<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) August 12, 1994
THE ACTAVA GROUP INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1-5706 58-0971455
- - ------------------------------- ------------------------ -------------------
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
4900 GEORGIA-PACIFIC CENTER, ATLANTA, GEORGIA 30303
-----------------------------------------------------
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code 404/658-9000
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<PAGE> 2
ITEM 2.
On August 12, 1994, JCJ, Inc. ("JCJ"), a wholly owned subsidiary of The
Actava Group Inc. (the "Company"), sold its interest in Qualex Inc. ("Qualex")
to Eastman Kodak Company ("Kodak"), and both JCJ and the Company entered into a
covenant not to compete and a release in favor of Kodak in exchange for
payments in cash and notes totaling $150 million. Qualex is a wholesale
photofinishing company created in 1988 through a merger of the Company's and
Kodak's photofinishing operations. Qualex had been jointly owned by the
Company or an affiliate and Kodak since its formation.
JCJ sold to Kodak its 50% ownership interest in Qualex in exchange for a
total purchase price of $136 million. The purchase price consisted of a $36
million cash payment on August 12, 1994 and a $100 million note, payable in two
installments of $50 million each, without interest, on February 13, 1995 and
August 11, 1995. In the second quarter of 1994, the Company provided for an
anticipated loss of $37.9 million on the sale of its interest in Qualex.
Because the principal amount due under the note does not bear interest, the
Company discounted the value of the note to $92.8 million for financial
reporting purposes and will record imputed interest income of $7.2 million over
the term of the note.
In addition, in exchange for a cash payment on August 12, 1994 of $10
million, both JCJ and the Company entered into a covenant-not-to-compete with
Kodak, under which both JCJ and the Company have agreed not to engage in
certain activities for a period which ends on August 12, 1999. Both JCJ and
the Company also executed a release in favor of Kodak with regard to certain
items arising under the Shareholders' Agreement dated as of December 7, 1987,
as amended, between the Company and Kodak in exchange for a $4 million cash
payment on August 12, 1994. The consideration for the Company's interest in
Qualex and the covenant-not-to-compete and release were determined by arm's
length negotiation.
There was no material relationship, other than the joint ownership of Qualex
and related matters, between Kodak and the Company or any of its affiliates,
any director or officer of the Company or any associate of such director or
officer.
<PAGE> 3
ITEM 5. Other Events
On June 8, 1993, the Company, through a wholly owned subsidiary, acquired
substantially all the assets of Diversified Products Corporation ("DP") for a
net purchase price consisting of $11.6 million in cash, the issuance of
1,090,909 shares of the Company's Common Stock (the "Acquisition Shares")
valued at $12 million, and the assumption or payment of certain liabilities
including trade payables and a revolving credit facility. The Company also
entered into an agreement providing the holder of the Acquisition Shares (the
"Holder") with the right to receive additional payments depending upon the
value of the Acquisition Shares over a period of not longer than one year from
the purchase date. The agreement gives the Holder the right under certain
circumstances to require the Company to purchase the Acquisition Shares at a
price equal to $11.00 per share. The repurchase of the Acquisition Shares will
not increase the cost recorded by Actava for DP, but will affect the manner in
which the total purchase price is recorded by Actava. The right of the Holder
to receive additional payments of cash became exercisable after June 8, 1994
and would have expired if not exercised on or before August 7, 1994. On August
3, 1994, the Holder agreed to extend the exercise date to February 7, 1995 in
exchange for the payment by Actava of a $435,000 fee and an irrevocable letter
of credit in the amount of $12.0 million which is available and payable to the
Holder on February 17, 1995 upon demand and tender of the Acquisition Shares.
On August 17, 1994, an amendment to the Shareholder Rights Agreement dated June
8, 1993 between the Company and Westinghouse Electric Corporation was executed
to confirm the August 3, 1994 agreement. A copy of the amendment is herewith
filed as an exhibit.
<PAGE> 4
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
THE ACTAVA GROUP INC.
PRO FORMA BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
The following Pro Forma Balance Sheet reflects the consolidated balance sheet
of the Company as of June 30, 1994, and the adjustments necessary to reflect
the balance sheet as it might have been affected if the sale of the Company's
interest in Qualex had been consummated on June 30, 1994. The statements are
based on the assumptions explained herein. These pro forma statements do not
necessarily reflect the financial position as it would have been if the Company
had sold its interest in Qualex on June 30, 1994. The pro forma information
presented should be read in conjunction with the separate audited and unaudited
consolidated financial statements and notes thereto of the Company, which were
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993 and its Quarterly Report on Form 10-Q for the six months
ended June 30, 1994, and the Pro Forma Statements of Continuing Operations and
notes thereto filed herewith.
THE ACTAVA GROUP INC.
PRO FORMA BALANCE SHEET
JUNE 30, 1994
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
ASSETS Actava Adjustments Pro Forma
-------- ----------- ---------
<S> <C> <C> <C>
Current Assets
Cash $ 14,015 $ 50,000 (a) $ 64,015
Short-term investments 31,922 31,922
Receivables 177,272 177,272
Inventories 67,051 67,051
Prepaid expenses 4,710 4,710
Future income tax benefits 25,343 25,343
Note receivable from Kodak - 92,832 92,832
-------- --------- --------
Total current assets 320,313 142,832 463,145
Investment in Qualex 142,832 (142,832)(a) -
Property, plant and equipment 113,455 113,455
Less allowances for depreciation (44,351) (44,351)
-------- --------- --------
69,104 69,104
Notes receivable
from Triton Group Ltd. 19,226 19,226
Other assets 5,610 5,610
Long-term investments 15,473 15,473
Intangibles 15,048 15,048
-------- --------- --------
Total assets $587,606 $ - $587,606
======== ========= ========
</TABLE>
<PAGE> 5
THE ACTAVA GROUP INC.
PRO FORMA BALANCE SHEET
JUNE 30, 1994
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
LIABILITIES AND Pro Forma as of
STOCKHOLDERS' EQUITY Actava Adjustments June 30, 1994
--------- ------------- -------------
<S> <C> <C> <C>
Current Liabilities
Accounts payable, accrued expenses
and other current liabilities $ 116,121 $ $ 116,121
Notes payable 100,447 100,447
Current portion of long-term debt 4,604 4,604
--------- --------- ---------
Total current liabilities 221,172 221,172
Deferred income taxes 33,621 33,621
Long-term debt 2,107 2,107
Subordinated debt 187,787 187,787
Redeemable common stock 12,000 12,000
Stockholders' equity:
Common Stock 22,768 22,768
Additional capital 36,310 36,310
Retained earnings 179,719 179,719
Less treasury stock - at cost (107,878) (107,878)
--------- --------- ---------
Total equity 130,919 130,919
--------- --------- ---------
Total liabilities and
stockholders' equity $ 587,606 $ $ 587,606
========= ========= =========
</TABLE>
(a) Represents the disposition of the Company's equity investment in Qualex
of $142,832,000 in exchange for a cash payment of $36,000,000 and a
non-interest bearing note with a discounted value of $92,832,000. The
note has required payments of $50,000,000 each on the dates six and
twelve months from the date of the transaction. Also reflects the
receipt of cash payments by the Company of $10,000,000 and
$4,000,000 in exchange for a covenant-not-to-compete and a release
relating to certain items arising under the Qualex Shareholders'
Agreement dated as of June 7, 1987, between Kodak and the Company,
respectively.
<PAGE> 6
THE ACTAVA GROUP INC.
