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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) APRIL 19, 1994
THE ACTAVA GROUP INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-5706 58-0971455
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
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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Item 5. Other Events.
On April 19, 1994, John D. Phillips was elected president and
chief executive officer of The Actava Group Inc. (the "Company"). Mr. Phillips
was also elected to the Board of Directors of the Company. Mr. Phillips
succeeds Charles R. Scott, who had served as the Company's president and chief
executive officer since 1991. Mr. Scott resigned as a director but will
continue as a senior officer of the Company at his current salary until
December 31, 1994.
In connection with the election of Mr. Phillips, an investment
partnership led by Mr. Phillips and Michael P. Marshall 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 was having discussions with
Mr. Phillips. Mr. Phillips also entered into an Employment Agreement with the
Company, providing that he would serve as Chief Executive Officer for a term
extending through December 31, 1996 at an annual salary of $625,000 plus any
bonus earned under the Company's Senior Officer Bonus Plan. Mr. Phillips also
received an option to purchase 300,000 shares of the Company's common stock at
a price of $6.375 per share.
On April 12, 1994, the Company announced that it had received
a proposal from Mr. Phillips which included an investment in a senior
convertible preferred stock and certain other matters. The Board and Mr.
Phillips agreed not to proceed with these matters at this time.
Mr. Phillips is the former president and chief executive
officer of Resurgeons Communications Group, Inc. ("Resurgeons"). Resurgeons
was merged last year with Metromedia Communications Corporation and LDDS
Communications, Inc. Prior to this merger, Resurgeons was a non-facilities
based long distance telecommunications company that processed and transmitted
operator-assisted long distance calls from multi-telephone facilities such as
hotels and hospitals and from pay phones. Prior to serving as chief executive
officer of Resurgeons, Mr. Phillips served as president and chief executive
officer of Advanced Telecommunications Corporation, a long distance
telecommunications company providing services in the southeastern and
southwestern parts of the United States.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit No. Description
- - ----------- -----------
(99)(a) Employment Agreement among The Actava Group Inc. and
John D. Phillips dated April 19, 1994.
(99)(b) Option Agreement among The Actava Group Inc. and John
D. Phillips dated April 19, 1994.
(99)(c) Registration Rights Agreement among The Actava Group
Inc., Renaissance Partners and John D. Phillips dated
April 19, 1994.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
THE ACTAVA GROUP INC.
(Registrant)
Date: May 4, 1994 By: /s/ Walter M. Grant
------------------------------
Walter M. Grant
Senior Vice President,
General Counsel and Secretary
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EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
as of April 19, 1994, between The Actava Group Inc., a Delaware corporation
(the "Company"), and John D. Phillips (the "Employee"). The Company hereby
employs the Employee and the Employee hereby accepts employment with the
Company in accordance with the following terms and subject to the following
conditions:
1. TERM. The term of this Agreement shall begin on the date
hereof and shall continue until December 31, 1996 (the "Term").
2. EMPLOYMENT AND DUTIES. The Company hereby employs the
Employee as its Chief Executive Officer. The duties and responsibilities of
the Employee as Chief Executive Officer shall be those duties and
responsibilities that are consistent with the office of Chief Executive Officer
and those duties and responsibilities that are assigned, from time to time, by
the Board of Directors of the Company. The Employee shall report directly to
the Board of Directors of the Company.
3. SALARY. For all services to be rendered by the Employee
pursuant to this Agreement, the Company hereby agrees to pay the Employee a
base salary at an annual rate of $625,000 per year (the "Base Salary"), payable
in accordance with the Company's payroll practices in effect from time to time.
4. BONUS. The Employee shall be entitled to participate in the
Company's Senior Officer Bonus Plan for 1994 and any subsequent year during the
Term of this Agreement on the same basis and to the same extent as the
Company's other senior corporate officers.
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5. STOCK OPTIONS. In consideration of his employment hereunder,
Employee shall be granted an option to purchase 300,000 shares of common stock
of the Company at an exercise price of $6.375 (the "Option"). The Option shall
contain substantially the terms set forth in the form of the Option Agreement
attached hereto as Exhibit A.
6. BENEFITS. The Employee shall be entitled to all benefits and
conditions of employment previously provided by the Company to the Employee's
predecessor as Chief Executive Officer of the Company, including, without
limitation, automobile allowance, insurance, participation in the Company's
Days-Off Policy, and participation in any pension, profit sharing or other
retirement plans, subject to the terms of such plans and provisions, rules,
regulations and laws applicable to such plans and except for differences in the
previous Chief Executive Officer's benefits based on plan terms.
7. REIMBURSEMENT FOR BUSINESS EXPENSES. The Employee shall be
reimbursed for all reasonable out-of-pocket business expenses incurred by him
in the direct performance of his duties during his employment with the Company
pursuant to the terms of this Agreement and in accordance with the Company's
policies in effect from time to time. All requests for reimbursement shall be
substantiated by invoices and other pertinent data satisfactory to the Company.
8. PERFORMANCE. The Employee shall devote all of his working
time and efforts to the business and affairs of the Company and to the
diligent, faithful and competent performance of the duties and responsibilities
assigned to him pursuant to this Agreement, except for vacations, weekends and
holidays. Notwithstanding the foregoing, the
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Employee may render charitable, civic and outside board services so long as
such services do not materially interfere with the Employee's ability to
discharge his duties, including, without limitation, such outside services as
the Employee is currently performing.
9. NON-DISCLOSURE OF PROPRIETARY INFORMATION; NON-COMPETITION;
NON-SOLICITATION. As used in this Agreement, the term "Confidential
Information" shall mean valuable, non-public, competitively sensitive data and
information relating to the Company's business or the business of any entity
affiliated with the Company, other than Trade Secrets (as defined in the next
sentence). "Confidential Information" shall include, among other things,
information specifically designated as a Trade Secret that is, notwithstanding
the designation, determined by a court of competent jurisdiction not to be a
"trade secret" under applicable law. As used in this Agreement, the term
"Trade Secrets" shall mean information or data of or about the Company or any
entity affiliated with the Company, including, but not limited to, technical or
non-technical data, formulas, patterns, compilations, programs, devices,
methods, techniques, drawings, processes, financial data, financial plans,
product plans, or lists of actual or potential customers or suppliers, that:
(i) derive economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by, other persons who
can obtain economic value from their disclosure or use; and (ii) are the
subject of efforts that are reasonable under the circumstances to maintain
their secrecy. To the extent that the foregoing definition is inconsistent
with a definition of "trade secret" mandated under applicable law, the
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foregoing definition shall be deemed amended to the degree necessary to render
it consistent with applicable law.
Employee will be exposed to Trade Secrets and Confidential Information
as a result of his employment by the Company as provided in this Agreement.
Employee acknowledges and agrees that any unauthorized disclosure or use of any
of the Trade Secrets or Confidential Information of the Company would be
wrongful and would likely result in immediate and irreparable injury to the
Company. In consideration of Employee's right to employment (or continued
employment) under the terms of this Agreement, except as appropriate in
connection with the performance of his obligations under this Agreement,
Employee shall not, without the express prior written consent of an officer of
the Company other than Employee, redistribute, market, publish, disclose or
divulge to any other person or entity, or use or modify for use, directly or
indirectly in any way for any person or entity: (i) any Confidential
Information during the Term of this Agreement and for a period of two (2) years
after the final date of the Term of this Agreement; and (ii) any Trade Secrets
at any time (during or after the Term of this Agreement) during which such
information or data shall continue to constitute a "trade secret" under
applicable law. Employee agrees to cooperate with any reasonable
confidentiality requirements of the Company. Employee shall immediately notify
the Company of any unauthorized disclosure or use of any Trade Secrets or
Confidential Information of which Employee becomes aware.
The Employee shall not, either directly or indirectly, alone or in
partnership, be connected or concerned with or participate in any other
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competing business or pursuit during any employment by the Company, except that
the Employee may own up to three percent of the outstanding securities of a
competing business with securities which are registered with the Securities and
Exchange Commission if such company is required to file current reports
pursuant to the Securities Exchange Act of 1934.
For a period of one year immediately following any termination of the
Employee's employment, the Employee will not solicit, or participate in any
solicitation of, the customers, suppliers, employees or representatives of the
Company (or any of its subsidiaries or affiliated companies) to breach any
contract with the Company, terminate any relationship with the Company or leave
the Company. For purposes of this Agreement, (i) customers shall be limited to
actual customers or actively sought prospective customers of the Company or any
subsidiary or affiliate of the Company with whom Employee has had substantial
contact during the Term of this Agreement and (ii) employees or representatives
of the Company (or any of its subsidiaries or affiliates) shall be limited to
persons residing within fifty (50) miles of the Company's offices in Atlanta,
Georgia.
