIONSHIP WITH
TRITON -- TRITON LOAN."

Mr. Darden is chairman and chief executive officer of Sands, a food service
business headquartered in Atlanta. For approximately ten years, Sands has
provided snack bar and vending machine services to the employees of the
Company's Snapper Division in McDonough, Georgia ("Snapper"). During 1993, the
revenue received by Sands from this relationship totalled approximately
$314,000, all of which was paid by employees of Snapper rather than by the
Company. The relationship between Sands and Snapper existed before Mr. Darden
was elected as a director of the Company.

INDEMNIFICATION AGREEMENTS

The Company entered into indemnification agreements (the "Indemnification
Agreements") with each person who was an officer or director of the Company
during 1993, and the Company has approved Indemnification Agreements for Mr.
Cahr and Mr. Phillips, who became directors in 1994. The Indemnification
Agreements provide for indemnification of directors and officers to the full
extent authorized or permitted by law. The Indemnification Agreements also
provide for (i) advancement by the Company of expenses incurred by the director
or officer in defending certain litigation, (ii) the appointment of an
independent legal counsel to determine whether the director or officer is
entitled to indemnity after a change in control, and (iii) the continued
maintenance by the Company of the directors' and officers' liability insurance
currently in effect ($5 million of primary coverage and an excess policy
providing $5 million of additional coverage). These Indemnification Agreements
were approved by the stockholders of the Company at the 1993 Annual Meeting of
Stockholders.

INDEBTEDNESS OF MANAGEMENT

During 1991, certain executive officers of the Company purchased shares of
Common Stock from the Company under the Company's Restricted Stock Plan in
exchange for full recourse promissory notes issued to the Company in the amounts
indicated below:

<TABLE>
<CAPTION>
NO. OF SHARES OF AMOUNT OF
NAME AND TITLE OF RESTRICTED INDEBTEDNESS
EXECUTIVE OFFICER STOCK PURCHASED TO COMPANY
- - ------------------------------------------------------------------- ---------------- ------------
<S> <C> <C>
Frederick B. Beilstein, III........................................ 20,000 $254,719
Senior Vice President -- Treasurer and Chief Financial Officer
Paul N. Kiel....................................................... 2,000 $ 26,569
Former Vice President -- Legal and Secretary
Michael A. Lustig.................................................. 6,000 $ 81,334
Former Vice President -- Corporate Development
</TABLE>

These notes are payable on August 1, 2001 and originally provided for
interest at 9% per annum. In addition, as a condition of his employment, the
Company loaned to Mr. Beilstein $117,000, pursuant to a full recourse promissory
note which originally provided for interest at 9% per annum and is payable on
August 1, 2001, to finance his purchase of 10,000 shares of the Company's Common
Stock in an open market transaction. All of the notes described above were
modified in 1993, with the approval of the Compensation Committee, to provide
for interest at the prime rate plus 1/2% per annum.

13
<PAGE> 15

SHAREHOLDER RIGHTS AGREEMENT WITH WESTINGHOUSE

On June 8, 1993, in connection with the Company's acquisition of
substantially all of the assets of Diversified Products Corporation ("DP"), the
Company and Westinghouse entered into a Shareholder Rights Agreement with regard
to the 1,090,909 shares (the "Westinghouse Shares") which were included in the
net purchase price for DP's assets. The Shareholder Rights Agreement provides
that Westinghouse has the right (the "Put Right"), under certain circumstances,
to require the Company to purchase any Westinghouse Shares owned by Westinghouse
at a price equal to $11.00 per share which price is subject to adjustment (the
"Applicable Price"). This Put Right may be exercised on June 8, 1994, the first
anniversary date of the Shareholder Rights Agreement. In the event that a
registration statement is in effect with respect to the Westinghouse Shares
under the Securities Act of 1933, as amended, at the time the Put Right is
exercised, the Company may request that Westinghouse sell the Westinghouse
Shares to purchasers other than the Company in lieu of requiring the Company to
purchase such shares. If, pursuant to this request, Westinghouse sells any
Westinghouse Shares to purchasers other than the Company for a price less than
the Applicable Price, the Company will be required to pay the difference between
the price received by the selling shareholder and the Applicable Price. The
Company, at its election, may pay this amount in cash or in additional shares of
Common Stock of the Company provided that a registration statement is in effect
with respect to such additional shares at the time of exercise of the Put Right.
The Shareholder Rights Agreement also provides that the Westinghouse Shares will
be voted in favor of the slate of nominees for directors of the Company proposed
by management of the Company (i) at each regular or special meeting of the
Company's stockholders at which directors are elected held between June 8, 1993
and the sixtieth (60th) day after the Exercise Date of the Put Right and (ii)
pursuant to any solicitation of votes for directors of the Company circulated
between June 8, 1993 and the sixtieth (60th) day after the Exercise Date.
Westinghouse has agreed to cause certain transferees of the Westinghouse Shares,
including the Westinghouse Executive Pension Trust Fund which currently holds
the Westinghouse Shares, to agree in writing with the Company to vote the
Westinghouse Shares held by it in accordance with such provisions.