PRO FORMA STATEMENTS OF CONTINUING OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
The following Pro Forma Statements of Continuing Operations reflect the
consolidated results of operations of the Company for the two years ended
December 31, 1991 and 1992 after classifying Qualex's results of operations as
dicontinued as a result of the sale of the Company's interest in Qualex as if
it had occurred on January 1, 1991. The statements are based on the assumptions
explained herein. These pro forma statements do not necessarily reflect the
results of operations as they would have been if the Company had disposed of
its interest in Qualex on January 1, 1991. The information presented below
should be read in conjunction with the separate audited consolidated financial
statements and notes thereto of the Company for the years ended December 31,
1991 and 1992 included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993.
THE ACTAVA GROUP INC.
PRO FORMA CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Year Ended December 31, 1991
---------------------------------------------------
Actava Qualex (a) Pro Forma
------------ ----------- ------------
<S> <C> <C> <C>
Net Sales $ 924,635 $ 649,728 $ 274,907
Cost and Expenses:
Costs of products sold 608,283 385,730 222,553
Selling, general & administrative 352,043 235,979 116,064
--------- --------- ---------
Total operating expenses 960,326 621,709 338,617
--------- --------- ---------
Operating (Loss) (35,691) 28,019 (63,710)
Interest (expense) (23,534) (3,871) (19,663)
Other income -- net 3,537 602 2,935
--------- ---------- ----------
(Loss) before income taxes and
minority interest (55,688) 24,750 (80,438)
Income tax (benefit) (10,033) 14,418 (24,451)
--------- --------- ---------
Income (loss) before Minority Interest (45,655) 10,332 (55,987)
Minority Interest (5,166) (5,166) -
---------- --------- ---------
(Loss) from Continuing Operations $ (50,821) $ 5,166 $ (55,987)
========= ========= =========
Average Common and Common
Equivalent Shares:
Primary 16,526 16,526
Fully Diluted 16,526 16,526
(Loss) Per Share of Stock:
Primary--(Loss) from
Continuing Operations $ (3.07) $ (3.39)
Fully Diluted --(Loss) from
Continuing Operations $ (3.07) $ (3.39)
</TABLE>
(a) Represents deletion of the financial accounts of Qualex to the extent
included in the Company's consolidated results of continuing operations.
<PAGE> 7
THE ACTAVA GROUP INC.
PRO FORMA CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Year Ended December 31, 1992
---------------------------------------------------
Actava Qualex (a) Pro Forma
------------ ----------- ------------
<S> <C> <C> <C>
Net Sales $1,148,743 $ 770,853 $ 377,890
Cost and Expenses:
Costs of products sold 743,130 459,495 283,635
Selling, general & administrative 333,477 256,722 76,755
---------- ---------- ----------
Total operating expenses 1,076,607 716,217 360,390
---------- ---------- ----------
Operating Income 72,136 54,636 17,500
Interest (expense) (33,454) (12,643) (20,811)
Other income -- net 6,099 1,448 4,651
---------- ----------- -----------
Income before income taxes and
minority interest 44,781 43,441 1,340
Income tax expense 23,328 21,666 1,662
---------- ---------- ----------
Income (loss) before Minority Interest 21,453 21,775 (322)
Minority Interest (10,888) (10,888) -
----------- ------------ ---------
Income (Loss) from Continuing Operations $ 10,565 $ 10,887 $ (322)
========== ========== ==========
Average Common and Common
Equivalent Shares:
Primary 16,544 16,544
Fully Diluted 16,544 16,544
Income (Loss) Per Share of Stock:
Primary--Income (Loss) from
Continuing Operations $ 0.64 $ (0.02)
Fully Diluted -- Income (Loss) from
Continuing Operations $ 0.64 $ (0.02)
</TABLE>
(a) Represents deletion of the financial accounts of Qualex to the extent
included in the Company's consolidated results of continuing operations.
<PAGE> 8
The following Pro Forma Statements of Continuing Operations reflect the
consolidated results of operations of the Company for the year ended December
31, 1993 and the six months ended June 30, 1994 after classifying the results
of operations or Qualex as discontinued and after giving effect to the sale of
the Company's interest in Qualex as if the disposition had taken place at
January 1, 1993. The statements are based on the assumptions explained herein.
These pro forma statements do not necessarily reflect the results of operations
as they would have been if the Company had disposed of its interest in Qualex
on January 1, 1993. The information presented below should be read in
conjunction with the separate audited and unaudited consolidated financial
statements and notes thereto of the Company which were included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1993 and
its Quarterly Report on Form 10-Q for the six months ended June 30, 1994, and
the Pro Forma Balance Sheet and notes thereto included elsewhere in this
Report.
THE ACTAVA GROUP INC.
PRO FORMA STATEMENT OF CONTINUING OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Year Ended December 31, 1993
------------------------------------------------------
Adjustments for
----------------------
Actava Qualex (a) Other Pro Forma
---------- -------- --------- ---------
<S> <C> <C> <C>
Net Sales $1,241,111 $775,299 $ $465,812
Cost and Expenses:
Costs of products sold 957,440 555,969 401,471
Selling, general and
administrative 256,958 167,983 88,975
---------- -------- -------- --------
Total operating expenses 1,214,398 723,952 490,446
Operating Profit (Loss) 26,713 51,347 (24,634)
Interest (expense) (43,299) (16,488) (26,811)
Other income (expense) - net (2,915) (1,209) 7,168(b)(c) 5,462
---------- -------- -------- --------
(Loss) Before Income Taxes, &
Minority Interest (19,501) 33,650 7,168 (45,983)
Income Tax Expense (Benefit) 15,163 16,598 (1,435)
---------- -------- -------- --------
(Loss) Before Minority Interest (34,664) 17,052 7,168 (44,548)
Minority Interest (8,526) (8,526) -
---------- -------- -------- --------
(Loss) from Continuing Operations $ (43,190) $ 8,526 $ 7,168 $(44,548)
========== ======== ======== ========
Average Common and Common
Equivalent Shares:
Primary 17,163 17,163
Fully Diluted 17,163 17,163
(Loss) Per Share of Stock:
Primary -- (Loss) from
Continuing Operations $(2.52) $(2.60)
Fully Diluted -- (Loss) from
Continuing Operations $(2.52) $(2.60)
</TABLE>
(a) Represents deletion of the financial accounts of Qualex to the extent
included in the Company's consolidated results of continuing operations.
(b) Represents imputed interest income of $7,168,000 on the $100,000,000
non-interest bearing note received by the Company in the sale of its
investment in Qualex.
(c) No pro forma investment income from the proceeds received by the Company
from the sale of its investment in Qualex is included in the pro forma
financial statement.
<PAGE> 9
THE ACTAVA GROUP INC.
