<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT TO APPLICATION OR REPORT
Pursuant to Section 12, 13 or 15(d) of the
Securities Exhange Act of 1934
WESTWOOD ONE, INC.
(Exact name of issuer as specified in charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends (effective February 1, 1994) the
following items of its Annual Report on Form 10-K dated February 1, 1994 as
set forth in the attached pages hereto:
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
Pursuant to requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this amendment to be signed on behalf of the undersigned,
thereunto duly authorized.
WESTWOOD ONE, INC.
(Registrant)
March 28, 1994 By: FARID SULEMAN
---------------------------------
Farid Suleman
Chief Financial Officer
<PAGE> 2
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
DIRECTORS
As of February 1, 1994, the Board of Directors (the "Board") consists of
five individuals and is divided into three classes (Class I, II and III), each
class serving for three-year terms, which terms do not coincide.
The directors of the Company at February 1, 1994 are:
<TABLE>
<S> <C> <C> <C> <C>
Norman J. Pattiz..... 51 1974 I 1995
Bruce E. Kanter...... 51 1992 I 1995
Arthur E. Levine..... 42 1991 II 1994
Joseph B. Smith...... 66 1984 III 1996
Paul G. Krasnow...... 55 1989 III 1996
</TABLE>
The principal occupations of the foregoing directors are as follows:
Mr. Pattiz - founded the Company in 1974 and has held the position of the
Chairman of the Board and Chief Executive Officer since that time. He
currently serves on the Board of Directors of the Radio Advertising Bureau,
along with the chief executives of other major broadcast companies.
Mr. Kanter - joined the Company as Executive Vice President and Chief
Financial Officer in December 1991. From October 1980 to December 1991, he
served as Senior Vice President and Chief Financial Officer at Neutrogena
Corporation.
Mr. Levine - has served as director of the Company since May 1991.
Additionally, he has been an independent consultant to the Company since June
1990. For the last nine years Mr. Levine has been a private investor.
Mr. Smith - has been a director of the Company since February 1984. He
was President and Chief Executive Officer of EMI/Capitol Records until April 1,
1993. Mr. Smith is currently an industry consultant involved in a number of
production projects in the music business, Executive Producer for World Cup
Soccer Entertainment and a consultant to Blockbuster Entertainment.
Mr. Krasnow - has been a director of the Company since January 1989.
Since September 1974, he has been the President and sole shareholder of Krasnow
Insurance Services, Inc., an insurance agency providing life, disability and
health benefits, of which he is the sole agent.
Messrs. Levine and Krasnow are the members of the Audit Committee of the
Board of Directors. The Audit Committee is authorized to review the Company's
financial statements, meet with the Company's auditors, and make
recommendations to the Board of Directors about internal accounting controls
and procedures. See discussion of the Compensation Committee in "Executive
Compensation - Compensation Committee Interlocks and Insider Participation"
appearing elsewhere in this report.
Upon the close of the pending acquisition of Unistar (expected on or about
February 3, 1994 and as more fully discussed in "Item 1 - Business - Business
Strategy" appearing elsewhere in
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this report), Messrs. Kanter and Smith will resign and Messrs. Karmazin and
Suleman will join the Board of Directors. The Board of Directors will be
expanded to nine members made up of three directors designated by Mr. Pattiz,
three directors designated by Infinity and three independent directors.
EXECUTIVE OFFICERS
The names, ages and principal occupations (if not set out previously) of
the executive officers of the Company at February 1, 1994 are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Norman J. Pattiz..... 51 Chief Executive Officer and Chairman of the
Board of Directors
Bruce E. Kanter...... 51 Executive Vice President, Chief Financial
Officer, Secretary and Director
Gregory P. Batusic... 39 President, Network Division
Eric R. Weiss........ 35 Executive Vice President - Business and
Legal Affairs and Assistant Secretary
</TABLE>
Mr. Batusic - was appointed President, Network Division in June 1992 and
had been Executive Vice President - Sales Division from June 1987 to June 1992.
