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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(MARK ONE)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM
COMMISSION FILE NUMBER 1-5706
THE ACTAVA GROUP INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 58-0971455
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
4900 GEORGIA-PACIFIC CENTER, ATLANTA, GEORGIA 30303
(ADDRESS AND ZIP CODE OF PRINCIPAL EXECUTIVE OFFICES)
(404) 658-9000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Certain information concerning the executive officers of The Actava
Group Inc. (the "Company") is set forth in Part I of the Company's Annual
Report on Form 10-K for the year ended December 31, 1994 and is incorporated
herein by reference.
MEMBERS OF THE BOARD OF DIRECTORS
The following is a brief description of the business experience for at
least the past five years of the current members of the Board of Directors of
the Company:
JOHN E. ADERHOLD, age 69, has been Chairman of Winter Properties,
Inc., a real estate development company, since May 1994. From December 1992
until May 1994, Mr. Aderhold served as Co-Chairman of the Corporation of
Olympic Development in Atlanta ("CODA"). He served as Vice Chairman of and a
consultant to Intermet Corporation (the foundry division) headquartered in
Atlanta, Georgia from March 1992 until he joined CODA in December 1992. From
1967 until joining Intermet, Mr. Aderhold served as President, and in 1989
became Chairman and Chief Executive Officer, of the Rayloc Division of Genuine
Parts Company. He is currently a director of Aaron Rents, Inc., American
Business Products, Fredrica Bank & Trust Company, and Lanier Bank & Trust
Company. Mr. Aderhold has served as a director of the Company since January
18, 1993, and is Chairman of the Company's Audit Committee and a member of the
Compensation Committee.
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MICHAEL E. CAHR, age 55, is President and Chief Executive Officer of
Allscrips Pharmaceuticals, Inc., a privately-owned company engaged in the
distribution of pharmaceutical products. He has served in this position since
June 1994. Between 1987 and June 1994, Mr. Cahr served as Venture Group
Manager for Allstate Venture Capital, a division of Allstate Insurance Company.
He is also a director of Triton Group Ltd., LifeCell Corporation, Optek
Technologies, Inc., and several privately owned companies. Mr. Cahr was
elected to the Board of Directors of the Company on March 15, 1994 and is a
member of the Audit Committee.
JOHN M. DARDEN, III, age 55, is Chairman and Chief Executive Officer
of Sands & Company, Inc. ("Sands"), a privately-held company in the food
service business headquartered in Atlanta, Georgia. Mr. Darden joined Sands in
1961 and has served in his current position since 1970. He is Chairman of the
Company's Compensation Committee and is a member of the Audit Committee. Mr.
Darden has served as a director of the Company since March 16, 1992.
JOHN P. IMLAY, JR., age 58, has served since 1990 as Chairman of Dun &
Bradstreet Software Services, Inc., an application software company located in
Atlanta, Georgia. Mr. Imlay is the former Chairman of Management Science
America, a mainframe applications software company which he founded in the
1960's. Management Science America was acquired by Dun & Bradstreet Software
Services, Inc. in 1990. Mr. Imlay is also a director of the Atlanta Falcons, a
National Football League team, and The Gartner Group. Mr. Imlay is a
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member of the Compensation Committee. He has served as a director of the
Company since January 18, 1993.
CLARK A. JOHNSON, age 64, has been a director of the Company since
April 27, 1990. He has served as Chairman and Chief Executive Officer of Pier
1 Imports, Inc., a specialty retailer of decorative home furnishings, since
March 1984. Mr. Johnson is a director of Albertson's Inc., Anacomp, Inc.,
Heritage Media Corporation, InterTAN, Inc., and Pier 1 Imports, Inc. He is a
member of the Company's Executive Committee.
ANTHONY F. KOPP, age 62, has been President and Chief Executive
Officer of Newport Development Corporation since November 1985. Newport
Development Corporation, located in Orlando, Florida, owns and operates mobile
home parks in the Orlando area and maintains an equipment leasing division. He
has been a director of the Company since February 1991 and is a member of the
Audit Committee.
RICHARD NEVINS, age 47, is President of Richard Nevins & Associates, a
financial advisory firm founded by Mr. Nevins in January 1992. From 1990
until January 1992, Mr. Nevins was a Managing Director at Smith, Barney,
Harris, Upham & Co., Inc. He is a director of Fruehauf Trailer Corporation and
Ampex Corporation. Mr. Nevins was elected to the Company's Board of Directors
on July 19, 1993 and is a member of the Executive Committee and the
Compensation Committee.
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JOHN D. PHILLIPS, age 52, was elected President and Chief Executive
Officer of the Company on April 19, 1994. He was also elected to the Board of
Directors of the Company and to the Executive Committee on the same date. Mr.
Phillips served as Chief Executive Officer of Resurgens Communications Group,
Inc. ("Resurgens") from May 1989 until Resurgens was merged with Metromedia
Communications Corporation and LDDS Communications, Inc. in September 1993.
Mr. Phillips served as President and Chief Operating Officer of Advanced
Telecommunications Corporation from June 1985 until October 1988. He is a
director of Restor Industries, Inc. and Roadmaster Industries, Inc. Mr.
Phillips and the Company are parties to an Employment Agreement containing the
terms of Mr. Phillips' employment by the Company. See "AGREEMENT WITH JOHN D.
PHILLIPS."
CARL E. SANDERS, age 69, is engaged in the private practice of law as
the Chairman of Troutman Sanders, a law firm located in Atlanta, Georgia. He
has been a director of the Company since 1967, except for a one-year period
from April 1970 to April 1971. Mr. Sanders is a former Governor of the State
of Georgia and is a director of Carmike Cinemas, Inc., Norrell Corporation,
Healthdyne, Inc., and Roadmaster Industries, Inc. Mr. Sanders is Chairman of
the Company's Executive Committee.
Triton Group Ltd. ("Triton") owns approximately 25.5% of the
outstanding shares of the Company's Common Stock. The Company and Triton are
parties to an Amended and Restated Stockholder Agreement dated as of June 25,
1993 (the "Stockholder Agreement") pursuant to which the Company and Triton
agreed that the Board of Directors of the Company
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would consist of not more than nine directors, two of whom shall be designated
by Triton. Two of the individuals currently serving on the Board of Directors
were designated by Triton. They are Mr. Nevins, who was elected to the Board
of Directors on July 19, 1993, and Mr. Cahr, who was elected to the Board of
Directors on March 15, 1994. In addition, under the Stockholder Agreement,
Triton has agreed to vote in favor of the Company's nominees for the Board of
Directors as long as any amount remains outstanding under a loan made by the
Company to Triton. See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."
