<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
The Actava Group Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
The Actava Group Inc.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
THE ACTAVA GROUP INC.
4900 GEORGIA-PACIFIC CENTER
ATLANTA, GEORGIA 30303
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 10, 1994
---------------------
The Annual Meeting of Stockholders of The Actava Group Inc. (formerly named
Fuqua Industries, Inc.) (the "Company") will be held at 133 Peachtree Street,
Georgia-Pacific Center Auditorium, Atlanta, Georgia 30303, on Friday, June 10,
1994, at 11:00 a.m., local time, for the following purposes:
(1) To elect nine directors to serve for the ensuing year or until
their successors are duly elected and have qualified.
(2) To act upon such other matters as may properly come before the
meeting or any reconvened meeting following any adjournment thereof.
The Board of Directors has fixed the close of business on April 29, 1994 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting.
The Annual Meeting of Stockholders may be adjourned from time to time
without notice other than announcement at the Annual Meeting, and any business
for which notice of the Annual Meeting is hereby given may be transacted at a
reconvened meeting following such adjournment.
We urge you to sign and date the enclosed proxy card and return it promptly
in the enclosed envelope. In the event you are able to attend the meeting, you
may revoke your proxy and vote your shares in person.
By Order of the Board of Directors
JOHN D. PHILLIPS
President and Chief Executive Officer
Atlanta, Georgia
May 9, 1994
<PAGE> 3
THE ACTAVA GROUP INC.
---------------------
PROXY STATEMENT FOR THE
ANNUAL MEETING OF STOCKHOLDERS
JUNE 10, 1994
---------------------
This proxy solicitation is made by the Board of Directors of The Actava
Group Inc. (formerly named Fuqua Industries, Inc.) (the "Company"), which has
its principal executive offices at 4900 Georgia-Pacific Center, Atlanta, Georgia
30303. By signing and returning the enclosed proxy card, you authorize the
representatives of the Board of Directors named on it to represent you and vote
your shares.
If you attend the Annual Meeting, you may vote by ballot. If you are not
present at the Annual Meeting, your shares can be voted only when represented by
proxy. You may indicate a vote for or against each proposal on the proxy card
and your shares will be voted accordingly. If you indicate a preference to
abstain on any proposal, no vote will be recorded. You may withhold your vote
from any nominee for director by writing his name in the appropriate space on
the proxy card. You may cancel your proxy before balloting begins by notifying
the Corporate Secretary in writing at 4900 Georgia-Pacific Center, Atlanta,
Georgia 30303. In addition, you may revoke any proxy signed and returned by you
at any time before it is voted by signing and duly delivering a new proxy
bearing a later date or by attending the meeting and voting in person. If you
return a signed proxy card that does not indicate your voting preferences, the
proxy committee will vote your shares for the election of the nominated
directors and in their discretion on any other matters that properly come before
the meeting.
The cost of solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, proxy solicitations may also be made
personally or by telephone or telegram by directors or officers of the Company,
as yet undesignated, without added compensation. The Company will reimburse
brokers, custodians and nominees for their expenses in sending proxies and proxy
materials to beneficial owners. The Company has engaged Georgeson & Co., a
professional proxy soliciting firm, to assist in the solicitation of proxies for
a fee of $7,000 plus reimbursement of out-of-pocket expenses.
Only stockholders of record as of the close of business on April 29, 1994
will be entitled to notice of and to vote at the Annual Meeting of Stockholders.
On April 29, 1994, the Company had outstanding and entitled to vote at the
Annual Meeting of Stockholders 18,264,876 shares of its Common Stock, par value
$1.00 per share (the "Common Stock").
This proxy statement and form of proxy are first being sent to stockholders
on or about May 9, 1994. The Company's 1993 Annual Report to Stockholders has
previously been distributed to all stockholders of record as of the record date
for the Annual Meeting of Stockholders and should be read in conjunction with
the matters set forth herein. See "OTHER BUSINESS -- ANNUAL REPORT."
I. ELECTION OF DIRECTORS
NOMINEES
Stockholders annually elect directors to serve for one year or until their
successors have been elected and shall have qualified. All of the individuals
nominated by the Board of Directors for election are presently directors of the
Company.
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
<PAGE> 4
designated by Triton. Two of the individuals currently serving on the Board of
Directors and being nominated for election by the stockholders 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. See "OWNERSHIP OF COMPANY STOCK BY CERTAIN HOLDERS" and "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS".