10. SUCCESSORS AND ASSIGNS. This Agreement and all rights under
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective personal or legal
representatives, executors, administrators, heirs, distributees, devisees,
legatees, successors and assigns. This Agreement is personal in nature, and
neither of the parties to this Agreement shall, without the written consent of
the other, assign or transfer this Agreement or
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any right or obligation under this Agreement to any other person or entity,
provided, however, that the Company may, without the written consent of the
Employee, transfer any or all of its rights and obligations under this
Agreement to any successor to the business of the Company by merger,
consolidation, sale of assets or otherwise. Any other attempted assignment by
the Employee or the Company shall be void ab initio.
11. INJUNCTIVE RELIEF. The Company and the Employee agree that
damages are an inadequate remedy for, and that the Company or any successor to
the business of the Company would be irreparably harmed by, any breach of
Paragraph 9 of this Agreement, and that the Company, any successor to the
business of the Company or any permitted assignee of the Company shall be
entitled to equitable relief in the form of a preliminary or permanent
injunction upon any breach of Paragraph 9 hereof.
12. NOTICES. For the purpose of this Agreement, notices and all
other communications to either party hereunder provided for in the Agreement
shall be in writing and shall be deemed to have been duly given when delivered
in person or mailed by first-class mail or airmail, postage prepaid, addressed:
If to the Employee:
John D. Phillips
2210 Resurgens Plaza South
945 East Paces Ferry Road, NE
Atlanta, Georgia 30326
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If to the Company:
The Actava Group Inc.
4900 Georgia-Pacific Center
Atlanta, Georgia 30303
Attention: Senior Vice President
and General Counsel
or to such other address(es) as either party may have furnished to the other
party in writing in accordance with this Paragraph.
13. TERMINATION.
(a) DEFINITIONS. For purposes of this Agreement:
(i) The term "Cause" when used with respect to the
termination of the Employee's employment hereunder shall mean
that the Employee during the Term of this Agreement: (A) has
misappropriated, stolen or embezzled funds of the Company; or
(B) has committed an act of deceit, fraud, dereliction of
duty, or gross or willful misconduct; or (C) has been
convicted of a crime involving moral turpitude or entered a
plea of nolo contendere in response to any indictment for such
crime; or (D) has intentionally disclosed Trade Secrets or
Confidential Information of the Company except when such
disclosure is made pursuant to the direction of the Company or
in accordance with Company policy; or (E) has engaged in
competitive behavior against the Company, has purposely aided
a competitor of the Company or has misappropriated or aided in
misappropriating a material opportunity of the Company;
provided, however, that in the case of (D) and (E) hereof, the
Board of Directors of the Company shall have determined that
such action by the Employee has had a material adverse effect
on the Company.
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(ii) The term "Without Cause" when used with respect
to the termination of the Employee's employment hereunder
shall mean (A) termination of the Employee's employment by the
Company for any reason other than Cause or Disability (defined
in Paragraph 13(a)(iii) hereof) or (B) termination of his
employment by the Employee (in accordance with the notice
provisions of Paragraph 13(d) hereof) at any time upon any
material breach by the Company of any term or condition of
this Agreement and failure by the Company to cure such breach
within thirty days after written notice from the Employee to
the Company specifying such breach.
(iii) The term "Disability" shall mean the mental or
physical illness or disability of the Employee, as certified
in a written statement from a physician mutually approved by
the Company and the Employee, which renders the Employee
unable to perform substantially all of his duties and services
hereunder for a period in excess of 180 days (regardless of
whether such days are consecutive) during any consecutive
two-year period during the Term of this Agreement.
(b) TERMINATION BY THE COMPANY FOR CAUSE. The Company
may terminate the Employee's employment at any time for Cause. In the
event of the termination of the Employee's employment under this
Paragraph 13(b), the Company shall be obligated only to pay the
Employee his accrued Base Salary and accrued benefits herein provided
for through the date of termination of Employee's employment
(including, without limitation, payment or reimbursement
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to the date of such termination of the amounts provided for in
Paragraph 6 hereof), all at the then-effective rates, in accordance
with the Company's then effective payroll payment practices, minus
payroll deductions and costs of group insurance. Upon any termination
by the Company of the Employee's employment for Cause, the Employee
may continue any then-effective group health insurance (to the extent
permitted by law) under the Consolidated Omnibus Reconciliation Act
("COBRA").
(c) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company
may terminate the Employee's employment Without Cause at any time
during the Term hereof by providing the Employee with written notice of
such termination and specifying in such notice the effective date of
such termination, whereupon the Employee's employment shall terminate
on the date specified in such notice. Upon such termination, as the
Employee's sole remedy for such termination, the Employee shall be
entitled to continue to receive his Base Salary and the other benefits
provided for in Paragraph 6 hereof (unless such benefits are not
available after termination of employment under the terms of such
benefit plans), all at the then-effective rates, in accordance with the
Company's then-effective payroll payment practices, minus payroll
deductions and costs of group insurance, during the remaining Term of
this Agreement.
(d) TERMINATION BY THE EMPLOYEE. The Employee's
employment may be terminated by the Employee at any time by providing
the Company with notice of such termination and specifying in the
notice the effective date of such termination, which shall not be less
than
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fifteen days after giving such notice, whereupon the Employee's
employment shall terminate on the date specified in such notice,
provided, however, that following receipt of such notice the Company
may specify, in its discretion, the date on which the Employee's
employment shall terminate so long as the date so specified is not
more than fifteen days after the date on which the Employee shall have
given notice, in which case the Employee's employment shall terminate
on the date so specified by the Company. In the event of his
termination of employment by the Employee (except in accordance with
Paragraph 13(a)(ii)(B) hereof, which shall be deemed a termination of
employment Without Cause by the Company hereunder), the Company shall
be obligated only to pay the Employee his accrued Base Salary and
other accrued benefits herein provided for through the date of
termination of Employee's employment (including, without limitation,
payment or reimbursement to the date of such termination of the
amounts provided for in Paragraph 6 hereof), all at the then-effective
rates, in accordance with the Company's then-effective payroll payment
practices, minus payroll deductions and costs of group insurance.
(e) TERMINATION UPON DISABILITY. The Company may
terminate the Employee's employment upon the Disability of the Employee by
providing the Employee with written notice of termination and specifying in the
notice the effective date of such termination, which shall not be less than
thirty days after giving such notice, whereupon the Employee's employment shall
terminate on the date specified in such notice. Upon termination of the
Employee's employment by the Company
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upon the Disability of the Employee, the Employee shall receive the following
payments and benefits:
(i) The Employee shall receive his accrued Base
Salary through the date of such termination and other accrued benefits
herein provided for (including without limitation, payment or
reimbursement to the date of such termination of the amounts provided
for in Paragraph 6 hereof), all at the then-effective rates, in
accordance with the Company's then-effective payroll payment
practices, minus payroll deductions and costs of group insurance,
payable upon the effective date of such termination.
(ii) The Employee shall receive disability
insurance payments payable to the Employee under the basic employee
benefit plans made available to the Employee hereunder.
(f) DEATH. In the event of the Employee's death during
his employment hereunder, the Employee's employment shall be automatically
terminated and the Company shall be obligated only to pay the Employee's estate
his accrued Base Salary and accrued benefits herein provided for (including,
without limitation, payment or reimbursement to the date of such termination of
the amounts provided for in Paragraph 6 hereof), all at the then-effective
rates, in accordance with the Company's then effective payroll payment
practices, minus payroll deductions and costs of group insurance.
14. MISCELLANEOUS. No provision of this Agreement may be amended,
modified or waived unless such amendment, modification or waiver (i) is agreed
to in writing and is signed by the Employee and a representative of the
Company, its successor or permitted assignee and (ii) has been
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approved by the Board of Directors of the Company, its successor or any
permitted assignee of the Company. No waiver by either party to this Agreement
at any time of any breach by the other party of, or compliance by the other
party with, any condition or provision of this Agreement to be performed by the
other party shall be deemed to be a waiver of similar or dissimilar provisions
or conditions at the same or any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied, with respect to the
subject matter of this Agreement have been made by either party that are not
expressly set forth in this Agreement. This Agreement supersedes any and all
employment agreements between the Employee and the Company (or the Company's
predecessors or subsidiaries) in their entirety.