PRO FORMA STATEMENT OF CONTINUING OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30, 1994
----------------------------------------------------
Adjustments for
---------------------
Actava (a) Qualex Other Pro Forma
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net Sales $279,214 $ $ $279,214
Cost and Expenses:
Costs of products sold 233,488 233,488
Selling, general and
administrative 49,908 49,908
-------- -------- -------- --------
Total operating expenses 283,396 283,396
Operating (Loss) (4,182) (4,182)
Interest (expense) (14,822) (14,822)
Other income -- net 741 741
-------- -------- -------- --------
(Loss) Before Income Taxes &
Discontinued Operations (18,263) (18,263)
Income Tax Expense - -
-------- -------- -------- --------
(Loss) from Continuing Operations $(18,263) $(18,263)
======== ======== ======== ========
Average Common and Common
Equivalent Shares:
Primary 17,918 17,918
Fully Diluted 17,918 17,918
(Loss) Per Share of Stock:
Primary -- (Loss) from
Continuing Operations $(1.02) $(1.02)
Fully Diluted -- (Loss) from
Continuing Operations $(1.02) $(1.02)
</TABLE>
(a) Reflects Actava's historical financial information as previously
reported in its Quarterly Report on Form 10-Q for the quarter ended
June 30, 1994. The sale of Actava's 50% ownership interest in Qualex
had been given effect in the Company's results of operations for the
quarter ended June 30, 1994, by treating Qualex as a discontinued
operation. Discontinued operations are excluded from the condensed pro
forma statement set forth above.
(b) No pro forma investment income from the proceeds received by the
Company in the herein described transaction is included in the pro forma
financial statement.
<PAGE> 10
(c) Exhibits
Exhibit
Number Description
- - ------- ----------------------------------------------------------------------
2(a) Stock Purchase Agreement by and among JCJ, Inc., Eastman Kodak Company
and The Actava Group Inc. dated August 12, 1994. Also filed as
exhibits thereto are: Exhibit A - Promissory Note; Exhibit B - Seller
Release; and, Exhibit C - Noncompetition Agreement. The following is
a list of omitted schedules (or similar attachments) which the Company
as registrant agrees to furnish supplementally to the Commission upon
request: Exhibit D - Certificate of Incorporation of Qualex Inc.;
Exhibit E - By-Laws of Qualex Inc.; Exhibit F - Buyer Release;
Schedule 1 - Shares Owned by Seller; Schedule 2.02 - Capitalization
of Qualex Inc.; and, Schedule 2.06 - Agreements between The Actava
Group Inc. and Qualex Inc.
99 Amendment dated August 17, 1994 to Shareholder Rights Agreement
between the Company and Westinghouse Electric Corporation dated June
8, 1993.
Item 8. Change in Fiscal Year
On August 12, 1994, the Company's Board of Directors approved a
change in the Company's fiscal year from a calendar year-end to a
fiscal year ending on August 31, to be effective for the year ending
August 31, 1994. The resulting transition period will be covered on
Form 10-K to be filed for the year ended August 31, 1994.
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE ACTAVA GROUP INC.
------------------------------
Registrant
/s/ Frederick B. Beilstein, III
--------------------------------
Frederick B. Beilstein, III
Senior Vice President and
Chief Financial Officer
Dated: August 25, 1994
<PAGE> 12
Exhibit Index
Exhibit
Number Description
- - ------- ----------------------------------------------------------------------
2(a) Stock Purchase Agreement by and among JCJ, Inc., Eastman Kodak Company
and The Actava Group Inc. dated August 12, 1994. Also filed as
exhibits thereto are: Exhibit A - Promissory Note; Exhibit B - Seller
Release; and, Exhibit C - Noncompetition Agreement. The following is
a list of omitted schedules (or similar attachments) which the Company
as registrant agrees to furnish supplementally to the Commission upon
request: Exhibit D - Certificate of Incorporation of Qualex Inc.;
Exhibit E - By-Laws of Qualex Inc.; Exhibit F - Buyer Release;
Schedule 1 - Shares Owned by Seller; Schedule 2.02 - Capitalization
of Qualex Inc.; and, Schedule 2.06 - Agreements between The Actava
Group Inc. and Qualex Inc.
99 Amendment dated August 17, 1994 to Shareholder Rights Agreement
between the Company and Westinghouse Electric Corporation dated June
8, 1993.
<PAGE> 1
EXHIBIT 2(a)
STOCK PURCHASE AGREEMENT
This Agreement is made and entered into as of the 12th day of August, 1994, by
and among JCJ, Inc., a Delaware corporation ("Seller"), Eastman Kodak Company,
a New Jersey corporation ("Buyer"), and The Actava Group Inc., a Delaware
corporation ("Parent").
WITNESSETH:
WHEREAS, Seller is the owner of the issued and outstanding shares of capital
stock of Qualex Inc., a Delaware corporation (the "Company"), as set forth in
Schedule 1 hereto (the "Shares"); and
WHEREAS, Seller desires to sell and Buyer desires to purchase the Shares upon
the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements herein contained, and upon the terms and subject to
the conditions hereinafter set forth, the parties do hereby agree as follows:
<PAGE> 2
ARTICLE I
SALE AND PURCHASE OF SHARES
1.01 Sale of Shares. Upon the terms and subject to the conditions set
forth herein, at the Closing (as defined in Section 1.02 hereof), Seller shall
sell, assign, transfer, convey and deliver to Buyer and Buyer shall purchase
and acquire from Seller, the Shares.
1.02 The Closing. The closing of the transactions contemplated hereby (the
"Closing") shall commence at 12:00 noon on August 12, 1994, or on such other
date and/or other time as the parties may mutually agree (the "Closing Date").
The Closing shall take place at the offices of Eastman Kodak Company, 343 State
Street, Rochester, New York, or at such other place as the parties may mutually
agree.
1.03 Consideration. The purchase price for the Shares shall be $136
million (the "Purchase Price"). The Purchase Price shall be payable as
follows:
(a) At the Closing, Buyer shall pay $36 million to Seller by
wire transfer in immediately available funds to an account
designated by Seller.
(b) At the Closing, Buyer shall execute and deliver to Seller a
promissory note in the principal
-2-
<PAGE> 3
amount of $100 million in the form attached hereto as Exhibit A (the
"Promissory Note").
1.04 Deliveries by Seller at Closing. Seller shall deliver to Buyer at
the Closing:
(a) the certificates representing the Shares duly endorsed for
transfer or accompanied by stock powers executed in blank;
and
(b) all other documents, instruments and other items required to
be delivered by or on behalf of Seller or Parent at or prior
to the Closing pursuant to Article V hereof.
1.05 Deliveries by Buyer at Closing. Buyer shall deliver to Seller at
the Closing:
(a) the Purchase Price as provided in Section 1.03 and the
consideration for (i) the release in the form annexed hereto
as Exhibit B (the "Seller Release") and (ii) the
Noncompetition Agreement in the form annexed hereto as
Exhibit C (the "Noncompetition Agreement") in immediately
available funds by wire transfer to an account designated by
Seller; and
(b) all other documents, instruments and other items required to
be delivered by or on behalf of Buyer at or prior to the
Closing pursuant to Article VI hereof.
-3-
<PAGE> 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
SELLER AND PARENT
Seller and Parent represent and warrant to Buyer as follows:
2.01 Capacity and Authority; Validity of Agreement. Seller and Parent
have all requisite legal capacity and authority to execute, deliver and perform
this Agreement and to consummate the transactions contemplated hereby in
accordance with the terms of this Agreement, and have taken all necessary
corporate action to consummate the transactions contemplated hereby and to
perform their respective obligations hereunder. This Agreement has been duly
and validly executed and delivered by Seller and Parent and, assuming the due
authorization, execution and delivery hereof by Buyer, constitutes a valid and
binding obligation of each of Seller and Parent, enforceable against each in
accordance with its terms, except to the extent that such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally. The execution, delivery and
performance by Seller and Parent of this Agreement and the consummation by
Seller and Parent of
-4-
<PAGE> 5
the transactions contemplated hereby will not, with or without the giving of
notice or the lapse of time: (i) violate or conflict with any provision of law,
rule or regulation to which Seller or Parent is subject; (ii) violate or
conflict with any order, judgment or decree applicable to Seller or Parent;
(iii) violate or conflict with any provision of the By-laws of Seller or
Parent; or (iv) violate, conflict with, result in the breach of any provision
of, constitute a default or event of default under or result in the termination
of or permit any third party to terminate (with or without notice, lapse of
time or pursuant to any legal principle) or accelerate the performance required
on the part of Seller or Parent under the terms of any contract, agreement or
understanding to which Seller or Parent is a party or by which any of their
respective assets are bound, except for violations, conflicts or breaches in
the case of any of the foregoing which, individually or in the aggregate, would
not hinder or impair the consummation of the transactions contemplated
hereunder.
