SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule
14a-12
LIVE Entertainment Inc.
(Name of Registrant as Specified in its Charter)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(j)(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: N/A
(2) Aggregate number of securities to which transaction
applies: N/A
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: N/A
(4) Proposed maximum aggregate value of transaction: N/A
[ ] 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: N/A
(2) Form, schedule or registration statement no.: N/A
(3) Filing party: N/A
(4) Date filed: N/A
<PAGE>
LIVE ENTERTAINMENT INC.
15400 Sherman Way
Van Nuys, California 91406
NOTICE OF ANNUAL MEETING OF HOLDERS OF COMMON STOCK,
SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK AND
SERIES C CONVERTIBLE PREFERRED STOCK
To Be Held May 9, 1995
Notice is hereby given that the annual meeting of holders of
Common Stock, Series B Cumulative Convertible Preferred Stock and
Series C Convertible Preferred Stock of LIVE Entertainment Inc.
(the "Company") will be held at The Peninsula Beverly Hills, 9882
Little Santa Monica Boulevard, Beverly Hills, California 90212, on
Tuesday, May 9, 1995, at 10:00 a.m. for the following purposes:
(1) Election of Directors by Common Stockholders and Series
C Convertible Preferred Stockholders.
(2) Election of Directors by Series B Cumulative Convertible
Preferred Stockholders.
(3) Approval by Common Stockholders and Series C Convertible
Preferred Stockholders of an amendment to the Company's
1988 Stock Option and Stock Appreciation Rights Plan to
increase the number of shares of the Company's Common
Stock for which options may be granted by an additional
100,000 shares.
(4) Ratification by Common Stockholders and Series C
Convertible Preferred Stockholders of the selection of
Ernst & Young LLP as independent auditors of the Company
for the fiscal year ending December 31, 1995.
(5) Such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed March 24, 1995 as the record
date for determining the stockholders entitled to receive notice of
and to vote at the meeting.
You are cordially invited to attend the meeting. Whether or
not you plan to attend the meeting, you are urged to promptly
complete, date and sign the enclosed proxy and mail it to the
Company in the enclosed envelope, which requires no postage if
mailed in the United States. Return of your proxy does not deprive
you of your right to attend the meeting and to vote your shares in
person.
By Order of the Board of Directors,
MICHAEL J. WHITE
Secretary
April 3, 1995
Van Nuys, California
<PAGE>
LIVE ENTERTAINMENT INC.
15400 Sherman Way
Van Nuys, California 91406
PROXY STATEMENT
SOLICITATION
This Proxy Statement is furnished to stockholders of LIVE
Entertainment Inc. (the "Company" or "LIVE") in connection with the
solicitation of proxies by and on behalf of the Board of Directors
of the Company (the "Board") for use at the annual meeting of
holders of Common Stock, Series B Cumulative Convertible Preferred
Stock (the "Series B Preferred Stock") and Series C Convertible
Preferred Stock (the "Series C Preferred Stock") scheduled to be
held at The Peninsula Beverly Hills, 9882 Little Santa Monica
Boulevard, Beverly Hills, California 90212, on Tuesday, May 9,
1995, at 10:00 a.m. and at any adjournments thereof. The
approximate date on which this Proxy Statement and the accompanying
forms of proxy are first being mailed to stockholders is April 7,
1995. The Company's principal executive offices are located at
15400 Sherman Way, Van Nuys, California 91406.
Proxies, in the forms enclosed, are being solicited by the
Board for use at the annual meeting. The persons named as proxies
were selected by the Board and are officers of the Company or its
affiliates. Proxies may be revoked by a stockholder by written
notice (including a properly executed and later dated proxy) to the
Secretary of the Company at any time prior to the voting. In
addition, a stockholder who attends the annual meeting may vote his
shares personally and revoke his proxy at that time. All shares
represented by valid proxies received pursuant to this
solicitation, and not subsequently revoked, will be voted as
provided on the proxy.
The expense of preparing, printing and mailing this Proxy
Statement and the proxies solicited hereby will be borne by the
Company. In addition to the use of the mails, proxies may be
solicited by officers, Directors and regular employees of the
Company, without extra remuneration, by personal interviews,
telephone, telegraph or otherwise. The Company will also request
brokerage firms, nominees, custodians and fiduciaries to forward
proxy materials to the beneficial owners of shares held of record
and will reimburse such persons for their reasonable out-of-pocket
expenses.
The Board has fixed the close of business on March 24, 1995 as
the record date (the "Record Date") for the determination of
stockholders entitled to receive notice of and to vote at the
annual meeting. Only stockholders of record at the close of
business on the Record Date will be entitled to notice of and to
vote at the annual meeting. At the close of business on the Record
Date, the Company had outstanding 2,418,720 shares of Common Stock,
5,600,000 shares of Series B Preferred Stock and 15,000 shares of
Series C Preferred Stock. The Common Stock and Series C Preferred
Stock are entitled to vote as a group on the election of six
members of the Board, the amendment to the Company's 1988 Stock
Option and Stock Appreciation Rights Plan, the ratification of the
appointment of independent auditors and other business as may
properly come before the meeting or any adjournment thereof. The
Series B Preferred Stock is entitled to elect two members of the
Board, separate and distinct from the Directors being voted on by
holders of Common Stock and Series C Preferred Stock. Each share
of Common Stock and Series B Preferred Stock is entitled to one
vote. Each share of Series C Preferred Stock is entitled to 71.72
votes. The holders of a majority of the Common Stock and Series C
Preferred Stock constitute a quorum for those portions of the
meeting where action is required of holders of Common Stock and
Series C Preferred Stock. The holders of a majority of the Series
B Preferred Stock constitute a quorum for those portions of the
meeting where action is required of holders of Series B Preferred
Stock.
ACTION TO BE TAKEN UNDER PROXY
All proxies for Common Stockholders and Series C Preferred
Stockholders in the accompanying form that are properly executed
and returned will be voted at the meeting and any adjournments
thereof in accordance with any specifications thereon or, if no
specifications are made, will be voted for the election of the six
nominees described herein, to amend the Company's 1988 Stock Option
and Stock Appreciation Rights Plan and for the ratification of the
appointment of independent auditors. All proxies for Series B
Preferred Stockholders in the accompanying form that are properly
executed and returned will be voted at the meeting and any
adjournments thereof in accordance with any specifications thereon
or, if no specifications are made, will be voted for the election
of the two nominees described herein.