Mr. Weiss - was appointed Executive Vice President - Business and Legal
Affairs in August 1993. From September, 1992 to August 1993, he was Senior
Vice President - Business and Legal Affairs. From September 1987 to September,
1992, he was Vice President - Business and Legal Affairs.
Messrs. Pattiz, Kanter, Batusic and Weiss have written employment
agreements with the Company (Also see "Executive Compensation - Employment
Agreements" appearing elsewhere in this report). All other officers of the
Company and its subsidiaries serve at the discretion of the Board of Directors.
Upon the close of the pending acquisition of Unistar (expected on or about
February 3, 1994 and as more fully discussed in "Item 1 - Business - Business
Strategy" appearing elsewhere in this report), Messrs. Pattiz and Kanter will
no longer serve as Chief Executive Officer and Chief Financial Officer,
respectively, of the Company. These positions will be held by Mel Karmazin and
Farid Suleman, the Chief Executive Officer and Chief Financial Officer,
respectively, of Infinity.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and more than ten percent shareholders are required by
Securities and Exchange Commission regulation to furnish the Company with copies
of all Section 16(a) forms they file.
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Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during fiscal 1993 its
officers, directors and more than ten percent shareholders complied with all
filing requirements applicable to them.
ITEM 11. EXECUTIVE COMPENSATION
Executive compensation disclosures are provided for all four executive
officers identified in Item 10 plus the following additional individual who
would have otherwise qualified for disclosure but for the fact that he was not
serving as an executive officer at November 30, 1993.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Robert M. Wilson 47 Publisher and Chief Executive Officer,
Radio & Records (which was disposed of on
November 1, 1993)
</TABLE>
SUMMARY COMPENSATION TABLE
The following table shows for fiscal years ending November 30 1993, 1992
and 1991, the cash compensation as well as certain other compensation, paid to
the named executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION> Long-Term
Compensation
Annual Compensation ------------
---------------------------------------- Securities
Fiscal Other Annual Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Compensation ($) Options (#) Compensation ($)
--------------------------- ------ ---------- --------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Norman J. Pattiz............................. 1993 570,000 0 (5) 350,000 0
Chairman of the Board 1992 570,000 0 (5) 0 0
and Chief Executive Officer 1991 570,000 0 (5) 0 0
Bruce E. Kanter (1) (2)...................... 1993 275,000 220,000 52,921 (4) 0 4,953 (7)
Executive Vice President 1992 243,217 167,438 (6) 46,457 (4) 250,000 4,252 (7)
and Chief Financial Officer 1991 0 0 0 0 0
Gregory P. Batusic........................... 1993 300,000 50,000 (5) 0 2,249 (8)
Executive Vice President 1992 327,750 73,500 (5) 50,000 2,238 (8)
and President Network Division 1991 331,000 0 (5) 0 2,063 (8)
Eric R. Weiss................................ 1993 206,250 25,000 (5) 70,000 2,249 (8)
Executive Vice President - 1992 147,250 0 (5) 50,000 2,182 (8)
Business and Legal Affairs 1991 138,000 0 (5) 0 1,585 (8)
Robert M. Wilson (3)......................... 1993 320,833 0 (5) 100,000 0
Publisher and Chief Executive Officer 1992 350,000 150,000 (5) 200,000 0
Radio & Records 1991 343,000 150,000 (5) 0 0
</TABLE>
- ---------------------------------------------
(1) Mr. Kanter joined the Company as Executive Vice President and Chief
Financial Officer effective December 6, 1991.
(2) In December 1991 the Company established a Supplemental Executive
Retirement Plan (SERP) for Mr. Kanter. The SERP provides supplemental
insurance and long-term retirement benefits payable in annual
installments of $200,000 for 15 years beginning in 2008 when Mr.
Kanter becomes 65 years old. The $488,521 present value of these
benefits was expensed during fiscal 1992. Mr. Kanter vested in the
SERP upon commencement of employment in December 1991.