The following is a brief description of the business experience of each
nominee for at least the past five years.
JOHN E. ADERHOLD, age 68, is Chairman of Winter Properties, a real estate
development company. From December 1992 until May 1994, he served as 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 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,
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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. See "AGREEMENTS WITH JOHN D. PHILLIPS."
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.
All of the nominees have indicated a willingness to serve on the Board of
Directors of the Company. If, for any reason, any of the nominees shall become
unavailable for election, the individuals named in the enclosed proxy may
exercise their discretion to vote for any substitute nominee or nominees
proposed by the Board of Directors.
The nine nominees who receive the greatest number of votes cast for the
election of directors at the meeting shall become directors at the conclusion of
the tabulation of votes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES SET FORTH ABOVE.
ADDITIONAL INFORMATION
MEETINGS AND CERTAIN COMMITTEES OF THE BOARD
The Board of Directors held seven regular meetings and ten special
telephonic meetings during 1993. All directors attended at least 75% of the
aggregate total number of meetings of the Board of Directors and all committees
of the Board of Directors on which they served.
The Board of Directors has delegated certain functions to the following
standing committees:
THE EXECUTIVE COMMITTEE is authorized, to the extent permitted by law
and by the Company's Certificate of Incorporation and By-Laws, to act on
behalf of the Board of Directors on all matters that may arise between
regular meetings of the Board. During 1993, the committee held one meeting
and took action by unanimous written consent in lieu of a meeting on nine
occasions. All actions taken by the committee were subsequently ratified by
the full Board of Directors. The current members of the Executive Committee
are Messrs. Phillips, Sanders, and Johnson.
THE AUDIT COMMITTEE recommends to the Board of Directors the
engagement of the independent auditors of the Company and reviews with the
independent auditors the scope and results of the Company's audits, the
Company's internal accounting controls, and the professional services
furnished by the independent auditors to the Company. The Audit Committee
held one meeting during 1993. The current members of the Audit Committee
are Messrs. Aderhold, Darden and Kopp.
THE COMPENSATION COMMITTEE'S functions are to review, approve,
recommend and report to the chief executive officer and the Board of
Directors matters specifically relating to the compensation of the
Company's chief executive officer and other key executives and to
administer the Company's stock option plans. The committee held four
meetings during 1993 and took action by unanimous written consent in lieu
of a meeting on one occasion. The current members of the Compensation
Committee are Messrs. Darden, Aderhold and Imlay.
3
<PAGE> 6
THE RETIREMENT COMMITTEE'S functions are to review and make findings,
reports and recommendations to the Board of Directors regarding matters
relative to retirement benefit plans, packages or programs for the
Company's officers and employees. The current members of the Retirement
Committee, which held no meetings in 1993, are Messrs. Kopp, Darden, Imlay
and Nevins.
THE ACQUISITION ADVISORY COMMITTEE is responsible for reviewing
acquisition, merger or other combination opportunities involving the
Company. This committee did not hold any formal meetings during 1993. The
current members of the Acquisition Advisory Committee are Messrs. Imlay,
Aderhold, Darden, Sanders, Johnson, Kopp and Nevins.
THE NOMINATION COMMITTEE'S principal function is to identify
candidates and recommend to the Board of Directors nominees for membership
on the Board of Directors. The Nomination Committee expects normally to be
able to identify from its own resources the names of qualified nominees,
but it will accept from stockholders recommendations of individuals to be
considered as nominees. Any such nominations should be submitted in writing
to the Company at 4900 Georgia-Pacific Center, Atlanta, Georgia 30303,
Attention: Corporate Secretary. The Nomination Committee did not hold any
formal meetings in 1993. The current members of the Nomination Committee
are Messrs. Sanders, Johnson, and Nevins.
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. 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.
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<PAGE> 7
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
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.
(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.
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 "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS -- 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.
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 24% 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
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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 (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.
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
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<PAGE> 9
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.
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.
7
<PAGE> 10
(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 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."
For further information regarding the relationship between the Company and
Triton, see "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" below.
8
<PAGE> 11
EXECUTIVE COMPENSATION AND OTHER INFORMATION
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>
- - ---------------
(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 proxy 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
9
<PAGE> 12
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 $60,000 in
exchange for legal services to be provided to the Company by Mr. Kiel.