15. VALIDITY. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of the other provisions of this Agreement, which other provisions shall remain
in full force and effect, nor shall the invalidity or unenforceability of a
portion of any provision of this Agreement affect the validity or
enforceability of the balance of such provision.
16. COUNTERPARTS. This document may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute a single agreement.
17. HEADINGS. The headings of the paragraphs contained in this
document are for reference purposes only and shall not, in any way, affect the
meaning or interpretation of any provision of this Agreement.
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18. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal substantive laws, and not the choice
of law rules, of the State of Georgia.
19. ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, other than the provisions of
paragraph 9 hereof, shall, on the written request of one party served upon the
other, be settled by binding arbitration in Fulton County, Georgia in
accordance with the commercial arbitration rules then recognized by the
American Arbitration Association, and judgment upon the award rendered may be
entered and enforced in any court having jurisdiction thereof. The prevailing
party in any such arbitration proceeding or court action shall be entitled to
recover all of its costs and expenses (including, without limitation,
reasonable attorneys' fees) incurred therein from the nonprevailing party.
IN WITNESS WHEREOF, the Company and the Employee have executed and
delivered this Agreement as of the date first above written.
THE ACTAVA GROUP INC.
By:
-----------------------------
Walter M. Grant
Senior Vice President
and General Counsel
-----------------------------
John D. Phillips
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EXHIBIT A
to the Employment Agreement
THIS OPTION HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF
1933 (THE "ACT") AND MAY NOT
BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION
OR EXEMPTION THEREFROM UNDER
SUCH ACT. THE OPTION MAY BE
TRANSFERRED ONLY IN
COMPLIANCE WITH THE
CONDITIONS SPECIFIED IN THIS
OPTION AGREEMENT.
OPTION AGREEMENT
OPTION AGREEMENT made in Atlanta,
Georgia, this 19th day of April, 1994, between THE ACTAVA GROUP INC., a
Delaware corporation (the "Company"), and John D. Phillips (the "Employee").
Renaissance Partners, a partnership in
which Employee is a general partner, has purchased 700,000 shares of the
Company's Common Stock, $1.00 par value (the "Common Stock"), from the Company
for $4,462,500 and the Company has entered into an Employment Agreement with
Employee pursuant to which Employee has agreed to serve as Chief Executive
Officer of the Company and the Company has agreed to issue options to purchase
300,000 shares of the Common Stock as herein provided.
NOW, THEREFORE, in consideration of the
premises and the mutual covenants contained herein and for other good and
valuable consideration, the parties hereto agree as follows:
1. Pursuant to the Employment
Agreement, the Company herewith grants to the Employee the right and option
(the "Option" or, after transfer of any part thereof, the "Options") to
purchase all or any part of an aggregate of Three Hundred Thousand (300,000)
shares of Common Stock on the terms and conditions herein set forth.
2. The purchase price of the
shares of Common Stock subject to the Option (the "Exercise Price") shall be
$6.375 per share, subject to adjustment as provided herein.
3. The term of the Option shall
be a period of seven years from the date hereof, terminating at the close of
business on April 18, 2001, and the Option shall be exercisable in full at any
time during said term. The Option shall be exercisable in whole at any time or
in part from time to time during said term as to any or all
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full shares which are then purchasable under the provisions of the Option, but
in no case may the Option be exercised as to less than 25 shares at any one
time (or the remaining shares then purchasable under the Option, if less than
25 shares). The Employee shall not have any of the rights of a stockholder
with respect to any of the shares of Common Stock subject to the Option until
such shares shall be issued to him pursuant to the Option.
4. The Option shall be
transferable in whole or in part by the Employee, subject to the restrictions
set forth below. The Employee (i) represents that he is acquiring the Option
for his own account for investment and not with a view to any distribution or
public offering within the meaning of the Securities Act of 1933, as amended
(the "Securities Act"), (ii) acknowledges that the Option has not been
registered under the Securities Act and (iii) agrees that he will not sell or
otherwise transfer the Option except upon the terms and conditions specified
herein, provided that the Employee may sell or otherwise transfer the Option in
one or more private transactions not requiring registration under the
Securities Act. Each Option shall include a legend in substantially the
following form:
THIS OPTION HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF
1933 (THE "ACT") AND MAY NOT
BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION
OR EXEMPTION THEREFROM UNDER
SUCH ACT. THE OPTION MAY BE
TRANSFERRED ONLY IN
COMPLIANCE WITH THE
CONDITIONS SPECIFIED IN THIS
OPTION AGREEMENT.
Prior to any proposed assignment, transfer or sale of this Option, the Employee
shall give written notice to the Company of the Employee's intention to effect
such assignment, transfer or sale, which notice shall set forth the date of
such proposed assignment, transfer or sale. Employee shall also furnish to the
Company an agreement by the transferee thereof that such transferee is taking
and holding the same subject to the terms and conditions specified herein and,
if requested by the Company, a written opinion of Employee's counsel, in form
reasonably satisfactory to the Company, to the effect that the proposed
transfer may be effected without registration under the Securities Act. The
restrictions set forth in this Section 4 shall terminate and cease to be
effective with respect to this Option upon receipt by the Company of an opinion
of counsel, in a form reasonably satisfactory to the Company, to the effect
that compliance with such restrictions is not necessary in order to comply with
the registration requirements of the Securities Act. Whenever such
restrictions shall so terminate, the Employee shall be entitled to receive from
the Company, without expense, a copy of this Option Agreement not bearing a
legend set forth above at which time the Company will rescind any transfer
restrictions relating to this Option.
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5. The Company shall keep, at its
principal executive office, a register, in which, subject to such reasonable
regulations as it may prescribe, the Company shall register the Options at the
time of issuance thereof and shall transfer Options so registered. Upon
surrender for transfer of any Option at such office, the Company shall execute
and deliver to the transferee(s) a new Option Agreement evidencing Options to
purchase a like number of shares.
6. The Option shall not be
affected by any change of employment of Employee. Nothing herein contained
shall confer on the Employee any right to continue in the employ of the Company
or any subsidiary or affiliate or affect in any way the right of the Company or
any subsidiary or affiliate to terminate the employment of the Employee at any
time.
7. The Exercise Price and the
number of shares issuable upon exercise of this Option shall be adjusted from
time to time as follows:
(i) If the Company shall
after the date hereof (A) pay a dividend
or make a distribution on its capital
stock in shares of its Common Stock, (B)
subdivide its outstanding Common Stock
into a greater number of shares, (C)
combine its outstanding Common Stock
into a smaller number of shares or (D)
issue any shares of capital stock by
reclassification of its Common Stock,
the Exercise Price and the number of
shares issuable upon exercise of this
Option shall be adjusted at the opening
of business on the day next following
the date fixed for the determination of
stockholders entitled to receive such
dividend or distribution or at the
opening of business on the day next
following the day on which such
subdivision, combination or
reclassification becomes effective, as
the case may be, so that the holder of
this Option shall be entitled upon
exercise to receive the number of shares
of Common Stock that such holder would
have owned or have been entitled to
receive after the happening of any of
the events described above had such
Option been exercised immediately prior
to the record date in the case of a
dividend or distribution or the
effective date in the case of a
subdivision, combination or
reclassification. An adjustment made
pursuant to this subparagraph (i) shall
become effective immediately after the
opening of business
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on the day next following the record
date (except as provided in
Section 10 below) in the case of a
dividend or distribution and shall
become effective immediately after the
opening of business on the day next
following the effective date in the case
of a subdivision, combination or
reclassification.