(3) Mr. Wilson no longer served as an executive officer or employee of the
Company upon the November 1, 1993 disposition of Radio & Records. Mr.
Wilson is included in this table as an additional individual who would
have otherwise qualified for disclosure but for the fact that he was
not serving as an executive officer at November 30, 1993.
(Notes continued on following page)
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(Notes continued from preceding page)
(4) Other Annual Compensation for Mr. Kanter consisted of: (a) long-term
disability insurance premiums of $13,646, personal financial planning
and legal services of $11,425, country club dues of $6,538, car
allowance of $16,250 and reimbursement for medical expenses of $5,062
in 1993 and (b) long-term disability insurance premiums of $12,758,
personal financial planning and legal services of $1,660, country
club dues of $6,498, car allowance of $15,000 and reimbursement for
medical expenses of $10,541 in 1992.
(5) Messrs. Pattiz, Batusic, Weiss and Wilson enjoyed certain perquisites
and other personal benefits commensurate with industry practice. The
aggregate amount of these items did not exceed the lesser of $50,000
or 10% of such officer's salary and bonus.
(6) Bonus in 1992 for Mr. Kanter included a common stock award without
restrictions of $67,438 (41,500 shares at market value of $1.625 per
share).
(7) All Other Compensation for Mr. Kanter consisted of life insurance
premiums of $2,704 in 1993 and $2,533 in 1992 and company
contributions to the employee Savings and Profit-Sharing Plan of
$2,249 in 1993 and $1,719 in 1992.
(8) All Other Compensation for Messrs. Batusic and Weiss consisted of
company contributions to the employee Savings and Profit-Sharing Plan.
STOCK OPTION TABLES
The following two tables provide information on stock option grants made
to the named executive officers in fiscal 1993, options exercised during
fiscal 1993 and options outstanding on November 30, 1993.
OPTION GRANTS IN FISCAL 1993
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
--------------------------------------------------------------- Value at Assumed
Number of Annual Rates of Stock
Securities Price Appreciation for
Underlying % of Total Options Exercise or Option Term
Options Granted to Employees Base Price Expiration -----------------------
Name Granted (#) in Fiscal Year(5) ($/Share) Date 5% ($) 10% ($)
---- ----------- -------------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Norman J. Pattiz............. 350,000(1) 60% 5.38 10/17/03 1,186,290 2,993,970
Bruce E. Kanter.............. 0 - - - - -
Gregory P. Batusic........... 0 - - - - -
Eric R. Weiss................ 20,000(2) 3% 2.13 2/15/03 26,838 67,734
50,000(3) 9% 2.75 8/29/03 86,625 218,625
------- -- ------- -------
70,000 12% 113,463 286,359
------- -- ------- -------
Robert M. Wilson............. 100,000(4) 17% 2.00 2/21/03 126,000 318,000
</TABLE>
- -----------------------------
(1) These options were granted on October 18, 1993, with 70,000
shares becoming exercisable on each October 18 anniversary
between 1994 and 1998.
(2) These options were granted on February 16, 1993 and will
become exerciseable on February 16, 1994.
(3) These options were granted on August 30, 1993 and will become
exerciseable on August 30, 1994.
(4) These options were granted on February 22, 1993 and, in
accordance with an acceleration of exercisabilty provision in
the option agreement, became exercisable upon the November 1,
1993 disposal of Radio & Records.
(5) Percentage calculations exclude the impact of a mandatory
grant of 150,000 options on March 3, 1993 to outside directors
(50,000 each to Messrs. Levine, Smith and Krasnow) which, in
accordance with the terms of the Amended and Restated 1989
Stock Incentive Plan (as approved by the Company's
shareholders at its May 4, 1993 Annual Meeting), became
exerciseable six months from the date of grant.