(7) Mr. Lustig ceased to be an executive officer of the Company when he became
Executive Vice President and Chief Financial Officer of Diversified
Products Corporation, a wholly owned subsidiary of the Company, in November
1993. The amounts shown in the Summary Compensation Table for Mr. Lustig
include all compensation earned by him during 1993, including compensation
earned after he ceased to be an executive officer of the Company.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table contains information concerning the grant of stock
options and tandem limited stock appreciation rights ("SARs") under the
Company's 1989 Stock Option Plan during the fiscal year ended December 31, 1993:
OPTION AND SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM
- - ----------------------------------------------------------------------------------- ------------------------
(A) (B) (C) (D) (E) (F) (G)
% OF TOTAL
OPTIONS/
SARS
OPTIONS/ GRANTED TO EXERCISE
SARS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION
#(1) YEAR (S/SH) DATE 5%($)(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>
- - ---------------
(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
10
<PAGE> 13
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 limitations on
qualified plan benefits and provides certain other supplemental pension benefits
to certain of the Company's management and highly compensated employees.
11
<PAGE> 14
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 COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for developing and making recommendations to the Board with respect
to the Company's executive compensation policies. The following report of the
Committee discusses generally the Company's executive compensation objectives
and policies and the relationship of corporate performance in 1993 to executive
compensation.
The Committee's three primary objectives for executive compensation at the
Company are to align executives' interests with those of stockholders, to reward
executives appropriately for performance, and to
12
<PAGE> 15
retain good performers. The Committee believes that stock ownership by
management and stock-based performance compensation arrangements are beneficial
to the enhancement of stockholder value on the basis that officers who are
substantial stockholders in the Company are motivated to act on behalf of all
stockholders to optimize overall Company performance. The executive compensation
program provides an overall level of executive compensation that is competitive
with companies of comparable size with similar market and operating
characteristics within the context of the Company's performance achievements. In
establishing executive compensation, the Committee takes into account the small
size of the Company's executive officer staff relative to the size of the
Company and the resulting scope of responsibilities of each executive officer.
The Company's executive compensation program consists of base salary, a
corporate officer bonus plan and stock options. Benefits are also offered to
officers that are not based on performance, such as benefits in the event of
illness, disability, death or retirement. These benefits are provided to the
vast majority of employees of the Company. Executive officers are provided more
life insurance than other employees in order to attract and retain strong senior
management.
Base Salary. An executive's base salary is based primarily on job content
and market comparisons. The Committee believes that base salaries at least equal
to the market average are essential to retaining good performers. During 1993,
the Committee, with the assistance of outside consultants, reviewed total
officer compensation, including base salaries, against a market comparison group
of approximately 200 companies in the consumer goods industry (the "Comparison
Group") to assess the current competitiveness of the base salaries of the
Company's executive officers. Using the Comparison Group as a frame of
reference, the Committee considered the Company's executive compensation in view
of the Company's size, number of operating units, and the roles and scope of
responsibilities of the Company's executive officers. As a result of this
review, some executive officers did not receive increases in their base salaries
during 1993 and others received modest increases because of the Committee's
belief that their base salaries were at or near the median of the Comparison
Group. Other executive officers received larger increases because of an increase
in their individual responsibilities. The Committee believes that it is
satisfying its policy of paying base salaries that are at least market average
for good performers.
Corporate Officer Bonus Plan. The Corporate Officer Bonus Plan (the
"Plan") is based primarily upon two elements of corporate performance: (1) total
stockholder return of the Company's stockholders as compared with the S&P
average, and (2) attainment of goals recommended by the Committee and approved
by the Board of Directors. The specific goals under the Plan for 1993 (the "1993
Plan") involved the sale of specified assets, achievement of budget, and other
specified improvements relating to the operating companies. In addition, under
the 1993 Plan, the Committee could recommend a discretionary bonus at the end of
the year if warranted. The Plan first became effective for fiscal year 1992 and
is reviewed each year by the Board of Directors. The 1993 Plan was designed to
reflect both an internal and an external perspective on Company performance.