CERTAIN LEGAL PROCEEDINGS
Certain members of the Board of Directors of the Company are
defendants in a lawsuit pending since 1991 in the Chancery Court for New Castle
County, Delaware under the style In re Fuqua Industries, Inc. Shareholder
Litigation, Civil Action No. 11974. In addition, all of the current members of
the Board of Directors are defendants in a lawsuit filed on September 23, 1994
in the Chancery Court for New Castle County, Delaware under the style James F.
Sweeney, Trustee of Frank Sweeney Defined Benefit Pension Plan Trust v. John D.
Phillips, et al., Civil Action No. 13765. For a description of these lawsuits,
see Item 3 of Part 1 of the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994.
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COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than 10% of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission and the New York Stock Exchange
initial reports of ownership and reports of changes in ownership of the
Company's Common Stock and other equity securities of the Company. Officers,
directors and greater than 10% stockholders are required by the regulations of
the Securities and Exchange Commission to furnish the Company with copies of
all reports that they file under Section 16(a). To the Company's knowledge,
based solely on a review of the copies of such reports furnished to the Company
and written representations that no other reports were required, all Section
16(a) filing requirements applicable to the Company's officers, directors and
greater than 10% beneficial owners were complied with by such persons during
the fiscal year ended December 31, 1994, except that Mr. Aderhold failed to
file timely reports with respect to his purchase of (i) 1,000 shares of the
Company's Common Stock in March 1994, (ii) 620 shares of the Company's Common
Stock in May 1994, and (iii) 1,000 shares of the Company's Common Stock in
September 1994.
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ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the compensation paid to or accrued for
each named executive officer for services rendered to the Company and its
subsidiaries during the fiscal years ending December 31, 1992, 1993 and 1994:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
-----------------------
ANNUAL COMPENSATION AWARDS
--------------------------------------------- --------
NUMBER OF
OTHER SECURITIES
NAME AND ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION($)(1) STOCK OPTIONS (#) COMPENSATION ($)(2)
- ------------------ ---- ---------- --------- ------------------ ----------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
John D. Phillips(3) 1994(4) $438,289 $438,289 -- 300,000 $13,336
President and Chief
Executive Officer
Frederick B. 1994 $274,992 $165,000 -- 95,000 $ 4,435
Beilstein, III 1993 $269,783 $ 41,250 -- 19,100 $ 4,390
Senior Vice 1992 $257,797 $ 44,625 -- 20,000 $ 4,344
President,
Treasurer and Chief
Financial Officer
Walter M. Grant 1994 $237,500 $142,500 -- 95,000 $12,623
Senior Vice 1993(5) $110,048 $ 16,875 -- 20,000 $44,645
President,
General Counsel
and Secretary
W. Tod Chmar 1994(4) $164,801 $ 98,881 -- 70,000 $ 6,866
Senior Vice President
Charles R. 1994 $624,984 -0- -- 50,000 $33,572
Scott(6) 1993 $624,984 $ 93,750 -- 45,500 $46,975
Former President 1992 $624,984 $ 75,000 -- 40,000 $25,770
and Chief
Executive Officer
</TABLE>
- ---------------
(1) The Company provides perquisites and other personal benefits
to the executive officers of the Company. The value of the perquisites and
benefits provided to each executive officer during 1992, 1993 and 1994 did not
exceed the lesser of $50,000 or 10% of such officer's salary plus annual bonus.
(2) The amounts in this column include (i) premium payments paid
by the Company on behalf of its executive officers under life insurance
policies providing death benefits to the designated beneficiaries of the
executive officers, (ii) a payment of $13,336 made by the Company to Mr.
Phillips in 1994 in lieu of his
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participation in the life insurance programs maintained by the Company for its
executive officers, (iii) matching contributions made by the Company under its
Employees Stock Purchase Plan totaling $4,917 in 1992 for the benefit of Mr.
Scott, $8,000 and $3,333 in 1993 for the benefit of Messrs. Scott and Grant,
respectively, and $8,000, $5,000 and $4,582 in 1994 for the benefit of Messrs.
Scott, Grant, and Chmar, respectively, (iv) matching contributions of $2,310
made by the Company in 1994 for the benefit of Mr. Grant under a 401(k) savings
plan sponsored by a subsidiary of the Company, and (v) relocation allowances of
$15,845 and $40,000 provided by the Company to Mr. Scott and Mr. Grant,
respectively, in 1993. Under the Company's group universal life insurance
program, each of the Company's executive officers is entitled to own $500,000
of universal life insurance on which the Company pays the premiums. The
Company made premium payments of (i) $12,180 in each of the years 1992, 1993
and 1994 on behalf of Mr. Scott, (ii) $4,200 in each of the years 1992, 1993
and 1994 on behalf of Mr. Beilstein, (iii) $1,312 in 1993 and $5,080 in 1994 on
behalf of Mr. Grant, and (iv) $2,159 in 1994 on behalf of Mr. Chmar. In
addition to the universal life insurance program, the Company also made premium
payments for term life insurance policies of (i) $8,673 in 1992, $10,950 in
1993, and $13,392 in 1994 on behalf of Mr. Scott, (ii) $144 in 1992, $190 in
1993, and $235 in 1994 on behalf of Mr. Beilstein, (iii) $233 in 1994 on behalf
of Mr. Grant, and (iv) $125 in 1994 on behalf of Mr. Chmar.
(3) Mr. Phillips was elected President and Chief Executive Officer
of the Company on April 19, 1994. See "AGREEMENT WITH JOHN D. PHILLIPS."
(4) The amounts shown for 1994 reflect less than a full year of
compensation for Messrs. Phillips and Chmar, both of whom were employed by the
Company on April 19, 1994.
(5) The amounts shown for 1993 reflect less than a full year of
compensation for Mr. Grant, who was employed by the Company on July 6, 1993.
(6) Mr. Scott served as President and Chief Executive Officer of
the Company from February 1991 until April 19, 1994. He resigned as President
and Chief Executive Officer and as a director of the Company on April 19, 1994
but continued to serve as a Senior Officer of the Company at the same salary
until December 31, 1994. See "AGREEMENT WITH CHARLES R. SCOTT."