2.02 Capitalization. The authorized, issued and outstanding capital
stock of the Company is set forth in Schedule 2.02 hereto. All of the Shares
are duly authorized, validly issued, fully paid and non-assessable and are
owned of record and beneficially by Seller free and clear of all liens, claims,
security interests, options, charges, restrictions or other encumbrances or
rights of third parties ("Liens"). On the Closing Date, subject to
-5-
<PAGE> 6
termination of the Shareholders' Agreement between Buyer and Parent (then named
Fuqua Industries, Inc.) dated as of December 7, 1987, as amended (the
"Shareholders' Agreement"), Buyer will acquire good and valid record and
beneficial title to the Shares, free and clear of any Liens.
2.03 Organization. The Company is duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the requisite
corporate power and authority to carry on its business as it is now being
conducted and to own and lease its properties and assets. Attached hereto as
Exhibits D and E, respectively, are complete and accurate copies of the
Certificate of Incorporation and By-Laws of the Company in effect as of the
Closing Date.
2.04 Compliance with Securities Laws. In connection with the
transactions contemplated hereby, Parent has complied and will comply with all
applicable requirements of the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
2.05 Consents and Approvals. No consent, approval or authorization of,
or filing or registration with, any governmental or regulatory authority is
required to be made or obtained by Parent or Seller in connection with the
execution, delivery and performance of this Agreement by
-6-
<PAGE> 7
Parent and Seller and the consummation by Parent and Seller of the transactions
contemplated hereby.
2.06 Agreements between Parent and the Company. Except as set forth on
Schedule 2.06, there are no agreements between Parent or its affiliates (other
than the Company) and the Company which are not cancelable on notice of thirty
(30) days or less or which require or contemplate payments to or from the
Company in excess of an aggregate amount of $100,000 during any 12-month period
beginning on or after July 1, 1994.
2.07 Knowledge of the Company. Parent and Seller have evaluated Seller's
interest in the Company and are selling the Shares based upon their independent
examination and judgment as to the prospects of the Company and Parent's
strategic intent. Parent and Seller have had an opportunity to ask questions
of and to receive answers from officers of the Company and to obtain additional
information in writing regarding the Company to the extent that the Company
possesses such information or could acquire it without unreasonable effort or
expense. All such information requested by Seller and Parent has been made
available to and examined by Seller and Parent. Parent and Seller have
sufficient knowledge and experience in business and financial matters to
evaluate the Company, to evaluate the risk of selling the Shares, to make an
informed decision with respect thereto and to protect their interest in
connection therewith.
-7-
<PAGE> 8
2.08 Disclosure. No representation or warranty by Parent or Seller in
this Agreement, and no statement contained in any document, certificate or
exhibit furnished or to be furnished by or on behalf of Parent or Seller to
Buyer or any of its representatives on, prior to or subsequent to the date
hereof in connection with the transactions contemplated by this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit a material fact necessary in order to make the statements contained
herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller and Parent as follows:
3.01 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey and has
all requisite corporate power and authority to execute, deliver and perform
this Agreement and to consummate the transactions contemplated hereby in
accordance with the terms of this Agreement.
3.02 Corporate Power and Authority; Authorization and Validity of
Agreement. The execution, delivery and performance by Buyer of this Agreement
and the consummation
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<PAGE> 9
by Buyer of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of Buyer. This Agreement has been
duly and validly executed and delivered by Buyer and, assuming the due
authorization, execution and delivery by Parent and Seller, constitutes a valid
and binding obligation of Buyer, enforceable against it in accordance with its
terms, except to the extent that such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated hereby will not, with or without the giving of notice
or the lapse of time, (i) violate or conflict with any provision of law, rule
or regulation to which Buyer is subject, (ii) violate or conflict with any
order, judgment or decree applicable to Buyer, (iii) violate or conflict with
any provision of the certificate of incorporation or By-Laws of Buyer or (iv)
violate, conflict with, result in the breach of any provision of, constitute a
default or event of default under or result in the termination of or permit any
third party to terminate (with or without notice, lapse of time or pursuant to
any legal principle) or accelerate the performance required on the part of
Buyer under the terms of any contract, agreement or understanding; except for
such violations, conflicts or breaches in the case of any of the foregoing
which, individually or in the aggregate, would not hinder or impair the
consummation of the transactions contemplated hereby.
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<PAGE> 10
3.03 Consents and Approvals. No consent, approval, authorization of, or
filing with or notification to, any governmental or regulatory authority is
required to be made or obtained by Buyer in connection with the execution,
delivery and performance of this Agreement by Buyer and the consummation by
Buyer of the transactions contemplated hereby.
3.04 Experience. Buyer is an accredited investor as defined in Rule
501(a) of the rules and regulations of the Securities and Exchange Commission
under the Securities Act of 1933, as amended. Buyer has evaluated the risk of
purchasing the Shares and is acquiring the Shares based upon its independent
examination and judgment as to the prospects of the Company as determined from
information obtained by Buyer from the Company. Buyer has had an opportunity
to ask questions of and to receive answers from officers of the Company and to
obtain additional information in writing regarding the Company to the extent
that the Company possesses such information or could acquire it without
unreasonable effort or expense. All such information requested by Buyer has
been made available to and examined by Buyer. Buyer has sufficient knowledge
and experience in business and financial matters to evaluate the Company, to
evaluate the risk of an investment in the Company, to make an informed
investment decision
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<PAGE> 11
with respect thereto and to protect its interest in connection with its
purchase of the Shares.
3.05 Investment. Buyer is acquiring the Shares for investment for its
own account, not as a nominee or agent, and not with the view to, or for resale
in connection with, any distribution thereof.
3.06 Disclosure. No representation or warranty by Buyer in this
Agreement, and no statement contained in any document, certificate or exhibit
furnished or to be furnished by or on behalf of Buyer to Parent or Seller or
any of their representatives on, prior to or subsequent to the date hereof in
connection with the transactions contemplated by this Agreement contains or
will contain any untrue statement of a material fact or omits or will omit a
material fact necessary in order to make the statements contained herein or
therein not misleading.
ARTICLE IV
COVENANTS
4.01 Distributions. From and after the Closing Date, Seller and Parent
shall not be entitled to any distribution on the Shares whatsoever, whether or
not accruing prior to the Closing Date, except for any accrued and unpaid
dividends on the Series D Preferred Stock of the Company as declared by the
Board of Directors of the Company. Within
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<PAGE> 12
thirty (30) days after the Closing Date, Buyer shall cause the Company to pay
any such dividends accrued through the Closing Date.
4.02 New York Real Property Transfer Gains Tax and New York Real Estate
Transfer Tax. Seller shall file all New York Real Property Transfer Gains Tax
returns required under Article 31B of the New York Tax Law and shall pay any
tax due thereunder and any New York Real Estate Transfer Tax which is payable
as a result of the sale of the Shares.