RELATIONSHIP WITH TRITON

Triton is the beneficial owner of approximately 24% of the outstanding
shares of the Company's Common Stock. See "OWNERSHIP OF COMPANY STOCK BY CERTAIN
HOLDERS." Charles R. Scott, the former president and chief executive officer of
the Company and currently a senior officer of the Company, served, until
February 15, 1993, as chairman and a director of Intermark (which was merged
into Triton on June 25, 1993) and as chairman of the board of Triton. Triton and
the Company are parties to a Stockholder Agreement which, among other things,
contains provisions regarding the composition of the Board of Directors of the
Company. Richard Nevins and Michael E. Cahr were designated by Triton and
elected as directors of the Company pursuant to the Stockholder Agreement. See
"DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT."

STOCKHOLDER AGREEMENT

On May 22, 1989, Triton and the Company entered into a Stockholder
Agreement, as amended (the "Original Stockholder Agreement"), pursuant to which
Triton agreed to certain conditions required by the Board of Directors of the
Company to obtain its approval, pursuant to Section 203(a)(1) of the Delaware
General Corporation Law, for the purchase by Triton of in excess of 15% of the
outstanding shares of the Company's Common Stock in open market or private
purchases. The Original Stockholder Agreement provided that Triton may not
engage, or cause any affiliate of Triton to engage, in any "business
combination" (as defined in Section 203 of the Delaware General Corporation Law)
with the Company without the prior approval of a majority of the directors of
the Company who are "disinterested" from Triton or any affiliate of Triton
(except the Company). The Original Stockholder Agreement further provided that
the Board of Directors of the Company would consist of not less than seven
directors, at least three of whom would be disinterested from Triton, and that
Triton would cause all shares of voting stock of the Company owned by it or any
affiliate to vote for all of the Company's nominees to the Board of Directors.
The Original Stockholder Agreement was entered into when Triton owned 9.9% of
the outstanding shares of the Company's Common Stock. The term of the Original
Stockholder Agreement originally expired on July 7, 1992, which is the third

14
<PAGE> 16

anniversary of Triton's becoming a 15% owner of Common Stock. On November 27,
1991, the Company and Triton entered into an amendment to the Original
Stockholder Agreement in connection with a loan made by the Company to Triton.
See "TRITON LOAN" below. The 1991 amendment extended the term of the Original
Stockholder Agreement until the later to occur of: (i) July 7, 1993; or (ii)
twelve (12) months from the payment in full of the loan made by the Company to
Triton, but in no event later than November 27, 1994 unless the loan has not
been paid in full by such date, in which case the Original Stockholder Agreement
would expire on the date the loan is paid in full.

In October 1992, Intermark and Triton filed petitions for reorganization
under Chapter 11 of the U.S. Bankruptcy Code (the "Chapter 11 Proceeding"). On
February 10, 1993, Triton filed a motion with the bankruptcy court in the
Chapter 11 Proceeding seeking to have the Original Stockholder Agreement
rejected as an executory contract and seeking the bankruptcy court's approval
for the use of estate property to fund the solicitation of proxies for Triton's
own slate of directors at the Company's 1993 Annual Meeting of Stockholders. On
March 8, 1993, the bankruptcy court denied Triton's motion and Triton voted its
shares in favor of the Company's nominees for the Board of Directors at the 1993
Annual Meeting of Stockholders.