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<PAGE> 6
AGGREGATED OPTION EXERCISES IN FISCAL 1993
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised,
Unexercised Options In-the-Money Options
at Fiscal Year End (#) at Fiscal Year End ($) (1)
Shares Acquired Value ------------------------------- ------------------------------
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ------------ ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Norman J. Pattiz....... 0 0 543,750 356,250 1,482,844 999,031
Bruce E. Kanter........ 0 0 250,000 0 1,623,750 0
Gregory P. Batusic..... 75,000 328,125 12,500 62,500 76,563 382,813
Eric R. Weiss.......... 20,000 78,810 57,500 112,500 333,438 630,213
Robert M. Wilson....... 125,000 303,250 175,000(2) 0 1,062,875 0
</TABLE>
- ------------------------
(1) On November 30, 1993, the closing per share price for the Company's
Common Stock on the NASDAQ National Market System was $8 1/8.
(2) Mr. Wilson's option agreements contained an acceleration of
exercisability provision in the event of a sale of Radio & Records.
Radio & Records was disposed of on November 1, 1993, at which time
all of Mr. Wilson's then outstanding options became exercisable.
Mr. Wilson exercised all 175,000 options on December 13, 1993.
COMPENSATION OF DIRECTORS
Directors who are not officers receive $3,750 per meeting attended for
their services as directors or committee members and are also reimbursed for
reasonable expenses incurred in attending such meetings. In addition, such
outside directors also received on March 3, 1993 (and will receive every four
years thereafter) a mandatory grant of 50,000 stock options, with such options
becoming exerciseable six months from date of grant. Mr. Levine also received
compensation pursuant to a consulting arrangement with the Company (See
"Compensation Committee Interlocks and Insider Participation", appearing
elsewhere in this Report).
EMPLOYMENT AGREEMENTS
During fiscal 1993, the Company entered into a new written employment
agreement with Mr. Pattiz, effective October 18, 1993 (as amended on January
26, 1994), pursuant to which Mr. Pattiz is to serve as Chairman of the Board
and Chief Executive Officer of the Company for a five-year term ending November
30, 1998 at an annual salary of $750,000 (the 1993 base salary to which he was
entitled under his prior employment agreement with the Company, although he
elected to receive a salary of only $570,000) plus an annual cash bonus of at
least $250,000 payable in the event that the Company achieves certain earnings
targets. The agreement also granted Mr. Pattiz ten-year options to acquire
350,000 shares of Common Stock (which vest at the rate of 70,000 shares per
year over the five year term of the employement agreement) and provides
additional benefits which are standard for executives in the industry. The
agreement generally will be terminable by Mr. Pattiz upon ninety days' written
notice to the Company; it will be terminable by the Company only in the event
of death, permanent and total disability, or for cause. In the event of
permanent and total disability, Mr. Pattiz will receive his base salary and
cash bonus for the following twelve months and 75% of his base salary for the
remainder of the term of the Agreement. In the event of a change of control,
any unvested options granted pursuant to this agreement will become immediately
exerciseable and Mr. Pattiz will continue to
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<PAGE> 7
receive any base and cash bonus compensation he would have otherwise been
entitled to receive for the remaining term of the agreement. Upon the close of
the pending acquisition of Unistar (expected on or about February 3, 1994 and
as more fully discussed in "Item 1 - Business - Business Strategy" appearing
elsewhere in this report), Mr. Pattiz will no longer serve as Chief Executive
Officer. However, Mr. Pattiz' employment agreement will otherwise remain in
effect and the transaction will not be considered a change in control.
The Company has a written employment agreement with its Executive Vice
President and Chief Financial Officer, Mr. Kanter, effective December 6, 1991.