4.03 Election. Buyer will cause the Company to file a timely election to
apply Section 197 of the Internal Revenue Code of 1986, as amended (the
"Code"), to all acquisitions made by the Company after July 25, 1991 and before
August 11, 1993, as specified by the Omnibus Budget Reconciliation Act of 1993
and in accordance with Regulation Section 1.197-1T under the Code. The
information provided in this election shall be that which is specified in
Regulation Section 1.197-1T(e)(2). Parent will timely file an election
consistent with the Company's filing.
4.04 Workers' Compensation. Parent shall cooperate with the Company, and
Buyer shall cause the Company to cooperate with Parent, in (a) identifying the
states where Parent functions as a guarantor or surety for the workers'
compensation obligations of the Company; (b) removing Parent as a guarantor or
surety in such states; and
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<PAGE> 13
(c) settling all reserve balances with respect to the Company's workers'
compensation claims for the calendar years 1988 through 1992, inclusive, as
referenced in Schedule 2.06. The Indemnity Agreement between Parent and Buyer,
dated June 14, 1991, is hereby terminated, except insofar as it applies to
obligations of Parent which are in existence as of the Closing Date or were in
existence at any time prior thereto.
4.05 Other Parent Guaranties of Company Obligations. From and after the
Closing Date, Buyer will indemnify and reimburse Parent and Seller for any
claims, losses, liabilities, damages, costs (including court costs), and
expenses (including reasonable attorneys' and accountants' fees) incurred by
Parent or Seller, or their respective successors or assigns, and their
respective officers, employees, consultants and agents after the Closing Date
as a result of any guaranty or assurance of any obligation (payment or
performance) of the Company and its subsidiaries, provided that the liability
which underlies such obligation has been reflected on the June 30, 1994 balance
sheet of the Company or relates to premises occupied by the Company on the
Closing Date.
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<PAGE> 14
ARTICLE V
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions contemplated hereby
shall be subject to the satisfaction (or waiver) at or prior to the Closing of
all of the following conditions:
5.01 No Prohibition. No statute, rule or regulation or order of any
court or administrative agency shall be in effect which prohibits Buyer from
consummating the transactions contemplated hereby in the manner set forth
herein.
5.02 Consents and Approvals. All consents and approvals and all other
authorizations, exceptions and waivers required in order to enable the parties
hereto to consummate the transactions contemplated hereby shall have been
obtained.
5.03 Opinion of Counsel to Seller and Parent. Buyer shall have received
the opinion of Walter M. Grant, general counsel to Parent, dated the Closing
Date, in form and substance reasonably satisfactory to counsel for Buyer to the
effect that:
(a) This Agreement, the Seller Release and the Noncompetition
Agreement have been duly and validly authorized and executed
by Seller and Parent;
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<PAGE> 15
(b) The execution, delivery and performance by Seller and Parent
of this Agreement and the consummation by Seller and Parent
of the transactions contemplated hereby will not, with or
without the giving of notice or the lapse of time, (i)
violate or conflict with any order, judgment or decree
applicable to either, (ii) violate or conflict with any
provision of the Certificate of Incorporation of either, or
(iii) require the approval of Parent's shareholders; and
(c) All of the Shares are owned of record and beneficially by
Seller free and clear of all Liens (assuming termination of
the Shareholders' Agreement); and at the Closing, Buyer will
acquire good and valid record and beneficial title to the
Shares, free and clear of all Liens, except for any Liens
that may have been created by Buyer.
5.04 Additional Documents. Seller and Parent shall have delivered to
Buyer:
(a) resignations of Frederick B. Beilstein III, Walter M. Grant,
D. Carl Hamill, Michael A. Lustig and John D. Phillips as
directors of the Company, effective as of the Closing Date;
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<PAGE> 16
(b) the Noncompetition Agreement executed by Parent and Seller;
(c) the Seller Release executed by Parent and Seller;
(d) a certified copy of the resolutions of Parent's Board of
Directors duly authorizing the execution, delivery and
performance of this Agreement and the transactions
contemplated hereby;
(e) a certified copy of the resolutions of Seller's Board of
Directors and shareholder duly authorizing the execution,
delivery and performance of this Agreement and the
transactions contemplated hereby; and
(f) the corporate seal and minute books of the Company.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF SELLER AND PARENT
The obligations of Seller and Parent to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver)
at or prior to the Closing of all of the following conditions:
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<PAGE> 17
6.01 No Prohibition. No statute, rule or regulation or order or any
court of administrative agency shall be in effect which prohibits Seller or
Parent from consummating the transactions contemplated hereby in the manner set
forth herein.
6.02 Consents and Approvals. All consents and approvals and all other
authorizations, exemptions and waivers required in order to enable the parties
hereto to consummate the transactions contemplated hereby, shall have been
obtained.
6.03 Opinion of Counsel to Buyer. Seller shall have received the opinion
of Gary P. Van Graafeiland, general counsel to Buyer, dated the Closing Date,
in form and substance reasonably satisfactory to counsel for Parent to the
effect that:
(a) This Agreement, the Promissory Note, the
Noncompetition Agreement and the Buyer Release (as
hereinafter defined) have been duly and validly
authorized and executed by Buyer; and
(b) The execution, delivery and performance by Buyer of
this Agreement and the consummation by Buyer of the
transactions contemplated hereby will not, with or
without the giving of notice or the lapse of time,
(i) violate or conflict with any order,
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<PAGE> 18
judgment or decree applicable to Buyer, (ii) violate
or conflict with any provision of the Certificate of
Incorporation of Buyer or (iii) require the approval
of Buyer's shareholders.
6.04 Additional Documents. Buyer shall have delivered to Seller and
Parent:
(a) a certified copy of the resolutions of Buyer's Board of Directors
duly authorizing the execution and delivery of this Agreement;
(b) the Noncompetition Agreement executed by Buyer; and
(c) a release in the form annexed hereto as Exhibit F (the "Buyer
Release").
ARTICLE VII
INDEMNIFICATION
7.01 Survival of Representations and Warranties. Each representation and
warranty set forth herein shall survive until the third anniversary of the
Closing Date, other than the representations and warranties set forth in
Sections 2.01, 2.02, and 2.03 relating to title and the right to transfer the
Shares, each of which shall survive indefinitely.
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<PAGE> 19
7.02 Indemnification by Parent and Seller.
(a) Upon the terms and subject to the conditions of this
Article VII, Parent and Seller shall jointly and
severally indemnify, defend and hold harmless Buyer and the
Company against all Losses (as hereinafter defined) and all
demands, claims, actions or causes of action based upon any
Loss which arises out of, is based upon or results from any
breach of any representation or warranty of Parent or Seller
contained in this Agreement. The obligations of Parent and
Seller under this Article VII represent the exclusive remedy of
Buyer for any breach of the representations and warranties of
Parent and Seller contained in this Agreement.
(b) "Loss" shall mean any loss, damage, liability,
cost and expense (including, without limitation, any interest,
fine, penalty, assessment, court cost, attorneys' fees and
disbursements) suffered by Buyer or the Company.
(c) Buyer and the Company shall not be entitled to
demand indemnification pursuant to this Section 7.02 with
respect to a breach of any representation or warranty contained
in this Agreement after the date on which such representation
or warranty ceases to survive
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<PAGE> 20
pursuant to Section 7.01, provided that if a demand for
indemnification with respect to a breach of a representation
or warranty is timely made, it may continue to be asserted
beyond the survival date set forth in Section 7.01 with
respect to the representation or warranty to which such
demand relates.
