<PAGE>
As filed with the Securities and Exchange Commission on August 6, 1996
- -------------------------------------------------------------------
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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
------------------------
METROMEDIA INTERNATIONAL GROUP, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
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- -------------------------------------------------------------------
<PAGE>
[LOGO]
------------------------
AUGUST 6, 1996
Dear Stockholder:
On behalf of the Board of Directors, I wish to extend to you a cordial
invitation to attend the Annual Meeting of Stockholders of Metromedia
International Group, Inc. ("MIG"), which will be held in the Concourse Level at
1285 Avenue of the Americas, New York, New York 10019 at 9:30 a.m., New York
time, on August 29, 1996. I look forward to greeting as many stockholders as
possible at the Annual Meeting.
At the Annual Meeting, you will be asked to vote on proposals:
1. to amend MIG's Restated Certificate of Incorporation to increase the
number of authorized shares of Common Stock from 100,000,000 to
400,000,000;
2. to elect three Class I Directors for a three year term ending in 1999;
3. to approve the Metromedia International Group, Inc. 1996 Incentive Stock
Plan; and
4. to ratify the selection of KPMG Peat Marwick LLP as MIG's independent
accountants for the year ending December 31, 1996.
It is important that your shares be represented at the Annual Meeting,
whether or not you are able to attend. Accordingly, you are urged to sign, date
and mail the enclosed proxy promptly. If you later decide to attend the Annual
Meeting, you may revoke your proxy and vote in person.
Thank you.
Sincerely,
[LOGO]
John D. Phillips
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.
---------------------
945 EAST PACES FERRY ROAD
SUITE 2210
ATLANTA, GEORGIA 30326
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 29, 1996
---------------------
TO THE STOCKHOLDERS OF
METROMEDIA INTERNATIONAL GROUP, INC.:
NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders (the
"Meeting") of Metromedia International Group, Inc., a Delaware corporation
("MIG"), will be held on August 29, 1996, at 9:30 a.m., local time, in the
Concourse Level, 1285 Avenue of the Americas, New York, New York 10019 for the
purpose of considering and acting upon the following:
1. A proposal to approve an amendment to MIG's Restated Certificate of
Incorporation to increase the authorized number of shares of common
stock, par value $1.00 per share, to 400,000,000.
2. The election of three members to MIG's Board of Directors to serve a
three-year term as Class I Directors.
3. A proposal to approve and adopt the Metromedia International Group, Inc.
1996 Incentive Stock Plan.
4. Ratification of the selection of KPMG Peat Marwick LLP as MIG's
independent accountants for the year ending December 31, 1996.
5. The transaction of such other business as may properly come before the
Meeting or any adjournment thereof. The Board of Directors is not aware
of any other business that will be presented for consideration at the
Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" EACH OF THE PROPOSALS TO BE PRESENTED TO MIG STOCKHOLDERS AT THE MIG
ANNUAL MEETING.
Only stockholders of record at the close of business on July 25, 1996 will
be entitled to notice of and to vote at the Meeting or any adjournment thereof.
The Meeting may be adjourned from time to time without notice other than by
announcement at the Meeting. A list of stockholders entitled to vote at the
Meeting will be available for inspection by any stockholder, for any reason
germane to the Meeting, during ordinary business hours during the ten days prior
to the Meeting at 215 East 67th Street, New York, New York 10021.
By Order of the Board of Directors.
Arnold L. Wadler
SECRETARY
New York, New York
August 6, 1996
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS OF
THE NUMBER OF SHARES YOU HOLD IN ORDER THAT A QUORUM MAY BE ASSURED, WHETHER OR
NOT YOU PLAN TO BE PRESENT AT THE MEETING IN PERSON. PLEASE COMPLETE, SIGN, DATE
AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING RETURN ENVELOPE (TO WHICH NO
POSTAGE NEED BE AFFIXED BY THE SENDER IF MAILED WITHIN THE UNITED STATES). IF
YOU RECEIVE MORE THAN ONE PROXY BECAUSE YOUR SHARES ARE REGISTERED IN DIFFERENT
NAMES OR ADDRESSES, EACH SUCH PROXY SHOULD BE SIGNED AND RETURNED TO ASSURE THAT
ALL OF YOUR SHARES WILL BE VOTED. THE PROXY SHOULD BE SIGNED BY ALL REGISTERED
HOLDERS EXACTLY AS THE STOCK IS REGISTERED.
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.
------------------
PROXY STATEMENT
FOR AN ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 29, 1996
---------------------
METROMEDIA INTERNATIONAL GROUP, INC.
This Proxy Statement is being furnished to the holders of shares of common
stock, par value $1.00 per share (the "Common Stock"), of Metromedia
International Group, Inc., a Delaware corporation ("MIG" or the "Company") in
connection with the solicitation of proxies by the Board of Directors of MIG for
use at the Annual Meeting of the Stockholders of MIG to be held at 9:30 a.m. on
August 29, 1996 in the Concourse Level, 1285 Avenue of the Americas, New York,
New York 10019 (the "Annual Meeting"), and any adjournments of the Meeting. This
Proxy Statement and the accompanying proxy card are first being mailed to the
stockholders of the Company on or about August 6, 1996.
At the Annual Meeting, MIG Stockholders will be asked to vote upon (i) a
proposal to amend MIG's Restated Certificate of Incorporation to increase the
authorized number of shares of Common Stock from 110,000,000 to 400,000,000 (the
"Charter Amendment"), (ii) the election of three members to MIG's Board of
Directors to serve a three-year term as Class I Directors, (iii) a proposal to
approve the Metromedia International Group, Inc. 1996 Incentive Stock Plan and
(iv) the ratification of the selection of KPMG Peat Marwick LLP as MIG's
independent accountants for the year ending December 31, 1996.
INFORMATION REGARDING THE ANNUAL MEETING
GENERAL
This Proxy Statement is being furnished to holders of Common Stock in
connection with the solicitation of proxies by the Board of Directors of MIG for
use at the Annual Meeting, and any adjournments thereof. Each copy of this Proxy
Statement which is being mailed or delivered to MIG Stockholders is accompanied
by a MIG proxy card and the Notice of Annual Meeting of Stockholders of MIG.
MIG's Annual Report to Stockholders, including financial statements for the year
ended December 31, 1995, accompanies but does not constitute part of this Proxy
Statement.
All properly executed proxy cards delivered pursuant to this solicitation
and not revoked will be voted at the Annual Meeting in accordance with the
directions given. In voting by proxy with regard to the election of directors,
MIG Stockholders may vote in favor of all nominees, withhold their votes as to
all nominees or withhold their votes as to specific nominees. With regard to
other proposals, MIG Stockholders may vote in favor of each proposal or against
each proposal, or in favor of some proposals and against others, or may abstain
from voting on any or all proposals. Stockholders should specify their
respective choices on the accompanying proxy card. If no specific instructions
are given with regard to the matters to be voted upon, the shares of Common
Stock represented by a signed proxy card will be voted "FOR" each of the
proposals listed on the proxy card. If any other matters properly come before
the Annual Meeting, the persons named as proxies will vote upon such matters
according to their judgment.
All proxy cards delivered pursuant to this solicitation are revocable at any
time prior to the Annual Meeting at the option of the persons executing them by
giving written notice to the Secretary of MIG, by delivering a later dated proxy
card or by voting in person at the Annual Meeting. All
1
<PAGE>
written notices of revocation and other communications with respect to
revocations of proxies should be addressed to: Metromedia International Group,
Inc., c/o Metromedia Company, One Meadowlands Plaza, East Rutherford, NJ 07073,
Attention: Arnold L. Wadler, Secretary.
Proxies will initially be solicited by MIG by mail, but directors, officers
and selected employees may solicit proxies from stockholders personally or by
telephone, facsimile or other forms of communication. Such directors, officers
and employees will not receive any additional compensation for such
solicitation. MIG also will request brokerage houses, nominees, fiduciaries and
other custodians to forward soliciting materials to beneficial owners, and MIG
will reimburse such persons for their reasonable expenses incurred in doing so.
All expenses incurred in connection with the solicitation of proxies will be
borne by MIG.
THE ANNUAL MEETING
The Annual Meeting is scheduled to be held in the Concourse Level at 1285
Avenue of the Americas, New York, New York 10019, on August 29, 1996, beginning
at 9:30 a.m., local time. MIG Stockholders will be asked to vote upon (i) the
Charter Amendment (Proposal No. 1), which amendment would increase the
authorized number of shares of Common Stock from 110,000,000 to 400,000,000,
(ii) the election of three persons to serve a three-year term as Class I
Directors of MIG's Board of Directors (Proposal No. 2), (iii) a proposal to
approve the Metromedia International Group, Inc. 1996 Incentive Stock Plan
(Proposal No. 3) and (iv) a proposal to ratify the selection of KPMG Peat
Marwick LLP as MIG's independent accountants for the year ending December 31,
1996 (Proposal No. 4).
The Board of Directors of MIG knows of no business that will be presented
for consideration at the Annual Meeting other than the matters described in this
Proxy Statement.
RECORD DATE; QUORUM. Only holders of record of Common Stock as of the close
of business on July 25, 1996 (the "Record Date") will be entitled to notice of
and to vote at the Annual Meeting. As of the Record Date, there were 66,051,054
shares of Common Stock outstanding and entitled to vote at the Annual Meeting,
held by approximately 7,658 stockholders of record, with each share entitled to
one vote. The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock is necessary to constitute a quorum at the Annual
Meeting. Except with respect to broker non-votes, the consequences of which are
described below, shares of Common Stock represented by proxies marked "ABSTAIN"
for any proposal presented at the Annual Meeting and shares of Common Stock held
by persons in attendance at the Annual Meeting who abstain from voting on any
such proposal will be counted for purposes of determining the presence of a
quorum but shall not be voted for or against such proposal. Because of the vote
required (see below) to approve the proposals presented at the Annual Meeting,
abstentions will have the effect of a vote against such proposal (other than the
election of directors). Shares as to which a broker indicates it has no
discretion to vote and which are not voted will be considered not present at
such meeting for purposes of determining the presence of a quorum and as unvoted
for purposes of the approval of any proposal presented at the Annual Meeting.
Because of the vote required to approve the Charter Amendment, broker non-votes
with respect to such proposals will have the effect of a vote against the
Charter Amendment and because of the vote required to approve the other
proposals at the Annual Meeting, broker non-votes will have no effect on the
outcome and the vote on any of such other proposals. With respect to the
election of directors, abstentions and broker non-votes will be disregarded and
will have no effect on the vote.
VOTE REQUIRED. The affirmative vote of the holders of a majority of shares
of Common Stock present in person or represented by proxy at the Annual Meeting
will be required to approve and adopt each of the matters identified in this
Proxy Statement as being presented to holders of shares of Common Stock at the
Annual Meeting (other than the Charter Amendment and the election of directors),
each of which will be voted upon separately at the Annual Meeting. The
affirmative vote of the holders of a majority of all of the issued and
outstanding shares of Common Stock (whether or not
2
<PAGE>
represented in person or by proxy at the Annual Meeting) is required to approve
the Charter Amendment. The affirmative vote of the holders of a plurality of
shares of Common Stock present in person or represented by proxy at the Annual
Meeting will be required to elect each of the Class I Directors to MIG's Board
of Directors.
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of the MIG Record Date, certain
information regarding each person (including any "group" as that term is used in
Section 13(d)(3) of the Exchange Act) known (based solely upon filings with the
Commission prior to such date pursuant to Sections 13(d) or 13(g) of the
Exchange Act) to own beneficially (as such term is defined in Rule 13d-3 under
the Exchange Act) more than 5% of the outstanding Common Stock. In accordance
with the rules promulgated by the Commission, such ownership includes shares
currently owned as well as shares which the named person has the right to
acquire beneficial ownership of within 60 days, including, but not limited to,
shares which the named person has the right to acquire through the exercise of
any option, warrant or right, or through the conversion of a security.
Accordingly, more than one person may be deemed to be a beneficial owner of the
same securities.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK PERCENTAGE OF
BENEFICIALLY OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED (1) COMMON STOCK
- ----------------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
John W. Kluge, Stuart Subotnick and Metromedia Company........... 15,272,128(2) 23.1%
One Meadowlands Plaza
E. Rutherford, NJ 07073
Dietche & Field Advisers, Inc.................................... 3,160,000 5.02%
437 Madison Avenue
New York, New York 10022
</TABLE>
- ------------------------
(1) Unless otherwise indicated by footnote, the named persons have sole voting
and investment power with respect to the shares of Common Stock beneficially
owned.
(2) Metromedia Company is a Delaware general partnership owned and controlled by
John W. Kluge and Stuart Subotnick, each of whom is a director of MIG. The
amount set forth in the table above includes 12,415,455 shares beneficially
owned by Mr. Kluge and Mr. Subotnick beneficially through Metromedia Company
and Met Telcell, Inc. ("Met Telcell"), a corporation owned and controlled by
Messrs. Kluge and Subotnick, and 2,605,448 and 231,225 shares of Common
Stock owned directly by a trust affiliated with Mr. Kluge and by Mr.
Subotnick, respectively. The amount also includes options issued under the
Metromedia International Group, Inc. 1996 Incentive Stock Plan (the "MIG
1996 Stock Plan") exercisable within 60 days of the date hereof. The MIG
1996 Stock Plan has not been approved by MIG's stockholders and the options
issued thereunder are subject to forfeiture in the event the MIG 1996 Stock
Plan is not approved by MIG's stockholders.
------------------------
The foregoing information is based on a review, as of the MIG Record Date,
by MIG of statements filed with the Commission under Sections 13(d) and 13(g) of
the Exchange Act. To the best knowledge of MIG, except as set forth above, no
person owns beneficially more than 5% of the outstanding Common Stock.
3
<PAGE>
SECURITIES BENEFICIALLY OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership of Common Stock as
of the MIG Record Date with respect to (i) each director and director nominee of
MIG, (ii) each executive officer named in the Summary Compensation Table under
"Executive Compensation" and (iii) all directors and executive officers of MIG
as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF
COMMON STOCK
PERCENTAGE OF BENEFICIALLY
NAME OF BENEFICIAL OWNER COMMON STOCK OWNED (1)(10)
- -------------------------------------------------------------- ------------------------ -----------------
<S> <C> <C>
Frederick B. Beilstein, III................................... 126,825(2) *
W. Tod Chmar.................................................. 753,042(2)(6)(7) 1.1%
Walter M. Grant............................................... 62,729(2)(6) *
John P. Imlay, Jr............................................. 20,000(2)(12) *
Clark A. Johnson.............................................. 28,000(2)(12) *
John W. Kluge................................................. 15,030,903(3)(12) 22.8%
Silvia Kessel................................................. 53,085(12) *
John D. Phillips.............................................. 1,010,000(4)(12) 1.5%
Carl E. Sanders............................................... 32,097(2)(8)(12) *
Richard J. Sherwin............................................ 912,605(11) 1.4%
Stuart Subotnick.............................................. 12,656,680(5)(12) 19.2%
Arnold L. Wadler.............................................. 65,416(12) *
Leonard White................................................. 50,000(12) *
All Directors and Executive Officers as a group (13
persons)..................................................... 17,445,702(9) 26.4%
</TABLE>
- --------------------------
* Holdings do not exceed one percent of the total outstanding shares of Common
Stock.
(1) Unless otherwise indicated by footnote, the named individuals have sole
voting and investment power with respect to the shares of Common Stock
beneficially owned.
(2) Includes shares subject to purchase within the next 60 days under MIG's
1989 Stock Option Plan and MIG's 1991 Non-Employee Director Stock Option
Plan.
(3) Represents 12,415,455 shares beneficially owned through Metromedia Company
and Met Telcell and 2,605,448 shares of Common Stock owned directly by a
trust affiliated with Mr. Kluge.
(4) Includes 1,000 shares owned by Mr. Phillips directly, 699,000 shares owned
by Renaissance Partners, a Georgia general partnership in which Mr. Philips
is a general partner, and 300,000 shares subject to purchase by Mr. Philips
within the next 60 days pursuant to the exercise of a stock option. Mr.
Phillips disclaims beneficial ownership of the shares owned by Renaissance
Partners except to the extent of his interest in Renaissance Partners.
(5) Represents 12,415,455 shares beneficially owned through Metromedia Company
and Met Telcell and 231,225 shares owned directly by Mr. Subotnick.
(6) Includes shares allocated to the named executive officer's account under
MIG's Employee Stock Purchase Plan as of the date hereof.
(7) Includes 699,000 shares owned by Renaissance Partners, a Georgia general
partnership in which a corporation owned by Mr. Chmar serves as general
partner. Mr. Chmar disclaims beneficial ownership of the shares owned by
Renaissance Partners except to extent of his interest in Renaissance
Partners.
4
<PAGE>
(8) Includes 600 shares subject to purchase by Mr. Sanders within the next 60
days pursuant to the conversion of the $25,000 face amount (less than 1%) of
the Company's 6 1/2% Convertible Subordinated Debentures due 2002
beneficially owned by Mr. Sanders, which are convertible into Common Stock
at a conversion price of $41 5/8 per share.
(9) The number of shares shown for directors and executive officers as a group
includes an aggregate of 1,090,784 shares which are subject to purchase
within 60 days of the date hereof pursuant to stock options.
(10) Does not include options issued under the 1996 Incentive Stock Plan (as
defined below), as such options are not presently exercisable and will not
become exercisable within 60 days of the date hereof.
(11) Includes options to purchase 657,917 shares of Common Stock exercisable
within 60 days of the date hereof.
(12) Includes options issued under the Metromedia International Group, Inc. 1996
Incentive Stock Plan (the "MIG 1996 Stock Plan") exercisable within 60 days
of the date hereof. The MIG 1996 Stock Plan has not been approved by MIG's
stockholders and the options issued thereunder are subject to forfeiture in
the event the MIG 1996 Stock Plan is not approved by MIG's stockholders.