(ii) If the Company shall issue
after the date hereof rights,
options or warrants to all holders of
Common Stock entitling them for a period
expiring within 45 days after the record
date mentioned below to subscribe for or
purchase Common Stock at a price per
share less than the Fair Market Value
per share of Common Stock on the record
date for the determination of
stockholders entitled to receive such
rights, options or warrants, then the
number of shares of Common Stock into
which this Option is exercisable at the
opening of business on the day next
following such record date shall be
adjusted to equal the number of shares
of Common Stock determined by
multiplying (1) the number of shares of
Common Stock into which this Option was
exercisable immediately prior to the
opening of business on the day next
following the date fixed for such
determination by (2) a fraction, the
numerator of which shall be the sum of
(A) the number of shares of Common Stock
outstanding on the close of business on
the date fixed for such determination
and (B) the number of additional shares
of Common Stock purchased pursuant to
such rights, options or warrants, and
the denominator of which shall be the
sum of (A) the number of shares of
Common Stock outstanding on the close of
business on the date fixed for such
determination and (B) the number of
shares that the aggregate proceeds
received by the Company from the
exercise of such rights, options or
warrants for Common Stock would purchase
at such Fair Market Value. The Exercise
Price shall also be adjusted so that it
shall equal the amount determined by
multiplying (x) the number of shares of
Common Stock into which this Option was
exercisable prior to adjustment by (y)
the Exercise Price, and dividing such
product by the number of
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<PAGE> 5
shares of Common Stock into which this
Option is exercisable after
adjustment pursuant to this
subparagraph. Such adjustment shall
become effective immediately after the
opening of business on the day next
following such record date (except as
provided in Section 10 below). In
determining whether any rights, options
or warrants entitle the holders of
Common Stock to subscribe for or
purchase shares of Common Stock at less
than such Fair Market Value, there shall
be taken into account any consideration
received by the Company upon issuance
and upon exercise of such rights,
options or warrants, the value of such
consideration, if other than cash, to be
determined by the Board of Directors of
the Company.
(iii) If the Company shall
distribute after the date hereof to all
holders of its Common Stock any shares
of capital stock of the Company (other
than Common Stock) or evidences of its
indebtedness or assets (excluding cash
dividends or distributions paid from
profits or surplus of the Company) or
rights, options or warrants to subscribe
for or purchase any of its securities
(excluding those rights, options and
warrants issued to all holders of Common
Stock entitling them for a period
expiring within 45 days after the record
date referred to in subparagraph (ii)
above to subscribe for or purchase
Common Stock, which rights, options and
warrants are referred to in and treated
under subparagraph (ii) above) (any of
the foregoing being hereinafter in this
subparagraph (iii) called the
"Securities"), then in each such case
the number of shares of Common Stock
into which this Option is exercisable
shall be adjusted so that it shall equal
the number of shares of Common Stock
determined by multiplying (I) the number
of shares of Common Stock into which
this Option was exercisable immediately
prior to the close of business on the
record date fixed for the determination
of stockholders entitled to receive such
distribution by (II) a fraction, the
numerator of which shall be the Fair
Market Value per share of the Common
Stock on the record date mentioned
5
<PAGE> 6
above and the denominator of which
shall be the Fair Market Value
per share of the Common Stock on the
record date mentioned above less the
then fair market value (as determined by
the Board of Directors of the Company,
whose determination shall be conclusive)
of the portion of the Securities
applicable to one share of Common Stock.
The Exercise Price shall also be
adjusted in such event so that it shall
equal the amount determined by
multiplying (x) the number of shares of
Common Stock into which this Option was
exercisable prior to adjustment by (y)
the Exercise Price, and dividing such
product by the number of shares of
Common Stock into which this Option is
exercisable after adjustment pursuant to
this subparagraph. Such adjustment
shall become effective immediately at
the opening of business on the Business
Day next following (except as provided
in Section 10 below) the record date for
the determination of stockholders
entitled to receive such distribution.
(iv) No adjustment in the
Exercise Price shall be required unless
such adjustment would require a
cumulative increase or decrease of at
least 1% in such price; provided,
however, that any adjustments that by
reason of this subparagraph (iv) are not
required to be made shall be carried
forward and taken into account in any
subsequent adjustment until made; and
provided, further, that any adjustment
shall be required and made in accordance
with the provisions of this Section 7
(other than this subparagraph (iv)) not
later than such time as may be required
in order to preserve the tax-free nature
of a distribution to the holders of
shares of Common Stock. All calculations
under this Section 7 shall be made to
the nearest cent (with $.005 being
rounded upward) or to the nearest 1/100
of a share (with .005 of a share being
rounded upward), as the case may be.
Anything in this Section 7 to the
contrary notwithstanding, the Company
shall be entitled, to the extent
permitted by law, to make such
reductions in the Exercise Price, in
addition to those required by this
Section 7, as it in its discretion shall
6
<PAGE> 7
determine to be advisable in order that
any stock dividends, subdivision
of shares, reclassification or
combination of shares, distribution of
rights, options or warrants to purchase
stock or securities, or a distribution
of other assets (other than cash
dividends) hereafter made by the Company
to its stockholders shall not be
taxable.
(v) For purposes of this
Section 7, the number of shares
of Common Stock at any time outstanding
shall not include any shares of Common
Stock then owned or held by or for the
account of the Company. The Company
shall not pay a dividend or make any
distribution on shares of Common Stock
held in the treasury of the Company.
8. In case of any capital
reorganization or reclassification or other change of outstanding shares of
Common Stock, or in case of any consolidation or merger of the Company with or
into another entity (other than a consolidation or merger in which the Company
is the resulting or surviving person and which does not result in any
reclassification or change of outstanding Common Stock), or in case of any sale
or other disposition to another person or entity of all or substantially all of
the assets of the Company (any of the foregoing, a "Transaction"), the Company,
or such successor or purchasing person, as the case may be, shall execute and
deliver to the holder of this Option at least 10 business days prior to
effecting any of the foregoing Transactions a certificate stating that the
holder of this Option shall have the right thereafter to receive upon exercise
of this Option the kind and amount (estimating such amount to the extent
necessary) of shares of stock or other securities (of the Company or another
issuer) or property or cash receivable upon such Transaction by a holder of
this Option if this Option had been exercised immediately prior to such
Transaction. If, in the case of any such Transaction, the stock, other
securities, cash or property receivable thereupon by a holder of Common Stock
includes shares of stock or other securities of a person or entity other than
the successor or purchasing person or entity and other than the Company, which
controls or is controlled by the successor or purchasing person or entity or
which, in connection with such Transaction, issues stock, securities, other
property or cash to holders of Common Stock, then such certificate also shall
be executed by such person or entity, and such person or entity shall, in such
certificate, specifically acknowledge the obligations of such successor or
purchasing person or entity and acknowledge its obligations to issue such
stock, securities, other property or cash to the holders of this Option upon
exercise of this Option. The provisions of this Section 8 of this Option
similarly shall apply to successive Transactions.
9. Whenever the Exercise Price or
the number of shares of Common Stock into which this Option is exercisable is
adjusted as herein provided, the Company shall prepare a notice of such
adjustment of the Exercise Price or the number of
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<PAGE> 8
shares of Common Stock into which this Option is exercisable setting forth the
adjusted Exercise Price or the adjusted number of shares of Common Stock into
which this Option is exercisable and the effective date of such adjustment and
shall mail such notice of such adjustment to the holder of this Option at such
holder's last address as shown on the Option register of the Company. If any
action or transaction would require more than one adjustment to the number of
shares of Common Stock into which this Option is exercisable or the Exercise
Price pursuant to more than one provision of this Option, only one adjustment
shall be made and such adjustment shall be the amount of adjustment that has
the highest absolute value.
10. In any case in which Section 7
of this Option provides that an adjustment shall become effective on the day
next following a record date for an event, the Company may defer until the
occurrence of such event issuing to the holder of any Option exercised after
such record date and before the occurrence of such event the additional shares
of Common Stock issuable upon such exercise by reason of the adjustment
required by such event over and above the Common Stock issuable upon such
exercise before giving effect to such adjustment.
11. If:
(i) the Company shall
declare a dividend (or any other
distribution) on the Common Stock
(other than in cash out of profits or
surplus);
(ii) the Company shall
authorize the granting to the holders
of the Common Stock of rights, options
or warrants to subscribe for or purchase
any shares of any class or any other
rights, options or warrants;
(iii) there shall be any
reclassification of the Common
Stock (other than an event to which
paragraph (i) of Section 7 applies) or
any consolidation or merger to which the
Company is a party and for which
approval of any stockholders of the
Company is required, or the sale or
transfer of all or substantially all of
the assets of the Company as an
entirety; or
(iv) there shall occur the
voluntary or involuntary liquidation,
dissolution or winding up of the
Company, then the Company shall cause
to be mailed to the holder of this
Option at his address as shown on the
records of the Company, as promptly
8
<PAGE> 9
as possible, but at least 15
days prior to the applicable date
hereinafter specified, a notice stating
(A) the date on which a record is to be
taken for the purpose of such dividend,
distribution or rights, options or
warrants, or, if a record is not to be
taken, the date as of which the holders
of Common Stock of record to be entitled
to such dividend, distribution or
rights, options or warrants are to be
determined or (B) the date on which such
reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution
or winding up is expected to become
effective, and the date as of which it
is expected that holders of Common stock
of record shall be entitled to exchange
their shares of Common Stock for
securities or other property, if any,
deliverable upon such reclassification,
consolidation, merger, sale, transfer,
liquidation, dissolution or winding up.