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table contains information concerning stock options and
limited stock appreciation rights ("SARs") granted by the Company during the
fiscal year ended December 31, 1994:
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<TABLE>
<CAPTION>
OPTION AND SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- --------------------------------------------------------------------------------------- ---------------------------
(A) (B) (C) (D) (E) (F) (G)
% OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/ EMPLOYEES OR BASE
SARS IN FISCAL PRICE EXPIRATION
GRANTED(#) YEAR ($/SH) DATE 5%($)(1) 10%($)(1)
---------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
John D. Phillips(2) 300,000 43% $6.3750 4/18/01 778,500 1,814,400
Frederick B. Beilstein, III(3) 25,000 4% $8.3125 1/18/04 130,700 331,200
70,000 10% $8.6875 6/2/04 382,480 969,220
Walter M. Grant(3) 25,000 4% $8.3125 1/18/04 130,700 331,200
70,000 10% $8.6875 6/2/04 382,480 969,220
W. Tod Chmar(3) 70,000 10% $8.6875 6/2/04 382,480 969,220
Charles R. Scott(4) 50,000 7% $8.3125 12/31/96 261,400 662,400
</TABLE>
- ---------------
(1) The total value of all outstanding shares of the Company's Common
Stock, based on the last sale price on the New York Stock Exchange on April 25,
1995 of $9.375, was $162.4 million. If the Common Stock appreciates to the
potential realizable values shown in the table, the value of the Company's
Common Stock held by all stockholders will increase by $82.8 million and $228
million, respectively, from April 25, 1995 through June 2, 2004. There can be
no assurance that such increases in value will occur.
(2) The options for Mr. Phillips were granted in connection with his
employment as President and Chief Executive Officer of the Company on April 19,
1994. The exercise price for these options represents the last sale price of
the Company's Common Stock on the New York Stock Exchange on April 11, 1994,
the day before the Company announced that it had received an investment
proposal from Mr. Phillips. The options are fully vested and may be exercised
in whole or in part at any time on or prior to the expiration date of the
options on April 18, 2001. Subject to certain limitations relating to
compliance with the securities laws, the options are transferable in whole or
in part by Mr. Phillips. Moreover, the options will not be affected by any
change in the employment status of Mr. Phillips. The purchase price of the
shares subject to the options may be paid (i) in cash, or (ii) by check payable
to the Company. If any amount is payable by the Company for income tax
withholding upon exercise of the options, the number of shares of the Company's
Common Stock delivered to the exercising holder of the options will be
appropriately reduced to reimburse the Company for such amount unless such
holder has deposited such amount in cash with the Company. See "AGREEMENT WITH
JOHN D. PHILLIPS."
(3) The options for Messrs. Beilstein, Grant, Chmar and Scott were
granted under the Company's 1989 Stock Option Plan. The exercise price of each
option was equal to the market price on the date of grant. Each option becomes
exercisable in cumulative increments of 25% of the total number of shares
subject to the option six months from the date of grant and on the first,
second, and third anniversaries of the date of grant. The options each have a
term of ten years from the date of grant and are not transferrable otherwise
than by will or the laws of descent and distribution. Except as provided in
each of the option agreements, the options may not be exercised unless the
optionee continues to be employed by the Company or one of its affiliates or
subsidiaries. In the event of the termination of employment of any of the
optionees that is either (i) for "cause" (as defined in each of the option
agreements) or (ii) voluntary on the part of such optionee and without the
written consent of the Company, any options granted to such optionee, to the
extent not theretofore exercised, shall forthwith terminate. The purchase
price of the shares subject to these options may be paid (i) in cash, (ii) by
check payable to the Company,
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(iii) through the surrender of previously owned shares of the Company's Common
Stock, or (iv) by surrendering a portion of any such option equal to the
difference between the fair market value of the stock and the option exercise
price. The optionees may also elect to have a portion of the shares subject to
any such option withheld by the Company to meet any income tax withholding
payments that may be due in connection with any option exercise.
(4) The options for Mr. Scott were granted under the Company's 1989 Stock
Option Plan while Mr. Scott was serving as President and Chief Executive
Officer of the Company. In connection with his resignation as President and
Chief Executive Officer of the Company, the Board of Directors of the Company
agreed that all options previously granted by the Company to Mr. Scott would
become fully vested and exercisable as of December 31, 1994 and would expire on
December 31, 1996. See "AGREEMENT WITH CHARLES R. SCOTT."
OPTION AND SAR EXERCISES AND HOLDINGS
The following table sets forth information with respect to the named
executive officers concerning the exercise of options or SARs during the last
fiscal year and the number of unexercised options and SARs held as of the end
of the fiscal year.
FY End Value -- $9.125
<TABLE>
<CAPTION>
AGGREGATED OPTION AND SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION AND SAR VALUES
VALUE OF UNEXERCISED IN
NUMBER OF SECURITIES UNDERLYING THE MONEY
VALUE REALIZED($) UNEXERCISED OPTIONS/SARS OPTIONS/SARS AT FISCAL
SHARES (MARKET PRICE AT AT FISCAL YEAR END(#) YEAR END($)
ACQUIRED EXERCISE LESS -------------------------- -------------------------
NAME ON EXERCISE(#) EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John D. Phillips -0- -0- 300,000 -0- $825,000 -0-
Frederick B. Beilstein, III -0- -0- 59,550 89,550 $ 12,734 $38,203
Walter M. Grant -0- -0- 33,750 81,250 $ 15,234 $40,703
W. Tod Chmar -0- -0- 17,500 52,500 $ 7,656 $22,969
Charles R. Scott -0- -0- 135,500 -0- $ 40,625 -0-
</TABLE>
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PENSION PLANS
The following table shows the estimated pension benefits payable to a
covered participant at normal retirement age under the Company's qualified
defined benefit pension plan and nonqualified supplemental pension plan based
on remuneration that is covered under the plans and based on the participant's
years of service with the Company and its subsidiaries. The Company's
nonqualified supplemental pension plan provides benefits that would otherwise
be denied participants by reason of certain Internal Revenue Code limitations
on qualified plan benefits and provides certain other supplemental pension
benefits to certain of the Company's executive officers and highly compensated
employees.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
YEARS OF SERVICE
REMUNERATION 15 20 25 30 40 OR MORE
------------ -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
$125,000 $ 37,500 $ 50,000 $ 56,250 $ 62,500 $ 75,000
150,000 45,000 60,000 67,500 75,000 90,000
175,000 52,500 70,000 78,750 87,500 105,000
200,000 60,000 80,000 90,000 100,000 120,000
225,000 67,500 90,000 101,250 112,500 135,000
250,000 75,000 100,000 112,500 125,000 150,000
300,000 90,000 120,000 135,000 150,000 180,000
400,000 120,000 160,000 180,000 200,000 240,000
450,000 135,000 180,000 202,500 225,000 270,000
500,000 150,000 200,000 225,000 250,000 300,000
600,000 180,000 240,000 270,000 300,000 360,000
700,000 210,000 280,000 315,000 350,000 420,000
800,000 240,000 320,000 360,000 400,000 480,000
900,000 270,000 360,000 405,000 450,000 540,000
</TABLE>
A participant's compensation covered by the Company's pension plan and
supplemental pension plan is his or her average annual compensation for the
five calendar plan years during the last ten years of the participant's career
for which such average is the highest or, in the case of a participant who has
been employed for less than five full calendar years, the period of his
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or her employment with the Company and its subsidiaries ("covered
compensation"). A participant's covered compensation generally means the total
taxable compensation required to be reported on the participant's Form W-2 for
income tax purposes, except that this amount (excluding bonuses) is annualized
for periods covering less than a full calendar year. This amount for the named
executive officers as of the end of the last calendar year is: Mr. Phillips:
$657,600; Mr. Beilstein: $332,900; Mr. Grant: $263,500; Mr. Chmar: $246,400;
Mr. Scott: $764,800. The estimated years of service for each named executive
as of February 28, 1995 is as follows: Mr. Phillips: zero years; Mr. Beilstein:
three years; Mr. Grant: one year; Mr. Chmar: zero years; Mr. Scott: four years.