DIRECTORS AND OFFICERS
DIRECTORS OF MIG
The Board of Directors of MIG, which presently consists of ten members, is
divided into three classes. The Class I Directors were initially elected for a
term expiring at the Annual Meeting, the Class II Directors were initially
elected for a term expiring at the annual meeting of stockholders of MIG to be
held in 1997, and the Class III Directors were elected for a term expiring at
the annual meeting of stockholders to be held in 1998. Members of each class
will hold office until their successors are elected and qualified. At each
succeeding annual meeting of the stockholders of MIG, the successors of the
class of directors whose term expires at that meeting shall be elected by a
plurality vote of all votes cast at such meeting and will hold office for a
three-year term. The Class I Directors, whose term expires at the Annual
Meeting, are John W. Kluge, Stuart Subotnick and John P. Imlay, Jr. The Class II
Directors are John D. Phillips, Richard I. Sherwin and Leonard White. The Class
III Directors are Silvia Kessel, Carl E. Sanders, Arnold L. Wadler and Clark A.
Johnson.
For more information regarding each of MIG's directors, including
biographical information, see "PROPOSAL NO. 2 -- ELECTION OF DIRECTORS."
MEETINGS AND CERTAIN COMMITTEES OF THE BOARD
The Board of Directors held five regular meetings and three special meetings
during 1995. Of these meetings, four of the regular meetings and each of the
special meetings were held prior to the consummation of the November 1 Mergers,
and one regular meeting was held following the consummation of the November 1
Mergers. In addition, the Board of Directors took action by unanimous written
consent one time prior to the consummation of the November 1 Mergers and two
times following the consummation of the November 1 Mergers. All directors
attended at least 75% of the aggregate total number of meetings of the Board of
Directors and all committees of the Board of Directors on which they served.
The Board of Directors has delegated certain functions to the following
standing committees:
THE EXECUTIVE COMMITTEE is authorized to exercise, to the extent permitted
by law, all of the powers of the Board of Directors in the management and
affairs of the Company. Prior to the consummation of the November 1 Mergers, the
Executive Committee held nine meetings. Following such time, the Executive
Committee did not meet. The current members of the Executive Committee are
Messrs. Kluge, Subotnick and Phillips.
5
<PAGE>
THE AUDIT COMMITTEE is responsible for (a) reviewing the professional
services and independence of MIG's independent auditors and the scope of the
annual external audit recommended by the independent auditors, (b) ensuring that
the scope of the annual external audit is sufficiently comprehensive, (c)
reviewing, in consultation with MIG's independent auditors and MIG's internal
auditors, the plan and results of the annual external audit, the adequacy of
MIG's internal control systems and the results of MIG's internal audit and (d)
reviewing with management and MIG's independent auditors MIG's annual financial
statements, financial reporting practices and the results of such external
audit. The Audit Committee did not meet during 1995. The current members of the
Audit Committee are Messrs. Subotnick, Imlay and Johnson.
THE COMPENSATION COMMITTEE'S functions are to review, approve, recommend and
report to the Board of Directors on matters specifically relating to the
compensation of MIG's executive officers and other key executives and to
administer MIG's stock option plans. The committee held two meetings during
1995, one prior to the consummation of the November 1 Mergers and one subsequent
thereto. The current members of the Compensation Committee are Messrs. Sanders,
Imlay and Johnson.
THE NOMINATING COMMITTEE'S principal function is to identify candidates and
recommend to the Board of Directors nominees for membership on the Board of
Directors. The Nominating Committee expects normally to be able to identify from
its own resources the names of qualified nominees, but it will accept from
stockholders recommendations of individuals to be considered as nominees,
provided MIG's stockholders follow procedures specified in MIG's By-laws. These
procedures provide that, in order to nominate an individual to the Board of
Directors, a MIG Stockholder must provide timely notice of such nomination in
writing to the Secretary of MIG and a written statement by the candidate of his
or her willingness to serve. Such notice must include the information required
to be disclosed in solicitations for proxies for election of directors pursuant
to Regulation 14A under the Exchange Act, along with the name, record address,
class and number of shares of common stock beneficially owned by the stockholder
giving such notice. To be timely, notice must be received by MIG not less than
60 days nor more than 90 days prior to the first anniversary of the date of
MIG's annual meeting for the preceding year; PROVIDED, HOWEVER, that in the
event the date of annual meeting of stockholders is advanced by more than 30
days or delayed by more than 60 days from such anniversary date, such notice
must be received within 10 days following public disclosure by MIG of the date
of the annual or special meeting at which directors are to be elected. For
purposes of this notice requirement, disclosure shall be deemed to be first made
when disclosure of such date of the annual or special meeting of stockholders is
first made in a press release reported by the Dow Jones News Service, Associated
Press or other comparable national news services, or in a document which has
been publicly filed by MIG with the Commission pursuant to Sections 13, 14 or
15(d) of the Exchange Act. Any such nominations should be submitted in writing
to MIG, c/o Metromedia Company, One Meadowlands Plaza, East Rutherford, New
Jersey 07073, Attention: Secretary. The Nominating Committee did not hold any
formal meetings in 1995. The current members of the Nominating Committee are
Messrs. Subotnick and Wadler and Ms. Kessel.
COMPENSATION OF DIRECTORS
During 1995, each director of the Company who was not employed by the
Company or affiliated with Metromedia Company (the "Non-Employee Directors")
received a $2,000 monthly retainer plus a separate attendance fee for each
meeting of the Board of Directors or committee of the Board of Directors in
which such director participated. During 1995, 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.
6
<PAGE>
Prior to December 13, 1995, Non-Employee Directors were entitled to receive
options to purchase shares of the Company's Common Stock under the Company's
1991 Non-Employee Director Stock Option Plan (as amended, the "Director Plan").
Under the Director Plan, each Non-Employee Director who was a director of the
Company 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 certain amendments to the Director Plan at the Company's
1993 Annual Meeting of Stockholders.
The Director Plan further provided that each person who became a
Non-Employee Director of the Company after August 3, 1992 would receive an
option to purchase 10,000 shares of the Company's Common Stock on the day such
director is elected as a director, at an exercise price equal to the closing
price of the Common Stock on the trading day preceding such director's election.
Options granted to these Non-Employee Directors became fully vested and
exercisable as to all 10,000 shares on March 31 in the year after the date the
Non-Employee Director was elected, provided the Company had net income for the
year in which the Non-Employee Director was elected or earnings equal to or
better than budgeted results for such year.
All options granted under the Director Plan had a term of ten years. The
Director Plan had originally been scheduled to terminate on June 27, 2001.
However, at a meeting of the Board of Directors held on December 13, 1995, the
Board of Directors terminated the Director Plan. Options outstanding as of
December 13, 1995 are unaffected by the termination of the Director Plan.
In addition to establishing a stock option plan for its Non-Employee
Directors, the Company implemented, during the first quarter of 1992, a group
medical plan for its Non-Employee Directors (the "Non-Employee Director Medical
Plan") which provided medical coverage at group premium rates to active
Non-Employee Directors electing such coverage and to any Non-Employee Director
who retired from the Board of Directors after attaining age 65 and who either
participated in the plan for the entire period that the individual served as a
director since March 1, 1992 or participated in the plan for the three
consecutive years immediately prior to the individual's retirement as a
director. The medical plan paid for 100% of a Non-Employee Director's single
coverage premium and between 25% and 50% of the dependent coverage premium. At
the meeting of the Board of Directors of the Company held on December 13, 1995,
the Company's Board of Directors terminated the Non-Employee Director Medical
Plan.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth information on
compensation awarded to, earned by or paid to the Chief Executive Officer and
MIG's other most highly compensated executive officers during the fiscal years
ended December 31, 1995, December 31, 1994 and December 31, 1993 for services
rendered in all capacities to MIG and its subsidiaries. In addition, the Summary
Compensation Table sets forth similar information for such periods with respect
to Frederick B. Beilstein, III and Walter M. Grant, who would have been among
MIG's four most highly
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compensated executive officers during 1995 but for the fact that such persons
were not serving as executive officers of MIG at the end of 1995. The persons
listed in the table below are referred to as the "Named Executive Officers."
SUMMARY COMPENSATION
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------- -------------------
OTHER NUMBER OF
ANNUAL SECURITIES ALL OTHER
COMPENSA- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) TION ($)(1) STOCK OPTIONS (#) ($)(2)
- -------------------------------- ----------- ----------- ----------- ----------- ------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
John D. Phillips................ 1995 $ 624,984 $ 750,000 -- -0- $ 15,096
President and 1994(3) 438,289 438,289 -- 300,000 13,336
Chief Executive Officer 1993 -- -- -- -- --
Frederick B. Beilstein, III 1995 274,992 137,500 -- -0- 4,480
(4)...........................
Former Senior Vice President, 1994 274,992 165,000 -- 95,000 4,435
Treasurer and Chief 1993 269,783 41,250 -- 19,100 4,390
Financial Officer
Walter M. Grant (5)............. 1995 237,500 118,750 -- -0- 9,757
Former Senior Vice President, 1994 237,500 142,500 -- 95,000 12,623
General Counsel and 1993(6) 110,048 16,875 -- 20,000 44,645
Secretary
W. Tod Chmar.................... 1995 235,000 235,000 -- -0- 4,095
Senior Vice President 1994(3) 164,801 98,881 -- 70,000 6,866
1993 -- -- -- -- --
</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 Named Executive Officer during 1993, 1994 and 1995 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) premiums 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,
including premium payments of (A) $4,200 in each of 1993, 1994 and 1995 on
behalf of Mr. Beilstein, (B) $1,312 in 1993 and $5,080 in 1994 on behalf of
Mr. Grant, and (C) $2,159 in 1994 and $3,945 in 1995 on behalf of Mr. Chmar;
(ii) a payment of $13,336 made by the Company to Mr. Phillips in 1994 and
payments of $15,096 and $5,080 made by the Company to Mr. Phillips and Mr.
Grant, respectively, in 1995 in lieu of their participation in the life
insurance programs maintained by the Company for its executive officers;
(iii) matching contributions made by the Company under its Employee Stock
Purchase Plan totaling $3,333 in 1993 for the benefit of Mr. Grant, $5,000
and $4,582 in 1994 for the benefit of Messrs. Grant and Chmar, respectively,
and $2,083 in 1995 for the benefit of Mr. Grant; (iv) matching contributions
of $2,310 made by the Company in each of 1994 and 1995 for the benefit of
Mr. Grant under a 401(k) savings plan sponsored by a subsidiary of the
Company; and (v) a relocation allowance of $40,000 provided by the Company
to Mr. Grant 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.
In addition to the universal life insurance program, the Company also made
premium payments for term life insurance policies of (1) $190 in 1993, $235
in 1994 and $280 in 1995 on behalf of Mr. Beilstein; (2) $233 in 1994 and
$284 in 1995 on behalf of Mr. Grant; and (3) $125 in 1994 and $150 in 1995
on behalf of Mr. Chmar.
(3) 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.
(4) Mr. Beilstein served as Senior Vice President, Treasurer and Chief Financial
Officer of the Company from May 31, 1991 until November 1, 1995. Following
November 1, 1995, Mr. Beilstein remained as an employee of the Company until
January 21, 1996. The amounts shown in the table for 1995 reflect all
compensation paid to or accrued for Mr. Beilstein during 1995. Mr. Beilstein
served as a consultant to the Company from January 22, 1996 through March 3,
1996 pursuant to the terms of a Post-Employment Consulting Agreement between
the Company and Mr. Beilstein. See "-- Certain Agreements Regarding
Employment Post-Employment Consulting Agreements with Walter M. Grant and
Frederick B. Beilstein."
(5) Mr. Grant served as Senior Vice President, General Counsel and Secretary of
the Company from July 6, 1993 until the consummation of the November 1
Mergers. Following November 1, 1995, Mr. Grant remained as an employee of
the
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Company in order to assist in transition activities relating to the November
1 Mergers. The amounts shown in the table for 1995 reflect all compensation
paid to or accrued for Mr. Grant during 1995. Mr. Grant remained as an
employee of the Company until June 15, 1996. He now serves as a consultant
to the Company pursuant to the terms of a Post-Employment Consulting
Agreement between the Company and Mr. Grant. See "-- Certain Agreements
Regarding Employment Post-Employment Consulting Agreements with Walter M.
Grant and Frederick B. Beilstein."
(6) 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.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The Company did not grant any stock options or limited stock appreciation
rights ("SARs") to any of the Named Executive Officers during the fiscal year
ended December 31, 1995. The following table sets forth information concerning
the exercise of options or SARs by the Named Executive Officers during the 1995
fiscal year and the number of unexercised options and SARs held by such officers
as of the end of the 1995 fiscal year.
FY End Value -- $14.00
AGGREGATED OPTION AND SAR EXERCISES IN 1995 AND FISCAL
YEAR-END OPTION AND SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN
VALUE REALIZED UNDERLYING UNEXERCISED THE
($) (MARKET OPTIONS/SARS AT FISCAL MONEY OPTIONS/SARS AT
SHARES PRICE YEAR END (#) FISCAL YEAR END ($)
ACQUIRED ON AT EXERCISE LESS -------------------------- --------------------------
NAME EXERCISE (#) EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------ ------------- ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John D. Phillips.................... -0- -0- 300,000 -0- $2,287,500 -0-
Frederick B. Beilstien, III......... 47,000 $ 417,000 49,825 52,275 33,425 $ 272,445
Walter M. Grant..................... 46,000 409,430 16,500 52,500 88,914 296,876
W. Tod Chmar........................ -0- -0- 36,542 36,542 185,938 185,938
</TABLE>
PENSION PLANS
The Company maintains a qualified defined benefit pension plan and a
nonqualified supplemental pension plan for the benefit of eligible participants,
including certain of the Company's executive officers. The Company's
nonqualified supplemental pension plan provides benefits that would otherwise be
denied participants by reason of certain limitations under the Internal Revenue
Code on qualified plan benefits and provides certain other supplemental pension
benefits to certain of the Company's executive officers and highly compensated
employees. On December 13, 1995, the Board of Directors of the Company amended
the pension plan and the supplemental pension plan to cease benefit accruals
after December 31, 1995. Accordingly, the only benefits that will be payable
under these plans are those benefits that had accrued as of December 31, 1995.
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
consecutive calendar plan years during the last ten years of the participant's
career for which such average is the highest or, in the case of a participant
who has been employed for less than five full calendar years, the period of his
or her employment with the Company and its subsidiaries ("covered
compensation"). A participant's covered compensation generally means the total
taxable compensation required to be reported on the participant's Form W-2 for
income tax purposes, except that this amount (excluding bonuses) is annualized
for periods covering less than a full calendar year. 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.
Participants become vested in their retirement benefits after completing at
least five years of servicing or attaining age 50 or upon retirement after age
62 with at least one year of service. The estimated years of service for each
Named Executive Officer as of December 31, 1995 was as follows: Mr. Phillips:
1 2/3 years; Mr. Beilstein: 4 1/2 years; Mr. Grant: 2 1/2 Years;
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<PAGE>
and Mr. Chmar: 1 2/3 years. Based on these provisions and the number of years of
service completed, the annual vested retirement benefits as of December 31, 1995
were $42,015 for Mr. Phillips and $24,189 for Mr. Grant. Neither Mr. Beilstein
nor Mr. Chmar had vested retirement benefits as of December 31, 1995, the date
as of which MIG ceased benefit accruals under its pension plan and supplemental
pension plan, because neither had completed at least five years of service with
MIG or attained age 50 as of December 31, 1995. These benefits are based on a
straight line annuity beginning at age 62. Mr. Beilstein and Mr. Chmar did not
have a vested retirement benefit as of December 31, 1995, the date as of which
the Company ceased benefit accruals under its pension plans. Accordingly,
neither Mr. Beilstein nor Mr. Chmar is entitled to receive pension benefits
under such plans upon retirement. A participant's covered compensation for
purposes of the pension plan differs from compensation reported in the Summary
Compensation Table (the "Table") in that (i) covered compensation includes
certain taxable employee benefits not required to be reported in the Table and
(ii) covered compensation includes all compensation received by the executive
during the year (regardless of when it was earned), whereas the Table includes
only compensation earned during the year.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MIG'S RELATIONSHIP WITH METROMEDIA COMPANY
MIG is a party to a number of agreements and arrangements with Metromedia
Company ("Metromedia") and its affiliates, the material terms of which are
summarized below.
HISTORICAL RELATIONSHIP
Metromedia and its affiliates are collectively the largest single
stockholder of the Company, owning, as of the Record Date, approximately 23.1%
of the issued and outstanding shares of Common Stock. Prior to the November 1,
1995 mergers of Orion Pictures Corporation ("Orion") and Metromedia
Telecommunications, Inc. ("MITI") with and into subsidiaries of MIG and of MCEG
Sterling Incorporated ("Sterling") with and into MIG (collectively, the
"November 1 Mergers"), Metromedia and its affiliates were the principal
stockholders of Orion and MITI.
Prior to the November 1 Mergers, Orion, MITI and Sterling were party to a
number of material contracts and other arrangements with Metromedia and certain
affiliates of Metromedia pursuant to which Metromedia and certain of its
affiliates made loans or provided financing to, or paid obligations on behalf
of, each of Orion, MITI and Sterling (collectively, the "Metromedia
Obligations"). In connection with the consummation of the November 1 Mergers,
Metromedia Obligations were refinanced, repaid or converted into equity of the
Company.
A portion of the Metromedia Obligations ($20,400,000 owed by Orion,
$34,076,000 owed by MITI and $524,000 owed by Sterling) was financed by
Metromedia through borrowings under a $55 million credit agreement between the
Company (then known as "The Actava Group Inc.") and Metromedia (the
"Actava-Metromedia Credit Agreement"). On November 1, 1995, Orion, MITI and
Sterling each repaid such amounts to Metromedia Company and Metromedia Company
repaid the amounts owed by it to the Company under the Actava-Metromedia Credit
Agreement ($55 million). Because on November 1, 1995, Orion, Sterling and MITI
were merged with the Company, there was no net addition to the assets of the
Company as a result of these transactions.
In addition, prior to the November 1 Mergers, Metromedia and John W. Kluge,
the Chairman and Chief Executive Officer of Metromedia, had guaranteed (the
"Orion Guarantee") certain amounts owed by Orion under its then existing credit
facility and certain amounts owed to Sony Pictures Entertainment Corp. by Orion.
Metromedia and Mr. Kluge collectively were majority stockholders of Orion and
issued these guarantees in 1991 as part of its bankruptcy reorganization plan.