12. If the Company shall take any
action affecting the Common Stock other than action described in Sections 7 or
8, that in the good faith opinion of the Board of Directors would adversely
affect the rights of the holders of this Option, the number of shares for which
this Option is exercisable and the Exercise Price for this Option shall be
adjusted, to the extent permitted by law, in such manner, if any, and at such
time, as the Board of Directors in good faith determine to be equitable in the
circumstances (such determination to be evidenced in a resolution, a certified
copy of which shall be mailed to the holders of this Option).
13. Subject to the terms and
conditions hereof, the Option may be exercised by written notice to the Company
at its principal executive office, which is now located at 4900 Georgia-Pacific
Center, Atlanta, Georgia, 30303, attention of the Secretary. Such notice shall
state the election to exercise the Option and the number of shares in respect
of which it is being exercised and shall be signed by the person so exercising
the Option. Such notice shall be accompanied by payment of the full purchase
price of said shares. The Company shall issue and deliver a certificate or
certificates representing such shares as soon as practicable after the notice
and payments are received. The purchase price of shares shall be paid (i) in
cash; or (ii) by check payable to the Company. In the event the Option shall
be exercised by any person other than the Employee, such notice and payment
shall be accompanied by appropriate proof of the right of such person to
exercise the Option. All shares that shall be purchased upon the exercise of
the Option as provided herein shall be fully paid and nonassessable.
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<PAGE> 10
14. If upon the exercise of the
Option there shall be payable by the Company any amount for income tax
withholding, the amount of Common Stock delivered to him upon exercise of the
Option shall be appropriately reduced to reimburse the Company for such
payment unless such holder has deposited such amount in cash with the Company.
15. The Company shall at all times
during the term of the Option reserve and keep available, as authorized and
unissued shares or as treasury shares, such number of shares of Common Stock as
will be sufficient to satisfy the requirements of this Agreement, shall pay all
original issue and transfer taxes, if any, with respect to the issue and
transfer of shares pursuant hereto and all other fees and expenses necessarily
incurred by the Company in connection therewith, and will from time to time use
its best efforts to comply with all laws and regulations which in the opinion
of counsel for the Company shall be applicable thereto.
16. The Employee acknowledges and
understands that, to the extent any shares of Common Stock issued to him upon
an exercise of the Option, whether in whole or in part, are not registered by
the Company under the Securities Act, the acquisition by him is exempt under
Section 4(2) of the Securities Act, and that the Company's reliance on such
exemption is predicated in part upon the representations of the Employee as set
forth herein. The Employee represents and warrants to the Company that he will
acquire such Common Stock for his own account for investment and not with a
view to selling or otherwise distributing such Common Stock. The Employee
hereby agrees that no Common Stock which he purchases pursuant hereto will be
sold or offered for sale unless a registration statement, effected in
accordance with the Securities Act, shall be in effect with respect thereto or
unless such sales shall be effected in compliance with Rule 144 of the
Securities and Exchange Commission under the Securities Act, to the extent such
rule is applicable to such sale.
17. As used herein, the term
"subsidiary" shall mean any present or future subsidiary corporation of the
Company, the term "affiliate" shall mean any corporation or other business in
which the Company shall have a substantial ownership interest, the term "Common
Stock" shall mean the Common Stock of the Company as authorized at the date
hereof and the term "Code" shall mean the Internal Revenue Code of 1986, as
amended. "Fair Market Value" shall mean the average of the daily Current
Market Prices of a share of Common Stock during any five (5) consecutive
Trading Days selected by the Company commencing not more than 20 Trading Days
before, and ending not later than, the earlier of the day in question and the
day before the "ex" date with respect to the issuance or distribution requiring
such computation. The term "'ex' date", when used with respect to any issuance
or distribution, means the first day on which the Common Stock trades regular
way, without the right to receive such issuance or distribution, on the
exchange or in the market, as the case may be, used to determine that day's
Current Market Price. "Current Market Price" of publicly traded shares of
Common Stock or any other class of capital stock or other security of the
Company or any other issuer for any day shall mean the last reported sales
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<PAGE> 11
price, regular way on such day, or, if no sale takes place on such day, the
average of the reported closing bid and asked prices on such day, regular way,
in either case as reported on the New York Stock Exchange ("NYSE") or, if such
security is not listed or admitted for trading on the NYSE, on the principal
national securities exchange on which such security is listed or admitted for
trading or, if not listed or admitted for trading on any national securities
exchange, on the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or, if such
security is not listed on such National Market System, the average of the
closing bid and asked prices on such day in the over-the-counter market as
reported by NASDAQ or, if bid and asked prices for such security on such day
shall not have been reported through NASDAQ, the average of the bid and asked
prices on such day as furnished by any NYSE member firm regularly making a
market in such security selected for such purpose by the Board of Directors of
the Company. "Trading Day" shall mean any day on which the securities in
question are traded or could be traded on the NYSE, or if such securities are
not listed or admitted for trading on the NYSE, on the principal national
securities exchange on which such securities are listed or admitted, or if not
listed or admitted for trading on any national securities exchange, on the
National Market System of the NASDAQ, or if such securities are not listed on
such National Market System, in the applicable securities market in which the
securities are traded.
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<PAGE> 12
IN WITNESS WHEREOF, the Company has
caused this Agreement to be duly executed by its officer thereunto duly
authorized, and the Employee has executed it, as of the day and year first
above written.
THE ACTAVA GROUP INC.
By:
-----------------------
Walter M. Grant
Senior Vice President
and General Counsel
-----------------------
John D. Phillips
12
<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of the ___ day of April, 1994 by and between The Actava Group
Inc., a Delaware corporation (the "Company"), Renaissance Partners, a Georgia
general partnership (the "Partnership"), and John D. Phillips ("Phillips").
In consideration of the following mutual covenants and agreements, and
subject to the terms and conditions set forth herein, the parties hereto agree
as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. The following definitions shall be applicable
to the terms set forth below as used in this Agreement:
(a) "Commission." The term "Commission" shall mean the
Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.
(b) "Common Shares." The term "Common Shares" shall mean
those 700,000 shares of the Company's Common Stock issued and sold to the
Partnership by the Company as of April 19, 1994.
(c) "Common Stock." The term "Common Stock" shall mean
the Company's Common Stock, $1.00 par value per share, as constituted on the
date hereof.
(d) "Company's Notice." The term "Company's Notice"
shall have the meaning set forth in Section 2.2 hereof.
(e) "Fair Market Value." The term "Fair Market Value"
shall mean the average of the daily Current Market Prices of a share of Common
Stock during any five (5) consecutive trading days selected by the Company
commencing not more than 20 trading days before, and ending not later than, the
earlier of the day in question and the day before the "ex" date with respect to
the issuance or distribution requiring such computation. The term "'ex' date",
when used with respect to any issuance or distribution, means the first day on
which the Common Stock trades regular way, without the right to receive such
issuance or distribution, on the exchange or in the market, as the case may be,
used to determine that day's Current Market Price. "Current Market Price" of
publicly traded shares of Common Stock for any day shall mean
<PAGE> 2
the last reported sales price, regular way on such day, or, if no sale takes
place on such day, the average of the reported closing bid and asked prices on
such day, regular way, in either case as reported on the New York Stock
Exchange ("NYSE") or, if such security is not listed or admitted for trading on
the NYSE, on the principal national securities exchange on which such security
is listed or admitted for trading or, if not listed or admitted for trading on
any national securities exchange, on the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ")
or, if such security is not listed on such National Market System, the average
of the closing bid and asked prices on such day in the over-the-counter market
as reported by NASDAQ or, if bid and asked prices for such security on such day
shall not have been reported through NASDAQ, the average of the bid and asked
prices on such day as furnished by any NYSE member firm regularly making a
market in such security selected for such purpose by the Board of Directors.
(f) "Investors." The term "Investors" shall mean the
Partnership, Phillips and any other holder of Registrable Stock who by
amendment is added as a party to this Agreement or who is granted registration
rights hereunder and has agreed with the Company in writing to be bound by this
Agreement.