Pursuant to the three-year agreement, Mr. Kanter received a base salary of
$275,000 in fiscal 1993 and is to receive $300,000 in fiscal 1994, plus a
minimum bonus of $100,000 per year. The agreement also granted Mr. Kanter
options to acquire 250,000 shares of Common Stock, all of which are currently
exercisable, and provides Mr. Kanter with supplemental insurance, additional
benefits which are standard for executives in the industry, and a Supplemental
Executive Retirement Plan (SERP), which will provide an annual benefit of not
less than $200,000 per year for a period of 15 years. The employment agreement
may be terminated by the Company upon thirty days' notice and a vote of the
Board of Directors for fraud, gross misconduct, or violation of certain
non-competition obligations. Generally, Mr. Kanter can terminate his
employment upon thirty days' written notice, upon a change in control of the
Company, or if his duties or responsibilities are substantially altered. In
the event that the Company terminates this agreement other than for cause, Mr.
Kanter will continue to receive the base salary he would have otherwise been
entitled to receive for the remaining term of the agreement, an additional
year's $300,000 base salary and the continuation of certain benefits. Upon the
close of the pending acquisition of Unistar (expected on or about February 3,
1994 and as more fully discussed in "Item 1 - Business - Business Strategy"
appearing elsewhere in this report), Mr. Kanter will no longer serve as Chief
Financial Officer and the foregoing salary continuation provision will come
into effect at that time.
The Company has a written three-year employment agreement with the
President of Westwood One's Network Radio Division, Mr. Batusic, effective June
1, 1992. Pursuant to the terms of the agreement, Mr. Batusic receives a base
salary of $300,000 per year. Additionally, pusuant to the agreement, Mr.
Batusic received a guaranteed bonus of $73,500 in the first quarter of 1993 and
is eligible to receive bonuses of $50,000 in February 1994 and February 1995
upon approval of the Board of Directors. The agreement provides Mr. Batusic
with additional benefits which are standard for executives in the industry.
The agreement may be terminated by the Company for cause without further
obligation to Mr. Batusic. The agreement may also be terminated by the Company
for any reason, at its discretion, upon written notice and, in such an event,
the Company must pay Mr. Batusic's $300,000 base salary for one-year. In the
event of a merger or sale of substantially all of the Company's assets, if the
purchaser or successor company fails to assume the remaining compensation
obligations for a period of not less than two years, the Company must pay Mr.
Batusic's $300,000 base salary for two years.
During fiscal 1993, the Company entered into a written employment
agreement with Mr. Weiss, effective August 30, 1993, pursuant to which Mr.
Weiss is to serve as Executive Vice President - Business and Legal Affairs or
other such capacity as determined by the Board of Directors. Pursuant to the
agreement, which commenced on September 1, 1993 and continues through November
30, 1995, Mr. Weiss receives an annual base salary of $300,000 through November
30, 1994 and $250,000 in fiscal 1995. Mr. Weiss is also eligible to receive a
$50,000 bonus in January 1996 upon approval of the Board of Directors. The
agreement also granted Mr. Weiss options to acquire 50,000 shares of Common
Stock, all exerciseable one year from the
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<PAGE> 8
date of grant, benefits standard for executives in the industry, and certain
relocation expense reimbursements should he be required to relocate. The
agreement may be terminated by the Company for cause without further obligation
to Mr. Weiss. The agreement may also be terminated by the Company for any
reason, at its discretion, upon written notice and, in such an event, the
Company must pay Mr. Weiss the base salary he would have otherwise been
entitled to receive for the remaining term of the agreement plus an additional
year's $250,000 base salary. In the event of a merger or sale of substantially
all of the Company's assets, if the purchaser or successor company fails to
assume the remaining compensation obligations for a period of not less than two
years, the Company must pay Mr. Weiss his $250,000 base salary for two years.
In the event that the agreement is not renewed for a period of two years on the
same or better terms, the Company will be obligated to continue to pay an
additional year's $250,000 base salary.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors has a Compensation Committee which consisted of
Messrs. Levine and Krasnow through March 16, 1993, at which time Mr. Smith
replaced Mr. Levine. The Compensation Committee administers the Company's 1989
Stock Incentive Plan and is authorized to negotiate employment arrangements
with key executives of the Company and its subsidiaries.