As consideration for the guarantees and the contribution to Orion by Metromedia
and Mr. Kluge of $15 million in cash and certain film rights, Metromedia and Mr.
Kluge received a total of 10,020,000 shares of Orion
10
<PAGE>
common stock, which shares were converted into MIG Common Stock in connection
with the November 1 Mergers. Pursuant to the Orion Guarantee, Metromedia made
payments on behalf of Orion to the banks under its then existing credit facility
and to Sony in the aggregate amount of $59,592,446 during 1994 and 1995. Under a
Reimbursement Agreement between Orion and Metromedia, Orion was required to
reimburse Metromedia in full for all payments made by Metromedia on Orion's
behalf pursuant to the Orion Guarantee. At the effective time of the November 1
Mergers, Orion repaid Metromedia $63,296,514 pursuant to the Reimbursement
Agreement. Of the payments made by Metromedia on behalf of Orion and repaid by
Orion to Metromedia pursuant to the Reimbursement Agreement, $20,400,000 was
financed by borrowings by Metromedia under the Actava-Metromedia Credit
Agreement described above.
Prior to the November 1 Mergers, Metromedia, through an affiliate, provided
Orion and its affiliates with non-recourse financing (which was not financed by
Metromedia pursuant to the Actava-Metromedia Credit Agreement) to acquire
certain theatrical and home video product (the "MetProductions Indebtedness").
Pursuant to a Contribution Agreement entered into in connection with the
November 1 Mergers, the MetProductions Indebtedness ($10,426,552 at November 1,
1995, including accrued interest) was converted into 993,005 shares of Common
Stock at the effective time of the November 1 Mergers. In addition, Metromedia,
through its affiliates, provided MITI and its affiliates with certain loans
(which were not financed by Metromedia pursuant to the Actava-Metromedia Credit
Agreement) to fund MITI's operations and repay certain of its indebtedness (the
"MITI Indebtedness"). Pursuant to the Contribution Agreement, the MITI
Indebtedness ($26,641,744 at November 1, 1995, including accrued interest) was
converted into 2,537,309 shares of Common Stock at the effective time of the
November 1 Mergers.
RELATIONSHIPS WITH THE COMPANY FOLLOWING THE NOVEMBER 1 MERGERS
ORION CREDIT FACILITY. On November 1, 1995, Orion entered into a Credit,
Security and Guaranty Agreement (the "Old Credit Agreement") with Chemical Bank
("Chemical") and a syndicate of lenders (the "Lenders"), under which Chemical
and the Lenders provided Orion with a five-year $185 million secured credit
facility (the "Old Credit Facility") to finance Orion's development, production,
acquisition and worldwide distribution and exploitation of motion pictures,
video product and made-for-television product. On June 27, 1996, Orion, its
subsidiaries and Chemical amended and restated the Old Credit Agreement,
increasing the amount available under the Old Credit Facility to a $300 million
facility, consisting of a $200 million term loan and a $100 million revolving
credit facility (the "Amended Credit Facility"). Orion's obligations under the
Amended Credit Facility are guaranteed on a joint and several basis by all of
Orion's active subsidiaries (including recently acquired Goldwyn Entertainment
Company ("Goldwyn") and Motion Picture Corp. of America ("MPCA") and their
respective subsidiaries). In addition, in order further to induce Chemical and
the other Lenders to provide the revolving portion of the Amended Credit
Facility, John W. Kluge and Metromedia Company each guaranteed the due and
punctual payment of all funds due under the revolving credit loan portion of
such credit facility, including all related costs and attorneys' fees, up to a
maximum amount of the lesser of (i) $100 million and (ii) the amount, if any, by
which Orion's outstanding obligations under the revolver exceed the amount by
which the borrowing base under the Amended Credit Facility exceeds the term loan
portion of such credit facility. As of the MIG Record Date, Orion owed
approximately $31.5 million under the revolving portion of the Amended Credit
Facility, of which approximately $4 million was reserved for outstanding letters
of credit. Neither Mr. Kluge nor Metromedia received any consideration for
guaranteeing Orion's obligations under the Amended Credit Facility. Their
guarantees were, however, a condition to Chemical's agreeing to provide the
revolving portion of such Facility. In addition, Metromedia had guaranteed the
payment by Orion to Chemical of certain fees payable in connection with the
execution of the commitment letter with Chemical for the Old Credit Facility.
All such fees were paid by Orion on January 1, 1996. Furthermore, Metromedia
11
<PAGE>
guaranteed the payment of certain third party accounts receivable owed to Orion
so that the entire face amount of such accounts could be included in the
borrowing base for the Old Credit Facility. Neither Mr. Kluge nor Metromedia
received any consideration for providing such guarantees.
MIG CREDIT FACILITY. Mr. Kluge had guaranteed the payment by the Company of
the difference between the amount outstanding under the Company's $35 million
revolving credit facility with Chemical Bank and the maximum available amount
permitted to be outstanding under such credit facility, which was based on a
percentage of the market value of the shares of the common stock of Roadmaster
Industries Inc. held by the Company. All amounts outstanding under this Credit
Agreement were repaid on July 2, 1996.
MITI BRIDGE LOAN AGREEMENT. Metromedia, pursuant to the terms of a Bridge
Loan Agreement between Metromedia and MITI, had made available to MITI up to $15
million of revolving credit in order to satisfy its commitments and working
capital requirements. Amounts outstanding under the Bridge Loan Agreement, plus
interest at the rate of LIBOR plus 2%, were repaid in full on July 2, 1996 in
accordance with the terms of the Bridge Loan Agreement.
MANAGEMENT AGREEMENT. The Company is a party to a management agreement with
Metromedia dated November 1, 1995 (the "Management Agreement"), pursuant to
which Metromedia provides the Company with management services, including legal,
insurance, payroll and financial accounting systems and cash management, tax and
benefit plans. The Management Agreement terminates on October 31, 1996, and is
automatically renewed for successive one year terms unless either party
terminates upon 60 days prior written notice. The management fee under the
Management Agreement is $1.5 million per year, payable monthly at a rate of
$125,000 per month. The Company is also obligated to reimburse Metromedia all
its out-of-pocket costs and expenses incurred and advances paid by Metromedia in
connection with the Management Agreement. Pursuant to the Management Agreement,
the Company has agreed to indemnify and hold Metromedia harmless from and
against any and all damages, liabilities, losses, claims, actions, suits,
proceedings, fees, costs or expenses (including reasonable attorneys' fees and
other costs and expenses incident to any suit, proceeding or investigation of
any kind) imposed on, incurred by or asserted against Metromedia in connection
with the Management Agreement. In fiscal 1995, Metromedia received no money for
its out-of-pocket costs and expenses or for interest on advances extended by it
to the Company pursuant to the Management Agreement.
TRADEMARK LICENSE AGREEMENT. The Company is a party to a license agreement
with Metromedia (the "Metromedia License Agreement"), dated November 1, 1995,
pursuant to which Metromedia has granted the Company a non-exclusive,
non-transferable, non-assignable right and license, without the right to grant
sublicenses, to use the trade name, trademark and corporate name "Metromedia" in
the United States and, with respect to MITI, worldwide, royalty-free for a term
of 10 years. The Metromedia License Agreement can be terminated by Metromedia
upon one month's prior written notice in the event (i) Metromedia or its
affiliates own less than 20% of the Common Stock; (ii) of a Change in Control of
the Company (as defined below); or (iii) any of the stock or all or
substantially all of the assets of any of the subsidiaries of the Company are
sold or transferred, in which case, the Metromedia License Agreement shall
terminate with respect to such subsidiary. A Change in Control of the Company is
defined as (a) a transaction in which a person or "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) not in existence at the time of the
execution of the Metromedia License Agreement becomes the beneficial owner of
stock entitling such person or group to exercise 50% or more of the combined
voting power of all classes of stock of the Company; (b) a change in the
composition of the Company's Board of Directors whereby a majority of the
members thereof are not directors serving on the board at the time of the
Metromedia License Agreement or any person succeeding such director who was
recommended or elected by such directors; (c) a reorganization, merger or
consolidation whereby, following the consummation thereof, Metromedia would hold
less than 20% of the combined voting power of all classes of the Company's
12
<PAGE>
stock; (d) a sale or other disposition of all or substantially all of the assets
of the Company; or (e) any transaction the result of which would be that the
Common Stock would not be required to be registered under the Exchange Act and
the holders of Common Stock would not receive common stock of the survivor of
the transaction which is required to be registered under the Exchange Act.
In addition, Metromedia has reserved the right to terminate the Metromedia
License Agreement in its entirety immediately upon written notice to the Company
if, in Metromedia's sole judgment, the Company's continued use of "Metromedia"
as a trade name would jeopardize or be detrimental to the goodwill and
reputation of Metromedia.
Pursuant to the Metromedia License Agreement, the Company has agreed to
indemnify and hold harmless Metromedia against any and all losses, claims,
suits, actions, proceedings, investigations, judgments, deficiencies, damages,
settlements, liabilities and reasonable legal (and other expenses related
thereto) arising in connection with the Metromedia License Agreement.
The Company believes that the terms of each of the transactions described
above were no less favorable to the Company then could have been obtained from
non-affiliated parties.
IMAGE OUTPUT AGREEMENT. Mr. Kluge beneficially owns more than 10% of the
common stock of Image Investors Co., a Delaware corporation. Image Investors
owns approximately 40% of the common stock of Image Entertainment, Inc.
("Image"). OHEC was a party to an output license agreement with Image which
terminated on December 31, 1995 pursuant to which OHEC granted to Image the
rights to manufacture, market and sell on laserdiscs for private in-home use
certain feature length programs released by Orion on videocassette for a period
of three years from the date of first release by Image on laserdisc in
consideration of a royalty payment payable with respect to each program. For the
year ended December 31, 1995, Image paid to Orion approximately $719,310 under
the agreement. Orion, OHEC and Image are currently negotiating the terms of a
new output agreement. Since December 31, 1995, the parties have been operating
as if the old output agreement is still in effect.
WORLDCOM. Orion is a customer of WorldCom, Inc. (formerly known as LDDS
Metromedia Communications), which provides long distance telephone services to
Orion ("Worldcom"). Mr. Kluge, the Chairman of the Company, is Chairman of the
Board of WorldCom; Mr. Subotnick, the Vice Chairman of the Board of the Company,
is a Director of WorldCom; and Silvia Kessel, a Senior Vice President and
Director of the Company, serves on WorldCom's Board of Directors. For the fiscal
year ended December 31, 1995, Orion paid $164,583 to WorldCom for long distance
services rendered.
CHANGE IN CONTROL
The consummation on November 1, 1995 of the mergers of Orion Pictures
Corporation ("Orion") and Metromedia International Telecommunications, Inc.
("MITI") with and into newly-formed subsidiaries of MIG (then known as The
Actava Group Inc.) and the merger of MCEG Sterling Incorporated with and into
MIG (collectively, the "November 1 Mergers") effected a "change in control" of
MIG. Metromedia Company and its affiliates, MetProductions, Inc., Met
International, Inc. and Met Telcell, Inc., as stockholders of Orion and MITI,
were issued 15,252,128 shares of Common Stock in connection with the November 1
Mergers and related transactions (in consideration for 11,215,325 shares of
Orion Common Stock, 957,414 shares of MITI Common Stock and the contribution to
the Company of approximately $37,068,296 in indebtedness), which, at the time,
represented approximately 35.9% of the outstanding shares of Common Stock. Also,
pursuant to the November 1 Mergers, Metromedia Company and its affiliates were
entitled to appoint, and did appoint, six of the ten members of MIG's Board of
Directors. As of the Record Date, Metromedia Company and its affiliates
beneficially own approximately 23.1% of the outstanding Common Stock.
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<PAGE>
AGREEMENTS ENTERED INTO IN CONNECTION WITH THE GOLDWYN MERGER
DISTRIBUTION AGREEMENT
In connection with the acquisition of Goldwyn by MIG on July 2, 1996 (the
"Goldwyn Merger"), the Samuel Goldwyn, Jr. Family Trust (the "Goldwyn Trust")
and Goldwyn entered into a distribution agreement (the "Distribution Agreement")
for the worldwide distribution in all media of 75 classic motion pictures owned
by the Goldwyn Trust for a term ending on December 31, 2020. The Goldwyn Trust
was the majority stockholder of Goldwyn and immediately following the Goldwyn
Merger owned 1,996,418 shares of Common Stock. Mr. Samuel Goldwyn, Jr. is a
trustee of the Goldwyn Trust and serves as Chairman of Goldwyn, an indirect
wholly-owned subsidiary of MIG. Under the Distribution Agreement, Goldwyn has
the sole and exclusive right and license to distribute, license and otherwise
exploit the Pictures in any and all versions and languages in all media
throughout the world. In addition, so long as Mr. Goldwyn remains Chairman of
Goldwyn, Goldwyn shall have the exclusive right of first refusal to produce any
remake or sequel rights which the Goldwyn Trust elects to exploit; provided,
that, in the event that Mr. Goldwyn no longer serves as Chairman, other than as
a result of termination for "cause," such rights shall terminate; and, provided
further, that if he is terminated for "cause," such rights shall terminate on
the seventh anniversary of the date of the Distribution Agreement.
Under the Distribution Agreement, until December 31, 1996, Goldwyn is
entitled to receive a distribution fee of 35% of the proceeds derived from the
distribution of the Pictures and shall be reimbursed for all costs incurred in
connection with such distribution. From January 1, 1997 through the remainder of
the term of the Distribution Agreement, Goldwyn will receive a distribution fee
of 30% of the proceeds received from the distribution of the Pictures, and shall
be reimbursed for all costs relating to such distribution.
In addition, certain participations payable owed by Goldwyn to the Goldwyn
Trust have accrued under an existing distribution agreement between the Company
and the Goldwyn Trust relating to the Pictures (the "Accrued Participations")
and have not been paid as a result of limitations set forth in the Company
credit facility with its bank group. Pursuant to the Distribution Agreement, the
Goldwyn Trust will receive a minimum of $800,000 per year until the amount of
Accrued Participations has been reduced to zero. The Distribution Agreement
limits the amount of money that the Goldwyn Trust can receive in respect of
Accrued Participations and future participations owed to the Goldwyn Trust to a
maximum amount per year escalating from $1.25 million to $1.5 million over a
four-year period.
TRADEMARK LICENSE AGREEMENT
Pursuant to a trademark license agreement entered into in connection with
the Goldwyn Merger, Mr. Samuel Goldwyn, Jr. agreed to license the trademark
"Samuel Goldwyn" to Goldwyn in perpetuity, royalty-free for use in connection
with presently existing film and television product and has agreed to a
non-exclusive license to use the name "Goldwyn" in perpetuity, royalty-free in
connection with the film and television product of Goldwyn that is consistent
with the high quality standards established by Mr. Goldwyn.
PRODUCTIONS AND NIGHTLIFE
Samuel Goldwyn Productions ("Productions") is a California corporation
wholly owned by Mr. Goldwyn which is involved in the acquisition and development
of literary properties for production as motion pictures and television
programs. In connection with the consummation of the Goldwyn Merger, certain of
Productions' assets which had been financed by Goldwyn or that otherwise related
to the operations of Goldwyn were transferred to Goldwyn. Neither MIG nor
Goldwyn paid any consideration for the transfer of these assets.
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<PAGE>
Nightlife, Inc. ("Nightlife") is a California corporation wholly owned by
Meyer Gottlieb, President and Chief Operating Officer of Goldwyn, which has been
involved in the production of motion pictures and television programs. In
connection with the consummation of the Goldwyn Merger, the assets of Nightlife
which had been financed by Goldwyn or that otherwise related to the operations
of Goldwyn were transferred to Goldwyn. Neither MIG nor Goldwyn received any
consideration for the transfer of these assets.
REGISTRATION RIGHTS AGREEMENT
Concurrently with the consummation of the Goldwyn Merger, the Commission
declared effective a shelf registration statement which registers for resale all
of the shares of Common Stock received by Mr. Goldwyn or the Goldwyn Family
Trust pursuant to the Goldwyn Merger. MIG has agreed to keep such Form S-3
effective until the earlier of (i) the date all shares of Common Stock
registered on such Form S-3 have been sold by Mr. Goldwyn or the Goldwyn Family
Trust, (ii) the date all shares of Common Stock registered on such Form S-3 may
be immediately sold by Mr. Goldwyn or the Goldwyn Family Trust in a single
transaction using Rule 144 promulgated under the Securities Act and (iii) three
years from the effective time of the Goldwyn Merger.
OTHER
Steven A. Gilula, Chief Operating Officer of Goldwyn's Theatre Group, is a
general partner of and owns a one-third interest in Uptown Associates, a
California general partnership whose partnership's assets consist of the Uptown
Theatre located in Minneapolis, Minnesota. The partnership leases such real
property and improvements to Landmark Theatre Corporation ("Landmark"), a
subsidiary of Goldwyn, pursuant to a 10-year lease that expires on April 30,
2003, with a 10-year renewal option. During the 12-month period ended March 31,
1996, Landmark paid or accrued a total of $93,520 to Uptown Associates pursuant
to this lease.
CERTAIN AGREEMENTS REGARDING EMPLOYMENT
PHILLIPS EMPLOYMENT AGREEMENT
Mr. Phillips and the Company are parties to an employment agreement dated as
of April 19, 1994, as amended on November 1, 1995 (the "Phillips Employment
Agreement"), under which the Company has agreed to employ Mr. Phillips as its
President and Chief Executive Officer reporting directly to the Vice Chairman of
the Company. The Phillips Employment Agreement provides that Mr. Phillips will
be entitled to receive a base salary at an annual rate of $625,000 per year. Mr.
Phillips also is entitled to participate in any bonus plans maintained by the
Company for its senior executive officers and to receive other benefits provided
by the Company to its senior corporate officers. Both the Company and Mr.
Phillips have the right to terminate the Phillips Employment Agreement at any
time. If the Company terminates the Phillips Employment Agreement without cause
(as defined in the Phillips Employment Agreement) or by request for resignation
by the Chairman or Vice Chairman of the Company or if Mr. Phillips terminates
the Phillips Employment Agreement for good reason (as defined in the Phillips
Employment Agreement), the Company will be required to continue to pay Mr.