All outstanding shares of the Company's Common Stock and
Series C Preferred Stock represented by properly executed and
unrevoked proxies received in the accompanying form in time for the
Annual Meeting will be voted. A stockholder may, with respect to
the election of Directors (i) vote for the election of all nominees
named herein as Directors, (ii) withhold authority to vote for all
such Director nominees or (iii) vote for the election of all such
Director nominees other than any nominee with respect to whom the
stockholder withholds authority to vote by so indicating on the
proxy. Withholding authority to vote for a Director nominee will
not prevent the nominee from being elected. A stockholder may,
with respect to each other matter specified in the Notice of Annual
Meeting (i) vote "for" the matter, (ii) vote "against" the matter
or (iii) "abstain" from voting on the matter. A vote to abstain
from voting on a matter has the legal effect of a vote against such
matter. Shares will be voted as instructed in the accompanying
proxy on each matter submitted to stockholders. If no instructions
are given, the shares will be voted for the election of all
nominees named herein as Directors, for the approval of the
proposed amendments to the Company's 1988 Stock Option and Stock
Appreciation Rights Plan, and for ratification of the selection of
Ernst & Young LLP as independent auditors for the Company for the
fiscal year ending December 31, 1995.
A proxy submitted by a stockholder may indicate that all or a
portion of the shares represented by such proxy are not being voted
by such stockholder with respect to a particular matter. This
could occur, for example, when a broker is not permitted to vote
stock held in street name on certain matters in the absence of
instructions from the beneficial owner of the stock. The shares
subject to any such proxy which are not being voted with respect to
a particular matter (the "non-voted shares") will be considered
shares not present and entitled to vote on such matter, although
such shares may be considered present and entitled to vote for all
other purposes and will count for the purpose of determining the
presence of a quorum. (Shares voted to abstain on a particular
matter will not be considered non-voted shares.) Approval of each
matter specified in the Notice of Annual Meeting requires the
affirmative vote of a majority, or in the case of the election of
Directors, a plurality, of the shares of Common Stock and Series C
Preferred Stock present in person or by proxy at the meeting and
entitled to vote on the matter. Accordingly, non-voted shares with
respect to such matters will not affect the determination of
whether such matters are approved or the outcome of the election of
Directors.
Similar rules apply with respect to the vote for Directors by
holders of the Series B Preferred Stock.
The Board knows of no matters, other than those stated above,
to be presented and considered at the meeting. If, however, any
other matters properly come before the meeting or any adjournments
thereof, it is the intention of the persons named in the enclosed
proxy to vote such proxy in accordance with their judgment on any
such matters. The persons named in the enclosed proxy may also, if
a quorum is not present, vote such proxy to adjourn the meeting
from time to time.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Since the beginning of 1994, Messrs. Satoshi Matsumoto, Mario
Kassar, David Mount and Lynwood Spinks have resigned from the Board
of Directors. None of the departures from the Board of Directors
was the result of any dispute with the Company. The Board
appointed Gregory R. Pierson, Roger A. Burlage, Ryuichi Noda and
Michael J. White to fill the positions left vacant by those
departures. The general practice of the Company is that its
Directors who are to be elected by holders of Common Stock and
Series C Preferred Stock are divided into three separate classes,
with the Directors of each class having a three year term. Thus,
the terms of Ronald B. Cushey, Gregory R. Pierson and R. Timothy
O'Donnell were to expire at the 1994 Annual Meeting of
Stockholders. However, the Company did not hold an Annual Meeting
in 1994, and the terms of Messrs. Cushey, Pierson and O'Donnell
have continued to the 1995 Annual Meeting. Mr. Cushey is not
standing for reelection as a Director of the Company. Mr. Makoto
Koshiba has been nominated to fill the open position resulting from
the departure of Mr. Cushey as a Board member. In order to assure
that approximately one third of each class of the Company's
Directors who are to be elected by holders of Common Stock and
Series C Preferred Stock will continue to be subject to election
each year, the terms of Messrs. Koshiba, Pierson and O'Donnell will
only last for two years after the 1995 Annual Meeting.
It is intended that the persons named in the proxy for Common
Stockholders and Series C Preferred Stockholders will, unless
otherwise instructed, vote for the election of the six nominees
listed below to serve as Directors until the annual meeting of
Common Stockholders and Series C Preferred Stockholders following
their election listed opposite their names and until their
respective successors are elected and have qualified. It is
intended that the persons named in the proxy for Series B Preferred
Stockholders will, unless otherwise instructed, vote for the
election of the two nominees listed below to serve as Directors
until the next annual meeting of Series B Preferred Stockholders
following their election and until their respective successors are
elected and have qualified. If any nominee, for any reason
presently unknown, cannot be a candidate for election, the shares
represented by valid proxies will be voted in favor of the
remaining nominees and may be voted for the election of a
substitute nominee recommended by the Board. All of the nominees
listed below have agreed to serve if elected.
Nominees for Election by Common Stockholders
and Series C Preferred Stockholders
Terms
Makoto Koshiba Until 1997 Annual Meeting
Gregory R. Pierson Until 1997 Annual Meeting
R. Timothy O'Donnell Until 1997 Annual Meeting
Roger A. Burlage Until 1998 Annual Meeting
Roger R. Smith Until 1998 Annual Meeting
Michael J. White Until 1998 Annual Meeting
Vote Required for Approval
An affirmative vote of the holders of at least a
plurality of the combined voting power of the Common Stock and
Series C Preferred Stock voting and present at the annual meeting
is necessary for election of the six nominees listed above.
Pursuant to Delaware law, broker non-votes will have the effect of
a vote to withhold approval of the nominees for election.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
THE NOMINEES LISTED ABOVE.