7.03 Retention of Liability. Buyer and the Company shall be entitled to
indemnification in respect of claims against Parent and Seller under Section
7.02 only after the aggregate amount of such claims exceeds $500,000, and then
only for amounts in excess thereof.
7.04 Conditions of Indemnification. The obligations and liabilities of
Parent and Seller for indemnification with respect to claims made by or against
a party other than the Company or a party to this Agreement (a "Claim") shall
be subject to the following terms and conditions:
(a) As used in this Section 7.04, the term "Indemnified Party"
means Buyer, and/or the Company, as the case may be; and the
term "Indemnifying Parties" means Seller and Parent.
(b) The Indemnified Party will give the Indemnifying Parties
prompt notice of each Claim, and the Indemnifying Parties
will (except as otherwise contemplated by the proviso to
Section 7.04(c)
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<PAGE> 21
hereof) assume the defense thereof; provided, that an
Indemnified Party shall be entitled to participate in such
action and to employ counsel at its own expense to assist in
the handling of each such Claim.
(c) If the Indemnifying Parties fail promptly to assume the
defense thereof, the Indemnified Party shall (without
further notice to the Indemnifying Parties) have the right
to undertake the defense or to undertake a compromise or
settlement of such Claim on behalf of and for the account
and risk of the Indemnifying Parties, subject to the rights
of the Indemnifying Parties to assume the defense of such
Claim at any time prior to the settlement, compromise or
final determination thereof. During any period when the
Indemnifying Parties are contesting any such Claim in good
faith, the Indemnified Party shall not pay, compromise or
settle such Claim without the consent of the Indemnifying
Parties (which shall not be reasonably withheld or delayed);
provided that the Indemnified Party may nonetheless pay,
compromise or settle such Claim without such consent during
such period, in which event it shall, automatically and
without any further action on its part, waive any right
(whether or not pursuant to this Agreement) to
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<PAGE> 22
indemnity in respect of all Losses relating to such Claim.
If the Indemnified Party shall defend any such Claim until
such Claim shall be adjudicated by order, decree, ruling or
other action, then the Indemnified Party shall have the
right, in the exercise of its sole discretion, to determine
whether or not to appeal such adjudication.
(d) Anything in this Section 7.04 to the contrary
notwithstanding, the Indemnifying Parties shall not, without
the prior written consent of the Indemnified Party (which
consent shall not be withheld unreasonably or delayed),
settle or compromise any Claim or consent to the entry of
any judgment which imposes any future obligation on the
Indemnified Party or which does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to the Indemnified Party a release from all
liability in respect of such Claim.
(e) The Indemnified Party shall, and shall cause its affiliates
to, provide the Indemnifying Parties with such assistance
(without charge) as they may reasonably request in
connection with any indemnification or defense provided for
herein, including, without limitation, providing such
information, documents and records and
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<PAGE> 23
reasonable access to the services of and consultations with
such personnel of the Indemnified Party or its affiliates as
the Indemnifying Parties reasonably shall deem necessary
(provided that such access shall not unreasonably interfere
with the performance of the duties performed by or
responsibilities of such personnel).
ARTICLE VIII
MISCELLANEOUS
8.01 Entire Agreement. This Agreement, including the Schedules and
Exhibits hereto, constitutes the sole and entire understanding of the parties
with respect to the subject matter hereof. The Shareholders' Agreement shall
be deemed terminated and all rights and obligations thereunder shall expire as
of the Closing.
8.02 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
parties and their respective permitted successors and assigns.
8.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
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<PAGE> 24
8.04. Headings. The headings of the Articles and Sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part of this Agreement or to affect the construction hereof.
8.05. Modification, Waiver and Reliance. No amendment, modification or
alteration of the terms or provisions of this Agreement shall be binding unless
the same shall be in writing and duly executed by the parties hereto, except
that any of the terms or provisions of this Agreement may be waived in writing
at any time by the party which is entitled to the benefits of such waived terms
or provisions. No waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether
or not similar). No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof. Parent and
Seller, on one hand, and Buyer, on the other, in making their respective
representations under this Agreement, are entitled to rely on the accuracy of
the representations and warranties made by the other party or parties, as the
case may be.
8.06. Notices. Any notice, request, instruction or other document to be
given hereunder by any party hereto to any other party shall be in writing and
delivered personally or sent by overnight, next-day delivery, or by facsimile
confirmed by first class mail as follows:
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If to Parent or Seller, addressed to:
Attention: President
The Actava Group Inc.
4900 Georgia-Pacific Center
Atlanta, Georgia 30303
Fax: (404) 524-4713
with a copy to General Counsel at
the above-referenced address
(Fax No. (404) 525-3010)
If to Buyer, addressed to:
Attention: Vice President and General Manager,
Consumer Imaging
Eastman Kodak Company
343 State Street
Rochester, New York 14650-0107
Fax: (716) 724-9493
with a copy to General Counsel at the above-referenced address (Fax
No. (716) 724-9448)
or to such other address for a party as shall be specified by like notice. Any
notice which is delivered personally or by facsimile in the manner provided
herein shall be deemed to have been duly given to the party to whom it is
directed upon delivery or facsimile transmission, respectively, to such party.
Any notice which is addressed and delivered in the other manner herein provided
shall be deemed to have been duly given to the party to which it is addressed
on the next business day after the date on which such notice is deposited with
the firm or service retained to make the delivery.
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8.07 Governing Law. This Agreement shall be construed in accordance
with and governed by the internal laws of the State of New York.
8.08 Public Announcements. None of the parties hereto shall make any
public statement, including without limitation, any press release, with respect
to this Agreement and the transactions contemplated hereby or disclose the
existence or terms of this Agreement or the transactions contemplated hereby
without the prior written consent of the other parties; provided, however, that
this Section shall not be deemed to prohibit any party hereto from making any
disclosure which (i) its counsel deems necessary or advisable upon prior notice
to the other party in order to fulfill disclosure obligations imposed by law;
or (ii) does not materially vary in substance from any disclosure to which the
other parties have previously consented.
8.09 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by the party
incurring such expense.
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8.10 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by Seller or Parent without the prior
written consent of Buyer, or by Buyer without the prior written consent of
Parent.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed on its behalf as of the date first written above.
JCJ, INC.
By: /s/ Frederick B. Beilstein, III
--------------------------------
Name: Frederick B. Beilstein, III
Title: President
THE ACTAVA GROUP INC.
By: /s/ John D. Phillips
--------------------------------
Name: John D. Phillips
Title: President and Chief Executive Officer
EASTMAN KODAK COMPANY
By: /s/ David P. Biehn
--------------------------------
Name: David P. Biehn
Title: Vice President
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TABLE OF ATTACHMENTS
EXHIBITS
- - --------
A Promissory Note
B Seller Release
C Noncompetition Agreement
D Certificate of Incorporation of the Company
E By-Laws of the Company
F Buyer Release
SCHEDULES
- - ---------
1 Shares Owned by Seller
2.02 Capitalization
2.06 Agreements between Parent and the Company
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<PAGE> 29
EXHIBIT A
PROMISSORY NOTE
$100,000,000.00 August 12, 1994
FOR VALUE RECEIVED, the undersigned, EASTMAN KODAK COMPANY, a New
Jersey corporation (the "Company"), hereby promises to pay to the order of JCJ,
Inc., a Delaware corporation (the "Payee"), the principal sum of One Hundred
Million Dollars ($100,000,000.00). The principal amount hereunder shall be
paid by the Company in two installments of Fifty Million Dollars
($50,000,000.00) each, with the first such installment to be due and payable on
February 13, 1995, and with the final installment to be due and payable on
August 11, 1995.