Phillips' base salary and other benefits and to provide Mr. Phillips with an
office and a secretary designated by the Company for one year following such
termination. If the Company terminates the Phillips Employment Agreement with
cause or if Mr. Phillips terminates the Phillips Employment Agreement without
good reason, 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 "Phillips Option") to purchase 300,000 shares of Common
Stock at a price of $6.375 per share. The Phillips Option may be exercised at
any time through April 18, 2001. Mr. Phillips has the right to transfer the
Phillips Option in whole or in part at any time. The Company has also entered
into a Registration Rights Agreement with Mr. Phillips pursuant to which the
Company has agreed to register with the Commission any shares purchased upon the
exercise of the Option.
15
<PAGE>
POST-EMPLOYMENT AGREEMENTS WITH WALTER M. GRANT AND FREDERICK B. BEILSTEIN
In 1995, the Company entered into Post-Employment Consulting Agreements (the
"Post-Employment Agreements") with two former officers, Frederick B. Beilstein,
III, former Senior Vice President and Chief Financial Officer, and Walter M.
Grant, former Senior Vice President and General Counsel. The Post-Employment
Agreements provide that if an executive's employment with the Company is
terminated by the Company (other than 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 Post-Employment 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 Post-Employment Agreements also provide for the continuation of
certain medical and other employee benefits during the two-year consulting
period. In connection with its approval of the November 1 Mergers, the Board of
Directors of the Company agreed that Mr. Beilstein and Mr. Grant would each be
permitted to terminate his employment with the Company and receive the payments
and other benefits due under his Post-Employment Agreement if he did not wish to
remain with the Company following the consummation of the November 1 Mergers.
Mr. Grant terminated his employment with the Company on June 15, 1996 and
accordingly, his consulting period under his Post-Employment Agreement began on
that date. Mr. Grant's Post-Employment Agreement was terminated on June 17, 1996
when Mr. Grant accepted employment with another company. On July 2, 1996, the
Company paid Mr. Grant $237,500 under his Post-Employment Agreement in
satisfaction of the Company's obligations under such agreement.
Mr. Beilstein's employment with the Company was terminated on January 21,
1996, and his consulting period under his Post-Employment Agreement began on
that date. Mr. Beilstein's Post-Employment Agreement was terminated on March 3,
1996 when Mr. Beilstein accepted employment with another company. The amount
paid by the Company to Mr. Beilstein to satisfy the Company's obligation to Mr.
Beilstein under his Post-Employment Agreement totaled $291,263.44.
MISCELLANEOUS. During 1995, Orion reimbursed Metromedia $95,000 for the
services of Silvia Kessel, Senior Vice President of Metromedia who also serves
as Executive Vice President of Orion.
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. The Company paid $298,367 to JDP Aircraft under the lease
agreement for services provided during 1995.
On April 19, 1994, Mr. Phillips was elected President and Chief Executive
Officer of the Company. He was elected to the Board of Directors of the Company
on the same date. At the same time, Renaissance Partners in which Mr. Phillips
serves as a general partner, purchased 700,000 shares of Common Stock from the
Company for $4,462,500, representing a price of $6.375 per share. This price
represents the last sale price of the Common Stock on the New York Stock
Exchange (on which the Common Stock was traded prior to the November 1 Mergers)
on April 11, 1994, the date before the Company announced that it had received an
investment proposal from Mr. Phillips. The Company also entered into a
Registration Rights Agreement with Renaissance Partners pursuant to which the
Company agreed to register with the Commission the 700,000 shares of Common
Stock purchased by Renaissance Partners. Such shares were registered with the
Commission in November 1995.
16
<PAGE>
Mr. Sanders is Chairman of Troutman Sanders, a law firm which provided legal
services to the Company.
INDEMNIFICATION AGREEMENTS
MIG has entered into indemnification agreements (the "Indemnification
Agreements") with certain officers and directors of MIG. The Indemnification
Agreements provide for indemnification of such directors and officers to the
fullest extent authorized or permitted by law. The Indemnification Agreements
also provide for (i) advancement by MIG of expenses incurred by the director or
officer in defending certain litigation, (ii) the appointment in certain
circumstances of an independent legal counsel to determine whether the director
or officer is entitled to indemnification and (iii) the continued maintenance by
MIG of directors' and officers' liability insurance (consisting of $5 million of
primary coverage and an excess policy providing $5 million of additional
coverage). These Indemnification Agreements were approved by the stockholders of
MIG at its 1993 Annual Meeting of Stockholders.
In addition, MIG and Mr. Goldwyn have reached certain agreements with
respect to indemnification and insurance arrangements and other matters which
MIG will assume or has agreed to provide after the Goldwyn Merger.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires MIG's directors and executive
officers, and persons who beneficially own more than 10% of the outstanding
Common Stock, to file with the Commission and the AMEX initial reports of
ownership and reports of changes in ownership of the Common Stock. Such
officers, directors and greater than 10% stockholders are required by the
regulations of the Commission to furnish MIG with copies of all reports that
they file under Section 16(a). To MIG's knowledge, based solely on a review of
the copies of such reports furnished to MIG and written representations that no
other reports were required, all Section 16(a) filing requirements applicable to
MIG's officers, directors and greater than 10% beneficial owners were complied
with by such persons during the fiscal year ended December 31, 1995.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to June 7, 1995, the Compensation Committee consisted of John E.
Aderhold, John P. Imlay, Jr., J.M. Darden, III and Richard Nevins. On June 7,
1995, Mr. Darden resigned as a member of the Board of Directors. Mr. Darden's
letter of resignation did not provide reasons for his resignation. On September
15, 1995, Clark A. Johnson was appointed by the Board of Directors to replace
Mr. Darden, effective September 15, 1995. Following the November 1 Mergers, the
Compensation Committee consists of Messrs. Sanders, Inlay and Johnson.
COMPENSATION COMMITTEE REPORT ON COMPENSATION
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is comprised entirely of independent directors and is responsible
for developing and making recommendations to the Board with respect to MIG's
executive compensation policies. Prior to June 7, 1995, the Compensation
Committee consisted of John E. Aderhold, John P. Imlay, Jr., J.M. Darden, III
and Richard Nevins. On June 7, 1995, Mr. Darden resigned as a member of the
Board of Directors. Mr. Darden's letter of resignation did not provide reasons
for his resignation. Clark A. Johnson was appointed by the Board of Directors to
the Compensation Committee to replace Mr. Darden, effective September 15, 1995.
The following report of the Compensation Committee discusses MIG's executive
compensation policies generally and, specifically, the relationship of MIG's
performance in 1995 to the compensation by MIG of its executive officers.
In general, the Compensation Committee seeks to link the compensation paid
to MIG's executive officers to the performance of MIG and that of the individual
executive officer. Within these parameters, the executive compensation program
attempts to provide an overall level of executive compensation that is
competitive with companies of comparable size and with similar market and
operating characteristics.
17
<PAGE>
An executive officer's compensation consists of a base salary, a
discretionary bonus and the right to participate in certain benefit plans
generally available to MIG's employees, including MIG's health, disability and
life insurance programs, with executive officers provided more life insurance
than other employees in order to attract and retain strong senior management. In
addition, executive officers of the Company historically have been eligible to
participate in the Company's lifetime defined benefit pension plan and its
nonqualified supplemental pension plan. On December 13, 1995, the Board of
Directors amended both the pension plan and the supplemental pension plan to
cease benefit accruals after December 31, 1995. See "EXECUTIVE COMPENSATION --
Pension Plans."
BASE SALARY. An executive's base salary is based primarily on job content
and market comparisons. The Compensation Committee believes that base salaries
at least equal to the market average are essential to retaining good performers.
During 1994, the Compensation Committee, with the assistance of outside
consultants, reviewed total officer compensation, including base salaries,
against a market comparison group of approximately 200 companies in the consumer
goods industry (the "Comparison Group") to assess the current competitiveness of
the base salaries of MIG's executive officers. Using the Comparison Group as a
frame of reference, the`` Compensation Committee considered MIG's executive
compensation in view of MIG's size, number of operating units, and the roles and
scope of responsibilities of MIG's executive officers. No executive officers
received increases in their base salaries for 1995 because the total
compensation paid by MIG in 1994 to its Chief Executive Officer and its four
most highly compensated officers was at the high end of the range paid by
companies in the Comparison Group to their respective Chief Executive Officers
and four most highly compensated executives. In comparing the compensation of
its executives with that of executives of companies in the Comparison Group, the
Compensation Committee considered the competitiveness of MIG's entire
compensation package and did not limit its determination solely to an evaluation
of salary, bonus or other items of compensation.
The companies included in the Consumer Goods Index for purposes of analyzing
the performance of MIG's Common Stock during 1995 (see "-- Performance Graph"
below) are not identical to the 200 companies in the Comparison Group whose
compensation policies were reviewed by the Compensation Committee in 1994 in
assessing the competitiveness of the base salaries of MIG's executive officers.
Nevertheless, MIG believes that the cross-section of companies included in the
Consumer Goods Index and the Comparison Group are sufficiently similar and
provide a reasonable basis for the Compensation Committee to develop justified
compensation policies and for an investor to evaluate the performance of MIG's
Common Stock.
BONUS. In 1995, MIG did not maintain a bonus plan with established
performance criteria, but rather awarded bonuses on a discretionary basis based
upon the recommendations of the Compensation Committee. Bonuses were awarded in
1995 to reward MIG's executive officers for their efforts in helping to
consummate the November 1 Mergers. As the Board disclosed in connection with its
approval of the November 1 Mergers, such transactions repositioned MIG's assets
into the converging entertainment, media and communications industries. The
Compensation Committee believes that the November 1 Mergers will provide MIG
Stockholders with long-term growth opportunities previously unavailable to them
and that its executives should be rewarded for identifying and securing this
opportunity on behalf of the stockholders.
The Compensation Committee's decision to award bonuses to MIG's executive
officers in 1995 was also based on the performance of the Common Stock during
1995. On January 3, 1995 (the first trading day of 1995), the closing sale price
of the Common Stock on the New York Stock Exchange (on which the Common Stock
was then traded) was $9 3/4. On September 15, 1995, the date on which 1995
bonuses were awarded to MIG's executive officers, the closing sale price of the
Common Stock was $17 3/8, an increase of 78.2%. In comparison, the Standard and
Poor's 500 Index grew by 27.1% over the same period.
18
<PAGE>
Based on these factors, the Compensation Committee recommended 1995 bonuses
of $750,000 for Mr. Phillips and $235,000 for Mr. Chmar, and bonuses equaling
50% of the base salaries for each of Messrs. Beilstein and Grant. The
distinction between the bonuses awarded to Messrs. Phillips and Chmar and the
bonuses awarded to Messrs. Beilstein and Grant reflect the fact that both
Messrs. Beilstein and Grant had entered into post-employment consulting
agreements with MIG entitling them to two years compensation at their respective
base salaries following their departure from MIG. The Compensation Committee
also took into account that Messrs. Phillips and Chmar would continue to hold
executive positions with MIG following consummation of the November 1 Mergers,
whereas Messrs. Beilstein and Grant would not. In addition, the Compensation
Committee felt it necessary to express MIG's appreciation for the diligence,
conscientiousness and professionalism exhibited by both Messrs. Beilstein and
Grant in the months leading up to the November 1 Mergers, particularly after it
became clear that they would not retain their executive positions following such
mergers. The Compensation Committee believes that the bonuses paid to MIG's
executive officers in 1995 are justified and consistent with MIG's policy of
linking compensation with performance. The Compensation Committee considered a
number of factors in determining the level of bonuses to award to MIG's
executive officers for 1995 and did not quantify the extent to which such
bonuses were based upon the performance of MIG's Common Stock or the extent to
which they were based upon other factors.
CHIEF EXECUTIVE OFFICER COMPENSATION. Amounts earned during 1995 by MIG's
President and Chief Executive Officer, John D. Phillips, are shown in the
Summary Compensation Table. Mr. Phillips' base salary was established in April
1994, at the time he became the CEO, at the same amount earned by his
predecessor. This amount has remained unchanged since February 1991. In
determining to award Mr. Phillips a $750,000 bonus for 1995, the Compensation
Committee considered the same factors it did in awarding bonuses to MIG's other
executive officers and, in addition, his leadership in repositioning MIG's
assets.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). One of the factors
the Compensation Committee considers in connection with compensation matters is
the anticipated tax treatment to the Company and to the executives of the
compensation arrangements. The deductibility of certain types of compensation
depends upon the timing of an executive's vesting in, or exercise of, previously
granted rights. Moreover, interpretation of, and changes in, the tax laws and
other factors Beyond the Compensation Committee's control also affect the
deductibility of compensation. Accordingly, the Compensation Committee will not
necessarily limit executive compensation to that deductible under Section 162(m)
of the Code. The Compensation Committee will consider various alternatives to
preserving the deductibility of compensation payments and benefits to the extent
consistent with its other compensation objectives.
The foregoing report of the Compensation Committee shall not be deemed to be
incorporated by reference into any filing of MIG under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, except to
the extent that the Company specifically incorporates such information by
reference, and shall not otherwise be deemed filed under such Acts.
Submitted by the Compensation
Committee of MIG's Board of
Directors as of September 15, 1995
John E. Aderhold
John P. Imlay, Jr.
Clark A. Johnson
Richard Nevins
19
<PAGE>
PERFORMANCE GRAPH
The following graph sets forth MIG's total stockholder return as compared to
the Standard & Poor's 500 Index and the Standard & Poor's Consumer Goods Index
(the "Consumer Goods Index") for the five year period from January 1, 1991
through December 31, 1995. The total stockholder return assumes $100 invested at
the beginning of the period in MIG's Common Stock, the Standard & Poor's 500
Index and the Consumer Goods Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MIG S&P 500 CONSUMER GOODS INDEX
<S> <C> <C> <C>
12/31/90 100.00 100.00 100.00
12/31/91 130.90 126.31 135.83
12/31/92 120.14 131.95 145.85
12/31/93 76.31 141.26 144.61
12/31/94 92.84 139.09 144.35
12/31/95 142.44 186.53 191.27
</TABLE>
20
<PAGE>
PROPOSAL NO. 1 -- THE CHARTER AMENDMENT
On June 10, 1996, the Board of Directors of MIG unanimously approved an
amendment to Article FOURTH of MIG's Restated Certificate of Incorporation to
increase the authorized number of shares of Common Stock to 400,000,000, subject
to stockholder approval. The following summary description of the Charter
Amendment is qualified in its entirety by the text thereof contained in Appendix
A hereto.
As of the MIG Record Date, MIG had authorized (i) 110,000,000 shares of
Common Stock, of which 66,051,054 were issued and outstanding and (ii)
70,000,000 shares of Preferred Stock, none of which are issued and outstanding.
The Board of Directors believes it is desirable to have additional shares of
Common Stock available for future financings, potential acquisitions and the
payment of stock dividends. Having shares of Common Stock available for issuance
provides MIG with greater flexibility should opportunities arise that require
prompt action as it will allow such shares to be issued without the delay and
expense of obtaining stockholder approval at the time, which could otherwise
deprive MIG and its stockholders of the ability to effectively benefit from the
opportunity. In addition, MIG's Board of Directors could consider the issuance
of Common Stock as a means of protecting MIG's stockholders in the face of a
proposal relating to a change in control of MIG that the Board determined was
not in the best interests of MIG and its stockholders.
The Charter Amendment is not intended to have an anti-takeover effect.
However, as a result of the increase in the number of shares of authorized
Common Stock, the Board of Directors of MIG could, with certain restrictions,
issue additional shares of Common Stock without any further stockholder action.
The issuance of such shares of Common Stock could be used as an anti-takeover
measure by MIG's Board of Directors. Accordingly, the Charter Amendment may have
an anti-takeover effect.
Approval by the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock is required for approval of the Charter
Amendment.
THE BOARD OF DIRECTORS OF MIG RECOMMENDS THAT MIG STOCKHOLDERS VOTE "FOR"
THE PROPOSAL TO APPROVE THE CHARTER AMENDMENT.
21
<PAGE>
PROPOSAL NO. 2 -- ELECTION OF DIRECTORS
The following table sets forth certain information with respect to the
members of MIG's Board of Directors, including the three incumbent Class I
Directors (Messrs. Kluge, Subotnick, and Imlay) who have been nominated by the
Board of Directors for re-election as Class I Directors at the Annual Meeting.
The Board of Directors knows of no reason why any of its nominees will be
unable or will refuse to accept election. If any nominee becomes unable or
refuses to accept election, the Board of Directors will either reduce the number
of directors to be elected or select a substitute nominee. If a substitute
nominee is selected, proxies will be voted in favor of such nominee.
The affirmative vote of the holders of a plurality of shares of Common Stock
present in person or represented by proxy at the Annual Meeting will be required
to elect each of the three Class I Directors to MIG's Board.
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION FOR PAST FIVE YEARS CLASS OF DIRECTOR
AND CERTAIN DIRECTORSHIPS AGE DIRECTORS SINCE
- ------------------------------------------------------------------------------------- --- ---------- -----------
<S> <C> <C> <C>
John P. Imlay, Jr.................................................................... 59 Class I 1993
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.
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 member of the Audit Committee
and the Compensation Committee.
John W. Kluge........................................................................ 81 Class I 1995
Chairman of the Board of Directors of the Company since November 1, 1995. Chairman
of the Board and a director of Orion Pictures Corporation since 1992. Chairman and
President of Metromedia and its predecessor-in-interest, Metromedia, Inc. for over
five years. Director of The Bear Stearns Companies, Inc., WorldCom, Inc., Conair
Corporation and Occidental Petroleum Corporation. Mr. Kluge is Chairman of the
Executive Committee.
Stuart Subotnick..................................................................... 54 Class I 1995
Vice Chairman of the Board of Directors of the Company since November 1, 1995. Vice
Chairman of the Board and a director of Orion Pictures Corporation since 1992.
Executive Vice President of Metromedia and its predecessor-in-interest, Metromedia,
Inc., for over five years. Director of Carnival Cruise Lines, Inc. and WorldCom,
Inc. Mr. Subotnick is Chairman of the Audit Committee and a member of the Executive
and Nominating Committees.