(g) "Investor's Notice." The term "Investor's Notice"
shall have the meaning set forth in Section 2.2 hereof.
(h) "Options." The term "Options" shall mean those
certain options to acquire shares of Common Stock pursuant to that certain
Option Agreement dated as of April 19, 1994, by and between the Company and
John D. Phillips.
(i) "Option Shares." The term "Option Shares" shall have
the meaning set forth in Section 1.1(m) hereof.
(j) "Prospective Sellers." The term "Prospective
Sellers" shall have the meaning set forth in Section 2.4(a)(ii) hereof.
(k) "Register." The terms "register," "registered" and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act.
(l) "Registration Period." The term "Registration
Period" shall mean, with respect to any Investor and the shares of Registrable
Stock (as herein defined) then held by such Investor, that period beginning on
the date hereof and ending on the later of (i) the date which is three years
after the date hereof, unless on such date such Investor holds of record
Registrable Stock with an aggregate Fair Market Value of $5,000,000 or more, in
which event the Registration Period shall be extended with respect to such
Investor for an additional twelve years, and (ii) three months after the last
date on which such Investor was an affiliate of the Company within the meaning
2
<PAGE> 3
of Rule 144 under the Securities Act, but in no event later than fifteen years
after the date hereof.
(m) "Registrable Stock." The term "Registrable Stock"
shall mean (i) the Common Shares, (ii) any Common Stock issued or issuable upon
exercise of the Options (the "Option Shares"); and (iii) any Common Stock
issued or issuable with respect to the Common Shares or the Option Shares by
reason of a stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization.
Each share of Registrable Stock shall continue to be Registrable Stock only for
the duration of the Registration Period and only in the hands of (x) the
initial holder thereof, (y) any transferee or assignee (including any
subsequent transferee or assignee) which is an affiliate of the Company within
the meaning of Rule 144 under the Securities Act, and (z) any commercial or
institutional lender that has a right to acquire Registrable Stock as pledgee
in connection with a loan made to a person named in the foregoing clauses (x)
or (y) who is an affiliate of the Company within the meaning of Rule 144;
provided that any such share shall no longer be a share of Registrable Stock
hereunder (regardless of the identity of any subsequent transferee or assignee)
following any transfer thereof to a transferee or assignee who is not a person
named in the foregoing clauses (y) or (z). For the purposes of this Agreement,
(i) unless the context otherwise requires, the officers, directors and
stockholders, in the case of a corporation, and the partners, in the case of a
partnership, of a holder, without limitation, shall be deemed to be affiliated
with such holder, and (ii) the holder of any Option shall be deemed to be the
holder of the related Option Shares.
(n) "Securities Act." The term "Securities Act" shall
mean the Securities Act of 1933, as amended.
(o) "Westinghouse Agreement." The term "Westinghouse
Agreement" shall mean that certain Shareholder Rights Agreement dated as of
June 8, 1993, by and between the Company and Westinghouse Electric Corporation.
1.2 Additional Definitions. In addition to the foregoing, other
capitalized terms used in this Agreement shall have the meanings given to such
terms where they first appear herein.
ARTICLE II.
SECURITIES REGISTRATION
2.1 Immediate Registration. Within twenty-five (25) days
following the date hereof, or as promptly as practicable thereafter, the
Company shall file with the Commission a registration statement to register for
sale under the Securities Act all of the Common Shares and the Option Shares
then held by or issuable to any Investor.
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<PAGE> 4
2.2 Incidental Offering. If the Company at any time during the
Registration Period proposes to register any of its capital stock for sale for
its own account (other than a registration relating either to (i) a dividend
reinvestment, employee stock option, stock purchase or similar plan, (ii) a
transaction pursuant to Rule 145 under the Securities Act, or (iii) a merger,
consolidation or reorganization), it shall each such time give written notice
(the "Company's Notice"), at its expense, to each Investor then having
registration rights hereunder of its intention to do so at least 30 days prior
to the filing of a registration statement with respect to such registration
with the Commission. If any such Investor desires to dispose of all or part of
its Registrable Stock in connection therewith, it shall deliver to the Company,
within 10 days after the giving of the Company's Notice, written notice of such
desire (the "Investor's Notice") stating the number of shares of Registrable
Stock to be disposed of by such holder. The Company shall use all reasonable
efforts to cause all shares of Registrable Stock specified in such Investors'
Notices to be included in the offering of securities by the Company so as to
permit the sale by such holder or holders of all of the shares of Registrable
Stock referred to in such Investors' Notices, subject, however, to the
limitations set forth in Section 2.3 hereof.
Notwithstanding the foregoing, if the Company has performed
its obligations pursuant to Section 2.1 in accordance with the terms set forth
herein, (a) no Investor shall be entitled under this Section 2.2 to effect an
incidental offering under this Section 2.2 unless the registration referred to
in the Company's Notice is an underwritten offering, (b) no Investor who holds
of record Registrable Stock with an aggregate Fair Market Value of less than
$5,000,000 on the date of the Company's Notice shall be entitled to effect an
incidental offering of such of its Registrable Stock as shall be registered
pursuant to Section 2.1 on the date on which the Company Notice is given, and
(c) any Investor who delivers an Investor's Notice and subsequently withdraws
any of its Registrable Stock from such underwritten offering other than
pursuant to the limitations set forth in Section 2.3 hereof shall no longer
have any right hereunder to continue to have such Registrable Stock which has
been so withdrawn included in the registration effected by the Company pursuant
to Section 2.1, in each case provided that on the date on which the Company
Notice is given the registration statement filed pursuant to Section 2.1 with
respect to such Registrable Stock remains effective and current and sales of
such Registrable Stock may be made pursuant thereto.
2.3 Limitations on Inclusion in Incidental Offering.
(a) If the registration of which the Company gives notice
pursuant to Section 2.2 above is for the purpose of permitting a disposition of
securities by the Company pursuant to an underwritten offering, the notice
shall so state, and the Company shall have the right to limit the aggregate
size of the offering or the number of shares to be included therein by
stockholders of the Company if
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<PAGE> 5
requested to do so in good faith by the managing underwriter of the offering.
If the registration of which the Company gives notice pursuant to Section 2.2
above includes any shares being registered pursuant to the Westinghouse
Agreement, the notice shall so state, and the Company shall have the right to
limit the aggregate size of the offering or the number of shares of Registrable
Stock to be included therein by any of the Investors as shall be necessary for
the Company to remain in compliance with the terms of the Westinghouse
Agreement.
(b) Whenever the number of shares which may be offered
pursuant to Section 2.2 is limited by the provisions of Section 2.3(a) above,
(i) any such reduction shall apply on a proportional basis to the Registrable
Stock which Investors shall have requested to have included and all other
securities that the Company shall have been requested to include in the
offering other than those to be offered for the Company's own account, in each
case subject to the rights of any Holder under the Westinghouse Agreement, and
(ii) the Company shall have priority as to sales over the Investors and each
Investor hereby agrees that it shall withdraw its securities from such offering
to the extent necessary to allow the Company to include all the shares which
the Company desires to sell for its own account to be included within such
offering. The Investors given rights by Section 2.2 above who are Prospective
Sellers (as herein defined) shall share pro rata in the available portion of
the offering in question, such sharing to be based upon the number of shares of
Registrable Stock then held by each of such Investors, respectively, with
respect to which registration has been requested.
(c) The Company may, for any reason and without the
consent of any Investor, determine at any time not to proceed with any
registration which is the subject of a Company's Notice and abandon the
proposed offering, whereupon the Company shall be relieved of any further
obligation hereunder to proceed with such registration or offering.