Benefits shown are computed as a straight life annuity beginning at age 62.
Generally, a participant earns retirement benefits at the rate of 2% of his
covered compensation for the first 20 years of service and 1% for each
additional 20 years of service. In 1992, the supplemental pension plan was
amended to provide that participants over the age of 62 who have not otherwise
reached the maximum benefit would earn benefits at the rate of 5% of covered
compensation for each year of service after age 62. Participants become vested
in their retirement benefits after completing at least five years of service or
attaining age 50 or upon retirement after age 62 with at least one year of
service. Based on these provisions and the number of years of service
completed, none of Messrs. Phillips, Beilstein, Grant or Chmar had a vested
retirement benefit as of February 28, 1995. The annual vested retirement
benefit for Mr. Scott as of February 28, 1995 was $143,256. A participant's
covered compensation for purposes of the pension plan differs from compensation
reported in the Summary Compensation Table (the "Table") in that (i) covered
compensation includes certain taxable employee benefits not required to be
reported in the Table, and (ii) covered compensation
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includes all compensation received by the executive during the year (regardless
of when it was earned), whereas the Table includes only compensation earned
during the year.
COMPENSATION OF DIRECTORS
During 1994, each director of the Company who was not employed by the
Company (the "Non-Employee Directors") received a monthly retainer plus a
separate attendance fee for each meeting of the Board of Directors or a
committee of the Board of Directors in which he participated. The monthly
retainer was $2,000 in cash for the period from January 1, 1994 through March
31, 1994. On March 15, 1994, the Board of Directors adopted a proposal, which
was subject to stockholder approval, to eliminate the monthly cash retainer
previously paid to all Non-Employee Directors and to issue to each Non-Employee
Director, in lieu of the monthly cash retainer, 300 shares of the Company's
Common Stock for each month of service as a director beginning on April 1,
1994. The closing sales price for the Company's Common Stock on March 15, 1994
was $6.875 as reported by the New York Stock Exchange. It was anticipated that
the proposal by the Board of Directors to issue shares of the Company's Common
Stock in lieu of the monthly cash retainer would be submitted to the Company's
stockholders at the 1995 Annual Meeting of Stockholders. On February 27, 1995,
the Board of Directors rescinded the proposal to issue shares of the Company's
Common Stock in lieu of the monthly cash retainer and agreed that the Company
would pay a fee of $30,000 in cash to each Non-Employee Director for his
service as a director during the period from April 1, 1994 through March 31,
1995. The cash fee of $30,000 was paid to each Non-Employee Director in
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lieu of 3,600 shares of the Company's Common Stock to which each Non-Employee
Director would have been entitled under the proposal adopted on March 15, 1994.
As of February 27, 1995, the market value of 3,600 shares of the Company's
Common Stock was $36,450 based on the closing sales price for the Company's
Common Stock on such date as reported by the New York Stock Exchange.
Effective as of April 1, 1995, the Board of Directors has reinstated the
monthly cash retainer of $2,000 for each Non-Employee Director.
In addition to the retainer fees paid to the Non-Employee Directors as
described above, each Non-Employee Director also receives an attendance fee for
each meeting of the Board of Directors or a committee of the Board of Directors
in which he participates. During 1994, the attendance fees were $1,200 for
each meeting of the Board of Directors attended by a Non-Employee Director in
person and $500 for each meeting of the Board of Directors in which a
Non-Employee Director participated by conference telephone call. Members of
committees of the Board of Directors are paid $500 for each meeting attended if
the committee meeting is held in conjunction with a meeting of the full Board
of Directors and $1,200 if the committee meeting is held separately. The
attendance fees were not changed in 1994 and remain unchanged for 1995.
Non-Employee Directors also are reimbursed for their expenses in attending
meetings and engaging in other business activities for the Company.
Non-Employee Directors also are entitled to receive options to
purchase shares of the Company's Common Stock under the Company's 1991
Non-Employee Director Stock Option
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Plan (the "Director Plan"). Certain amendments to the Director Plan were
approved at the 1993 Annual Meeting of Stockholders. As amended, the Director
Plan provides that:
(1) Each Non-Employee Director on August 3, 1992 was granted an
option to purchase 10,000 shares of the Company's Common Stock at an exercise
price of $11.875, the closing price of the Common Stock on the trading day
immediately preceding the date of grant. Options granted to these Non-Employee
Directors became fully vested as to all 10,000 shares upon approval of the
amendments to the Director Plan at the 1993 Annual Meeting of Stockholders.
(2) Each person who becomes a Non-Employee Director of the Company
after August 3, 1992 will receive an option for 10,000 shares of the Company's
Common Stock on the day he is elected as a director at an exercise price equal
to the closing price of the Common Stock on the trading day preceding his
election. Options granted to these Non-Employee Directors become fully vested
and are exercisable as to all 10,000 shares on March 31 in the year after the
date the Non-Employee Director is elected if the Company has net income for the
year in which the Non-Employee Director is elected or earnings equal to or
better than budgeted results for such year. Options were granted under the
Director Plan to each of Messrs. Aderhold, Imlay and Nevins in 1993 and to Mr.
Cahr in 1994, but all of these options have expired because the Company did not
have net income or earnings equal to or better than budgeted results for 1993
or 1994.
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<PAGE> 17
Options granted under the Director Plan have a term of ten years, and
the Director Plan will be terminated on June 27, 2001.
The following table shows the amount of options held by Non-Employee
Directors under the Director Plan as of April 25, 1995:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND POSITION SUBJECT TO OPTIONS(1)
----------------- ------------------
<S> <C>
John M. Darden, III . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Clark A. Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Anthony F. Kopp . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Carl E. Sanders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
All Non-Employee Directors . . . . . . . . . . . . . . . . . . . . . . . 40,000
</TABLE>
- ---------------
(1) All of these options have an exercise price of $11.875 per
share.