John D. Phillips..................................................................... 53 Class II 1994
President and Chief Executive Officer of the Company since April 19, 1994. 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. from May 1989 until Resurgens was merged with Metromedia Communications
Corporation and LDDS Communications, Inc. (now known as WorldCom, Inc.) in
September 1993. He is a director of Restor Industries, Inc. and Roadmaster
Industries, Inc.
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION FOR PAST FIVE YEARS CLASS OF DIRECTOR
AND CERTAIN DIRECTORSHIPS AGE DIRECTORS SINCE
- ------------------------------------------------------------------------------------- --- ---------- -----------
<S> <C> <C> <C>
Richard J. Sherwin................................................................... 52 Class II 1995
Co-President of MITI. Mr. Sherwin has served as Co-President and director of MITI
and its predecessor companies since October 1990. Prior to that, Mr. Sherwin served
as the Chief Operating Officer of Graphic Scanning Corp., a paging and wireless
telecommunications company.
Leonard White........................................................................ 56 Class II 1992
President and Chief Executive Officer of Orion. Mr. White has served in this
capacity from March 1992 through November 1, 1995. Interim President and Chief
Executive Officer of Orion from March 1992 until November 1992. Chairman of the
Board and Chief Executive Officer of Orion Home Entertainment Corporation, a
subsidiary of Orion ("OHEC"), from March 1991 until March 1992. President and Chief
Operating Officer of Orion Home Video division of OHEC from March 1987 until March
1991.
Clark A. Johnson..................................................................... 64 Class III 1990
Director of the Company since April 27, 1990. He has served as chairman and Chief
Executive Officer of Pier One Imports, Inc., a specialty retailer of decorative
home furnishings, since August 1988. Mr. Johnson is a director of Albertson's,
Inc., Anacomp, Inc., Heritage Media Corporation, InterTAN, Inc. and Pier One
Imports, Inc. Mr. Johnson is a member of the Compensation and Audit Committees.
Silvia Kessel........................................................................ 45 Class III 1995
Senior Vice President, Chief Financial Officer and Treasurer of the Company since
the November 1, 1995. Executive Vice President and a director of Orion Pictures
Corporation since January 1993. Senior Vice President of Orion from June 1991 to
November 1992. Senior Vice President of Metromedia since January 1994. President of
Kluge & Company from January 1994. Managing Director of Kluge & Company (and its
predecessor) from April 1990 to January 1994. Director of WorldCom, Inc. Ms. Kessel
is a member of the Nominating Committee.
Carl E. Sanders...................................................................... 70 Class III 1967
Engaged in the private practice of law as Chairman of Troutman Sanders, a law firm
located in Atlanta, Georgia. Director of the Company since 1967, except for a
one-year period from April 1970 to April 1971. Former Governor of the State of
Georgia and a director of Carmike Cinemas, Inc., Norrell Corporation, Healthdyne,
Inc., and Roadmaster Industries, Inc. Mr. Sanders is Chairman of the Compensation
Committee.
Arnold L. Wadler..................................................................... 52 Class III 1995
Senior Vice President, General Counsel and Secretary of the Company since November
1, 1995. Senior Vice President, Secretary and General Counsel of Metromedia and its
predecessor-in-interest, Metromedia, Inc., for over five years. Director of Orion
Pictures Corporation since 1992. Mr. Wadler is Chairman of the Nominating
Committee.
</TABLE>
On December 11 and 12, 1991 (the "Filing Date"), Orion and certain of its
subsidiaries filed voluntary bankruptcy petitions under Chapter 11 of the United
States Bankruptcy Code. The United
23
<PAGE>
States Bankruptcy Court for the Southern District of New York confirmed Orion's
Modified Third Amended Joint Consolidated Plan of Reorganization (the "Plan") on
October 10, 1992 and the Plan was consummated on November 5, 1992. Silvia Kessel
and Leonard White, current directors of the Company, each served as Executive
Officers of Orion on the Filing Date.
24
<PAGE>
PROPOSAL NO. 3 -- PROPOSAL TO APPROVE THE
ADOPTION OF THE METROMEDIA INTERNATIONAL
GROUP, INC. 1996 INCENTIVE STOCK PLAN
On January 31, 1996, the Board of Directors of MIG approved, subject to the
approval of MIG's stockholders, the Metromedia International Group, Inc. 1996
Incentive Stock Plan (as amended, the "1996 Incentive Stock Plan"). See "--
Shares of Common Stock Subject to the 1996 Incentive Stock Plan." The purpose of
the 1996 Incentive Stock Plan is to give MIG a significant advantage in
retaining key employees, officers and directors, and to provide an incentive to
selected key employees, officers and directors of MIG who have substantial
responsibility in the direction of MIG, and others whom the Committee (as
defined below) determines provide substantial and important services to MIG, to
acquire a proprietary interest in MIG, to continue as employees, officers and
directors or in their other capacities, and to increase their efforts on behalf
of MIG.
DESCRIPTION OF THE 1996 INCENTIVE STOCK PLAN
The following summary of the 1996 Incentive Stock Plan is qualified in its
entirety by the full text of the 1996 Incentive Stock Plan, a copy of which is
attached hereto as Appendix B. The following is a brief description of the
material provisions of the 1996 Incentive Stock Plan.
TYPES OF AWARDS
The types of awards that may be granted pursuant to the 1996 Incentive Stock
Plan include (i) incentive stock options ("ISOs"), (ii) non-qualified stock
options ("NQSOs" and together with ISOs, "Stock Options"), and (iii) tandem
stock appreciation rights ("Tandem SARs" and together with Stock Options,
"Awards"). ISOs are intended to be treated as incentive stock options within the
meaning of Section 422 of the Code. NQSOs are, in general, options which do not
have the special income tax advantages associated with ISOs. Tandem SARs are
rights granted in conjunction with Stock Options that, upon exercise, entitle
the holder to receive an amount equal to the excess of the fair market value of
a share of Common Stock on the date of exercise (the "Closing Price") over the
exercise price of the related Stock Option, in cash or in stock, as determined
by MIG.
Stock Option grants will consist of the maximum number of ISOs that may be
granted to a particular grantee under applicable law with the balance of the
Stock Options being NQSOs. Tandem SARs will be granted in connection with Stock
Options.
ADMINISTRATION OF THE PLAN
The 1996 Incentive Stock Plan will be administered by the Compensation
Committee of the Board of Directors (the "Committee"). The Committee will
consist of two or more members of the Board of Directors each of whom shall be
an "outside director" as defined under Section 162(m) of the Code, and the
regulations and interpretations thereunder. Members of the Committee will be
eligible to receive certain Awards (other than ISOs) under the 1996 Incentive
Stock Plan.
Subject to the terms and conditions of the 1996 Incentive Stock Plan and the
formula awards for the Independent Directors (as defined below) discussed below,
the Committee is authorized to grant Awards, to determine which employees,
officers, directors or other individuals may be granted Awards, to determine the
type and number of Awards to be granted, to determine the term of such Awards,
to determine the exercise price of any Award, to determine the terms of any
agreement pursuant to which Awards are granted, to interpret and construe the
1996 Incentive Stock Plan, and to determine any other matters delegated to it
under the 1996 Incentive Stock Plan or necessary for the proper administration
of the 1996 Incentive Stock Plan.
SHARES OF COMMON STOCK SUBJECT TO THE 1996 INCENTIVE STOCK PLAN
Subject to certain exceptions set forth in the 1996 Incentive Stock Plan,
the aggregate number of shares of the Common Stock that may be the subject of
Awards under the 1996 Incentive Stock Plan is
25
<PAGE>
8,000,000. The maximum number of shares of Common Stock available with respect
to Awards granted to any one grantee shall not exceed, in the aggregate,
250,000. Shares of Common Stock granted under the 1996 Incentive Stock Plan may
either be authorized but unissued shares of Common Stock not reserved for any
other purpose or shares of Common Stock held in or acquired for the treasury of
MIG.
Shares of Common Stock subject to an Award which terminates unexercised may
again be the
subject of an Award under the 1996 Incentive Stock Plan. In addition, shares of
Common Stock surrendered to MIG in payment of the exercise price or applicable
taxes upon exercise or settlement of an Award may also be used thereafter for
additional Awards.
ELIGIBILITY
Any key employee, officer and director, including a director who is not an
employee and a director who serves on the Committee, of MIG and its subsidiaries
who has substantial responsibility in the direction of MIG and its subsidiaries
and anyone else whom the Committee determines provides substantial and important
services to MIG is eligible to receive Awards.
Independent Directors who serve on the Board of Directors on the date the
1996 Incentive Stock Plan is adopted shall be entitled to receive Awards under
the 1996 Incentive Stock Plan with respect to 50,000 shares of Common Stock,
each having an exercise price equal to the fair market value of a share of
Common Stock on the date of grant. Any other Independent Director who first
serves on the Board of Directors subsequent to the date the 1996 Incentive Stock
Plan was adopted shall be entitled to receive Awards under the 1996 Incentive
Stock Plan with respect to 50,000 shares of Common Stock, each having an
exercise price equal to the fair market value of a share of Common Stock on the
date of grant. For purposes hereof, "Independent Directors" shall mean any
member of the Board of Directors who during his entire term as a director was
not employed by MIG and its subsidiaries, within the meaning of Section 424(f)
of the Code, and who also satisfies the criteria for "outside director" under
Section 162(m) of the Code.
TERMS AND CONDITIONS OF STOCK OPTIONS
The exercise price of all ISOs granted under the 1996 Incentive Stock Plan
is the fair market value of the Common Stock on the date of grant. The exercise
price of all NQSOs granted under the 1996 Incentive Stock Option Plan will be
determined by the Committee, although the initial awards will be made at fair
market value of the Common Stock on the date of grant. The term of each Stock
Option granted under the 1996 Incentive Stock Plan will be determined by the
Committee but will in no event be greater than ten years from the date of grant.
With respect to ISOs granted to a grantee who owns stock possessing more
than 10% of the voting rights of MIG's outstanding capital stock on the date of
grant, the exercise price of the ISO shall be equal to 110% of the fair market
value of the Common Stock subject to the ISO on the date of grant and the ISO
may not be exercisable more than five years after the date of grant.
Stock Options shall vest and become exercisable over a period of years as
determined by the Committee.
Subject to the following sentence, upon the exercise of a Stock Option, the
grantee must pay the exercise price in cash. At the discretion of the Committee,
the exercise price may be paid with shares of Common Stock already owned by, and
in possession of, the grantee or in a combination of cash or shares of Common
Stock.
The aggregate fair market value of the Common Stock (determined on the date
of grant) for which ISOs granted under the 1996 Incentive Stock Plan and any
other plan of MIG or a subsidiary
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<PAGE>
may be exercisable for the first time by any grantee during any calendar year
cannot exceed $100,000 or such other amount as may be prescribed under the Code
or applicable regulations and rulings from time to time.
TERMS AND CONDITIONS OF TANDEM STOCK APPRECIATION RIGHTS
Tandem SARs provide optionees with an alternative means of realizing the
benefits of Stock Options. A Tandem SAR is the right to receive an amount equal
to the excess of the fair market value of a share of Common Stock on the date of
exercise over the exercise price of the related Stock Option (the "Spread").
This amount will be paid in cash, or in the discretion of the Committee, in
shares of Common Stock or in a combination of cash or shares of Common Stock.
The Committee will only grant Tandem SARs under the 1996 Incentive Stock Plan at
the time Stock Options are granted.
The exercise of either a Tandem SAR or a Stock Option will constitute a
surrender of the Stock Option or Tandem SAR, respectively. Thus, the exercise of
a Stock Option will result in the cancellation of the corresponding Tandem SAR
and the exercise of the Tandem SAR will result in a cancellation of the
corresponding Stock Option. A Tandem SAR terminates upon the termination of the
related Stock Option and is only exercisable at such times and to the extent the
related Stock Option is exercisable. If the Tandem SAR is exercised in cash by a
person subject to Section 16(a) of the Exchange Act (a "Reporting Person"), it
will be subject to additional restrictions.
ACCELERATION OF VESTING AND EXERCISABILITY
If a grantee's employment with MIG is terminated because of the grantee's
death, the grantee's retirement on or after attaining age sixty-five or a Change
in Control prior to the date the Stock Option is by its terms exercisable, the
Stock Option shall be immediately exercisable (and the restrictions thereof, if
any, shall lapse) as of the date of the termination of the grantee's employment,
subject to the other terms of the 1996 Incentive Stock Plan.
Upon a Change in Control of MIG, (i) each holder of a Stock Option shall
have the right to exercise the Stock Option in full without regard to any
waiting period, installment period or other limitation or restriction thereon
and (ii) each holder of a Stock Option shall have the right, exercisable by
written notice to MIG within sixty days after the Change in Control, to receive,
in exchange for the surrender of the Stock Option or any portion thereof to the
extent the Stock Option is then exercisable in accordance with clause (i), an
amount of cash equal to the difference between the fair market value of the
Common Stock on the date of exercise and the exercise price of the Stock Option.
Upon a Change in Control of MIG, each grantee with an outstanding Tandem SAR
shall have the right to the Spread as soon as practicable, without regard to any
limitations or restrictions thereon.
In general, under the 1996 Incentive Stock Plan, a "Change in Control" of
MIG shall be deemed to have occurred as of the first day any one or more of the
following four conditions have been satisfied: (I) any event whereby a Person
(other than (i) MIG or an affiliate, as defined in the Exchange Act, (ii) any
employee benefit plan or trust sponsored or maintained by MIG or an affiliate,
as defined in the Exchange Act, or (iii) either John W. Kluge or Stuart
Subotnick) (x) acquires 35% or more of MIG's outstanding voting securities, (y)
acquires securities of MIG bearing a majority of voting power with respect to
election of directors of MIG or (z) acquires all or substantially all of MIG's
assets, whether by sale, lease, exchange or other transfer (in one transaction
or in a series of related transactions); (II) a change in the composition of the
Board of Directors such that at any time a majority of the Board of Directors
shall not have been members of the Board of Directors for twenty-four months;
provided, however, that directors who were appointed or nominated for election
by at least two-thirds of the directors who were directors at the beginning of
such twenty-four month period (or deemed to be such directors under this
condition II) shall be deemed to be directors at the beginning of such
twenty-four month period for the purposes of this condition II; (III) the
stockholders of MIG approve any plan or proposal for the liquidation or
dissolution of MIG; or (IV) any
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<PAGE>
consolidation or merger of MIG, other than a merger or consolidation of MIG in
which the voting securities of MIG outstanding immediately prior thereto
continue to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 50% of the combined
voting power of the voting securities of MIG or such surviving entity
outstanding immediately after such merger or consolidation. "Person" shall have
the same meaning as ascribed to such term in Section 3(a)(9) of the Exchange Act
and used in Section 13(d) thereof.
ADJUSTMENT PROVISIONS
The total number and character of shares of Common Stock subject to Awards
and the number and character of shares of Common Stock subject to outstanding
Awards and/or the exercise price of such shares will be appropriately adjusted
by the Committee if the shares of Common Stock are changed into or exchanged for
a different number or kind of shares of stock or other securities of MIG or of
another corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, split, reverse split, combination of shares,
or otherwise). The Committee may also make appropriate adjustments in the event
of a merger, consolidation or other transaction or event having a similar
effect.
Amendment and Termination of the 1996 Incentive Stock Plan
Unless terminated earlier by action of the Board of Directors of MIG, the
1996 Incentive Stock Plan will terminate on January 31, 2006, and no additional
grants under the 1996 Incentive Stock Plan will be made after that date.
The Board of Directors may amend or terminate the 1996 Incentive Stock Plan
at any time, but may not, without the written consent of the grantee, make any
such alteration which would impair the rights of a holder of an outstanding
Award. Furthermore, the 1996 Incentive Stock Plan may not be amended without the
approval of the holders of a majority of the outstanding stock of MIG (i) to
decrease the minimum exercise price for ISOs or Tandem SARs; (ii) to extend the
term of the 1996 Incentive Stock Plan beyond ten years, (iii) to extend the
maximum terms of the Awards granted beyond ten years, (iv) to withdraw the
administration of the 1996 Incentive Stock Plan from the Committee, (v) to
change the class of eligible employees, officers, directors and other grantees,
(vi) to increase the aggregate number of shares of Common Stock authorized to be
issued, and (vii) to otherwise require stockholder approval to comply with Rule
16b-3 or any other applicable law, regulation, or listing requirement or to
qualify for an exemption or characterization that is deemed desirable by the
Board of Directors.
FEDERAL INCOME TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS
Under the Code and Treasury regulations and administrative pronouncements
thereunder, a grantee will not realize taxable income by reason of either the
grant or the exercise of an ISO, and MIG will not receive an income tax
deduction at either such time. However, any appreciation in share value
following the date of grant will be taken into consideration at the time of
exercise in determining liability for the alternative minimum tax. If a grantee
exercises an ISO and delivers shares of Common Stock as payment for part or all
of the option price of the Common Stock purchased ("Payment Stock"), no gain or
loss will be recognized with respect to the Common Stock delivered and no tax
will be payable with respect to the Payment Stock or the Common Stock purchased.
The holding period of such new ISO stock will include the holding period of the
Payment Stock. To the extent the number of shares received exceeds the number of
shares tendered, the grantee's basis in the additional new shares received upon
exercise of the ISO is zero and these shares have a holding period that
commences on the date of exercise of the ISO. However, if the Payment Stock was
acquired pursuant to the exercise of an ISO and the required holding period in
order to obtain favorable tax treatment with respect to such Common Stock is not
met as of the date such Common Stock is delivered, the grantee
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<PAGE>
will be treated as having sold the Payment Stock in a disqualifying disposition
and will be subject to the rules described below for disqualifying dispositions
with respect to the Payment Stock. The grantee's basis in such new ISO stock
that he or she receives upon exercise of the option in exchange for the Payment
Stock is the same as his or her basis in the Payment Stock increased by any
amount included in gross income as ordinary income due to any disqualifying
disposition and any cash paid on the exercise. The holding period of such new
ISO stock commences on the date of exercise of the ISO.