On June 4, 1993, the bankruptcy court approved the Joint Plan of
Reorganization of Triton and Intermark in the Chapter 11 Proceeding, and
Intermark was merged into Triton pursuant to the Plan of Reorganization on June
25, 1993. The Original Stockholder Agreement was amended on June 25, 1993 (the
"Stockholder Agreement") pursuant to the Plan of Reorganization to permit Triton
to designate two directors (who are not officers or employees of Triton) on an
expanded nine-member Board of Directors of the Company as long as Triton
continues to own 20% or more of the outstanding shares of the Company's Common
Stock. The Stockholder Agreement provides that if Triton's ownership of the
Company's Common Stock is reduced to less than 20%, but not less than 10%, then
Triton can designate one director, and if Triton's ownership is reduced to less
than 10% of the Common Stock, then Triton is not entitled to designate any
directors. Under the Stockholder Agreement, Triton is obligated to vote the
shares of Common Stock owned by it in favor of the Company's nominees to the
Board of Directors so long as any obligations are outstanding under the loan
made by the Company to Triton. See "TRITON LOAN" below. In addition, Triton's
right to designate any directors under the Stockholder Agreement terminates and
each designated director is required to resign if Triton directly or indirectly
initiates, participates in, finances or otherwise supports any effort to solicit
from other stockholders proxies or consents for the election of directors of the
Company other than the Company's nominees for the Board of Directors. The
Stockholder Agreement terminates after Triton's obligations under the loan made
by the Company to Triton have been satisfied in full and after Triton is no
longer entitled to designate any of the Company's directors under the
Stockholder Agreement. See "TRITON LOAN".

TRITON LOAN

In November 1991, after an independent review by the Company's
disinterested directors, the Company and Triton entered into a Loan Agreement
(the "Triton Loan Agreement") under which the Company agreed to lend up to $32
million to Triton secured by a pledge of the shares of the Company's Common
Stock owned by Triton (the "Triton Loan"). Triton's initial draw under the
Triton Loan was approximately $27 million, but subsequent draws, in accordance
with margin requirements, increased the principal amount of the Triton Loan to
$32 million. In connection with the Triton Loan, Triton granted to the Company a
right of first refusal to purchase the shares of the Company's Common Stock held
by Triton upon a proposed sale of all or any portion of such shares (voluntary
or involuntary) by Triton.

The proposed Plan of Reorganization originally filed by Triton in the
Chapter 11 Proceeding contemplated significant revisions in the terms of the
Triton Loan and the elimination of the Stockholder Agreement and the Company's
right of first refusal to purchase the shares of the Company's Common Stock
owned by Triton. The Company filed an objection to the proposed Plan of
Reorganization after a special committee of the Board of Directors consisting of
directors not affiliated with Triton (the "Special Committee") concluded that
the terms of the proposed Plan of Reorganization were not acceptable. Triton
then initiated settlement discussions with the Special Committee in an effort to
eliminate the Company's objections to the Plan of Reorganization. As a result of
these discussions, the proposed revisions to the terms of the Triton Loan and

15
<PAGE> 17

related documents were modified in a manner acceptable to the Special Committee
and the Company withdrew its objections to the Plan of Reorganization.

In accordance with the settlement agreement reached between Triton and the
Company, the Triton Loan Agreement was amended pursuant to the Plan of
Reorganization to extend the maturity date of the Triton Loan from November 1994
to April 1997, the interest rate was reduced from prime plus 4% to an escalating
rate averaging prime plus 1 3/4% per annum for the balance of the term of the
Triton Loan, the ratio of minimum collateral value to loan balance required
under the mandatory payment (margin call) provisions of the Triton Loan
Agreement was reduced from approximately 154% (approximately $11.25 per share)
to 125% (approximately $9.14 per share), and release provisions were added
allowing Triton to withdraw shares pledged as collateral if and to the extent
the collateral exceeded approximately 190% of the loan balance ($14.00 per
share). The Company's right of first refusal with respect to any sale by Triton
of its shares of Common Stock of the Company was continued in effect until the
Triton Loan is paid in full. These changes in the Triton Loan Agreement and
related documents took effect upon consummation of Triton's Plan of
Reorganization on June 25, 1993.

On August 19, 1993, following an unsuccessful attempt by Triton to obtain
bankruptcy court approval for a modification or elimination of the mandatory
payment (margin call) provisions of the Triton Loan Agreement, the Company and
Triton entered into an amendment to the Triton Loan Agreement to permit Triton
to make deposits into a deposit account in lieu of pledging additional
certificates of deposit pursuant to the mandatory payment (margin call)
provisions of the Triton Loan Agreement. As of December 6, 1993, as a result of
declines in the market price of the Company's Common Stock, Triton had deposited
an aggregate of $7.5 million into a deposit account pursuant to these mandatory
payment provisions.

On December 7, 1993, the Company and Triton executed a further amendment to
the Triton Loan Agreement (the "Second Amendment") pursuant to which Triton made
a principal payment of $5 million plus accrued interest on the Triton Loan and
the loan repayment provisions were revised to provide for quarterly principal
payments of $1,250,000 on March 31, June 30, September 30 and December 31 of
each year, commencing March 31, 1994, with the remaining balance of the loan
being due and payable on April 1, 1997. In addition, the Second Amendment
provides that the per share value of the Company's Common Stock shall be deemed
to be not be less than $7.50 for purposes of the mandatory payment (margin call)
provisions of the Triton Loan. In addition, Triton granted to the Company in
connection with the execution of the Second Amendment a security interest in
75,000 additional shares of the Company's Common Stock purchased by Triton
earlier in 1993. The effect of the $7.50 valuation floor and the additional
security interest was to cause the $7.5 million that had been deposited in the
deposit account under the mandatory payment provisions of the Triton Loan
Agreement to be released to Triton.