Nominees for Election by
Series B Preferred Stockholders
Terms
Jay Burnham Until 1996 Annual Meeting
Jonathan D. Lloyd Until 1996 Annual Meeting
Vote Required for Approval
An affirmative vote of the holders of at least a
plurality of the Series B Preferred Stock voting and present at the
annual meeting is necessary for election of the two nominees listed
above. Pursuant to Delaware law, broker non-votes will have the
effect of a vote to withhold approval of the nominees for election.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
THE NOMINEES LISTED ABOVE.
Incumbent Directors Terms
Frans J. Afman Until 1996 Annual Meeting
Ryuichi Noda Until 1996 Annual Meeting
Masao Nomura Until 1996 Annual Meeting
Anthony J. Scotti Until 1996 Annual Meeting
The following information with respect to the principal
occupation or employment of each nominee and incumbent Director,
the name and principal business of the corporation or other
organization in which such occupation or employment is carried on,
and other affiliations and business experience during the past five
years, has been furnished to the Company by the respective nominees
and incumbent Directors. This information includes a description
of each person's service, if any, with the Company.
Information Concerning Current Directors, Nominees for Directors
and Executive Officers
The following table sets forth information with respect to the
Directors, nominees for Director and executive officers of the
Company as of February 28, 1995.
Name Age Position
Anthony J. Scotti 55 Director; Chairman of the Board
Frans J. Afman 61 Director
Jay Burnham 32 Director
Makoto Koshiba 51 Nominee for Director
Jonathan D. Lloyd 42 Director
Ryuichi Noda 60 Director
Masao Nomura 45 Director
R. Timothy O'Donnell 39 Director
Gregory R. Pierson 36 Director
Roger R. Smith 52 Director
Roger A. Burlage 52 Director; President and Chief
Executive Officer of the Company
and LIVE Home Video Inc. ("LHV")
Ronald B. Cushey 38 Director; Executive Vice President
and Chief Financial Officer of the
Company and LHV
Michael J. White 39 Director; Executive Vice
President/Chief Administrative
Officer, General Counsel and
Corporate Secretary of the Company
Paul Almond (1) 52 Executive Vice President/
Programming and Acquisitions of LHV
Steven E. Mangel (1) 41 Executive Vice President/Legal and
Business Affairs and General
Counsel of LHV
Elliot Slutzky (1) 46 Executive Vice President/Sales and
Marketing of LHV
- ------------------
(1) Executive officers of LHV who were determined by the Board to
be executive officers of the Company effective as of January
1, 1995 by virtue of the policy making functions that they
perform for the Company.
Mr. Scotti has been a Director of the Company since November
1988 and Chairman of the Board since November 1992. Since February
1991, Mr. Scotti has been Chairman of the Board and Chief Executive
Officer of All American Communications, Inc. ("All American"), a
multi-media entertainment conglomerate specializing in television
production and distribution, record producing, music publishing and
motion picture production. From 1976 to 1991, Mr. Scotti served as
Co-Chairman of the Board of Directors and Chief Executive Officer
of Scotti Brothers Entertainment Industries ("Scotti Brothers"), a
multi-media entertainment company which became a wholly owned
subsidiary of All American in February 1991.
Mr. Afman has been a Director of the Company since November
1988. From 1982 until July 1988, Mr. Afman was a Senior Vice
President of Credit Lyonnais Bank Nederland N.V. ("Credit
Lyonnais"). He served as a consultant to the Board of Directors of
Credit Lyonnais from July 1988 until July 1991. In July 1991, Mr.
Afman was appointed Managing Director of a newly formed financial
services unit of International Creative Management, a leading
worldwide talent and literary agency. Currently, Mr. Afman is an
independent financial consultant to the entertainment industry.
Mr. Burnham, a Director of the Company since June 1993, has
been an investment analyst with Libra Investments ("Libra"), a
diversified investment services firm, since January 1995. From
June 1990 until he joined Libra, Mr. Burnham performed investment
analyst services for Paul D. Sonz Partners, a diversified
investment services firm. From August 1987 until June 1990, he was
an investment analyst with Columbia Savings and Loan Association,
a financial savings institution. Mr. Burnham is a director of
Bally's Las Vegas, a hotel and gaming establishment located in Las
Vegas, Nevada.
Mr. Koshiba has been General Manager of the Finance Division
of Pioneer Electronic Corporation since August 1993. From
September 1991 to August 1993, Mr. Koshiba served as Executive Vice
President, Secretary and Treasurer of Pioneer Electronics Capital
Inc., a company engaged in the business of providing financing to
the U.S. Pioneer companies. From August 1985 to September 1991,
Mr. Koshiba was Secretary and Treasurer of Pioneer Electronics
(USA) Inc.
Mr. Lloyd, a Director of the Company since June 1993, is
currently the Chairman, President and Chief Executive Officer of
OpTel, Inc. ("OpTel"), a national developer and operator of cable
television and telephone systems. Prior to joining OpTel, Mr.
Lloyd was the President of Qintex Entertainment, Inc. ("Qintex"),
a company engaged in the development and production of television
programming, a position he held from January 1990 until December
1993. In October 1989, Qintex filed for reorganization under
Chapter 11 of the United States Bankruptcy Code and a plan of
reorganization for Qintex was confirmed in December 1992. From
April 1988 to January 1990, Mr. Lloyd was the Executive Vice
President and Chief Financial Officer of Qintex.
Mr. Noda became a Director of the Company in December 1994.
Mr. Noda became President of Pioneer LDC, Inc., a subsidiary of
Pioneer Electronic Corporation, in April 1991 and has been a
Director of Pioneer Electronic Corporation since December 1988.
From October 1988 to April 1991, he was Deputy General Manager of
the International Division of Pioneer Electronic Corporation. From
January 1986 until October 1988, he was President and Chief
Executive Officer of Pioneer Electronics (USA) Inc., a company
engaged in sales and marketing of consumer electronics in the
United States. From 1985 to 1986, he served as General Manager of
the Planning and Coordination Department of the International
Division of Pioneer Electronic Corporation. Mr. Noda also serves
as a Director of Carolco Pictures Inc., a diversified entertainment
company engaged in the financing, production and leasing of motion
picture properties worldwide ("Carolco").
Mr. Nomura became a Director of the Company on November 9,
1993. He has served as Secretary, Treasurer and Chief Financial
Officer of Pioneer LDCA, Inc. ("Pioneer") since March 1987.