Mr. Levine was formerly an executive officer of the Company until May
1986. The Company entered into a written consulting agreement with Mr. Levine,
effective August 1, 1990, whereby Mr. Levine provided management and financial
consulting services until May 31, 1992 for a monthly fee of $20,833. The
agreement was extended on a month-to-month basis. The agreement also provides
for additional compensation under certain circumstances in connection with
specific matters where Mr. Levine may provide services. In connection with the
pending acquisition of Unistar (as more fully discussed in "Item 1 - Business -
Business Strategy" appearing elsewhere in this report), Levine Leichtman
Capital Partners, of which Mr. Levine is a principal, will receive a $781,250
financial advisor fee. During fiscal 1993 Mr. Levine received $327,000 for his
services, including Board and Board committee fees.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of January 15, 1994, the number and
percentage of outstanding shares of Common Stock and Class B Stock held by (1)
each person or group known to the Company to beneficially own more than five
percent of the outstanding Common Stock or Class B Stock of the Company, (2)
each of the five directors included in item 10, (3) each of the executive
officers included in item 11 and (4) all directors and executive officers as a
group. At January 15, 1994, there were 19,742,275 shares of Common Stock
outstanding and 351,733 shares of Class B Stock outstanding.
Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act. Under this rule, certain shares may be deemed to be
beneficially owned by more than one person (such as where persons share voting
power or investment power). In addition, shares are deemed to be beneficially
owned by a person if the person has the right to acquire the shares (for
example, upon exercise of an option or the conversion of a debenture into
common stock) within 60 days of the date as of which the information is
provided; in computing the percentage ownership of any person (and only such
person) by reason of these acquisition
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<PAGE> 9
rights. As a result, the percentage of outstanding shares of any person as
shown in the following table does not necessarily reflect the person's actual
voting power at any particular date.
<TABLE>
<CAPTION>
Shares of Common Stock Shares of Class B Stock
Beneficially Owned (1) (14) Beneficially Owned (1) (14)
--------------------------- ---------------------------
Number Percent Number Percent
--------- ------- ------ -------
<S> <C> <C> <C> <C>
Norman J. Pattiz (2) (14)........................... 2,162,790 (3) 10.7% 351,690 99.9%
Bruce E. Kanter..................................... 291,500 (4) 1.5% -- --
Paul G. Krasnow..................................... 98,750 (5) * -- --
Joseph B. Smith..................................... 99,500 (6) * -- --
Arthur E. Levine.................................... 95,000 (7) * -- --
Gregory P. Batusic.................................. 12,500 (7) * -- --
Eric R. Weiss....................................... 77,500 (7) *
Robert M. Wilson.................................... 25,000 *
Putnam Investments, Inc. (12)....................... 1,950,583 (9) 9.9% -- --
One Post Office Square
Boston, MA 02109
The Equitable Life Assurance Society
of the United States (13)........................ 1,594,526 (10) 7.7% -- --
787 Seventh Avenue
New York, NY 10019
Gruber & McBaine Capital Management (13)............ 1,288,000 (11) 6.5% -- --
50 Osgood Place
San Francisco, CA 94133
State of Wisconsin Investment Board (13)............ 1,165,000 5.9% -- --
P.O. Box 7842
Madison, WI 53707
Froley, Revy Investment Co., Inc. (13).............. 1,082,841 (12) 5.2% -- --
10900 Wilshire Boulevard
Suite 1050
Los Angeles, CA 90024
All directors and executive officers as a group
(8 persons) ..................................... 2,862,540 (8) 13.7% 351,690 99.9%
</TABLE>
- ----------------------------------
* Represents less than one percent (1%) of the Company's outstanding shares of
Common Stock.
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock and Class B Stock, unless otherwise
indicated.
(2) As of January 15, 1994, Mr. Pattiz, whose business address is 9540
Washington Boulevard, Culver City, California 90232, owned or controlled
Common Stock and Class B Stock representing approximately 51.4% of the
total voting power of the Company. Mr. Pattiz disclaims economic interest
in 112,500 shares of Class B Stock over which he has voting control.