TRITON'S EFFORTS TO REFINANCE THE TRITON LOAN

In February 1994, Triton informed the Company that it was seeking a bank
loan to finance its prepayment of the remaining balance of approximately $27
million owed to the Company under the Triton Loan. The Company was advised that
Triton's bank lender, as a condition to making a loan to Triton, required that
the Company enter into certain agreements to protect the value of the Company's
Common Stock to be held by the bank as collateral for the new loan. These
agreements included a Stock Rights Agreement and a Registration Rights
Agreement. Under the Stock Rights Agreement, the Board of Directors of the
Company approved, for purposes of Section 203 of the Delaware General
Corporation Law, any acquisition of the shares of Common Stock of the Company by
the bank lender to Triton pursuant to the new loan agreement between Triton and
the bank. As a result of the Stock Rights Agreement, the bank lender to Triton
would be able to foreclose on the shares of Common Stock of the Company held by
Triton without incurring the three-year restrictions on transactions with the
Company applicable to any new 15% stockholder under the Delaware corporate law.
In addition, the Stock Rights Agreement prohibits the Company from taking
certain actions such as adopting a shareholder rights agreement, amending
certain provisions of the Company's Certificate of Incorporation and Bylaws, and
taking other prescribed actions that would detrimentally affect the rights of
Triton's new lender as a stockholder of the Company. Under the Registration
Rights Agreement, the Company granted certain registration rights to the bank
lender to permit it to register with the Securities and

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Exchange Commission any shares of Common Stock of the Company that it acquires
upon foreclosure of the new loan to Triton. The Company's directors approved
these agreements, after considerable discussion with representatives of Triton
and after the Company had obtained an agreement from Triton committing that
Triton would use the proceeds of this new loan to prepay its obligations to the
Company in full. These agreements expire if the Triton Loan is not paid in full
by July 1, 1994.

On March 2, 1994, Triton amended its Schedule 13D filed with the Securities
and Exchange Commission to report that it had obtained the bank commitment
discussed above which would permit Triton to prepay in full its obligations to
the Company under the Triton Loan. The amended Schedule 13D stated that the
commitment remained subject to the preparation of definitive documents and to
certain conditions to closing. The Schedule 13D also stated that Triton intended
to communicate with up to ten major holders of the Company's Common Stock with
respect to the strategic direction and performance of the Company and that
Triton would not make any further decisions with respect to its holdings of the
Company's Common Stock until it had received the results of such communications.

On March 15, 1994, a further amendment to Triton's Schedule 13D was filed
stating that the new loan that would enable Triton to prepay in full the
remaining balance owed to the Company under the Triton Loan was scheduled to be
funded on or about March 31, 1994, subject to certain conditions, and that
Triton "may seek to impose certain requirements on [the Company] as a condition
to Triton's prepayment of the loan, including, but not limited to, possible
additional nominees of Triton on [the Company's] Board of Directors." Triton's
13D amendment stated that Triton supported the effort of the Company's Board of
Directors in its search for a new president and chief executive officer of the
Company and that Triton had suggested that the Company's Board of Directors
convene a meeting prior to the prepayment of the Triton Loan to consider further
these matters.

On March 29, 1994, the Company's Board of Directors received a letter from
Triton seeking assurances from the Board of Directors that it would not take
certain actions (including selection of a new chief executive officer and any
sale of a major asset) over the objection of Triton and demanding that the
Company pay $1 million of Triton's alleged costs in arranging the loan to
refinance the Triton Loan. The Company's counsel responded to this letter by
stating that the disinterested directors of the Company had made it clear that
they did not believe it is in the best interest of the Company for the repayment
of the Triton Loan to be linked to additional concessions to Triton. On March
31, 1994, Triton's representatives advised representatives of the Company that
Triton had decided not to proceed at that time with the closing of its bank loan
to finance the prepayment of the Triton Loan and that Triton would pursue
certain alternatives to reduce the cost of its new bank loan prior to the
expiration of the bank lender's commitment on June 30, 1994.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

THE ACTAVA GROUP INC.

By: /s/ FREDERICK B. BEILSTEIN, III

--------------------------------------
Frederick B. Beilstein, III
Senior Vice President and
Chief Financial Officer