During the first quarter of 1992, the Company implemented a group
medical plan for Non-Employee Directors which provides medical coverage at
group premium rates to active Non-Employee Directors electing such coverage and
to any Non-Employee Director who retires from the Board of Directors after
attaining age 65 and who either has participated in the plan for the entire
period that the individual has been a director since March 1, 1992 or has
participated in the plan for the three consecutive years immediately prior to
the individual's retirement as a director. The medical plan currently pays for
100% of a Non-Employee Director's single coverage premium and between 25% and
50% of the dependent coverage premium. Mr. Kopp is the only Non-Employee
Director who is participating in the medical plan.
16
<PAGE> 18
AGREEMENT WITH JOHN D. PHILLIPS
On April 19, 1994, Mr. Phillips was elected President and Chief
Executive Officer of the Company. He was also elected to the Board of
Directors of the Company. Mr. Phillips succeeded Mr. Scott, who had served as
the Company's President and Chief Executive Officer since 1991. In conjunction
with the election of Mr. Phillips, Renaissance Partners, an investment
partnership in which Mr. Phillips serves as a general partner, purchased from
the Company 700,000 shares of the Company's Common Stock for $4,462,500,
representing a price of $6.375 per share. This price represents the last sale
price of the Company's Common Stock on the New York Stock Exchange on April 11,
1994, the day before the Company announced that it had received an investment
proposal from Mr. Phillips. The Company has entered into a Registration Rights
Agreement with Renaissance Partners pursuant to which the Company has agreed to
register with the Securities and Exchange Commission the 700,000 shares of
Common Stock purchased by Renaissance Partners.
Mr. Phillips and the Company are parties to an Employment Agreement
dated April 19, 1994 under which the Company agreed to employ Mr. Phillips as
its President and Chief Executive Officer until December 31, 1996. The
Employment Agreement provides that Mr. Phillips will be entitled to receive a
base salary at an annual rate of $625,000 per year, which is the same base
salary received by Mr. Scott during his term as President and Chief Executive
Officer of the Company. Mr. Phillips also is entitled to participate in the
Company's Senior Officer Bonus Plan and to receive other benefits provided by
the Company to its senior
17
<PAGE> 19
corporate officers. Both the Company and Mr. Phillips have the right to
terminate the Employment Agreement at any time. If the Company terminates the
Employment Agreement without cause (as defined in the Employment Agreement),
then the Company will be required to continue to pay Mr. Phillips' base salary
and other benefits through December 31, 1996. If the Company terminates the
Employment Agreement with cause or if Mr. Phillips terminates the Employment
Agreement, then Mr. Phillips will be entitled to receive his base salary and
other benefits only through the date of termination.
In connection with his employment, Mr. Phillips also received from the
Company an option (the "Option") to purchase 300,000 shares of the Company's
Common Stock at a price of $6.375 per share. The exercise price for the Option
represents the last sale price of the Company's Common Stock on the New York
Stock Exchange on April 11, 1994, the day before the Company announced that it
had received an investment proposal from Mr. Phillips. The Option may be
exercised at any time until the Option terminates on April 18, 2001. Mr.
Phillips has the right to transfer the Option in whole or in part at any time.
The Company has entered into a Registration Rights Agreement with Mr. Phillips
pursuant to which the Company has agreed to register with the Securities and
Exchange Commission any shares purchased upon exercise of the Option.
18
<PAGE> 20
POST-EMPLOYMENT CONSULTING AGREEMENTS
The Company has entered into Post-Employment Consulting Agreements
with each of Messrs. Beilstein and Grant and with Michael A. Lustig, the
Company's Vice President - Corporate Development. These agreements provide
that if an executive's employment with the Company is terminated by the Company
(other than a termination for cause) or if the executive's employment is
terminated by the executive for "good reason", then the Company will retain the
executive as a consultant for a period of two years following the date of
termination of his employment. An executive may terminate his employment for
"good reason" in the event of (i) a reduction in his base salary or benefits
other than an across-the-board reduction involving similarly situated
employees, (ii) the relocation of his full-time office to a location greater
than 50 miles from the Company's current corporate office, or (iii) a reduction
in his corporate title. The agreements provide that the Company, in exchange
for the executive's post-employment consulting services, will pay a monthly
consulting fee to the executive in an amount equal to the executive's monthly
base salary at the time of the termination of his employment. The agreements
also provide for the continuation of certain medical and other employee
benefits during the two-year consulting period. The consulting payments to
which a terminated executive is otherwise entitled under the agreements will be
reduced in the event the terminated executive has "earned income" (as defined
in the agreements) or retirement income under the Company's retirement plans
during the two-year consulting period.
19
<PAGE> 21
AGREEMENT WITH CHARLES R. SCOTT
Mr. Scott resigned as President and Chief Executive Officer and as a
director of the Company on April 19, 1994. At the same time of his
resignation, the Board of Directors of the Company agreed that Mr. Scott would
continue to serve as a Senior Officer of the Company at his then current salary
until December 31, 1994 and that Mr. Scott thereafter would serve as a
consultant to the Company for a period of two years under a Post-Employment
Consulting Agreement between the Company and Mr. Scott. The terms of the
Post-Employment Consulting Agreement between the Company and Mr. Scott were
substantially the same as the terms of the Post-Employment Consulting
Agreements between the Company and each of Messrs. Beilstein Grant and Lustig,
respectively, as described above. On July 19, 1994, the Company and Mr. Scott
entered into an Employment Agreement effective as of April 19, 1994. The
Employment Agreement replaced and superseded the Post-Employment Consulating
Agreement between the Company and Mr. Scott. Under the terms of the Employment
Agreement, Mr. Scott served as a Senior Officer of the Company during the
period beginning on April 19, 1994 and ending on December 31, 1994 (the
"Officer Period") and will continue to serve as an employee of the Company
during the period from January 1, 1995 through December 31, 1996 (the
"Transition Period"). The Employment Agreement provides that Mr. Scott would
continue to receive his annual base salary of $625,000 during both the Officer
Period and the Transition Period. This is the same base salary that the
Company was paying to Mr. Scott when he was serving as the Company's President
and Chief Executive Officer. The Employment Agreement further provided that
Mr. Scott would receive various benefits during the Officer Period but that
these
20
<PAGE> 22
benefits would not be provided during the Transition Period and that Mr. Scott
would not be entitled to receive a bonus for 1994. In addition, the Employment
Agreement provided that all stock options previously granted by the Company to
Mr. Scott would become fully vested and exercisable as of December 31, 1994 and
would expire on December 31, 1996. Mr. Scott's retirement benefits from the
Company are calculated as if Mr. Scott had retired on December 31, 1994.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT.