If a grantee exercises an ISO and does not dispose of the shares of Common
Stock within two years from the date of grant and one year from the date of
exercise, the entire gain, if any, realized upon disposition will be taxable to
the grantee as long term capital gain, and MIG will not be entitled to any
deduction. If, however, a grantee disposes of shares of Common Stock prior to
the expiration of the holding periods described in the previous sentence, the
grantee will generally realize ordinary income in, and tax withholding may be
required upon, an amount equal to the difference between the exercise price and
the Closing Price. MIG will be entitled to a deduction equal to the amount
recognized as ordinary income by the grantee. Any additional appreciation will
be treated as a capital gain (long term or short term depending on how long the
grantee held the shares of Common Stock prior to disposition) and MIG will not
be entitled to any further deductions for federal income tax purposes. If the
amount realized by the grantee is less than the value of the shares of Common
Stock upon exercise, then the amount of ordinary income and the corresponding
MIG deduction is equal to the excess of the amount realized over the option
price.
NON-QUALIFIED STOCK OPTIONS
As to the NQSOs, there will be no federal income tax consequences to either
the grantee or MIG on the grant of the option because the NQSO does not have a
"readily ascertainable fair market value" as required by Section 83 of the Code.
Additionally, if a grantee exercises a NQSO and delivers shares of Common Stock
as payment for part or all of the option price of the Common Stock purchased, no
gain or loss will be recognized with respect to the Common Stock delivered. To
the extent a grantee receives more shares of Common Stock pursuant to the
exercise of the option than shares of Common Stock delivered, the fair market
value of this excess, less any cash paid by the grantee, will be taxed as
ordinary income and will be subject to applicable tax withholding.
On the exercise of an NQSO, the grantee (except as described below)
recognizes taxable ordinary income equal to the difference between the exercise
price of the shares of Common Stock and the Closing Price. MIG will be entitled
to a tax deduction in an amount equal to the grantee's taxable ordinary income
if it provides the grantee with a timely Form W-2 or Form 1099, as appropriate.
Upon disposition of the Common Stock by the grantee, he or she will
recognize long term or short term capital gain or loss, as the case may be,
equal to the difference between the amount realized on such disposition and his
or her basis for the Common Stock, which will include the amount previously
recognized by him or her as ordinary income. The holding period for capital
gains purposes will commence on the day the optionee acquires the shares of
Common Stock pursuant to the NQSO. None of the appreciation on NQSOs is subject
to the alternative minimum tax.
TANDEM SARS
A grantee generally does not recognize income upon the grant of a Tandem SAR
or upon the appreciation of the underlying shares of Common Stock. The exercise
of a Tandem SAR will result in ordinary income to the holder in the year the
Tandem SAR is exercised. The amount of income recognized will be equal to the
total value of all cash and the fair market value of the Common Stock received
pursuant to the exercise of the Tandem SAR. MIG will be entitled to a
corresponding income tax deduction equal to such amount. The arrangement is not
a non-qualified deferred compensation plan, and is therefore not subject to FICA
withholding.
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SECTION 280G
Under Section 280G of the Code, amounts payable to officers and highly
compensated individuals that are contingent upon a change in the ownership or
effective control of a corporation or of a substantial portion of its assets may
be subject to a 20% excise tax and may not be deductible by the corporate payor
if they exceed a "basic amount" allocated to such payment (so-called "excess
parachute payments"). The acceleration of the right to exercise otherwise
non-vested NQSOs, when considered in connection with other payments to officers
and highly compensated individuals of MIG, may give rise to excess parachute
payments. In that event, the affected grantee will be subject to a 20% excise
tax, and MIG will lose its deduction.
SECTION 162(M)
Under Section 162(m) of the Code, the income tax deduction of
publicly-traded companies may be limited to the extent total compensation
(including base salary, annual bonus, stock option exercises and non-qualified
benefits paid in 1994 and thereafter) for certain executive officers exceeds
$1,000,000 (less the amount of any "excess parachute payments" as defined in
Section 280G of the Code) in any one year. However, under Section 162(m) of the
Code, the deduction limit does not apply to certain "performance-based"
compensation established by an independent compensation committee which is
adequately disclosed to, and approved by, stockholders. In particular, Awards
will satisfy the performance-based exception if the Awards are made by a
qualifying compensation committee, the plan sets the maximum number of shares
that can be granted to any particular grantee within a specified period and the
compensation is based solely on an increase in the stock price after the date of
grant (i.e., the option exercise price is equal to or greater than the fair
market value of the stock subject to the Award on the grant date). MIG intends
to consider fully the implications of the Section 162(m) of the Code on the
deductibility of compensation in making awards under the 1996 Incentive Stock
Plan.
The foregoing federal income tax information is a summary only and does not
purport to be a complete statement of the relevant provisions of the Code.
MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS
The Committee may, within the limitations of the 1996 Incentive Stock Plan,
modify, extend or renew outstanding Awards granted under the 1996 Incentive
Stock Plan, or accept the surrender of outstanding Awards and authorize the
granting of new Awards in substitution therefor. No modifi-cation may, without
the consent of the grantee, alter or impair any rights or obligations under any
Award theretofore granted to the grantee nor shall any modification adversely
affect the status of an ISO under Section 422 of the Code.
TRANSFERABILITY OF AWARDS AND OTHER PROVISIONS
The rights of a grantee with respect to the Awards granted pursuant to the
1996 Incentive Stock Plan are not transferable other than by will or the laws of
descent and distribution and are exercisable, during the lifetime of the
grantee, only by the grantee or by the guardian or legal representative of the
grantee acting in a fiduciary capacity on behalf of the grantee under state law
or court supervision. An Award is not subject, in whole or in part, to
attachment, execution or levy of any kind.
RIGHTS UPON TERMINATION OF EMPLOYMENT
If the grantee dies while an employee or when no longer an employee but
while he or she still has the right to exercise an Award, the grantee's estate
shall have the right for a period of one year following the date of death to
exercise the Award to the extent such Award is exercisable and to the extent
such Award has not yet expired.
Upon a grantee's retirement from MIG or a subsidiary on or after attaining
age sixty-five, the grantee shall have the right for a period of three months
following the date of retirement to exercise an Award to the extent such Award
is exercisable and to the extent such Award has not yet expired.
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Upon a grantee's termination of employment from MIG on account of
disability, the grantee or the legal representative of the grantee, shall have
the right for a period of one year following the date of such termination to
exercise an Award to the extent such Award is exercisable and to the extent such
Award has not yet expired.
In the event the grantee's employment with MIG or a subsidiary is terminated
for any reason other than disability, death or retirement on or after attaining
age sixty-five, the grantee may exercise an Award within three months after his
or her termination of employment.
RIGHTS AS STOCKHOLDER
No grantee of any Stock Option has any rights as a stockholder with respect
to any shares of Common Stock subject to his or her Stock Option prior to the
date on which he or she is recorded as the holder of such shares of Common Stock
on the records of MIG.
RIGHT TO CONTINUED EMPLOYMENT
The 1996 Incentive Stock Plan is not a contract of employment, and the terms
of employment of any grantee shall not be affected in any way by the 1996
Incentive Stock Plan or related instruments except as specifically provided
therein. The establishment of the 1996 Incentive Stock Plan shall not be
construed as conferring any legal rights upon any grantee for a continuation of
employment, nor shall it interfere with the right of MIG or any subsidiary to
discharge any grantee and to treat him or her without regard to the effect which
such treatment might have upon him or her as a grantee.
NEW PLAN BENEFITS
The Committee has made grants of Awards under the 1996 Incentive Stock Plan
to the following persons, subject to stockholder approval of the 1996 Incentive
Stock Plan, in the following amounts:
<TABLE>
<CAPTION>
NAME
- --------------------------------------
(A) INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT ASSUMED
--------------------- ANNUAL RATES OF STOCK PRICE APPRECIATION
NUMBER OF SECURITIES FOR OPTION TERMS (1)
UNDERLYING STOCK -----------------------------------------
OPTIONS/SARS GRANTED EXERCISE PRICE 5%($) 10%($)
--------------------- ($/SH)(2) (20.78 (33.02
--------------- STOCK STOCK
(B) PRICE) PRICE)
(C) ----------- -----------
(D) (E)
<S> <C> <C> <C> <C>
John D. Phillips...................... 50,000 12.75 401,500 1,013,500
Chief Executive Officer
Frederick B. Beilstein, III........... 0
Former Senior Vice President,
Treasurer and Chief Financial Officer
Walter M. Grant....................... 0
Former Senior Vice President, General
Counsel and Secretary
W. Tod Chmar.......................... 0
Senior Vice President
Executive Officer Group............... 725,000 12.75 5,821,750 14,695,750
(Total six individuals)
Non-Executive Director................ 400,000 12.75 3,212,000 8,108,000
Group (Total four individuals)
Non-Executive Director................ 1,473,221 12.75 11,829,965 29,862,190
Group (Total thirty-six individuals)
</TABLE>
- ------------------------------
(1) As required by rules of the Commission, the dollar amounts under columns (d)
and (e) represent the hypothetical gain or "option spread" that would exist
for the Stock Options held based on assumed 5% and 10% annual compounded
rate of stock price appreciation over the full option term. These assumed
rates would result in a Common Stock price on January 31, 2006 of $20.78 and
$33.02, respectively. If these price appreciation assumptions are applied to
all of MIG's outstanding shares of Common Stock on January 31, 1996, such
shares would appreciate in the aggregate by approximately
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$341,275,000 and $861,475,000 respectively, over the ten-year period ending
on January 31, 2006. These prescribed rates are not intended to forecast
possible future appreciation, if any, of the Common Stock. It is important
to note that Stock Options have value to its recipients only if the stock
price exceeds the exercise price.
(2) For purposes of this table, the assumed price per share is $12.75.
VOTE REQUIRED
The affirmative vote of holders of a majority of the shares of Common Stock
present, or represented by proxy and actually voting on the matter at the Annual
Meeting is required for approval of the adoption of the 1996 Incentive Stock
Plan. In order to qualify the 1996 Incentive Stock Plan under Rule 16b-3 of the
Exchange Act, the proposal to approve the 1996 Incentive Stock Plan must be
adopted by the affirmative vote of a majority of the shares of Common Stock
present in person or represented by proxy and entitled to vote at the Annual
Meeting. All properly executed proxies will be voted as specified in the proxy,
or if not specified, will be voted FOR the proposal to adopt the 1996 Incentive
Stock Plan.
As of the MIG Record Date, directors and Named Executive Officers of MIG who
have been designated to receive Awards under the Incentive Stock Plan
beneficially owned an aggregate of 17,256,148 shares of Common Stock, or
approximately 27.1% of the outstanding shares of Common Stock. It is anticipated
that all such directors and executive officers will vote their shares of Common
Stock in favor of the proposal to approve the Incentive Stock Plan.
THE BOARD OF DIRECTORS OF MIG RECOMMENDS THAT MIG STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE METROMEDIA INTERNATIONAL GROUP, INC. 1996 INCENTIVE STOCK PLAN.
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PROPOSAL NO. 4 -- RATIFICATION OF
THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of MIG has appointed the firm of KPMG Peat Marwick
LLP, independent auditors, to audit the consolidated financial statements of MIG
and its subsidiaries for the fiscal year ending December 31, 1996, subject to
ratification by MIG's stockholders.
On November 1, 1995, the Board of Directors of MIG approved the engagement
of KPMG Peat Marwick LLP as its independent auditors for the fiscal years ended
December 31, 1995 and December 31, 1996 to replace Ernst & Young LLP, who was
dismissed as auditors of MIG effective November 1, 1995.
In connection with the audit of MIG's financial statements for the fiscal
years ended December 31, 1994 and December 31, 1993, and in the subsequent
interim period, there did not exist any disagreements between MIG and Ernst &
Young LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure which, if not resolved to
the satisfaction of Ernst & Young, would have caused Ernst & Young LLP to have
referred to the subject matter of disagreement in its report.
Prior to the engagement of KPMG Peat Marwick LLP, no member of that firm was
consulted by MIG (i) for the purpose of obtaining a written report or oral
advice with regard to the application of accounting principles to a specified
transaction of MIG, either completed or proposed, (ii) regarding an inquiry as
to the type of audit opinion that may be rendered on MIG's financial statements
or (iii) regarding any matter that was the subject of a disagreement with Ernst
& Young LLP or which constituted a "reportable event" pursuant to Item
304(a)(1)(v) of Regulation S-K.
A partner of KPMG Peat Marwick LLP is expected to be present at the Annual
Meeting and to be provided with an opportunity to make a statement if such
partner desires to do so and to be available to respond to appropriate questions
from stockholders.
If the stockholders do not ratify the appointment KPMG Peat Marwick LLP as
MIG's independent auditors for the forthcoming fiscal year, such appointment
will be reconsidered by the Audit Committee and the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT AUDITORS OF MIG'S
CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1996.
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ANNUAL REPORT; INCORPORATION BY REFERENCE
THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
(WHICH CONTAINS THE COMPANY'S AUDITED CONSOLIDATED FINANCIAL STATEMENTS) IS
BEING MAILED TO STOCKHOLDERS TOGETHER WITH THIS PROXY STATEMENT. TO THE EXTENT
THIS PROXY STATEMENT HAS BEEN OR WILL BE SPECIFICALLY INCORPORATED BY REFERENCE
INTO ANY FILING BY THE COMPANY UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THE SECTIONS OF THE PROXY
STATEMENT ENTITLED "BOARD OF DIRECTORS REPORT ON COMPENSATION" AND "PERFORMANCE
GRAPH" SHALL NOT BE DEEMED TO BE SO INCORPORATED UNLESS SPECIFICALLY OTHERWISE
PROVIDED IN ANY SUCH FILING.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Any stockholder of MIG who wishes to present a proposal at the 1997 Annual
Meeting of Stockholders of MIG, and who wishes to have such proposal included in
MIG's proxy statement for that meeting, must deliver a copy of such proposal to
MIG at 945 East Paces Ferry Road, Suite 2210, Atlanta, Georgia 30326, Attention:
Corporate Secretary, no later than April 8, 1997; provided, however, that if the
1997 Annual Meeting of Stockholders is held on a date more than 30 days before
or after the corresponding date of the 1996 Annual Meeting, any stockholder who
wishes to have a proposal included in MIG's proxy statement for that meeting
must deliver a copy of the proposal to MIG a reasonable time before the proxy
solicitation is made. MIG reserves the right to decline to include in MIG's
proxy statement any stockholder's proposal which does not comply with the rules
of the Commission for inclusion therein.
OTHER BUSINESS
The Board of Directors does not intend to bring any other business before
the meeting and it is not aware that anyone else intends to do so. If any other
business comes before the meeting, it is the intention of the persons named in
the enclosed form of proxy to vote as proxies in accordance with their best
judgment.
PLEASE EXERCISE YOUR RIGHT TO VOTE BY PROMPTLY COMPLETING, SIGNING AND
RETURNING THE ENCLOSED PROXY FORM. YOU MAY LATER REVOKE THE PROXY AND, IF YOU
ARE ABLE TO ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors,
Arnold L. Wadler
SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
August 6, 1996
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APPENDIX A
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
METROMEDIA INTERNATIONAL GROUP, INC.
(Pursuant to Section 242 of the Delaware General Corporation Law)
The undersigned, Silvia Kessel and Arnold L. Wadler, Senior Vice President
and Secretary, respectively, of Metromedia International Group, Inc., a
corporation organized and existing under the laws of the State of Delaware (the
"Corporation"), do hereby certify as follows:
1. The name of the corporation is Metromedia International Group, Inc.
2. This Certificate of Amendment to the Restated Certificate of
Incorporation amends the Restated Certificate of Incorporation of the
Corporation to increase the authorized number of shares of the Corporation's
Common Stock, par value $1.00 per share (the "Common Stock").
3. The Restated Certificate of Incorporation of the Corporation is hereby
amended by replacing the first sentence of Article Fourth thereof in its
entirety and by substituting in its place the following:
"The total number of shares of stock which the Corporation shall have
authority to issue is 470,000,000, divided as follows: 70,000,000 shares of
Preferred Stock, of the par value of $1.00 per share (the "Preferred
Stock"), and 400,000,000 shares of Common Stock, of the par value of $1.00
per share (the "Common Stock")."
4. The Board of Directors of the Corporation duly adopted resolutions
pursuant to Section 242 of the Delaware General Corporation Law (the "DGCL")
proposing that this Certificate of Amendment to the Restated Certificate of
Incorporation be approved and declaring the adoption of this Amendment to the
Restated Certificate of Incorporation to be advisable, and the stockholders of
the Corporation duly approved this Certificate of Amendment to the Restated
Certificate of Incorporation in accordance with Sections 211 and 242 of the
DGCL. Dated and attested to as of , 1996.
METROMEDIA INTERNATIONAL GROUP INC.
By:
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Name: Silvia Kessel
Title: Senior Vice President
Attest:
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Name: Arnold L. Wadler
Title: Secretary
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APPENDIX B
METROMEDIA INTERNATIONAL GROUP, INC.
1996 INCENTIVE STOCK PLAN
1. PURPOSE. The purposes of the Metromedia International Group, Inc. 1996
Incentive Stock Plan are, in general, to give the Company a significant
advantage in retaining employees, officers and directors, and to provide an
incentive to selected key employees, officers and directors of the Company and
its subsidiaries, within the meaning of Code Section 424(f), who have
substantial responsibility in the direction of the Company and its subsidiaries,
and others whom the Committee determines provide substantial and important
services to the Company, to acquire a proprietary interest in the Company, to
continue as employees, officers and directors or in their other capacities, and
to increase their efforts on behalf of the Company.
2. DEFINITIONS. Unless the context clearly indicates to the contrary, the
following terms, when used in the Plan, shall have the meanings set forth in
this Section 2.
"Act" shall mean the Securities Act of 1933, as amended.
"Award" means any stock option or stock appreciation right.
"Base Price" means the price to be used as the basis for determining the
Spread upon the exercise of a SAR, as hereinafter defined in Section 7.
"Board" means the Board of Directors of the Company.