(3) Includes stock options for 525,000 shares granted pursuant to Mr. Pattiz'
previous written employment agreement and 18,750 shares under the Company's
1989 Stock Incentive Plan, as amended and restated.
(Notes continued on following page)
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<PAGE> 10
(Notes continued from preceding page)
(4) Represents stock options for 250,000 shares granted under the Company's
1984 Stock Incentive Plan, as amended and restated, and a common stock
award of 41,500 shares.
(5) Includes stock options for 93,750 shares granted under the Company's 1984
Non-Qualified Stock Option Plan and 1989 Stock Incentive Plan, as amended
and restated.
(6) Includes stock options for 83,750 shares granted under the Company's 1989
Stock Incentive Plan, as amended and restated.
(7) Represents stock options granted under the Company's 1989 Stock Incentive
Plan, as amended and restated.
(8) Includes stock options for 1,111,250 shares granted under the Company's
1984 Non-Qualified Stock Option Plan, 1989 Stock Incentive Plan, as amended
and restated, and Mr. Pattiz' previous written employment agreement.
(9) Putnam Investments, Inc. as an investment advisor has no sole voting
dispositive power, but has shared voting and dispositive power for
1,950,583 shares.
(10) Includes 848,957 shares issuable upon conversion of the Company's 9%
Convertible Senior Subordinated Debentures at a conversion price of $3.50
per share and 85,000 shares which may be acquired upon exercise of warrants
at an exercise price of $2.375 per share. The Equitable Life Assurance
Society of the United States as the parent holding company of various
subsidiaries, has sole power to vote 1,584,519 shares and sole dispositive
power over 1,591,669 shares.
(11) Gruber and McBaine Capital Management, Inc., as an investment advisor, has
no sole voting or dispositive power, but has shared voting and dispositive
power for 1,059,750 shares.
(12) Represents shares issuable upon conversion of the Company's 9% Convertible
Senior Subordinated Debentures due 2002 at a conversion price of $3.50 per
share.
(13) Tabular information and footnotes 9, 10, 11 and 12 are based upon
information contained in Schedule 13G filings and other information made
available to the Company.
(14) Upon the close of the pending acquisition of Unistar (expected on or about
February 3, 1994 and as more fully discussed in "Item 1 - Business -
Business Strategy" appearing elsewhere in this report), a subsidiary of
Infinity will purchase 5,000,000 newly issued shares of Common Stock, and
Mr. Pattiz, such subsidiary and the Company will enter into a Voting
Agreement pursuant to which Mr. Pattiz and such subsidiary will vote their
respective shares of the Company's Common Stock in favor of their
respective designees to the Board of Directors. If the closing had
occurred effective January 15, 1994: (1) Mr. Pattiz would own or
control Common Stock and Class B Stock representing 45.4% of the total
voting power of the Company; and (2) as a result of the Voting Agreement,
Mr. Pattiz and the subsidiary would together beneficially own 7,162,790
shares (28.3%) of the Company's Common Stock with respect to election of
directors. Pursuant to the Voting Agreement, Mr. Pattiz would also be
required to vote all of his shares of Class B Stock in accordance with the
recommendation of the full incumbent Board of Directors on any matters
presented to the Company's shareholders.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mary Turner, Mr. Pattiz's wife and an independent contractor for the
Company for the past thirteen years, received $147,000 from the Company in
fiscal 1993 as compensation for services as an interviewer and voice talent for
a Company program.
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Upon the close of the pending acquisition of Unistar (expected on or about
February 3, 1994 and as more fully discussed in "Item 1 - Business - Business
Strategy" appearing elsewhere in this report), Infinity will manage the
business and operations of the Company pursuant to the terms of a Mangement
Agreement between the Company and Infinity. Infinity will receive an annual
base fee of $2,000,000 (adjusted for inflation), an annual cash bonus payable
in the event of meeting certain financial targets and incentive warrants to
acquire up to 1,500,000 shares of Common Stock exercisable at certain prices
per share.
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