2.4 Registration Procedures.
(a) In connection with the registration by the Company of
shares of Registrable Stock pursuant to Section 2.1 above, or in connection
with the inclusion of shares of Registrable Stock in any offering of securities
of the Company pursuant to Section 2.2 above (including the registration of any
shares of Registrable Stock in connection with the Company's registration), the
Company shall:
(i) prepare and file with the Commission a
registration statement (the form of which shall be subject to the approval of
the holders of a majority of the Registrable Stock to be included in such
registration) with respect to such securities and use all reasonable efforts
to cause such registration statement to become and remain effective as provided
herein; provided that, in the case of any registration pursuant to Section 2.2,
such preparation and filing may
5
<PAGE> 6
be delayed in the sole discretion of the Company, without prejudice to the
rights of any of the Investors pursuant to Section 2.1 hereof;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectuses
used in connection therewith as may be necessary to keep such registration
statement effective and current and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all shares
covered by such registration statement, including such amendments and
supplements as may be necessary to reflect the intended method of disposition
from time to time of the Investors who have requested that any of their shares
be sold or otherwise disposed of in connection with any registration pursuant
to Section 2.2 or whose shares of Registrable Stock are included in any
registration pursuant to Section 2.1 (in either such case, the "Prospective
Sellers"), until the earlier of (a) such time as all of the securities covered
by such registration statement have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof or (b) the end
of the Registration Period;
(iii) furnish to each Prospective Seller such number
of copies of each prospectus, including preliminary prospectuses, in conformity
with the requirements of the Securities Act, and such other documents, as the
Prospective Seller may reasonably request in order to facilitate the public
sale or other disposition of the shares owned by it;
(iv) use all reasonable efforts to register or
qualify the shares covered by such registration statement under such other
securities or Blue Sky or other applicable laws of such jurisdictions as each
Prospective Seller shall reasonably request to enable such seller to consummate
the public sale or other disposition of the shares owned by such seller;
provided that the Company shall not be required in connection therewith or as
an election thereto to qualify to do business or to file a general consent to
service of process in any such jurisdiction, or to maintain the effectiveness
of any such registration or qualification for any period during which it is not
required to maintain the effectiveness of the related registration statement
under the Securities Act as set forth in Section 2.4(a)(ii);
(v) upon written request, furnish to each
Prospective Seller a signed counterpart, addressed to the Prospective Sellers
and their underwriters, if any, of: (A) an opinion of counsel for the Company,
dated the effective date of the registration statement; and (B) a "comfort"
letter signed by the independent public accountants who have certified the
Company's financial statements included in the registration statement; covering
substantially the same matters with respect to the registration statement (and
the prospectus included therein) and (in the case of the accountants' letter)
with respect to the events subsequent to the date of the financial statements,
as are
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customarily covered (at the time of such registration) in the opinions of
issuers' counsel and in accountants' letters delivered to the underwriters in
connection with underwritten public offerings of securities;
(vi) use all reasonable efforts to cause all such
Registrable Stock to be listed on each securities exchange or other securities
trading market on which similar securities issued by the Company are then
listed;
(vii) enter into such customary agreements
(including an underwriting agreement with respect to offerings pursuant
to Section 2.2 above) and take all such other customary actions as the holders
of a majority of the Registrable Stock being sold reasonably request in order
to expedite or facilitate the disposition of such Registrable Stock; and
(viii) make reasonably available for inspection by
any Prospective Seller, any underwriter participating in any disposition of
Registrable Stock, and any attorney, accountant or other agent retained by any
such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and use all reasonable
efforts to cause the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with the registration contemplated by Section
2.1 or Section 2.2 above, in each case as and to the extent necessary to permit
the Prospective Sellers to conduct a reasonable investigation within the
meaning of the Securities Act. To minimize disruption and expense to the
Company during the course of the registration process, all Prospective Sellers
shall, to the extent practicable, coordinate their investigation and due
diligence efforts hereunder and, to the extent practicable, will act through a
single set of counsel and a single set of accountants and will enter into
confidentiality agreements with the Company in form and substance reasonably
satisfactory to the Company and such Prospective Sellers prior to receiving any
confidential or proprietary information of the Company.
(b) Each Investor which is a Prospective Seller shall
furnish, and shall cause any Prospective Seller of Registrable Stock which is a
transferee of such Investor but is not an Investor to furnish, to the Company
in writing such information as the Company may reasonably request from such
Prospective Seller for use in preparing the registration statement (and the
prospectus included therein) and performing its other obligations hereunder.
(c) The Prospective Sellers shall not (until further
notice) effect sales of Registrable Stock after receipt of telegraphic,
telecopied or written notice from the Company to suspend sales to permit the
Company to correct or update a registration statement or prospectus.
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2.5 Expenses of Registration. All expenses incurred in effecting
any registration and/or sale of Registrable Stock pursuant to Section 2.1 or
2.2 hereof, including, without limitation, all registration and filing fees,
printing expenses, expenses of compliance with Blue Sky laws, fees and
disbursements of counsel for the Company, expenses of any audits incidental to
or required by any such registration, and expenses of all marketing and
promotional efforts requested by any underwriter shall be borne by the Company;
provided, however, that each Prospective Seller shall bear underwriting
discounts or brokerage fees or commissions relating to the sale of its
Registrable Stock and all fees and expenses of its own counsel, accountants and
other experts.
2.6 Indemnification.
(a) In connection with the registration and/or sale of
any shares of Registrable Stock pursuant to this Agreement, the Company shall
indemnify and hold harmless each Investor, each underwriter (as defined in the
Securities Act), each other selling agent who may be deemed to be an
underwriter, and each controlling person of any Investor, underwriter or other
selling agent, if any (within the meaning of the Securities Act), against any
losses, claims, damages or liabilities, joint or several (or actions in respect
thereof), to which such Investor, underwriter, other selling agent or
controlling person may be subject under the Securities Act, under any other
statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement (or alleged untrue statement) of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act or offered for sale, any preliminary
prospectus or final prospectus contained therein, or any summary prospectus
issued in connection with any securities being registered or offered for sale,
or any amendment or supplement thereto, (ii) any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading or (iii) any violation by the
Company of the Securities Act or any Blue Sky law, or any rule or regulation
promulgated under the Securities Act or any Blue Sky law, or any other law,
applicable to the Company in connection with the sale, registration or
qualification of any shares of Registrable Stock, and shall reimburse each such
Investor, underwriter, other selling agent or controlling person for any legal
or other expenses reasonably incurred by such Investor, underwriter, other
selling agent or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company shall not be liable to any Investor, underwriter, other
selling agent or controlling person in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any untrue
statement or omission made in such registration statement, preliminary
prospectus, summary prospectus, prospectus, or amendment or supplement thereto,
or any other document, in reliance upon and in conformity with written
information furnished to the Company by such
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<PAGE> 9
Investor, underwriter, other selling agent or controlling person, respectively,
specifically for use therein. The indemnity provided for herein shall remain
in full force and effect regardless of any investigation made by or on behalf
of such Investor, underwriter, other selling agent or controlling person, and
shall survive the transfer of such securities by such Investor.
The Company may require, as a condition to including any
Registrable Stock in any registration statement filed pursuant to Section 2.1
or Section 2.2, that the Company shall have received an undertaking
satisfactory to it from each prospective seller of such securities, severally
and not jointly, to indemnify and hold harmless (in the same manner and to the
same extent as set forth in the immediately preceding paragraph of this Section
2.6(a)) the Company, each director of the Company, each officer of the Company
who shall sign such registration statement and each other person, if any, who
controls the Company within the meaning of the Securities Act (except the
indemnifying holder, if such indemnifying holder so controls the Company), with
respect to any untrue statement in or omission from such registration
statement, any preliminary prospectus or final prospectus contained therein,
any summary prospectus issued in connection with any securities being
registered or offered for sale, or any amendment or supplement thereto, or any
filing with or representation to the Commission or any state securities
commission or other authority under the Securities Act or any Blue Sky law, or
any other law, applicable to the Company in connection with the sale,
registration or qualification of any shares of Registrable Stock, in each case
if such statement or omission was made in reliance on and in conformity with
written information furnished to the Company by such prospective seller
specifically for use in preparing any such registration statement, preliminary
prospectus, final prospectus, summary prospectus or amendment or supplement
thereto, or in making any such filing or representation. Each Investor
hereunder shall promptly provide such undertaking upon request. The indemnity
provided for herein shall remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party and shall survive
any transfer of the Registrable Stock held by the indemnifying party.
(b) If the indemnification provided for in Section 2.6(a)
above is unavailable to an indemnified party in respect of any losses, claims,
damages or liabilities referred to therein, then the intended indemnifying
party, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities, in such proportion as is
appropriate to reflect the relative fault of the intended indemnifying party on
the one hand and of the indemnified parties on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the intended indemnifying party and of the indemnified
parties shall be determined by reference to, among other
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things, whether the untrue or alleged untrue statement of a material fact or
the omission to state a material fact relates to information supplied by the
intended indemnifying party or by the indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Investors agree that it would not be just
and equitable if contribution pursuant to this Section 2.6(b) were determined
by pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities or actions in respect
thereof referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 2.6(b), no Investor shall be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Stock sold by it exceeds the amount of any damages which such
Investor has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentations (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Company may require, as a
condition to including any Registrable Stock in any registration statement
filed pursuant to Section 2.1 or Section 2.2, that the Company shall have
received an undertaking satisfactory to it from each prospective seller of such
securities, severally and not jointly, to contribute to the amount paid or
payable by an indemnified party hereunder as and to the extent set forth in
this Section 2.6(b), and each Investor hereunder shall promptly provide such
undertaking upon request.