"Change in Control" shall be deemed to have occurred as of the first day any
one or more of the following have been satisfied:
- any event whereby a Person (other than (i) the Company or an affiliate, as
defined in the Exchange Act, (ii) any employee benefit plan or trust
sponsored or maintained by the Company or an affiliate, as defined in the
Exchange Act, or (iii) either John W. Kluge or Stuart Subotnick) (x)
acquires 35% or more of the Company's outstanding voting securities, or
(y) acquires securities of the Company bearing a majority of voting power
with respect to election of directors of the Company, or (z) acquires all
or substantially all of the Company's assets, whether by sale, lease,
exchange or other transfer (in one transaction or in a series of related
transactions). "Person" shall have the same meaning as ascribed to such
term in Section 3(a)(9) of the Exchange Act and used in Section 13(d)
thereof;
- a change in the composition of the Board such that at any time a majority
of the Board shall not have been members of the Board for twenty-four (24)
months; provided, however, that directors who were appointed or nominated
for election by at least two-thirds of the directors who were directors at
the beginning of such twenty-four (24) month period (or deemed to be such
directors under this subparagraph (b)) shall be deemed to be directors at
the beginning of such twenty-four (24) month period for the purposes of
this subparagraph;
- the stockholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company;
- any consolidation or merger of the Company, other than a merger or
consolidation of the Company in which the voting securities of the Company
outstanding immediately prior thereto continue to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
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"Committee" means the Committee described in Section 12 of the Plan.
"Common Stock" means $.01 par value common stock of the Company.
"Company" shall mean the Metromedia International Group, Inc. or any
successor company thereto.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"Fair Market Value" shall mean the closing price of publicly traded Common
Stock on the national securities exchange on which the Common Stock is listed
(if the Common Stock is so listed) or on the NASDAQ National Market System (if
the Common Stock is regularly quoted on the NASDAQ National Market System), or,
if not so listed or regularly quoted, the mean between the closing bid and asked
prices of publicly traded Common Stock in the over-the-counter market, or, if
such bid and asked prices shall not be available, as reported by any nationally
recognized quotation service selected by the Company, or as determined by the
Committee in a manner consistent with the provisions of the Code.
"Grantee" shall mean any key employee, officer and director of the Company
and its subsidiaries, within the meaning of Code Section 424(f), as determined
by the Committee, who have substantial responsibility in the direction of the
Company and its subsidiaries, and anyone else whom the Committee determines
provides substantial and important services to the Company who is granted an
Award under the Plan.
"Incentive Stock Option" or "ISO" shall mean any stock option as defined in
Code Section 422.
"Non-Qualified Stock Option" or "NQSO" shall mean an option other than an
Incentive Stock Option.
"Option" shall mean ISOs and NQSOs, collectively.
"Plan" shall mean the Metromedia International Group, Inc. 1996 Incentive
Stock Plan.
"Reporting Person" shall mean any person subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to equity
securities of the Company.
"Rule 16b-3" means Rule 16b-3 of the Exchange Act, or any successor thereto,
that excepts transactions under employee benefit plans, as in effect from time
to time.
"Spread" shall mean the amount by which the Fair Market Value per share of
Common Stock on the date when the SAR is exercised exceeds the option price for
the related Option.
"Stock Appreciation Right" or "SAR" shall mean the right of the holder
thereof to receive, pursuant to the terms of the SAR, either cash or stock, at
the discretion of the Company, based on the increase in the value of the number
of shares specified in the SAR.
3. TYPES OF AWARDS. The Plan provides for incentive stock options,
non-qualified stock options, and stock appreciations rights. Except as provided
herein, a particular form of Award may be granted either alone or in addition to
other grants hereunder. The provisions of the particular forms of grants need
not be the same with respect to each recipient. Attached hereto as Exhibit A is
a list of specific Awards hereunder to specific individuals. If any future
grants require shareholder approval to satisfy the requirements of Rule 16b-3,
then Exhibit A shall be amended to include such subsequent grants.
ISOs may be awarded to employees of the Company and its subsidiaries, within
the meaning of Code Section 424(f), including employees who are officers and
directors, but shall not be issued to directors or others who are not employees.
NQSOs may be awarded to employees and directors, including directors who are
not employees of the Company and its subsidiaries, within the meaning of Code
Section 424(f), and anyone whom the
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Committee administering the Plan pursuant to Section 12 determines provides
substantial and important services to the Company. To the extent that any Option
is not designated as an ISO, or if so designated it does not qualify as an ISO,
it shall be treated as a NQSO.
SARs in tandem with Options may be awarded to employees and directors,
including directors who are not employees of the Company and its subsidiaries
and anyone whom the Committee administering the Plan pursuant to Section 12
determines provides substantial and important services to the Company.
4. TERM OF PLAN.
(a) EFFECTIVE DATE. This Plan shall become effective as of the date of
adoption thereof by the Board; provided, however, that the Plan shall be
submitted for approval by the stockholders of the Company no earlier than twelve
(12) months prior to, and no later than twelve (12) months after, the date of
adoption of the Plan by the Board.
(b) TERMINATION DATE. This Plan shall terminate on the earliest of:
(i) The tenth anniversary of the effective date as determined under this
Section 4;
(ii) The date when all shares of the Common Stock reserved for issuance
under the Plan, shall have been acquired through exercise of any Awards
granted under the Plan; or
(iii) Such earlier date as the Board may determine. Any Award outstanding
under the Plan at the time of its termination shall remain in effect in
accordance with its terms and conditions and those of the Plan.
5. THE STOCK. Subject to adjustment as provided in Section 10, the
aggregate number of shares of Common Stock which may be issued under the Plan
shall be 8,000,000 shares; provided, however, that the maximum number of shares
of Common Stock available with respect to the Awards granted by the Committee to
any one Grantee under the Plan, in the aggregate, shall not exceed 250,000. Such
number of shares of Common Stock may be set aside out of the authorized but
unissued shares of Common Stock not reserved for any other purpose or out of
shares of Common Stock held in or acquired for the treasury of the Company. All
or any shares of Common Stock subjected under this Plan to an Award which, for
any reason, terminates unexercised as to such shares, may again be subjected to
an Award under the Plan.
6. STOCK OPTIONS.
(a) GRANTS. Options may be granted by the Committee at any time and
from time to time prior to the termination of the Plan. Each Option granted
under the Plan shall be evidenced by an agreement in a form approved by the
Committee. The terms and conditions of such Option agreement need not be
identical with respect to each Grantee, but each Option agreement will
evidence on its face whether it is an ISO, a NQSO, or both. For purposes of
this Section, an Option shall be deemed granted on the date the Committee
selects an individual to be a Grantee, determines the number of shares to be
issued pursuant to such Option and specifies the terms and conditions of the
Option. Except as hereinafter provided, Options granted pursuant to the Plan
shall be subject to the following terms and conditions set forth in this
Section 6.
Notwithstanding the foregoing, Independent Directors who serve on the
Board on the date the Plan is adopted shall be entitled to receive Options
under the Plan with respect to 50,000 shares of Common Stock of the Company,
each having an exercise price equal to the Fair Market Value of a share of
Common Stock of the Company on the date of grant. Any other Independent
Director who first serves on the Board subsequent to the date the Plan is
adopted shall be entitled to receive Options under the Plan with respect to
50,000 shares of Common Stock of the Company, each having an exercise price
equal to the Fair Market Value of a share of Common Stock of
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the Company on the date of grant. For purposes hereof, "Independent
Directors" shall mean any member of the Board who during his entire term as
a director was not employed by the Company and its subsidiaries, within the
meaning of Code Section 424(f).
(b) PRICE AND EXERCISE. The purchase price of the shares of Common
Stock upon exercise of an ISO or a SAR granted in tandem with an ISO shall
be no less than the Fair Market Value of the shares of Common Stock at the
time of grant of an ISO; provided, however, if an ISO is granted to a person
owning either directly (or through application of the attribution rules
under Code Section 318) shares of Common Stock of the Company possessing
more than 10% of the total combined voting power of all classes of shares of
Common Stock of the Company as defined in Code Section 422 ("10%
Stockholder"), the purchase price shall be equal to 110% of the Fair Market
Value of the shares of Common Stock. The purchase price of the shares of
Common Stock upon exercise of a NQSO may be any price set by the Committee.
The purchase price shall be paid in United States dollars in cash or by
certified or cashier's check payable to the order of the Company at the time
of purchase. At the discretion of the Committee, the purchase price may be
paid with: (i) shares of Common Stock already owned by, and in the
possession of, the Grantee; or (ii) any combination of United States dollars
or shares of Common Stock of the Company. Any required withholding tax shall
be paid by the Grantee in full in accordance with the provisions of Section
13. Shares of Common Stock of the Company used to satisfy the purchase price
of an Option shall be valued at their Fair Market Value. The purchase price
shall be subject to adjustment, but only as provided in Section 10 hereof.
Any vested Option may be exercised in full at one time by giving written
notice to the Company exercising the Option, which notice shall be signed
and dated by the Grantee and shall state the number of shares of Common
Stock with respect to which the Option is being exercised. The notice of the
exercise of any Option shall be accompanied by payment in full of the Option
price. If required by the Company, such notice of exercise of an Option
shall be accompanied by the Grantee's written representation in accordance
with Section 22. Upon such demand, delivery of such representation prior to
the delivery of any stock issued upon exercise of an Option shall be a
condition precedent to the right of the Grantee or such other person to
purchase any shares of Common Stock
(c) VESTING. Options shall vest in accordance with the schedule
established for each Grantee; provided, however, that all Options awarded to
a Grantee shall vest immediately upon said Grantee's death or retirement as
defined herein or upon any Change in Control as defined herein.
(d) ADDITIONAL RESTRICTIONS ON EXERCISE OF AN ISO. The aggregate Fair
Market Value of Common Stock (determined at the time an ISO is granted) for
which an ISO is exercisable for the first time by a Grantee during any
calendar year (under all plans of the Company and its subsidiaries or
parent) shall not exceed $100,000. To the extent that the aggregate Fair
Market Value of Common Stock (determined at the time an ISO is granted) with
respect to Options designated as ISOs exercisable for the first time by a
Grantee during any calendar year (under all plans of the Company and its
subsidiaries or parent) exceeds $100,000, such Options shall be treated as
NQSOs. The foregoing shall be applied by taking Options into account in the
order in which they were granted.
(e) DURATION OF OPTIONS. Options may be granted for terms of up to but
not exceeding ten (10) years from the effective date the particular Option
is granted; provided, however, that an ISO granted to a 10% Stockholder may
be granted for a term not exceeding five (5) years from the effective date
the particular ISO is granted.
If the stockholders of the Company have not approved the adoption of the
Plan prior to the end of one (1) year from the date the Plan is approved by
the Board, any Option granted under the
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Plan prior to such date shall be null and void and the Company shall rescind
the issuance of any shares of Common Stock issued upon the exercise of such
Options by a Grantee prior to such date. In the event of such rescission,
the Company shall refund the price paid per share of Common Stock by the
Grantee upon exercise of the Options upon receipt of the certificate
representing such shares.
(f) MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the
terms and conditions and within the limitations of the Plan, the Committee
may modify, extend or renew outstanding Options granted under the Plan, or
accept the surrender of outstanding Options (up to the extent not
theretofore exercised) and authorize the granting of new Options in
substitution therefor (up to the extent not theretofore exercised). In
addition to the limitations set forth in Section 16, the Committee shall
not, however, with respect to ISOs, modify any outstanding Award so as to
specify a lower Award price or accept the surrender of outstanding Awards
and authorize the granting of new Awards in substitution therefor specifying
a lower price. Notwithstanding the foregoing or anything herein, no
modification of an Award shall, without the consent of the Grantee, alter or
impair any rights or obligations under any Award theretofore granted under
the Plan nor shall any modification be made which shall adversely affect the
status of an ISO under Code Section 422; provided, however, that any such
provision shall remain in effect with respect to other Awards, and there
shall be no further effect on the Plan.
(g) OTHER TERMS AND CONDITIONS. Awards may contain such other
provisions, which shall not be inconsistent with any of the foregoing terms,
as the Committee shall deem appropriate.
7. STOCK APPRECIATION RIGHTS.
(a) The Committee may grant SARs in tandem with Options. If a SAR is
granted in tandem with an Option, the SAR may be exercised whenever the
related Option may be exercised. A tandem SAR must also meet the following
requirements:
(A) the SAR must expire no later than the expiration of the
underlying Option;
(B) the SAR may be for no more than 100% of the difference between
the exercise price of the Option and the market price of the stock
subject to the Option at the time the SAR is exercised;
(C) the SAR may only be transferred when the underlying Option is
transferable and subject to the same conditions;
(D) the SAR may only be exercised when the underlying Option may be
exercised;
(E) the SAR may only be exercised when the market price of the stock
exceeds the exercise price of the Option.
(b) A SAR shall be a right of a Grantee to receive from the Company an
amount, which shall be determined by the Committee and shall be expressed as
a percentage (not exceeding 100%) of the Spread at the time of the exercise
of the SAR.
(c) To the extent the tandem SAR is exercised, a corresponding number of
shares of Common Stock subject to the related Option will be canceled. To
the extent the related Option is exercised, a corresponding number of tandem
SARs will be canceled.
(d) The form of settlement of a SAR shall be in cash or stock, or any
combination thereof, at the Company's discretion.
(e) If the stockholders of the Company have not approved the adoption of
the Plan prior to the end of one (1) year from the date the Plan is approved
by the Board, any SAR granted under the Plan prior to such date shall be
null and void.
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(f) Subject to the terms and conditions and within the limitations of
the Plan, the Committee may modify, extend or renew outstanding SARs granted
under the Plan, or authorize the granting of new SARs in substitution
therefor.
(g) Any grant of a SAR may specify (i) a waiting period or periods
before SARs shall become exercisable and (ii) the permissible dates or
periods on or during which SARs shall be exercisable.
8. TERMINATION OF EMPLOYMENT. Upon the termination of a Grantee's
employment with the Company, his or her right to exercise an Award then held by
such Grantee or Grantee's estate shall be only as follows:
(i) RETIREMENT. If the Grantee's employment is terminated because he or
she has attained the age which the Company may from time to time establish
as the retirement age for any class of its employees, or in accordance with
the age specified in an employment agreement with a Grantee, he or she may
within three (3) months following such termination, exercise the Award to
the extent such Award is otherwise exercisable. However, in the event of his
or her death prior to the end of the three (3) month period after the
aforesaid termination of his or her employment, his or her estate shall have
the right to exercise the Award within one (1) year (but in no event after
the scheduled expiration of the term of the Award) following such
termination with respect to all or any part of the stock subject thereto, to
the extent such Award is exercisable.
(ii) DEATH. If the Grantee's employment with the Company is terminated
by death, his or her estate shall have the right to exercise the Award
within one (1) year (but in no event after the scheduled expiration of the
term of the Award) following such termination with respect to all or any
part of the stock subject thereto, to the extent such Award is exercisable.
(iii) DISABILITY. If the Grantee's employment with the Company is
terminated by disability, as defined in Code Section 22(e)(3), he or she
shall have the right for a period of one (1) year (but in no event after the
scheduled expiration of the term of the Award) following the date of such
termination of employment to exercise any Award, to the extent such Award is
exercisable.
(iv) OTHER REASONS. If the Grantee's employment with the Company is
terminated for any reason other than those provided above under
"Retirement", "Death" or "Disability", the Grantee or Grantee's estate in
the event of his or her death shall have the right for a period of ninety
(90) days (but in no event after the scheduled expiration of the term of the
Award) following the date of such termination of employment to exercise any
Award, to the extent such Award is exercisable. All other Awards may be
exercised within such other period of time as determined by the Committee in
its sole discretion.
For purposes of this Section 8, "termination of employment" shall mean the
termination of a Grantee's employment with the Company or a subsidiary or a
parent within the meaning of Code Section 424, provided, however, that solely
for purposes of this Section, "30%" shall be substituted for "50%" in Code
Section 424(f). A Grantee employed by a subsidiary shall also be deemed to have
a termination of employment if the subsidiary ceases to be a subsidiary of the
Company, and the Grantee does not immediately thereafter become an employee of
the Company or of a subsidiary or of a parent. A Grantee who is a member of the
Board but who is also not an employee of the Company shall be considered to have
terminated his or her employment at such time as he or she is no longer a member
of the Board. Any other Grantee who is not otherwise an employee of the Company
shall be considered to have terminated employment when substantial services, as
determined by the Committee, are no longer provided to the Company by the
Grantee.
Also for purposes of this Section 8, a Grantee's "estate" shall mean his or
her legal representatives upon his or her death or any person who acquires the
right to exercise an Award by reason of the Grantee's death. The Committee may
in its discretion require the transferee of a Grantee to supply it
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with written notice of the Grantee's death or disability and to supply it with a
copy of the will (in the case of the Grantee's death) or such other evidence as
the Committee deems necessary to establish the validity of the transfer of an
Option.
If a Grantee's employment with the Company is terminated after a Change in
Control, the provisions of Section 9 shall supersede the provisions of this
Section 8.
9. CHANGE IN CONTROL. In the event of a Change in Control:
(a) Each Grantee with an outstanding Option (i) shall have the right at any
time thereafter to exercise the Option in full notwithstanding any waiting
period, installment period or other limitation or restriction in any Option
certificate or in the Plan, and (ii) shall have the right, exercisable by
written notice to the Company within sixty (60) days after the Change in
Control, to receive, in exchange for the surrender of the Option or any portion
thereof to the extent the Option is then exercisable in accordance with clause
(i), an amount of cash equal to the difference between the Fair Market Value on
the date of exercise of the Common Stock covered by the Option or portion
thereof which is so surrendered and the purchase price of such Common Stock
under the Option, provided that the right described in this clause (ii) shall be
exercisable only if a positive amount would be payable to the Grantee pursuant
to the formula specified in this clause (ii).
(b) Each Grantee with an outstanding SAR shall have the right to the Spread
as soon as practicable, without regard to any limitations or restrictions
thereon.