Under the 1993 Plan, each executive officer was eligible to receive a maximum
bonus equal to 100% of his base salary. A bonus from 0% to 40% of base salary
could be earned based upon the Company's outperforming specified percentiles of
the S&P 500 Index on total stockholder return (defined in the 1993 Plan as
appreciation plus cash dividends for the period from January 1, 1993 to December
31, 1993). For example, the maximum bonus of 40% could be earned only if the
Company's total stockholder return exceeded the total stockholder return of 80%
of the companies included in the S&P 500 Index. A bonus of up to 60% of base
salary could be earned based upon the accomplishment by the Company of the
specific goals set forth in the Plan. Thus, the 1993 Plan was designed to reward
executive officers both for the accomplishment of internal company goals and for
the performance of the Company in the area of total stockholder return as
compared to a broad market index. The latter measure provided a check against
the Company's internal goal setting process and decreased bonuses if internal
performance did not produce additional stock market value for the Company's
stockholders. In 1993, bonuses equal to 15% of each participating executive
officer's base salary were earned based on the accomplishment of specific goals
set by the Board of Directors. No discretionary bonuses were awarded in 1993.
Stock Options. The Committee believes that the Company's 1989 Stock Option
Plan, along with the Corporate Officer Bonus Plan, aligns executives' interests
with stockholders because stock options allow
13
<PAGE> 16
executives to benefit when the value of the Company's Common Stock increases.
Options to purchase 95,500 shares of the Company's Common Stock were issued
during 1993 to various executive officers. The Committee determines the number
of option shares granted to an officer based on the individual's performance
record, current competitive long-term incentive opportunities as evidenced by
the Comparison Group, and the individual's past history of stock option grants.
The Company's stock value must increase from the fair market value at time of
grant in order for the holders of options to realize any benefit from these
rewards. Thus, the holders of options benefit only if all stockholders benefit.
Chief Executive Officer Compensation. Amounts earned during 1993 by the
Company's then president and chief executive officer, Charles R. Scott, are
shown in the Summary Compensation Table. Mr. Scott's base salary was established
at the time he became the CEO at the same amount earned by the predecessor CEO.
This amount has remained unchanged since February 1991. Mr. Scott's maximum
bonus payable from the Corporate Officer Bonus Plan is 100% of base salary. This
is consistent with the practices of other companies in the Comparison Group. The
actual bonus earned by Mr. Scott for 1993 of $93,750 (15% of base salary) was
based on the Company's accomplishing two of the goals specified in the Corporate
Officer Bonus Plan. These goals involved an asset sale and an acquisition by the
Company. Mr. Scott received options to purchase 45,500 shares of stock at $13.75
during 1993. The grant of these options was based on the Committee's assessment
of Mr. Scott's performance, his aggregate historical stock option grants, the
Company's performance with respect to its long-term strategies, and market
competitive practices in the Comparison Group. The Committee believes that this
long-term incentive opportunity is conservative when compared to the practices
of other companies in the Comparison Group.
Summary. The Company's executive compensation program is designed to
reward the following elements of performance:
- Individual performance is rewarded through continued employment with
the Company and through levels of, and increases to, base salary.
- Achievement of internal goals approved by the Board of Directors is
rewarded through the bonus plan.
- Competitiveness of total shareholder return as compared to the S&P
500 is rewarded through the bonus plan.
- Stock price performance is rewarded through the bonus plan and
through increases in the value of previously granted stock options.
The Committee believes that the current program has been effective in
rewarding executives appropriately for performance, retaining good performers,
and aligning executives' interests with those of stockholders. While the
Committee is pleased with the present compensation system, it reserves the right
to make changes to the program to the extent necessary to continue to meet its
stated goals in future years.
The Committee is in the process of determining its policy regarding the
appropriate procedures for maintaining the deductibility of executive
compensation under the Internal Revenue Code of 1986, as amended. No executive
officer received compensation during 1993 that would exceed the tax
deductibility limit.
Submitted by the Compensation Committee of the
Company's Board of Directors, April 1, 1994
John M. Darden, III
John E. Aderhold
John P. Imlay, Jr.
14
<PAGE> 17
STOCK PERFORMANCE GRAPH*
The graph shown below is a line-graph presentation comparing the Company's
cumulative five-year stockholder returns on an indexed basis with the S&P 500
Stock Index, the S&P Consumers' Goods Composite Index (the "Consumer Goods
Index") and the Value Line Diversified Companies Index (the "Diversified
Companies Index").