OWNERSHIP OF COMPANY STOCK BY CERTAIN HOLDERS
The following table sets forth, as of the close of business on April
25, 1995, information as to those stockholders known to the Company to be the
beneficial owners of more than 5% of the outstanding shares of the Company's
Common Stock (based solely upon filings by each of such stockholders with the
Securities and Exchange Commission on Schedule 13D:
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
NAME AND ADDRESS ON APRIL 25, 1995 PERCENT OF CLASS
---------------- ------------------ ----------------
<S> <C> <C>
Triton Group Ltd.(1) . . . . . . . . . . . . . . . . . . . . 4,413,598 25.5%
550 West C
18th Floor
San Diego, California 92101
John D. Phillips(2) . . . . . . . . . . . . . . . . . . . . . 1,000,000 5.8%
945 E. Paces Ferry Road
Suite 2210, Resurgens Plaza
Atlanta, Georgia 30326
</TABLE>
- ---------------
21
<PAGE> 23
(1) Mr. Nevins serves as a financial advisor to Triton, and Mr. Cahr
serves as a director of Triton. Messrs. Nevins and Cahr were designated by
Triton to fill the two positions on the Company's Board of Directors that
Triton is entitled to fill under the Stockholder Agreement. See also "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS." Mr. Nevins and Mr. Cahr disclaim
beneficial ownership of the Common Stock owned by Triton.
(2) Mr. Phillips was elected President, Chief Executive Officer and a
director of the Company on April 19, 1994. See "AGREEMENT WITH JOHN D.
PHILLIPS." The shares shown in the table as beneficially owned by Mr. Phillips
include 700,000 shares owned by Renaissance Partners, a Georgia general
partnership in which Mr. Phillips is a general partner, and 300,000 shares
subject to purchase by Mr. Phillips within the next 60 days pursuant to the
exercise of a stock option. See "AGREEMENT WITH JOHN D. PHILLIPS." Mr.
Phillips disclaims beneficial ownership of the shares owned by Renaissance
Partners except to the extent of his interest in Renaissance Partners.
On April 12, 1995, the Company, Orion Pictures Corporation ("Orion"),
MCEG Sterling Incorporated ("Sterling"), and Metromedia International
Telecommunications, Inc. ("MITI") entered into an Agreement and Plan of Merger
(the "Merger Agreement") providing for the merger of each of Orion, Sterling
and MITI into and with the Company (the "Mergers"). If the Mergers are
consummated, the Company will be renamed "Metromedia International Group, Inc."
On April 12, 1995, the Company also entered into a Share Exchange Agreement
(the "Share Exchange Agreement") with Metromedia Company ("Metromedia") and
certain of its affiliates (together with Metromedia, the "Exchanging Holders").
The Exchanging Holders are the principal stockholders of both Orion and MITI.
Upon consummation of the transactions contemplated by the Merger Agreement and
the Share Exchange Agreement, the Exchanging Holders will own approximately 31%
(assuming that the Mergers had been consummated on March 31, 1995) of the
common equity of the Company and will collectively be entitled to control
approximately 57.4% (assuming that the Mergers had been consummated on March
31, 1995) of the common voting power of the Company. As a result, the Merger
Agreement and the Share Exchange Agreement represent an arrangement that may
result in a change of control
22
<PAGE> 24
of the Company. The Merger Agreement and the Share Exchange Agreement were
approved by the Board of Directors of the Company at a meeting held on April
12, 1995.
The Mergers were originally announced on August 31, 1994. On February
15, 1995, Triton filed with the Securities and Exchange Commission an amendment
to its report on Schedule 13D relating to its ownership of the Company's Common
Stock (the "Schedule 13D Amendment"). In the Schedule 13D Amendment, Triton
indicated that it opposed the Mergers and encouraged Actava's Board of
Directors and management to evaluate other alternative business strategies and
to exercise their obligations diligently under Delaware law relating to the
sale of the Company.
On March 24, 1995, TAC, Inc., a Delaware corporation ("TAC"), filed
with the Securities and Exchange Commission a Schedule 14D-1 Tender Offer
Statement (the "Schedule 14D-1") and commenced a tender offer (the "Offer") to
purchase for $1.80, net, in cash all outstanding shares of common stock
(including the associated common stock purchase rights) of Triton. On April
24, 1995, TAC announced that it had raised the consideration being offered for
all of the outstanding shares of Triton to $2.02 per share and that it was
extending the Offer at the revised price until May 5, 1995. TAC is a company
newly formed in order to commence the Offer by Mr. Phillips and Met Tac Inc.,
a company owned by John W. Kluge, as trustee, and Stuart Subotnick. Mr. Kluge
is the Chairman, Chief Executive Officer and President of Metromedia and
Chairman of Orion and MITI. Mr. Subotnick is Executive Vice President of
Metromedia and Vice Chairman of Orion and MITI. Consummation of the Offer is
subject to
23
<PAGE> 25
a number of conditions, but it is not subject either to obtaining financing or
to the consummation of the Mergers. The purpose of the Offer is to acquire
control of, and the entire equity interest in, Triton. Upon consummation of
the Offer, TAC has stated that it will cause the shares of the Company's Common
Stock owned by Triton to be voted in favor of the Mergers. In addition, TAC
has stated that it intends to have Triton consummate a merger or other business
combination with TAC or an affiliate of TAC as soon as practicable following
the consummation of the Offer.
TAC requested the Board of Directors of the Company to approve,
pursuant to Section 203(a)(1) of the Delaware General Corporation Law, the
purchase by TAC, directly or indirectly, of the shares of the Company's Common
Stock held by Triton. On April 12, 1995, the Board of Directors of the Company
approved such purchase after being advised that TAC had agreed that any
"business combination" (as defined in Section 203 of the Delaware General
Corporation Law) between the Company and TAC or Triton following any such
purchase must be approved by a majority of the directors of the Company who are
"disinterested" from TAC or any affiliate of TAC (except the Company).
OWNERSHIP OF COMPANY STOCK BY DIRECTORS AND OFFICERS
The members of the Company's Board of Directors and all directors and
executive officers of the Company as a group have beneficial ownership of the
number of shares of the Company's Common Stock indicated in the following table
and its footnotes. Unless otherwise
24
<PAGE> 26
indicated in the footnotes, each such individual has sole voting and investment
power with respect to the shares set forth in the table.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED ON PERCENT
NAME APRIL 25, 1995 OF CLASS
---- --------------------- --------
<S> <C> <C>
John E. Aderhold . . . . . . . . . . . . . . . . . . . . . . . . 8,900 *
Michael E. Cahr(1) . . . . . . . . . . . . . . . . . . . . . . . -0- *
John M. Darden, III(2) . . . . . . . . . . . . . . . . . . . . . 16,000 *
John P. Imlay, Jr. . . . . . . . . . . . . . . . . . . . . . . . 10,000 *
Clark A. Johnson(2) . . . . . . . . . . . . . . . . . . . . . . 11,000 *
Anthony F. Kopp(2) . . . . . . . . . . . . . . . . . . . . . . . 17,500 *
Richard Nevins(1) . . . . . . . . . . . . . . . . . . . . . . . . 1,000 *
John D. Phillips(3) . . . . . . . . . . . . . . . . . . . . . . 1,000,000 5.8%
Carl E. Sanders(2)(4) . . . . . . . . . . . . . . . . . . . . . 31,497 *
Frederick B. Beilstein, III(2) . . . . . . . . . . . . . . . . . 126,825 *
Walter M. Grant(2)(5) . . . . . . . . . . . . . . . . . . . . . 62,729 *
W. Tod Chmar(2)(5)(6) . . . . . . . . . . . . . . . . . . . . . . 36,411 *
Michael A. Lustig(2)(5) . . . . . . . . . . . . . . . . . . . . . 29,834 *
Charles R. Scott(2)(5) . . . . . . . . . . . . . . . . . . . . . 143,809 *
Directors and Officers as a Group (13 persons)(5)(7) . . . . . . 1,351,696 7.8%
</TABLE>
- ---------------
* Less than one percent.