Mr. O'Donnell has been a Director of the Company since
November 1988. He is currently President of Jefferson Capital
Group, Ltd. ("Jefferson Capital"), a privately held investment
banking group which he co-founded in September 1989. Mr. O'Donnell
has been a Director of All American since January 1992, a Director
of Shorewood Packaging Corporation, a packager of records,
audiocassettes and videocassettes, since 1992, and a Director of
Cinergi Pictures Entertainment Inc., an independent motion picture
distribution company, since 1994.
Mr. Pierson became a Director of LIVE in April 1994. Mr.
Pierson has been the General Counsel of Pioneer North America, Inc.
("PNA") since 1991. From 1985 to 1991, Mr. Pierson was an attorney
with the law firm of Adams, Duque & Hazeltine in Los Angeles. Mr.
Pierson also serves as a Director of Carolco.
Mr. Smith has been a Director of the Company since November
1988 and was Executive Vice President of Carolco from October 1990
to June 1992. Since June 1992, Mr. Smith has been self employed as
an independent motion picture producer. He served as Executive
Vice President of the Company from November 1989 until September
1990 and Chief Financial Officer of the Company from November 1988
until September 1990. He also served as Senior Vice President of
the Company from November 1988 until he became Acting President of
the Company in August 1989, a position he held until his
appointment as Executive Vice President of the Company. He was
also President of LIVE Enterprises Inc., a subsidiary of the
Company, from November 1989 until September 1990.
Mr. Burlage has served as President and Chief Executive
Officer of LIVE and LHV since January 1994 and became a Director of
the Company in December 1994. From 1989 until joining LIVE, Mr.
Burlage served as President and Chief Executive Officer of Trimark
Holdings, Inc., a diversified entertainment company ("Trimark").
Prior to joining Trimark, Mr. Burlage served in several other
capacities in the entertainment industry, including positions with
New World Pictures, Ltd. ("New World") and with AVCO Corporation
and AVCO Embassy Pictures.
Mr. Cushey has served as Executive Vice President and Chief
Financial Officer of LIVE and LHV since January 1995. He became a
Director of the Company on November 9, 1993. He was an Executive
Consultant for PNA from April 1992 until December 1994. Mr. Cushey
served as Chief Financial Officer of Nelson Holdings International
Ltd. and Nelson Entertainment Group (collectively, "Nelson") from
January 1989 until June 1991, after serving as Nelson's Acting
Chief Financial Officer since November 1987.
Mr. White became a Director of the Company in December 1994.
He has been Executive Vice President/Chief Administrative Officer
of the Company since November 1993 and General Counsel since
September 1990. In February 1993, the Company filed a "prepackaged
plan of reorganization" in the United States Bankruptcy Court in
order to consummate its financial restructuring. The plan of
reorganization was confirmed on March 17, 1993 and the Company
emerged from bankruptcy on March 23, 1993. Prior to joining the
Company, Mr. White served as Vice President, Human Resources and
Corporate Counsel of PACE Membership Warehouse, Inc. ("PACE") from
June 1988 and February 1988, respectively, until April 1990.
Mr. Almond was named Executive Vice President, Acquisitions
and Productions, of LHV in January 1994. From 1986 until joining
LIVE, Mr. Almond was Senior Vice President, Worldwide Acquisitions
at ITC Entertainment Group, an international motion picture
production and distribution company.
Mr. Mangel became LHV's Executive Vice President in July 1994
and currently supervises the Company's international sales division
and its legal and business affairs department. Previously, Mr.
Mangel served as General Counsel and Senior Vice President/Legal
and Business Affairs since August 1989 after serving as its Vice
President since January 1986. From 1979 until joining LHV, Mr.
Mangel was a private practitioner, specializing in copyright and
entertainment law, becoming a member of the law offices of Shapiro
and Mangel in 1984.
Mr. Slutzky was named Executive Vice President, Sales and
Marketing of LHV in February 1994. From 1989 until his appointment
at LIVE, Mr. Slutzky was President, Marketing and Distribution, for
Epic Productions, Inc. and Vision International.
Board Meetings
During 1994, the Board met eleven times. Messrs. Kassar and
Matsumoto attended less than 75% of the meetings of the Board and
the Committees thereof on which they served during those portions
of 1994 when such individuals were members of the Board.
Executive Committee
The Executive Committee of the Board consists of Messrs.
Burlage, Scotti, Noda and O'Donnell. During intervals between
meetings of the Board, the Executive Committee exercises all powers
of the Board (except those powers specifically reserved by Delaware
law to the full Board) in the management and direction of the
business and conduct of the affairs of the Company in all cases in
which specific directions have not been given by the Board. The
Executive Committee met five times in 1994.
Compensation Committee
The Compensation Committee of the Board consists of Messrs.
Afman, O'Donnell and Pierson. The Compensation Committee, which
determines executive remuneration, met five times in 1994.
Stock Option Committee
The Stock Option Committee of the Board consists of Messrs.
Afman and O'Donnell. The Stock Option Committee, which was formed
in 1993 pursuant to the Company's 1988 Stock Option and Stock
Appreciation Rights Plan, as amended (the "1988 Plan"), grants
stock options or stock appreciation rights to selected key
employees of the Company or its subsidiaries, Directors,
consultants or other persons. The Stock Option Committee met three
times in 1994.
Independent Committee
The Independent Committee of the Board consists of Messrs.
Burnham, Lloyd, O'Donnell and Scotti. Transactions between the
Company, on the one hand, and affiliates of the Company or its
Directors, other than wholly-owned subsidiaries of the Company, on
the other, are referred to the Independent Committee to ensure that
the interests of the Company are protected in any such transaction.
The Independent Committee met three times in 1994.
Audit Committee
The Audit Committee of the Board consists of Messrs. Nomura,
O'Donnell and Smith. The function of the Audit Committee is to
review and approve the selection of, and all services performed by,
the Company's independent auditors; to meet and consult with, and
to receive reports from, the Company's independent auditors, its
financial and accounting staff and its internal audit department;
and to review and act with respect to the scope of audit
procedures, accounting practices and internal accounting and
financial controls of the Company. The Audit Committee met three
times in 1994.