<TABLE>
<CAPTION>
Diversified
Measurement Period S&P 500 In- Consumer Companies In
(Fiscal Year Covered) dex The Company Goods Index dex
<S> <C> <C> <C> <C>
1988 100 100 100 100
1989 132 84 132 122
1990 127 37 135 98
1991 166 49 193 131
1992 179 45 195 154
1993 197 28 193 202
</TABLE>
------------------------
* Assumes $100 invested on January 1, 1988. Total return assumes
reinvestment of dividends, except for the Consumer Goods Index.
The Diversified Companies Index has been adopted by the Company as its peer
group because the Consumer Goods Index does not reflect reinvestment of
dividends as required by the rules of the Securities and Exchange Commission.
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 an
investment 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
15
<PAGE> 18
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 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 plans 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
OPTIONS AND STOCK APPRECIATION RIGHTS."
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
16
<PAGE> 19
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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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
17
<PAGE> 20
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
"ELECTION OF DIRECTORS -- NOMINEES."
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
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
18
<PAGE> 21
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
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,
19
<PAGE> 22
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 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
20
<PAGE> 23
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.
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.
II. OTHER BUSINESS
No other matters are to be presented for action at the Annual Meeting of
Stockholders other than as set forth in Item I of this proxy statement.
ANNUAL REPORT
The Company's 1993 Annual Report to Stockholders has previously been
distributed to stockholders of record as of April 29, 1994.
INDEPENDENT ACCOUNTANTS
Ernst & Young, a firm of independent public accountants, was engaged by the
Company to examine its financial statements for the year 1993. The appointment
of auditors is approved annually by the Board of Directors. The decision of the
Board of Directors is based on the recommendation of the Audit Committee. Ernst
& Young has been appointed the Company's independent public accountants for the
year 1994. A representative of Ernst & Young is expected to attend the Annual
Meeting of Stockholders and will have the opportunity to make a statement if he
or she desires to do so. The representative will also be available to respond to
appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
Any stockholder of the Company who wishes to present a proposal at the 1995
Annual Meeting of Stockholders of the Company, and who wishes to have such
proposal included in the Company's proxy statement for that meeting, must
deliver a copy of such proposal to the Company at 4900 Georgia-Pacific Center,
Atlanta, Georgia 30303, Attention: Corporate Secretary, no later than December
10, 1994; provided, however, that if the 1995 Annual Meeting of Stockholders is
held on a date more than 30 days before or after the corresponding date of the
1994 Annual Meeting, any stockholder who wishes to have a proposal included in
the Company's proxy statement for that meeting must deliver a copy of the
proposal to the Company a reasonable time before the proxy solicitation is made.
The Company reserves the right to decline to include in the Company's proxy
statement any stockholder's proposal which does not comply with the rules of the
Securities and Exchange Commission for inclusion therein.
YOU ARE ENCOURAGED TO LET US KNOW YOUR PREFERENCE BY MARKING THE
APPROPRIATE BOXES ON THE ENCLOSED PROXY.
21
<PAGE> 24
THE ACTAVA GROUP INC.
133 Peachtree Street - 4900 Georgia-Pacific Center
Atlanta, Georgia 30303
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS, JUNE 10, 1994
The undersigned hereby appoints FREDERICK B. BEILSTEIN, III, VICTOR E.
GOETZ and WALTER M. GRANT, and each of them, proxies with full power of
substitution, to represent and to vote as set forth herein all the shares of
Common Stock of The Actava Group Inc., held of record by the undersigned on
April 29, 1994, at the Annual Meeting of Stockholders of The Actava Group Inc.
to be held at the Georgia-Pacific Center Auditorium, 133 Peachtree Street,
Atlanta, Georgia 30303, at 11:00 a.m. local time, on Friday, June 10, 1994 and
any adjournments thereof.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
*FOLD AND DETACH HERE*
<PAGE> 25
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" THE ELECTION OF ALL NOMINEES.
<TABLE>
<S> <C>
MANAGEMENT RECOMMENDS A VOTE FOR ALL NOMINEES:
1. Election of Directors: John E. Aderhold, Michael E. Cahr, John M. Darden, III, John P. Imlay,
Jr., Clark A. Johnson, Anthony F. Kopp, Richard Nevins, John D. Phillips
FOR all nominees WITHHOLD and Carl E. Sanders
(except as marked vote from
to the right) all nominees (INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
[ ] [ ]
--------------------------------------------------------------------------
2. In their discretion, the Proxies are authorized
to vote as described in the proxy statement and upon
such other business as may properly come before the
meeting.