10. ADJUSTMENT OF THE CHANGES IN THE STOCK.
(a) In the event the shares of Common Stock, as presently constituted, shall
be changed into or exchanged for a different number or kind of shares of stock
or other securities of the Company or of another corporation (whether by reason
of merger, consolidation, recapitalization, reclassification, split, reverse
split, combination of shares, or otherwise) or if the number of such shares of
Common Stock shall be increased through the payment of a stock dividend, then
there shall be substituted for or added to each share of Common Stock
theretofore appropriated or thereafter subject or which may become subject to an
Award under this Plan, the number and kind of shares of stock or other
securities into which each outstanding share of Common Stock shall be so
changed, or for which each such share of Common Stock shall be exchanged, or to
which each such share shall be entitled, as the case may be. Moreover, in
accordance with Section 9, the Committee may on or after the date of grant
provide in the agreement evidencing any Award that the holder of the Award may
elect to receive an equivalent Award in respect of securities of the surviving
entity of any merger, consolidation or other transaction or event having a
similar effect, or the Committee may provide that the holder will automatically
be entitled to receive such an equivalent Award. Outstanding Awards shall also
be appropriately amended as to price and other terms as may be necessary to
reflect the foregoing events. In the event there shall be any other change in
the number or kind of the outstanding shares of the Common Stock, or of any
stock or other securities into which such shares of Common Stock shall have been
changed, or for which it shall have been exchanged, then, if the Board shall, in
its sole discretion, determine that such change equitably requires an adjustment
in any Award theretofore granted or which may be granted under the Plan, such
adjustments shall be made in accordance with such determination.
(b) The Company shall not be required to issue any fractional shares of
Common Stock pursuant to the Plan. Fractional shares resulting from any
adjustment in Awards pursuant to this Section 10 may be settled in cash or
otherwise as the Committee shall determine.
(c) Notice of any adjustment shall be given by the Company to each holder of
an Award which shall have been so adjusted and such adjustment (whether or not
such notice is given) shall be effective and binding for all purposes of the
Plan.
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(d) If another corporation is merged into the Company or the Company
otherwise acquires another corporation, the Committee may elect to assume under
the Plan any or all outstanding stock options or other awards granted by such
corporation under any stock option or other plan adopted by it prior to such
acquisition. Such assumptions shall be on such terms and conditions as the
Committee may determine; provided, however, that the awards as so assumed do not
contain any terms, conditions or rights that are inconsistent with the terms of
this Plan. Unless otherwise determined by the Committee, such awards shall not
be taken into account for purposes of the limitations contained in Section 5 of
the Plan.
11. TRANSFERABILITY OF AWARDS. An Award shall be transferable only by will
or the laws of descent and distribution and shall be exercisable during the
Grantee's lifetime only by the Grantee or by the guardian or legal
representative of the Grantee acting in a fiduciary capacity on behalf of the
Grantee under state law and court supervision. An Award is not subject, in whole
or in part, to attachment, execution or levy of any kind.
12. ADMINISTRATION.
(a) The Plan shall be administered by the Committee appointed by the Board
which shall be composed of not less than two (2) members of the Board, each of
whom shall be an "outside director" within the meaning of Proposed Treasury
Regulation Section 1.162-27(e)(3) or such other regulations as may be issued in
proposed, temporary or final form under Code Section 162(m).
(b) The Committee shall act by a majority of its members at the time in
office and eligible to vote on any particular matter, and such action may be
taken either by a vote at a meeting or in writing without a meeting.
(c) Subject to the provisions of the Plan, the Committee shall from time to
time and at its discretion take the following actions:
(i) grant Awards;
(ii) determine which employees, officers, directors and other
individuals performing substantial and important services may be granted
Awards under the Plan;
(iii) determine whether any Option shall be an ISO or NQSO;
(iv) determine the number of shares subject to each Award;
(v) determine the term of each Award granted under the Plan;
(vi) determine the date or dates on which the Award granted shall be
exercisable;
(vii) determine the exercise price of any Award granted;
(viii) determine the Fair Market Value of the Common Stock subject to
the Awards granted;
(ix) determine the terms of any agreement pursuant to which Awards are
granted;
(x) amend any such agreement with the consent of the Grantee;
(xi) establish performance-based goals within the meaning of Code
Section 162(m);
(xii) establish such procedures as it deems appropriate for a
recipient of an Award hereunder to designate a beneficiary to whom any
benefits payable in the event of his or her death are to be made; and
(xiii) determine any other matters specifically delegated to it under
the Plan or necessary for the proper administration of the Plan.
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The Committee shall also have the final authority and discretion to
interpret and construe the terms of the Plan and of any Award granted and such
interpretation and construction by the Committee shall be final, binding and
conclusive upon all persons including, without limitation, the Company,
stockholders of the Company or any subsidiary, the Plan, and all persons
claiming an interest in the Plan. Notwithstanding anything contained in this
Section to the contrary, no term of the Plan relating to ISOs shall be
interpreted, nor shall any discretion or authority of the Committee be
exercised, so as to disqualify the Plan under Code Section 422 or, without the
consent of the Grantee, to disqualify any ISO under Code Section 422 or in a
manner inconsistent with Rule 16b-3.
(d) No member of the Committee or director shall be liable for any action,
interpretation or construction made in good faith with respect to the Plan or
any Award granted hereunder.
13. TAX WITHHOLDING. The Company shall have the right to deduct from any
cash payment made under the Plan any federal, state or local income or other
taxes required by law to be withheld with respect to such payment. It shall be a
condition to the obligation of the Company to deliver shares or securities of
the Company upon exercise of an Award, that the Grantee of such Award pay to the
Company such amount as may be requested by the Company for the purpose of
satisfying any liability for such withholding taxes. Any grant issued under the
Plan may provide by the grant that the Grantee of such Award may elect, in
accordance with any applicable regulations of the authority issuing such
regulations, to pay a portion or all of the amount of such minimum required or
additional permitted withholding taxes in shares. The Grantee shall authorize
the Company to withhold, or shall agree to surrender back to the Company, on or
about the date such withholding tax liability is determinable, shares previously
owned by such Grantee or a portion of the shares that were or otherwise would be
distributed to such Grantee pursuant to such Award having a Fair Market Value
equal to the amount of such required or permitted withholding taxes to be paid
in shares.
14. SECURITIES LAW REQUIREMENTS.
(a) No Award granted pursuant to this Plan shall be exercisable in whole or
in part, nor shall the Company be obligated to acquire or sell any shares of
Common Stock subject to any such Option or pay any shares of Common Stock in
settlement of a SAR, if such exercise, acquisition and sale would, in the
opinion of counsel for the Company, violate the Act (or other federal or state
statutes having similar requirements), as it may be in effect at that time. In
this regard, the Committee may demand the representations described in Sections
6(b) and 22.
(b) Each Award shall be subject to the further requirement that, if at any
time the Committee shall determine in its discretion that the listing or
qualification of the shares of Common Stock subject to such Award under any
securities exchange requirements or under any applicable law, or the consent or
approval of any governmental regulatory body, is necessary as a condition of, or
in connection with, the granting of such Award or the issue of shares
thereunder, such Award may not be exercised in whole or in part, unless such
listing, qualification, consent or approval shall have been affected or obtained
free of any conditions not acceptable to the Board.
(c) No person who acquires shares of Common Stock under the Plan may, during
any period of time that such person is an affiliate of the Company within the
meaning of the rules and regulations of the Securities and Exchange Commission
under the Act, sell such shares of Common Stock, unless such offer and sale is
made (i) pursuant to an effective registration statement under the Act, which is
current and includes the shares to be sold, or (ii) pursuant to an appropriate
exemption from the registration requirement of the Act, such as that set forth
in Rule 144 promulgated under the Act.
(d) With respect to any Reporting Person, transactions under the Plan are
intended to comply with all applicable conditions of Rule 16b-3. To the extent
any provision of the Plan or any action by an authority under the Plan fails to
so comply, such provision or action shall, without further action by any person,
be deemed to be automatically amended to the extent necessary to effect
compliance with
B-9
<PAGE>
Rule 16b-3, provided that if such provision or action cannot be amended to
effect such compliance, such provision or action shall be deemed null and void,
to the extent permitted by law and deemed advisable by the appropriate
authority. Each Award to a Reporting Person under the Plan shall be deemed
issued subject to the foregoing qualification.
15. FOREIGN PARTICIPANTS. In order to facilitate the making of an Award
and to foster and promote achievement of the purposes of the Plan, the Committee
may provide for such special terms for Awards to Grantees who are foreign
nationals, or who are employed by the Company outside of the United States of
America, as the Committee may consider necessary or appropriate to accommodate
differences in local law, tax policy or custom. Moreover, the Committee may
approve such supplements to, or amendments, restatements or alternative versions
of, this Plan as in effect for any other purpose, and the Secretary or other
appropriate officer of the Company may certify any such document as having been
approved and adopted in the same manner as the Plan; provided, however, that no
such supplements, amendments, restatements or alternative versions shall include
any provisions that are inconsistent with the terms of the Plan, as then in
effect, unless the Plan could have been amended to eliminate the inconsistency
without further approval by the shareholders of the Company.
16. AMENDMENT OR TERMINATION OF THE PLAN.
The Board may amend or terminate the Plan at any time, except that approval
of the holders of a majority of the outstanding voting stock of the Company is
required for amendments which:
(i) decrease the minimum exercise price for ISOs or tandem SARs;
(ii) extend the term of the Plan beyond ten (10) years;
(iii) extend the maximum terms of the Awards granted hereunder beyond
(10) ten years;
(iv) withdraw the administration of the Plan from the Committee
appointed pursuant to Section 12;
(v) change the class of eligible employees, officers, directors and
other Grantees;
(vi) increase the aggregate number of shares of Common Stock which may
be issued pursuant to the provisions of the Plan;
(vii) otherwise require stockholder approval to comply with Rule 16b-3
or any other applicable law, regulation, or listing requirement or to
qualify for an exemption or characterization that is deemed desirable by
the Board.
Notwithstanding the foregoing, the Board may, without the need for
stockholders' approval, amend the Plan in any respect to qualify ISOs as
incentive stock options under Code Section 422.
Any Award that may be made pursuant to an amendment to the Plan that shall
have been adopted without the approval of the stockholders of the Company shall
be null and void as to persons subject to Section 16(a) of the Act if it is
subsequently determined that such approval was required in order for the Plan to
continue to satisfy the applicable conditions of Rule 16b-3.
Furthermore, technical or clarifying amendments shall be made by the
Committee, not the Board.
17. NO OBLIGATION TO EXERCISE OPTION OR SAR. The granting of an Award
shall impose no obligation upon the Grantee (or upon a transferee of a Grantee)
to exercise such Award.
18. NO LIMITATION ON RIGHTS OF THE COMPANY. The grant of any Award shall
not in any way affect the right or power of the Company to make adjustments,
reclassification, or changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
B-10
<PAGE>
19. PLAN NOT A CONTRACT OF EMPLOYMENT. The Plan is not a contract of
employment, and the terms of employment of any recipient of any Award hereunder
shall not be affected in any way by the Plan or related instruments except as
specifically provided therein. The establishment of the Plan shall not be
construed as conferring any legal rights upon any recipient of any Award
hereunder for a continuation of employment, nor shall it interfere with the
right of the Company or any subsidiary to discharge any recipient of any Award
hereunder and to treat him or her without regard to the effect which such
treatment might have upon him or her as the recipient of any Award hereunder.
20. EXPENSES OF THE PLAN. All of the expenses of the Plan shall be paid by
the Company.
21. FUNDING. The Plan shall be unfunded and shall not create (or be
construed to create) a trust or a separate fund or funds. The Plan shall not
establish any fiduciary relationship between the Company and any Grantee or
other person. To the extent any person holds any rights by virtue of an Award
granted under the Plan, such rights shall be no greater than the rights of an
unsecured general creditor of the Company.
22. COMPLIANCE WITH APPLICABLE LAW. Notwithstanding anything herein to the
contrary, the Company shall not be obligated to cause to be issued or delivered
any certificates for shares of Common Stock pursuant to the exercise of an
Option, unless and until the Company is advised by its counsel that the issuance
and delivery of such certificates is in compliance with all applicable laws,
regulations of governmental authority and the requirements of any exchange upon
which shares of Common Stock are traded. The Company shall in no event be
obligated to register any securities pursuant to the Act (as now in effect or as
hereafter amended) or to take any other action in order to cause the issuance
and delivery of such certificates to comply with any such law, regulation or
requirement. The Committee may require, as a condition of the issuance and
delivery of such certificates and in order to ensure compliance with such laws,
regulations and requirements, that the recipient of any Award hereunder make
such covenants, agreements and representations as the Committee, in its sole
discretion, deems necessary or desirable, including, without limitation, a
written representation from a stockholder that the stock is being purchased for
investment and not for distribution, acknowledging that such shares have not
been registered under the Act, as amended and agreeing that such shares may not
be sold or transferred unless there is an effective Registration Statement for
them under the Act, or, in the opinion of counsel to the Company, that such sale
or transfer is not in violation of the Act.
23. EFFECT UPON OTHER COMPENSATION. Nothing contained herein shall prevent
the Company or any subsidiary from adopting other or additional compensation
arrangements for its employees or directors. The effect under any other benefit
plan of the Company of an inclusion in income by virtue of an Award hereunder
shall be determined under such other plan.
24. GRANTEE TO HAVE NO RIGHTS AS A STOCKHOLDER. No Grantee of any Option
shall have any rights as a stockholder with respect to any shares subject to his
or her Option prior to the date on which he or she is recorded as the holder of
such shares on the records of the Company. No Grantee of any Option shall have
the rights of a stockholder until he or she has paid in full the Option price.
25. NOTICE. Notice to the Committee shall be deemed given if in writing
and mailed to Arnold L. Wadler, Esq., c/o Metromedia Company, One Meadowlands
Plaza, East Rutherford, New Jersey 07073-2137 by first class, certified mail.
Notice to the Grantee or the Grantee's estate, if applicable, shall be given by
registered mail to such person's last known address.
26. GOVERNING LAW. Except to the extent preempted by federal law, this
Plan and all Option agreements and SAR agreements entered into pursuant thereto
shall be construed and enforced in accordance with, and governed by, the laws of
the State of New York, determined without regard to its conflict of law rules.
B-11
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, AUGUST 29, 1996
The undersigned hereby appoints Silvia Kessel, Arnold L. Walder and
Robert A. Maresca, and each of them, with full power of substitution, the
true and lawful attorneys in fact, agents and proxies of the undersigned to
vote at the annual meeting (the "Annual Meeting") of Stockholders of
Metromedia International Group, Inc. ("MIG"), to be held on August 29, 1996
commencing at 9:30 a.m., local time, in the Concourse Level, 1285 Avenue of
the Americas, New York, New York 10019, and any and all adjournments thereof,
all of the shares of common stock, par value $1.00 per share, of MIG ("Common
Stock") according to the number of votes which the undersigned would possess
if personally present, for the purposes of considering and taking action upon
the following, as more fully set forth in the Proxy Statement of MIG, dated
August 6, 1996.
Please mark
your votes as
indicated in
this example
X
GRANT AUTHORITY
to vote for
all nominees
(except as otherwise
specified below).
WITHHOLD
AUTHORITY
to vote for all
nominees.
FOR AGAINST ABSTAIN
FOR AGAINSTABSTAIN
1. To elect three Class I directors to serve until the 1999 Annual
Meeting of Stockholders of MIG and until their
respective successors are elected and qualified.
Nominees:
John P. Imlay, Jr., John W. Kluge and Stuart Subotnick
3.To approve and adopt the Metromedia International Group, Inc. 1996
Incentive Stock Plan.
4. To ratify the appointment by the MIGBoard of Directors of KPMG
Peat Marwick LLP as MIG's independent auditors for the fiscal year ending
December 31, 1996.
5. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
2. To approve and adopt an amendment to MIG's Restated Certificate of
Incorporation to increase the authorized number of
<PAGE>
shares of Common Stock to 400,000,000 shares.
WITHHELD FOR: (Write that nominee's name on the space provided below).
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO
DIRECTION IS GIVEN HEREIN, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1-5 LISTED
ABOVE.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Signature(s)____________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________
PROXY
METROMEDIA INTERNATIONAL GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, AUGUST 29, 1996
The undersigned hereby appoints Silvia Kessel, Arnold L. Walder and
Robert A. Maresca, and each of them, with full power of substitution, the
true and lawful attorneys in fact, agents and proxies of the undersigned to
vote at the annual meeting (the "Annual Meeting") of Stockholders of
Metromedia International Group, Inc. ("MIG"), to be held on August 29, 1996
commencing at 9:30 a.m., local time, in the Concourse Level, 1285 Avenue of
the Americas, New York, New York 10019, and any and all adjournments thereof,
all of the shares of common stock, par value $1.00 per share, of MIG ("Common
Stock") according to the number of votes which the undersigned would possess
if personally present, for the purposes of considering and taking action upon
the following, as more fully set forth in the Proxy Statement of MIG, dated
August 6, 1996.
Chemical Mellon style
Please mark
your votes as
indicated in
this example
X
GRANT AUTHORITY
to vote for
all nominees
(except as otherwise
specified below).
WITHHOLD
AUTHORITY
to vote for all
nominees.
FOR AGAINST ABSTAIN
FOR AGAINSTABSTAIN
1. To elect three Class I directors to serve until the 1999 Annual
Meeting of Stockholders of MIG and until their
respective successors are elected and qualified.
<PAGE>
Nominees:
John P. Imlay, Jr., John W. Kluge and Stuart Subotnick
3.To approve and adopt the Metromedia International Group, Inc. 1996
Incentive Stock Plan.
4. To ratify the appointment by the MIGBoard of Directors of KPMG
Peat Marwick LLP as MIG's independent auditors for the fiscal year ending
December 31, 1996.
5. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
2. To approve and adopt an amendment to MIG's Restated Certificate of
Incorporation to increase the authorized number of
shares of Common Stock to 400,000,000 shares.
WITHHELD FOR: (Write that nominee's name on the space provided below).
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO
DIRECTION IS GIVEN HEREIN, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1-5 LISTED
ABOVE.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Signature(s)__________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
Date:_________________________________________________________________________
______________________________________________________________________________
Please sign exactly as name(s) appear on this Proxy Card. When Shares held by
joint tenants, both should sign. When signing as attorney-in-fact, executor,
administrator, personal representative, trustee, or guardian, please give
full title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
FOLD AND DETACH HERE