The Company does not have a standing Nominating Committee.
Arrangements Pursuant to Which Certain Directors Have Been Elected
By the terms of the Certificate of Designations, Preferences
and Relative, Participating, Optional or Other Special Rights of
the Series B Preferred Stock, the holders of the Series B Preferred
Stock, voting as a class, are entitled to elect two Directors of
the Company, and more in certain events. Messrs. Burnham and Lloyd
have been elected as Directors by the holders of the Series B
Preferred Stock.
Board Fees
Directors Fees
During 1994, all Directors of the Company were entitled to
receive non-qualified options to acquire 1,000 shares of the
Company's Common Stock for service as a Board member. All
Directors of the Company who are not employed by the Company are
also entitled to receive an annual fee of $10,000 plus $1,000 for
attendance at each committee meeting. Mr. Scotti does not receive
these fees.
Mr. Scotti receives $25,000 per month for services rendered as
Chairman of the Board of Directors of the Company. Mr. Scotti
receives no other annual meeting or committee fees for his service
on the Board.
Arrangements with Board Members
In September 1994, LIVE offered to amend the applicable stock
option agreements with respect to all stock options held by members
of its Board of Directors to provide that such options shall be
exercisable for a period of twelve months following termination of
employment or other relationship with LIVE to the extent such
options are exercisable on the date of such cessation of employment
or other relationship. Other than agreements concerning options
granted to members of the Stock Option Committee of LIVE's Board of
Directors in January 1994, which agreements include the twelve-
month exercise provision, the applicable stock option agreements of
all members of LIVE's Board currently provide that options shall be
exercisable for a period of ninety (90) days following termination
of employment or other relationship with LIVE to the extent such
options are exercisable on the date of such cessation of employment
or other relationship. All of the members of LIVE's Board of
Directors accepted this offer.
On March 6, 1995, the Stock Option Committee of the Board of
Directors granted to all current employees and Directors of LIVE
and LHV (other than members of the Stock Option Committee) who were
holders of options pursuant to the 1988 Plan, the option to agree
to cancel certain options (the "Canceled Options") and to receive
in return therefor new options (the "New Options") pursuant to the
1988 Plan, all on the following terms and conditions: (i) the
exercise price for the New Options would equal $3.50, the closing
price of the Common Stock on the SmallCap Market on March 6, 1995,
(ii) fifty percent (50%) of the New Options would vest on March 6,
1996; the remainder would vest on March 6, 1997, provided that no
New Options would vest earlier than the scheduled vesting date for
the corresponding Canceled Options, and (iv) all New Options would
expire on the expiration date of the corresponding Canceled
Options.
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended December 31, 1994, the following
Board members served on the Company's Compensation Committee: Mr.
Afman, Mr. O'Donnell, Mr. Scotti (until December 1994) and Mr.
Pierson (effective December 1994). During the fiscal year ended
December 31, 1994, none of the members of the Compensation
Committee were officers or employees of LIVE or any of its
subsidiaries. Furthermore, none of the members of the Compensation
Committee are former officers of LIVE or any of its subsidiaries.
The Company or its subsidiaries had the following relationships and
transactions with members of the Compensation Committee and/or
their affiliates.
Arrangements with Mr. Scotti or Affiliates
The Company and Mr. Scotti are parties to an agreement dated
December 1993, pursuant to which the Company agreed, for a term
ending in December 1996, to pay Mr. Scotti $25,000 per month, plus
normal Directors expenses and other out-of-pocket expenses he may
incur in connection with his services to the Company, in return for
Mr. Scotti making himself available to the Company or any video
subsidiary thereof to act as Mr. Burlage's primary reporting person
for the period ending December 31, 1996. Such compensation is
payable as long as Mr. Scotti makes himself available for such
purpose, whether or not the Company actually utilizes his services
and whether or not Mr. Burlage remains in the Company's employ.
Arrangements with Mr. O'Donnell or Affiliates
In a May 1992 agreement, amended in July and August 1992, the
Company engaged Jefferson Capital and Daniels and Associates
(collectively, the "Financial Advisors") to review the Company's
capital structure, assist in structuring and placing appropriate
working capital facilities at LHV and to make recommendations with
respect to the Company's capital structure. As part of their
engagement, the Financial Advisors assisted the Company in
negotiating and obtaining a $30,000,000 revolving credit facility
from Foothill Capital Corporation in November 1994 and in December
1994 received a total fee of $300,000 for such services. LIVE has
also agreed to reimburse the Financial Advisors for their
reasonable out-of-pocket expenses, including legal fees, in
connection with such engagement.
Jefferson Capital has performed various other investment
banking services for the Company. In January 1993, Jefferson
Capital received a $100,000 retainer for investment banking
services to be provided in connection with any consideration by the
Company of a potential business combination of the Company and
Carolco. As a result of the Company's execution of a Merger
Agreement with Carolco in August 1994, an additional $400,000 was
paid to Jefferson Capital in August 1994. LIVE has also agreed to
reimburse Jefferson Capital for its reasonable out-of-pocket
expenses, including legal fees, and to indemnify Jefferson Capital
against certain liabilities, including liabilities under the
federal securities laws, relating to or arising out of services
performed by Jefferson Capital as financial advisor to LIVE's
management.
In October 1994, LIVE retained Jefferson Capital as its
advisor in connection with LIVE's efforts to obtain the agreement
of the holders of the Company's $40,000,000 of Increasing Rate
Senior Subordinated Notes Due 1999 (the "LIVE Increasing Rate
Notes") to eliminate the minimum net worth covenant contained in
the Indenture governing the LIVE Increasing Rate Notes (the
"Indenture"). Jefferson Capital received a total fee of $200,000
(one half paid in October 1994 and the second half paid in November
1994) for investment banking services provided in connection with
such efforts. Jefferson Capital's fee was not contingent upon the
success of LIVE's efforts to amend the Indenture. LIVE also agreed
to reimburse Jefferson Capital for its reasonable out-of-pocket
expenses, including legal fees, and to indemnify Jefferson Capital
against certain liabilities, including liabilities under the
federal securities laws, relating to or arising out of services
performed by Jefferson Capital for this engagement.