(1) Excludes shares owned by Triton (which is the beneficial owner
of approximately 25.5% of the outstanding shares of the Company's Common
Stock). Mr. Cahr and Mr. Nevins were designated by Triton to fill the two
positions on the Company's Board of Directors that Triton is entitled to fill
under the Stockholder Agreement. See "OWNERSHIP OF COMPANY STOCK BY CERTAIN
HOLDERS" and "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."
(2) Includes shares subject to purchase within the next 60 days
under the Company's 1989 Stock Option Plan and under the Company's 1991
Non-Employee Director Stock Option Plan.
(3) Includes 700,000 shares owned by Renaissance Partners, a
Georgia general partnership in which Mr. Phillips is a general partner, and
300,000 shares subject to purchase by Mr. Phillips within the next 60 days
pursuant to the exercise of a stock option. See "AGREEMENT WITH JOHN D.
PHILLIPS." Mr. Phillips disclaims beneficial ownership of the shares owned by
Renaissance Partners except to the extent of his interest in Renaissance
Partners.
(4) In addition, Mr. Sanders beneficially owns $25,000 face amount
(less than 1%) of the Company's 6 1/2% Convertible Subordinated Debentures due
in 2002, which are convertible into Common Stock at a conversion price of $41
5/8 per share.
(5) Includes shares allocated to the named executive officer's
account under the Employees Stock Purchase Plan as of February 28, 1995.
25
<PAGE> 27
(6) Excludes 700,000 shares owned by Renaissance Partners, a
Georgia general partnership in which a corporation owned by Mr. Chmar serves as
a general partner.
(7) The number of shares shown for directors and executive
officers as a group includes an aggregate of 551,500 shares which are subject
to purchase by members of the group within the next 60 days pursuant to the
exercise of stock options, but excludes shares beneficially owned by Mr. Scott,
who is not longer an officer or director of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
CERTAIN RELATIONSHIPS BETWEEN THE COMPANY AND DIRECTORS
Mr. Phillips is the sole stockholder of JDP Aircraft II, Inc., a
Georgia corporation ("JDP Aircraft"). On October 21, 1994, the Company and JDP
Aircraft entered into a lease agreement under which JDP Aircraft provides the
Company with the use of a Citation Jet owned by JDP Aircraft. The lease
agreement can be terminated by either party by giving 30 days' notice to the
other party. During 1994, the Company paid $69,445 to JDP Aircraft under the
lease agreement for services provided from October 21, 1994 through January 31,
1995.
Mr. Darden is Chairman and Chief Executive Officer of Sands, a food
service business headquartered in Atlanta. For approximately ten years, Sands
has provided snack bar and vending machine services to the employees of the
Company's Snapper Division in McDonough, Georgia ("Snapper"). During 1994, the
revenue received by Sands from this relationship totalled approximately
$290,000, all of which was paid by employees of Snapper rather than by the
Company. The relationship between Sands and Snapper existed before Mr. Darden
was elected as a director of the Company.
26
<PAGE> 28
Mr. Sanders is Chairman of Troutman Sanders, a law firm which provides
legal services to the Company.
INDEMNIFICATION AGREEMENTS
The Company has entered into indemnification agreements (the
"Indemnification Agreements") with each person who is an officer or director of
the Company. The Indemnification Agreements provide for indemnification of
directors and officers to the full extent authorized or permitted by law. The
Indemnification Agreements also provide for (i) advancement by the Company of
expenses incurred by the director or officer in defending certain litigation,
(ii) the appointment of an independent legal counsel to determine whether the
director or officer is entitled to indemnity after a change in control, and
(iii) the continued maintenance by the Company of the directors' and officers'
liability insurance currently in effect ($5 million of primary coverage and an
excess policy providing $5 million of additional coverage). These
Indemnification Agreements were approved by the stockholders of the Company at
the 1993 Annual Meeting of Stockholders.
INDEBTEDNESS OF MANAGEMENT
During 1991, certain executive officers of the Company purchased
shares of Common Stock from the Company under the Company's Restricted Stock
Plan in exchange for full
27
<PAGE> 29
recourse promissory notes issued to the Company. The outstanding amounts under
these notes (including accrued but unpaid interest) as of April 25, 1995 are
shown below:
<TABLE>
<CAPTION>
RESTRICTED AMOUNT OF
NAME AND TITLE OF STOCK INDEBTEDNESS
EXECUTIVE OFFICER PURCHASED TO COMPANY
- ----------------- --------- ----------
<S> <C> <C>
Frederick B. Beilstein, III . . . . . . . . . . . . . . . . . . . . . . . . 20,000 $254,719
Senior Vice President, Treasurer and Chief Financial Officer
Michael A. Lustig . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 $ 81,334
Vice President -- Corporate Development
</TABLE>
These notes are payable on August 1, 2001 and originally provided for
interest at 9% per annum. In addition, as a condition of his employment, the
Company in 1991 loaned to Mr. Beilstein $117,000, pursuant to a full recourse
promissory note which originally provided for interest at 9% per annum and is
payable on August 1, 2001, to finance his purchase of 10,000 shares of the
Company's Common Stock in an open market transaction. The amount of Mr.
Beilstein's indebtedness to the Company under this note (including accrued but
unpaid interest) was $149,396 as of April 25, 1995. All of the notes described
above were modified in 1993, with the approval of the Compensation Committee,
to provide for interest at the prime rate plus 1/2% per annum.