No interest shall be due or payable on the principal amount of this
Note unless payments of principal are not paid when due. Overdue principal
shall bear interest, payable on demand, at the rate of twelve percent (12%) per
annum.
All payments of principal or interest shall be made in lawful money of
the United States of America and in immediately available funds by wire
transfer to an account designated by the Payee at the time of execution and
delivery of this Note or to such other account as the Payee or other holder of
this Note may designate by written notice to the Company at least ten (10) days
prior to the date on which any payment is due.
The indebtedness evidenced by this Note may be prepaid, either in
whole or in part, at any time without penalty.
Upon default in the payment of any installment of principal on this
Note, then the Payee or other holder of this Note may declare the unpaid
principal balance hereunder to be immediately due and payable, anything
hereinabove to the contrary notwithstanding. The Company acknowledges that
time is of the essence.
If this Note is not paid when due, whether at maturity or by
acceleration, the Company promises to pay all costs of collection, including
but not limited to reasonable attorneys' fees, whether or not suit is filed.
The Company waives presentment, demand for payment, protest, notice of
dishonor and any and all other notices or demands in connection with the
delivery, acceptance, performance, default or enforcement of this Note. The
Company agrees that no delay on the part of the Payee or other holder of this
Note in exercising any power or right hereunder shall operate as a waiver; nor
shall any single or partial exercise of any power or right preclude the later
exercise of that right or any other right.
Nothing contained in this Note shall be deemed to establish or require
the payment of a rate of interest in excess of the maximum rate permitted by
law. In the event that the rate of
<PAGE> 30
interest required to be paid under this Note exceeds the maximum rate permitted
by law, the rate of interest required to be paid hereunder shall be
automatically reduced to the maximum rate permitted by law.
IN WITNESS WHEREOF, the duly authorized officers of the Company have
hereunto set their hands under the corporate seal of the Company as of the day
and year first above written.
EASTMAN KODAK COMPANY
By:
-----------------------------------
Title:
--------------------------------
ATTEST:
- - --------------------------------
Secretary
[CORPORATE SEAL]
2
<PAGE> 31
EXHIBIT B
RELEASE
In consideration of the sum of Four Million Dollars ($4,000,000) and other good
and valuable consideration, receipt of which is hereby acknowledged, The Actava
Group Inc. ("Actava") and JCJ, Inc. ("JCJ") for themselves and their
predecessors, successors and assigns, hereby release and forever discharge
Eastman Kodak Company ("Kodak"), its affiliated companies, officers and
employees and their respective successors and assigns (each a "Released Kodak
Entity") from all demands, contracts, obligations, agreements, actions, causes
of actions, debts, losses, damages or claims, which heretofore existed, which
now exist or hereafter arise of whatever kind or nature and whether known or
unknown or suspected or unsuspected which could be asserted against any
Released Kodak Entity by Actava or JCJ in connection with or arising out of or
under the Shareholders' Agreement dated as of December 7, 1987, as amended,
between Actava (then named Fuqua Industries, Inc.) and Kodak ("Released
Claims").
Notwithstanding the above, the Released Claims shall not include any claims
arising out of the breach of any representations or warranties or failure to
comply with any of the continuing covenants or obligations contained or
referred to in the Stock Purchase Agreement between Actava, Kodak and JCJ of
even date herewith.
Actava hereby covenants and agrees never to commence, aid in any way, prosecute
or cause to permit to be commenced or prosecuted any action or other proceeding
against a Released Kodak Entity based upon any of the Released Claims.
IN WITNESS WHEREOF, The Actava Group Inc. and JCJ, Inc., by their duly
authorized representatives have executed this Release as of this 12th day of
August 1994.
THE ACTAVA GROUP INC. JCJ, INC.
By:_________________________ By:_________________________
Title: Title:
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<PAGE> 32
EXHIBIT C
NONCOMPETITION AGREEMENT
This Agreement is entered into as of the 12th day of August, 1994, by and among
Eastman Kodak Company, a New Jersey corporation ("Buyer"), The Actava Group
Inc., a Delaware corporation ("Actava"), and JCJ, Inc., a Delaware corporation
and a wholly-owned subsidiary of Actava ("JCJ").
WHEREAS, Buyer has purchased from JCJ all of its interest in Qualex Inc. (the
"Company") pursuant to a Stock Purchase Agreement dated as of August 12, 1994;
and
WHEREAS, it is essential to Buyer and the Company that Actava and JCJ refrain
from involvement in businesses that compete with the Company.
NOW, THEREFORE, the parties agree as follows:
1. Covenant Not to Compete.
(a) For the benefit of Buyer and the Company, Actava and JCJ shall
not, separately or jointly with a third party or directly or indirectly, for a
period of five years from the date hereof: (i) engage in activities or
businesses anywhere in the world which are in competition with the current
business of the Company and its subsidiaries, including without limitation,
rendering of wholesale or retail photofinishing services and wholesale and
retail sale and distribution of photographic equipment and supplies; (ii)
solicit any customer or prospective customer of the Company or its subsidiaries
to purchase any goods or services currently sold by the Company or its
subsidiaries from anyone other than the Company or its subsidiaries; (iii)
assist any person in any way to do, or attempt to do, anything prohibited by
(i) or (ii) above; (iv) solicit or recruit any employee of the Company or its
subsidiaries or solicit or encourage any employee of the Company or its
subsidiaries to leave the employment of the Company or its subsidiaries as
applicable; or (v) disclose or furnish to anyone any confidential information
relating to the Company or otherwise use such confidential information for
their own benefit or the benefit of any other person.
(b) In the event that the duration or geographical limit of any
restriction contained herein is determined to be unenforceable by any competent
authority in any enforcement proceeding, it is the intention of the parties
that the restrictive covenants set forth herein shall not thereby be terminated
but shall be deemed amended to the extent required to render it valid and
enforceable, such amendment to apply only with respect to the operation hereof
in the jurisdiction of the tribunal or court that has made the adjudication.
Actava and JCJ acknowledge that the restrictive covenant set forth herein is
necessary for the protection of the legitimate business interests of the
Company and Buyer.
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<PAGE> 33
2. Compensation. In consideration for the covenants of Actava and JCJ, Buyer
shall pay the sum of Ten Million Dollars ($10,000,000) concurrently with the
execution hereof.
3. Equitable Remedies. In the event of any actual or threatened breach of the
covenants contained herein, Actava and JCJ acknowledge that monetary damages
may not be sufficient to remedy such breach, and that Buyer and the Company
shall be entitled to an injunction restraining the breach thereof and may
pursue any of their available remedies for such actual or threatened breach,
including the recovery of monetary damages. If, in any judicial proceeding, a
court shall refuse to enforce any of such covenants, any such unenforceable
covenant shall be deemed amended to the extent necessary to permit its
enforcement to the extent practicable; otherwise, any such covenant shall be
deemed eliminated from this Agreement for the purposes of such proceeding to
the extent necessary to permit the remaining separate covenants to be enforced.
4. Miscellaneous.
(a) This Agreement shall be binding on and inure to the benefit of
the respective transferees, successors and assigns of the parties hereto.