In August 1994, LIVE sold its "Specialty Retail Division,"
consisting of its formerly wholly owned subsidiary, Strawberries
Inc. ("Strawberries"), and Strawberries' wholly owned subsidiary,
Waxie Maxie Quality Music Co., for the total purchase price of
$35,000,000. The purchaser is an affiliate of each of (i)
Jefferson Capital and (ii) Ivan Lipton, President of the Specialty
Retail Division.
Arrangements with Mr. Afman or Affiliates
In July 1994, LIVE entered into an agreement with affiliates
of Mr. Afman whereby such affiliates agreed to provide services
with respect to the international licensing of film rights held by
LIVE. The fees payable to the affiliates of Mr. Afman are based on
the license fee paid for such rights by unaffiliated third parties.
Such affiliates of Mr. Afman also are entitled to be reimbursed for
certain expenses they incur in connection with the services they
perform under the agreement. The agreement is terminable by either
party upon thirty days prior notice.
Arrangements with Mr. Pierson or Affiliates
Pioneer
Pursuant to an agreement dated October 1991, LIVE America
Inc., an affiliate of the Company ("LIVE America"), granted Pioneer
a license for United States laser videodisc rights to LIVE
America's library of motion pictures (subject to certain reserved
rights) for a term ending in September 1995. In October 1991,
Pioneer paid LIVE America $5,000,000 under this agreement as a non-
returnable advance recoupable on a cross-collateralized basis from
all royalties payable to LIVE America under the agreement. Such
advance has been recouped by Pioneer and no further amounts are
owing thereunder.
Pioneer is the owner of all of the Series C Preferred Stock.
The Series C Preferred Stock bears dividends at the rate of 5% per
annum, payable semi-annually on January 1 and July 1. The semi-
annual dividends on the Series C Preferred Stock scheduled to be
paid to Pioneer on July 1, 1993, January 1, 1994, July 1, 1994 and
January 1, 1995, were not paid due to restrictions on LIVE imposed
by the terms of the Series B Preferred Stock. Under the terms of
the Certificate of Designations, Preferences and Rights of the
Series C Preferred Stock, any accrued but unpaid dividends on the
Series C Preferred Stock are added to the liquidation preference of
the Series C Preferred Stock on the semi-annual payment date. As
of January 2, 1995, unpaid dividends totalling $1,378,000 from July
1, 1993, January 1, 1994, July 1, 1994 and January 1, 1995 had been
added to the liquidation preference resulting in a total
liquidation preference of $16,378,000.
Under the terms of the Certificate of Designations,
Preferences and Relative, Participating, Optional or Other Special
Rights of the Series B Preferred Stock, LIVE is prohibited from
paying dividends on any junior series of LIVE preferred stock,
including the Series C Preferred Stock, other than from the
cumulative net income of LIVE from and after the date of issuance
of the Series B Preferred Stock (March 23, 1993). LIVE has had a
cumulative net loss since March 23, 1993 and thus has been
prohibited from paying dividends on the Series C Preferred Stock.
As a result of such non-payment, the unreturned liquidation
preference of the Series C Preferred Stock increased to $16,378,000
as of December 31, 1994. It is the intention of LIVE, immediately
upon any redemption or retirement of the Series B Preferred Stock,
to pay all accrued and unpaid dividends on the Series C Preferred
Stock, provided that the payment of such dividends does not impair
the capital of LIVE and is not prohibited under the Delaware
General Corporation Law. Immediately following such payment, the
liquidation preference of the Series C Preferred Stock would equal
$15,000,000.
Giving effect to the one for five reverse stock split of the
Company's common stock that occurred on December 9, 1994 (the
"Reverse Stock Split"), the Series C Preferred Stock is convertible
into that number of shares of Common Stock that is equal to the
unreturned liquidation preference of the Series C Preferred Stock
divided by $15.225. Thus, as of December 31, 1994, the Series C
Preferred Stock was convertible into 1,075,753 shares of Common
Stock. Upon the payment of all accrued and unpaid dividends on the
Series C Preferred Stock, the Series C Preferred Stock will be
convertible into 985,221 shares of Common Stock.
In July 1993, LIVE granted Pioneer, Le Studio Canal+ S.A. ("Le
Studio") and RCS Video International Services B.V. ("RCS") the
right to require LIVE to use its best efforts to register all
Common Stock in the Company owned by either Pioneer, Le Studio or
RCS, whether acquired directly from the Company, upon conversion of
the Series C Preferred Stock, or upon acquisition of such stock
from Carolco pursuant to the financial restructuring of Carolco
that occurred in October 1993.
Due to the illness and subsequent death of Rodney Trovinger,
LIVE's former Acting Chief Financial Officer, PNA agreed to allow
LIVE to use the services of Mr. Cushey, a Director of LIVE who was
at that time an Executive Consultant for PNA, on an indefinite
basis to provide assistance to LIVE's accounting and finance
departments pursuant to an agreement dated as of April 1, 1994.
The agreement was terminable by either party upon ten days' notice.
During the term of this agreement, LIVE agreed to reimburse PNA for
all of the costs to PNA of Mr. Cushey's employment by PNA. LIVE
also agreed to indemnify both Mr. Cushey and PNA for Mr. Cushey's
activities while providing services to LIVE under such agreement.
This agreement terminated in December 1994 as a result of Mr.
Cushey's departure from PNA in order to become a full time employee
of LIVE. LIVE paid PNA a total of $157,500 under this agreement.
In July 1994, LIVE paid Mr. Cushey an additional fee of $25,000 for
financial advisory services then expected to be rendered by Mr.
Cushey to LIVE during 1994 in connection with the proposed merger
with Carolco.
In July 1994, a subsidiary of LIVE and an affiliate of Pioneer
reached an agreement whereby the Pioneer affiliate will receive the
Japanese theatrical, video and television distribution rights to
the films Wagons East, Top Dog, The Beans of Egypt, Maine and Goldy
III.