REDEMPTION OF SHARES HELD BY 5% STOCKHOLDER
During 1994, the Westinghouse Executive Pension Trust Fund
("Westinghouse") owned 1,090,909 shares of the Company's Common Stock (the
"Westinghouse Shares"), which
28
<PAGE> 30
represented approximately 5.9% of the shares then outstanding. The
Westinghouse Shares were issued by the Company on June 8, 1993 in connection
with the Company's acquisition of substantially all of the assets of
Diversified Products Corporation. Simultaneously with the issuance of the
Westinghouse Shares, the Company and Westinghouse entered into a Shareholder
Rights Agreement under which Westinghouse had the right under certain
circumstances to require the Company to purchase the Westinghouse Shares at a
price equal to $11 per share. On February 17, 1995, the Company purchased the
Westinghouse Shares pursuant to the Shareholder Rights Agreement for a price
equal to $11 per share or an aggregate price of $12 million.
RELATIONSHIP WITH TRITON
Triton is the beneficial owner of approximately 25.5% of the
outstanding shares of the Company's Common Stock. See "OWNERSHIP OF COMPANY
STOCK BY CERTAIN HOLDERS." Mr. Scott, the former President and Chief Executive
Officer of the Company, served until February 15, 1993, as Chairman and a
director of Intermark, Inc. (which was merged into Triton on June 25, 1993) and
as Chairman of the Board of Triton. Triton and the Company are parties to a
Stockholder Agreement which, among other things, contains provisions regarding
the composition of the Board of Directors of the Company. Messrs. Nevins and
Cahr were designated by Triton and elected as directors of the Company pursuant
to the Stockholder Agreement. See "DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT."
29
<PAGE> 31
Stockholder Agreement
On May 22, 1989, Triton and the Company entered into a Stockholder
Agreement, as amended (the "Original Stockholder Agreement"), pursuant to which
Triton agreed to certain conditions required by the Board of Directors of the
Company to obtain its approval, pursuant to Section 203(a)(1) of the Delaware
General Corporation Law, for the purchase by Triton of in excess of 15% of the
outstanding shares of the Company's Common Stock in open market or private
purchases. The Original Stockholder Agreement provided that Triton may not
engage, or cause any affiliate of Triton to engage, in any "business
combination" (as defined in Section 203 of the Delaware General Corporation
Law) with the Company without the prior approval of a majority of the directors
of the Company who are "disinterested" from Triton or any affiliate of Triton
(except the Company). The Original Stockholder Agreement further provided that
the Board of Directors of the Company would consist of not less than seven
directors, at least three of whom would be disinterested from Triton, and that
Triton would cause all shares of voting stock of the Company owned by it or any
affiliate to vote for all of the Company's nominees to the Board of Directors.
In October 1992, Intermark and Triton filed petitions for
reorganization under Chapter 11 of the U.S. Bankruptcy Code. On June 4, 1993,
the bankruptcy court approved the Joint Plan of Reorganization of Triton and
Intermark (the "Plan of Reorganization"), and Intermark was merged into Triton
pursuant to the Plan of Reorganization on June 25, 1993. The Original
Stockholder Agreement was amended on June 25, 1993 (the "Stockholder
Agreement") pursuant
30
<PAGE> 32
to the Plan of Reorganization to permit Triton to designate two directors (who
are not officers or employees of Triton) on an expanded nine-member Board of
Directors of the Company as long as Triton continues to own 20% or more of the
outstanding shares of the Company's Common Stock. The Stockholder Agreement
provides that if Triton's ownership of the Company's Common Stock is reduced to
less than 20%, but not less than 10%, then Triton can designate one director,
and if Triton's ownership is reduced to less than 10% of the Common Stock, then
Triton is not entitled to designate any directors. Under the Stockholder
Agreement, Triton is obligated to vote the shares of Common Stock owned by it
in favor of the Company's nominees to the Board of Directors so long as any
obligations are outstanding under the loan made by the Company to Triton. See
"TRITON LOAN" below. In addition, Triton's right to designate any directors
under the Stockholder Agreement terminates and each designated director is
required to resign if Triton directly or indirectly initiates, participates in,
finances or otherwise supports any effort to solicit from other stockholders
proxies or consents for the election of directors of the Company other than the
Company's nominees for the Board of Directors. The Stockholder Agreement
terminates after Triton's obligations under the loan made by the Company to
Triton have been satisfied in full and after Triton is no longer entitled to
designate any of the Company's directors under the Stockholder Agreement. See
"TRITON LOAN."
31
<PAGE> 33
Triton Loan
In November 1991, after an independent review by the Company's
disinterested directors, the Company and Triton entered into a Loan Agreement
(the "Triton Loan Agreement") under which the Company agreed to lend up to $32
million to Triton secured by a pledge of the shares of the Company's Common
Stock owned by Triton (the "Triton Loan"). The Company subsequently advanced
$32 million to Triton under the Triton Loan. In connection with the Triton
Loan, Triton granted to the Company a right of first refusal to purchase the
shares of the Company's Common Stock held by Triton upon a proposed sale of all
or any portion of such shares (voluntary or involuntary) by Triton.
The Triton Loan Agreement was amended effective as of June 25, 1993
pursuant to the Plan of Reorganization. The amendments extended the maturity
date of the Triton Loan from November 1994 to April 1997, reduced the interest
rate from prime plus 4% to an escalating rate averaging prime plus 1 3/4% per
annum for the balance of the term of the Triton Loan, reduced the ratio of
minimum collateral value to loan balance required under the mandatory payment
(margin call) provisions of the Triton Loan Agreement from approximately 154%
to 125%, and added provisions allowing Triton to withdraw shares pledged as
collateral if and to the extent the value of the collateral exceeded
approximately 190% of the loan balance. The Company's right of first refusal
with respect to any sale by Triton of its shares of the Company's Common Stock
was continued in effect until the Triton Loan is paid in full.
32
<PAGE> 34
On December 7, 1993, the Company and Triton executed a further
amendment to the Triton Loan Agreement (the "Second Amendment") pursuant to
which Triton made a principal payment of $5 million plus accrued interest on
the Triton Loan and the loan repayment provisions were revised to provide for
quarterly principal payments of $1.25 million on March 31, June 30, September
30 and December 31 of each year, commencing March 31, 1994, with the remaining
balance of the Triton Loan being due and payable on April 1, 1997. In
addition, the Second Amendment provides that the per share value of the
Company's Common Stock shall be deemed to be not be less than $7.50 for
purposes of the mandatory payment (margin call) provisions of the Triton Loan.
The outstanding balance under the Triton Loan was $20.5 million as of April 25,
1995. The Company is currently holding 3,690,998 of the shares of the
Company's Common Stock owned by Triton as security for the Triton Loan.
33
<PAGE> 35
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this report to be
signed on behalf by the undersigned, thereunto duly authorized.
THE ACTAVA GROUP INC.
By: /s/ Frederick B. Beilstein, III
-------------------------------------
Frederick B. Beilstein, III
Senior Vice President and
Chief Financial Officer
Dated: April 28, 1995
34