(b) This Agreement shall be governed by and construed in
accordance with the laws of the New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
JCJ, INC. THE ACTAVA GROUP INC.
By:____________________ By:____________________________
Title: Title:
EASTMAN KODAK COMPANY
By:____________________________
Title:
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EXHIBIT 99
[LOGO]
Westinghouse Law Department
Electric Corporation
11 Stanwix Street
Pittsburgh Pennsylvania 15222-1384
Telecopier (412) 642-4905
August 17, 1994
The Actava Group Inc.
4900 Georgia-Pacific Center
Atlanta, GA 30303
Attn: Frederick B. Beilstein, III
Re: Amendment ("Amendment") of June 8, 1993 Shareholder Rights
Agreement between The Actava Group Inc. (formerly Fuqua
Industries) and Westinghouse Electric Corporation
("Shareholder Agreement")
Ladies and Gentlemen:
The purpose of this Amendment is to confirm that in consideration of
the agreement of the Westinghouse Executive Pension Trust Fund ("Fund") to
defer for a limited time exercising the put right to sell to The Actava Group
Inc. ("Company") all of the 1,090,909 shares of Company common stock (the
"Shares") acquired by Westinghouse Electric Corporation ("WEC") pursuant to the
April 30, 1993 Asset Purchase Agreement, within ten days of the execution of
this Amendment, the Company shall pay to the Fund a fee in the amount of
$435,000 (the "Fee"), and shall deliver to the Fund an irrevocable letter of
credit in favor of Mellon Bank, N.A., as Trustee ("Trustee") of the Fund, as
beneficiary, in the amount of $12,000,000, payable at any time ("Letter of
Credit").
The parties hereby agree to delete Section 6(e) of the Shareholder
Agreement, and to delete Sections 6(b) and 6(c) thereof, and to substitute the
following provisions in lieu of such latter two Sections.
b) Notice. Each WEC Holder may exercise the Put Right with respect to all
of the Shares by delivery of notice (the "Notice of Exercise") to the Company
on or before February 7, 1995. The Notice of Exercise shall bind all WEC
Holders to sell to the Company (and shall bind the Company to purchase) all of
the Shares.
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August 17, 1994
The Actava Group Inc.
Amendment of Shareholder Agreement
(c) Closing. The closing of any sale of the Shares pursuant to the
Notice of Exercise of the Put Right automatically shall occur on February 17,
1995. At such closing, (i) each WEC Holder selling the Shares shall deliver to
the bank issuing the Letter of Credit certificates representing all the Shares,
endorsed to the Company or accompanied by duly-executed stock powers
transferring all the Shares to the Company, and appropriate certification that
the selling WEC Holder has good, valid, and unencumbered title to all the
Shares, and has transferred such free and clear title to the Company; and (ii)
the WEC Holder shall immediately receive $12,000,000 upon draft or demand by
the Trustee to the bank issuing the Letter of Credit.
In addition to the foregoing, notwithstanding any other provision of
the Shareholder Agreement to the contrary, the parties hereby agree to the
following terms.
1. From the date hereof through February 6, 1995, the Company shall have the
right but not the obligation ("Call Right") to require the Fund or any other
WEC Holder to sell to the Company all of the Shares then owned by the Fund or
any other WEC Holder. The call purchase price ("Call Purchase Price") shall
equal the greater of (a) $11.00 per Share or (b) that amount offered to the
Fund or any other WEC Holder pursuant to a bonafide written offer to purchase
the Shares received by the Fund or any other WEC Holder from an unrelated third
party with the financial ability to purchase the Shares. In the event the Fund
or any other WEC Holder does not provide the Company with a copy of such
bonafide written offer within five (5) days of the date of the notice of
exercise hereunder, the Call Purchase Price shall equal the greater of (a)
$11.00 per Share or (b) ninety percent (90%) of the average trading price for
the Shares on the New York Stock Exchange for the ten (10) days prior to the
date on which the Company exercises its Call Right. The Company may exercise
its Call Right by delivery of notice to the Fund or any other WEC Holder no
later than February 6, 1995. The notice shall bind the Fund or such WEC Holder
to sell to the Company (and shall bind the Company to purchase) all of the
Shares. The closing of any sale of the Shares pursuant to the Call Right shall
occur on such date and at such place as shall be agreed upon by the Company and
the Fund or any other WEC Holder; provided, however, that such closing shall
occur within ten (10) days of the date of the
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August 17, 1994
The Actava Group Inc.
Amendment of Shareholder Agreement
notice, or the next business day thereafter. Such closing shall occur in
accordance with the terms, conditions and procedures set forth in Section 6(c)
(i) and (ii) of the Shareholder Agreement, as amended; the Fund or any other
WEC Holder selling the Shares shall immediately receive from the Company that
amount, if any, by which the Call Purchase Price exceeds $12,000,000; and the
Fund or any other WEC Holder shall refund to the Company a prorated portion of
the Fee which shall be an amount equal to the product of (a) the Fee; and (b) a
fraction, the numerator of which is the number of days from the date on which
the closing occurs to February 17, 1995, and the denominator of which is the
number of days from the date hereof to February 17, 1995. If such closing is
to occur before February 17, 1995, the Company shall, on or before the date of
such closing, deliver to the bank issuing the Letter of Credit the Company's
written consent to the drawing by the Trustee of the $12,000,000 under the
Letter of Credit on the date of such closing.
2. The Trustee shall only draw upon the Letter of Credit in connection with
the exercise of the Put Right or the Call Right.
3. For purposes of this Amendment, the Shares shall be deemed to be
represented by share certificates numbers NSD100053 through NSD100063,
inclusive, together with the certificates representing any other securities
hereafter issued with respect to the Shares by way of exchange,
reclassification, dividend or distribution. On or before any closing pursuant
to this Amendment, the Company shall furnish written certification to the bank
issuing the Letter of Credit either identifying any such additional or
different certificates issued and delivered by the Company to WEC or any WEC
Holder, or confirming that no such additional or different certificates have
been issued, as the case may be.
This Amendment is the final and entire agreement among the parties
with respect to the subject matter of this Amendment. Except as specifically
modified by this Amendment, the Shareholder Agreement shall remain in full
force and effect, and shall not operate as a waiver of either party's rights
thereunder. To confirm your acceptance of this Amendment, please execute the
enclosed counterpart original and return it to the undersigned.
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August 17, 1994
The Actava Group Inc.
Amendment of Shareholder Agreement
Westinghouse Electric Corporation
By: /s/ August W. Frisch
-------------------------------------
Name: August W. Frisch
Title: Vice President and General Tax Counsel
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August 17, 1994
The Actava Group Inc.
Amendment of Shareholder Agreement
AGREED TO AND ACCEPTED BY:
Mellon Bank, N.A., as Trustee for the
Westinghouse Executive Pension Trust Fund,
as Directed by Westinghouse Electric Corporation
By: /s/ Allan M. Seaman
---------------------
Name: ALLAN M. SEAMAN
-------------------
Title: ASSOCIATE COUNSEL
------------------
Date:
-------------------
The decision to participate in this
investment, any representations made
herein by the participant, and any actions
taken hereunder by the participant
has/have been made solely at the direction
of the investment fiduciary who has sole
investment discretion with respect to this
investment.
The Actava Group Inc.
By: /s/ Frederick B. Beilstein III
------------------------------
Name: Frederick B. Beilstein III
----------------------------
Title: Senior Vice President
---------------------------
Date: 8-17-94
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