[ ] Dated:
----------------------------------------------, 1994
----------------------------------------------------------
Signature
-----------------------------------------------------------
Signature if held jointly
Please sign exactly as name appears on Stock Certificate.
If stock is held in the name of two or more persons, all
must sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full
title as such. If a corporation, please sign in full
corporate name by president or other authorized
officer. If a partnership, please sign in partnership
name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
*PLEASE MARK INSIDE BLUE BOXES SO THAT DATA USING THE ENCLOSED ENVELOPE.
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES*
*FOLD AND DETACH HERE*
</TABLE>
<PAGE> 26
THE ACTAVA GROUP INC.
133 Peachtree Street - 4900 Georgia-Pacific Center
B Atlanta, Georgia 30303
A
L I hereby instruct the Trustees of The Actava Group Inc.
Employees Stock Purchase Plan (Automatic Account "Paysop") to vote
L by proxy the number of shares of Actava Common Stock indicated on
the reverse side of this ballot, in connection with the Annual
O Meeting of Stockholders of Actava on Friday, June 10, 1994.
T
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
*FOLD AND DETACH HERE*
<PAGE> 27
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" THE ELECTION OF ALL NOMINEES.
<TABLE>
<S> <C>
MANAGEMENT RECOMMENDS A VOTE FOR ALL NOMINEES:
1. Election of Directors: John E. Aderhold, Michael E. Cahr, John M. Darden, III, John P. Imlay,
Jr., Clark A. Johnson, Anthony F. Kopp, Richard Nevins, John D. Phillips
FOR all nominees WITHHOLD and Carl E. Sanders
(except as marked vote from
to the right) all nominees (INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
[ ] [ ]
--------------------------------------------------------------------------
2. In their discretion, the Proxies are authorized
to vote as described in the proxy statement and upon
such other business as may properly come before the
meeting.
[ ] Dated:
----------------------------------------------, 1994
----------------------------------------------------------
Signature
-----------------------------------------------------------
Signature if held jointly
Please sign exactly as name appears on Stock Certificate.
If stock is held in the name of two or more persons, all
must sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full
title as such. If a corporation, please sign in full
corporate name by president or other authorized
officer. If a partnership, please sign in partnership
name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
*PLEASE MARK INSIDE BLUE BOXES SO THAT DATA USING THE ENCLOSED ENVELOPE.
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES*
*FOLD AND DETACH HERE*
</TABLE>
<PAGE> 28
THE ACTAVA GROUP INC.
B 133 Peachtree Street - 4900 Georgia-Pacific Center
Atlanta, Georgia 30303
A
L
I hereby instruct the Trustees of The Actava Group Inc. Employees Stock
L Purchase Plan to vote by proxy the number of shares of Actava Common Stock
indicated on the reverse side of this ballot, in connection with the Annual
O Meeting of Stockholders of Actava on Friday, June 10, 1994.
T
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
*FOLD AND DETACH HERE*
<PAGE> 29
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" THE ELECTION OF ALL NOMINEES.
<TABLE>
<S> <C>
MANAGEMENT RECOMMENDS A VOTE FOR ALL NOMINEES:
1. Election of Directors: John E. Aderhold, Michael E. Cahr, John M. Darden, III, John P. Imlay,
Jr., Clark A. Johnson, Anthony F. Kopp, Richard Nevins, John D. Phillips
FOR all nominees WITHHOLD and Carl E. Sanders
(except as marked vote from
to the right) all nominees (INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
[ ] [ ]
--------------------------------------------------------------------------
2. In their discretion, the Proxies are authorized
to vote as described in the proxy statement and upon
such other business as may properly come before the
meeting.
[ ] Dated:
----------------------------------------------, 1994
----------------------------------------------------------
Signature
-----------------------------------------------------------
Signature if held jointly
Please sign exactly as name appears on Stock Certificate.
If stock is held in the name of two or more persons, all
must sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full
title as such. If a corporation, please sign in full
corporate name by president or other authorized
officer. If a partnership, please sign in partnership
name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
*PLEASE MARK INSIDE BLUE BOXES SO THAT DATA USING THE ENCLOSED ENVELOPE.
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES*
*FOLD AND DETACH HERE*
</TABLE>