(c) Promptly after receipt by an indemnified party under
Section 2.6(a) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made under such
Section, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than under
such Section or to the extent that it has not been prejudiced as a proximate
result of such failure. In case any such action shall be brought against any
indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, to assume the defense thereof,
in each case jointly with any other indemnifying parties and with counsel
reasonably satisfactory to such indemnified party; provided, however, that, if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have
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reasonably concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to assert such legal defenses (in
which case the indemnifying party shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties). Upon
the permitted assumption by the indemnifying party of the defense of such
action, and approval by the indemnified party of counsel, the indemnifying
party shall not be liable to such indemnified party under this Section 2.6 for
any legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof (other than reasonable costs of
investigation) unless (i) the indemnified party shall have employed separate
counsel in connection with the assertion of legal defenses in accordance with
the proviso to the next preceding sentence, (ii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time, or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party.
2.7 Inclusion of Additional Shares in Immediate Registration. The
Company shall not register securities for sale for its own account or for the
account of any other Person in the registration of Registrable Stock required
by Section 2.1 hereof, subject to any rights of any Holder under the
Westinghouse Agreement.
2.8 Rights Which May Be Granted to Other Persons. The Company
shall not grant any person registration rights which shall in any way
whatsoever impair the priority of the registration rights granted to the
Investors in this Agreement.
2.9 Assertion and Transfer of Registration Rights. The rights of any
Investor under this Agreement may be transferred or assigned only to a
transferee or assignee (including any subsequent transferee or assignee) which
is an affiliate of the Company within the meaning of Rule 144 under the
Securities Act or which is a commercial or institutional lender that has a
right to acquire Registrable Stock as pledgee in connection with a loan made to
an Investor or a transferee or assignee which in any such case is an affiliate
of the Company within the meaning of Rule 144, and, in either event, only in
connection with a transfer of securities which remain Registrable Stock
hereunder after giving effect to such transfer, and not to any other or
subsequent transferee of any such securities, and any such permitted transfer
or assignment shall be effective only upon the receipt by the Company of
written notice of such transfer or assignment and an instrument, the form and
substance of which shall be reasonably satisfactory to the Company, pursuant to
which such transferee or assignee agrees to be bound by the provisions of this
Agreement. In addition, any initial holder of any Registrable Stock which is
not a party to this Agreement shall have no rights hereunder (including
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without limitation any right to participate in any registration hereunder and
any right to any indemnification or contribution hereunder) unless and until
such holder has executed an instrument, the form and substance of which shall
be reasonably satisfactory to the Company, pursuant to which such holder agrees
to be bound by the provisions of this Agreement.
2.10 Effective Period of Immediate Registration. Once the
registration statement filed by the Company pursuant to Section 2.1 above
becomes effective, the Company shall file all reports, financial statements and
other documents necessary to keep such registration statement current and the
registration in effect until the earlier of (a) such time as all of the
securities covered by such registration statement have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof or (b) the end of the Registration Period.
2.11 Rule 144 Requirements. The Company shall file with the
Commission all reports, financial statements and other documents and shall take
all other actions necessary to make available current public information with
regard to the Company to enable the holders of Registrable Stock to make sales
of Registrable Stock pursuant to Rule 144 of the Commission under the
Securities Act.
2.12 Holdback Agreements. Notwithstanding any provision of this
Agreement to the contrary, in the event the Company notifies the Investors that
the Company intends to file a registration statement in connection with an
underwritten offering of any of its capital stock, each Investor will refrain,
to the extent reasonably requested by the managing underwriter of the public
offering, from selling or otherwise distributing any Registrable Stock within
the period beginning seven days prior to the effective date of such
registration statement and ending 120 days after such effective date except as
part of such offering as set forth herein. Each Investor further agrees that,
in the event the Company notifies such Investor that it intends to file or has
filed a registration statement relating to an underwritten registration
pursuant to Section 4.1 or 4.2 of the Westinghouse Agreement, such Investor
will refrain from effecting any public sale or distribution of any Registrable
Stock during the period beginning seven days prior to the effective date of
such registration statement and ending on the earlier of 120 days after such
registration statement has become effective and the date on which all
securities registered for sale thereunder have been sold, except as part of the
offering to which such registration statement relates and as permitted by this
Agreement and the Westinghouse Agreement.
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ARTICLE III.
MISCELLANEOUS
3.1 Notices. All notices, demands or other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, mailed by certified mail, return receipt requested, sent by
overnight courier service or telecopied, telegraphed or telexed (transmission
confirmed), or otherwise actually delivered:
If to the Partnership
or Phillips: Renaissance Partners
2210 Resurgens Plaza South
945 East Paces Ferry Road, N.E.
Attention: Mr. John D. Phillips
Telephone: (404) 261-6190
Facsimile: (404) 233-2280
If to the Company: The Actava Group Inc.
4900 Georgia-Pacific Center
133 Peachtree Street
Atlanta, Georgia 30303
Attention: Walter M. Grant, Esq.
Telephone: (404) 658-9000
Facsimile: (404) 525-3010
If to any other
Investor: At the address and numbers set forth in the
Company's records, marked for attention as
therein indicated;
or at such other address and numbers as may have been furnished by such person
in writing to the other parties, accompanied by a written request that such
address and numbers be used for the purpose of giving notices hereunder.
3.2 Severability and Governing Law. Should any Section or any
part of a Section within this Agreement be rendered void, invalid or
unenforceable by any court of law for any reason, such invalidity or
unenforceability shall not void or render invalid or unenforceable any other
Section or part of a Section in this Agreement. This Agreement is made and
entered into in the State of Georgia, and the laws of said state shall govern
the validity and interpretation hereof and the performance by the parties
hereto of their respective duties and obligations hereunder.
3.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
3.4 Captions and Section Headlines. Section titles or captions
contained in this Agreement are inserted as a matter of convenience and
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for reference purposes only, and in no way define, limit, extend or describe
the scope of this Agreement or the intent of any provision hereof.
3.5 Singular and Plural, Etc. Whenever the singular number is
used herein and where required by the context, the same shall include the
plural, and the neuter gender shall include the masculine and feminine genders.
3.6 Costs and Attorneys' Fees. In the event that any action,
suit, or other proceeding is instituted concerning or arising out of this
Agreement, the prevailing party shall recover all of such party's costs, and
attorneys' fees incurred in each and every such action, suit, or other
proceeding, including any and all appeals or petitions therefrom. As used
herein, "attorneys' fees" shall mean the full and actual costs of any legal
services actually rendered in connection with the matters involved, calculated
on the basis of the usual fee charged by the attorneys performing such
services.
3.7 Amendments and Waivers. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally or in writing,
except that any term of this Agreement may be amended and the observance of any
such term may be waived (either generally or in a particular instance and
either retroactively or prospectively) only with the written consent of the
Company and Investors holding at least 66-2/3% of the Registrable Stock then
outstanding; provided, however, that no such amendment or waiver shall affect
the provisions of this Section 3.7 and no such waiver shall extend to or affect
any other obligation not expressly waived. No failure to exercise and no delay
in exercising, on the part of any party, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law. The failure of any party to insist upon a strict performance
of any of the terms or provisions of this Agreement, or to exercise any option,
right or remedy herein contained, shall not be construed as a waiver or as a
relinquishment for the future of such term, provision, option, right or remedy,
but the same shall continue and remain in full force and effect.
3.8 Successors and Assigns. All rights, covenants and agreements
of the parties contained in this Agreement shall, except as otherwise provided
herein, be binding upon and inure to the benefit of their respective successors
and assigns.
3.9 Entire Agreement. This Agreement contains the entire
understanding of the parties and there are no further or other agreements or
understandings, written or oral, in effect between the
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parties relating to the subject matter hereof unless expressly referred to
herein.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
THE ACTAVA GROUP INC.
By:
---------------------------
Name:
--------------------
Title:
-------------------
RENAISSANCE PARTNERS
By:
---------------------------
Name: John D. Phillips
Title: Partner
---------------------------
John D. Phillips
15