Carolco
Pioneer owns approximately 41% of the outstanding voting
equity of Carolco. Le Studio and its affiliates own approximately
17% of the outstanding voting equity of Carolco. RCS and its
affiliates own approximately 5.8% of the outstanding voting equity
of Carolco.
In March 1994, LIVE and Carolco reached agreement in principle
on a business combination (the "Merger"), and executed a Merger
Agreement with respect thereto on August 10, 1994 (the "Merger
Agreement"). On October 13, 1994 LIVE and Carolco jointly
announced that they had agreed to terminate the Merger Agreement
between the two companies and to end all discussions regarding a
possible business combination.
LHV is party to an agreement with Carolco entitling LHV to
acquire home video rights in the United States and Canada for most
motion pictures produced or controlled by Carolco on which
principal photography has commenced prior to July 31, 1995 or for
which LHV has paid an advance to Carolco prior to such date, under
a series of agreements which principally consist of a master
agreement entered into in July 1987, restated in October 1987, and
amended in April 1990, March 1991, October 1991, March 1992 and
December 1994 (the "Domestic Master Agreement"). Canadian home
video rights have not been granted to LHV in the case of several
films produced or acquired by Carolco. Pioneer, Le Studio, RCS
and/or their affiliates (collectively, the "Carolco Strategic
Investors") have co-financed certain of the motion pictures
produced by Carolco subject to the Domestic Master Agreement. The
Domestic Master Agreement provides for the payment by LHV of
certain advances for each picture, which advances are recoupable
from LHV's net receipts from video distribution of the pictures.
The Domestic Master Agreement also guarantees that LHV will receive
a certain minimum distribution fee; there is a corresponding upper
limit on the total gross distribution fee that LHV can earn. "Net
receipts" generally are LHV's wholesale receipts less certain
expenses such as marketing and costs of manufacturing. All aspects
of the Domestic Master Agreement, amendments thereto and advances
on individual pictures have been or will be (in the case of future
amendments or pictures) approved by the Independent Committees of
each of Carolco's and LIVE's Board of Directors. In 1994, LHV made
no payments to Carolco and at December 31, 1994 had no recorded
contractual obligations under the Domestic Master Agreement.
Additional advances will be due if additional films are made
available from Carolco under the Domestic Master Agreement.
LIVE Entertainment International Inc. (formerly known as LEI-
IVE Entertainment N.V.), a subsidiary of the Company ("LEII") is
party to an agreement with Carolco International N.V. (now Carolco
International Inc.) ("CII") entitling LEII to acquire home video
rights in the German-speaking European market for most motion
pictures produced or controlled by CII on which principal
photography has commenced prior to July 31, 1995 or for which LHV
has paid an advance to CII prior to such date (other than rights
granted by CII to other parties prior to April 1991), under a
master agreement entered into in April 1991 (the "German Master
Agreement"). The Carolco Strategic Investors have co-financed
certain of the motion pictures produced by CII subject to the
German Master Agreement. The German Master Agreement provides for
the payment by LEII of certain advances for each picture, which
advances are recoupable from LEII's net receipts from video
distribution of these pictures. LEII is guaranteed to earn a
certain minimum overall distribution fee on each film; there is a
corresponding upper limit on the total gross distribution fee that
LEII can earn on each film. "Net receipts" generally are the
wholesale receipts of LEII or its designated subsidiaries, less
certain expenses such as marketing and costs of manufacturing. All
aspects of the German Master Agreement and advances on individual
pictures have been or will be (in the case of future amendments or
pictures) approved by the Independent Committee of each of
Carolco's and LIVE's Board of Directors. In 1994, LEII did not pay
any advances to CII and at December 31, 1994 had no recorded
contractual obligations under the German Master Agreement.
Additional advances will be due if additional films are made
available from Carolco under the German Master Agreement.
In December 1992, the Company, Carolco and certain of their
affiliates reconciled the amounts owing to each by the others (the
"Reconciliation Agreement"). In December 1994, as part of an
agreement settling all open accounts between them, including those
that arose as a result of the Reconciliation Agreement, LIVE and
Carolco agreed that all individual films previously delivered to
LHV or LEII under either the Domestic Master Agreement or the
German Master Agreement would no longer be cross-collateralized
with other films, either within individual packages or among so
called "film packages"; the companies also agreed that for purposes
of their settlement only, all such films would be deemed to have
earned the minimum distribution fee that was guaranteed to LHV and
LEII. As a result of this 1994 agreement, LIVE wrote off the
remaining unpaid receivable amount of $6,211,000 that LIVE had
recorded in its financial records as owing from Carolco, the entire
amount of which previously had been reserved for.
LEII and CII were general partners in a Netherlands Antilles
general partnership which was involved in the international
marketing and distribution of video rights. LEII's contribution to
the partnership consisted of international video rights, and CII's
contribution consisted of international distribution services.
LEII had a 99% interest in the partnership and CII's interest was
1%. By mutual agreement of LEII and CII, the partnership was
dissolved, and the service agreement was canceled, both effective
as of September 30, 1994.
In December 1993, an affiliate of Carolco commenced principal
photography of Wagons East, starring John Candy and Richard Lewis.
As a result of the untimely death of Mr. Candy, in March 1994
Carolco entered into an arrangement with the insurance carrier and
an affiliate of LIVE pursuant to which certain rights in the film
were conveyed to LIVE, LIVE agreed to fund completion of the film,
and LIVE engaged Carolco to complete production and servicing of
certain pre-existing distribution agreements.
In January 1995, in order to settle disputes between them with
respect to the ownership of the United States and Canada video
distribution rights to the film Cutthroat Island, LIVE and Carolco
reached agreement that Cutthroat Island would not be subject to
either the Domestic Master Agreement or the German Master
Agreement. LIVE also reached agreement with the distributor of
Cutthroat Island whereby LIVE obtained video distribution rights to
such film in the United States and Canada, and Carolco made certain
payments to LIVE to compensate LIVE for the fact that its
distribution fee under the Cutthroat Island video distribution
agreement was less favorable to LIVE than the terms of the Domestic
Master Agreement.
In connection with a pending class action litigation involving
the Company, Carolco and certain of the Company's past and present
Directors and executive officers, LIVE and Carolco entered into an
agreement dated April 8, 1992, with respect to the division of
legal fees and costs relating to that litigation. Pursuant to the
agreement, 65% of the legal fees and costs will be paid by LIVE and
35% of the legal fees and costs will be paid by Carolco.
The Company believes that each transaction with an affiliate
of the Company was on terms at least as favorable to the Company as
would have prevailed in arms-length transactions between unrelated
parties. In addition, future transactions between the Company and
its affiliates will be referred to either the Company's Board of
Directors or a committee of disinterested Directors to ensure that
the interests of the Company are protected in any such transaction.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of February 28, 1995,
certain information concerning the ownership of shares of Common
Stock and Series C Preferred Stock, and all such information gives
effect to the Reverse Stock Split. The Series C Preferred Stock
votes on an as converted basis on all matters which may come before
the holders of Common Stock, voting together on such matters with
the Common Stock. As of February 28, 1995 the Series C Preferred
Stock was convertible into 1,075,753 shares of Common Stock.
Information is provided concerning the ownership of Common Stock
and Series C Preferred Stock by (i) the holders known to LIVE of
more than 5% of the outstanding shares of Common Stock or Series C
Preferred Stock, (ii) each executive officer and Director of LIVE
and (iii) all executive officers and Directors of LIVE as a group.
Columns (A) and (B) of the table provide information regarding
the voting power of the foregoing persons, entities and groups.
Columns C through E of the table show their beneficial ownership of
Common Stock and Series C Preferred Stock issued and outstanding as
of February 28, 1995. Beneficial ownership has been determined in
accordance with Rule 13d-3(a) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), which provides that a
beneficial owner of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares (i) voting power, which
includes the power to vote, or to direct the voting of, such
security and/or (ii) investment power which includes the power to
dispose of, or to direct the disposition of, such security. Where
known by LIVE, the footnotes to the table indicate when shares have
been included in the table based upon beneficial ownership
resulting other than from actual ownership of the shares.
Column C of the table ("Number of Shares of Issued and
Outstanding Common Stock") includes only shares of Common Stock
actually issued and outstanding as of February 28, 1995. Column E
("Shares of Common Stock in Which Person Has Right to Acquire
Beneficial Ownership Within 60 Days") provides information with
respect to shares of Common Stock that are not held by a person as
of February 28, 1995, but which a person has the right to acquire
beneficial ownership of within 60 days of that date (such as upon
the exercise of options or warrants, the conversion of convertible
securities or through other similar securities or arrangements).
Shares of Common Stock issuable upon exercise of options or
warrants, upon conversion of convertible securities, or through
other similar securities or arrangements are included in Column E
if such options, warrants, convertible securities or other similar
securities or arrangements are exercisable (or convertible) within
60 days of February 28, 1995, regardless of whether the exercise,
conversion or other acquisition price is above or below the current
market price for Common Stock.
Columns (F) and (G) of the table show each of the person's,
entity's and group's beneficial ownership of Common Stock
calculated in accordance with Rule 13d-3(d)(1) under the Exchange
Act, and includes shares of Common Stock issued and outstanding as
of February 28, 1995, as well as shares for which beneficial
ownership may be acquired within 60 days of that date. In
accordance with Rule 13d-3(d)(1) under the Exchange Act, any
securities not outstanding but which are the subject of options,
warrants, rights, or conversion privileges (or other arrangements
which could result in the issuance of additional shares of Common
Stock by LIVE) exercisable within 60 days of February 28, 1995, are
deemed to be outstanding for the purpose of computing the
percentage of outstanding securities of the class owned by such
person, but are not deemed to be outstanding for the purpose of
computing the percentage of the class owned by any other person.
Certain members of the Board named in the table are affiliated
with one of the beneficial owners of more than 5% of the Common
Stock or Series C Preferred Stock (a "5% Owner"). In certain
circumstances, a 5% Owner may be deemed to beneficially own Common
Stock or Series C Preferred Stock held by such Directors, and vice
versa. For purposes of the table below, (i) the beneficial
ownership of a 5% Owner includes such Director's ownership where
indicated by footnote even though the 5% Owner may disclaim
beneficial ownership of such shares and (ii) the beneficial
ownership of the Director does not include such 5% Owner's
beneficial ownership solely by reason of such Director's
affiliation with such 5% Owner.
<PAGE>
<TABLE> BENEFICIAL OWNERSHIP OF COMMON STOCK AND SERIES C PREFERRED STOCK
<CAPTION>
(E)
Shares of
(C) Common (F) (G)
Number Stock in
(B) of Shares Which Person Amount of Beneficial
of Issued (D) Has Right Ownership of Common
Percent of and to Acquire Stock as of
(A) Votes that Outstanding Percent Beneficial February 28, 1995 (1)
Name of Beneficial Owner or Votes Entitled may be Common of Ownership
Identity of Group to Cast Cast (2) Stock Class Within 60 Days Number of Shares Percent
<S> <C> <C> <C> <C> <C> <C> <C>
5% Owners
Pioneer. . . . . . . . . . . 1,881,597(3) 53.8% 805,844 33.3% 1,077,753 1,883,597(4) 53.9%
Le Studio (5). . . . . . . . 257,606 7.4% 257,606 10.7% 0 257,606 10.7%
RCS Editori S.p.A.(6). . . . 257,606 7.4% 257,606 10.7% 0 257,606 10.7%
FMR Corp (7) . . . . . . . . 0 * 0 * 391,176 391,176 13.9%
Management
Anthony J. Scotti (8). . . . 2,829 * 2,829 * 10,841 13,670 *
Roger A. Burlage (9) . . . . 0 * 0 * 30,000 30,000 1.2%
Frans J. Afman (10). . . . . 0 * 0 * 4,900 4,900 *
Jay Burnham (11) . . . . . . 0 * 0 * 2,000 2,000 *
Ronald B. Cushey (12). . . . 0 * 0 * 1,000 1,000 *
Ryuichi Noda (13). . . . . . 0 * 0 * 0 0 *
Makoto Koshiba (14). . . . . 0 * 0 * 0 0 *
Jonathan D. Lloyd (15) . . . 0 * 0 * 2,000 2,000 *
Masao Nomura (16). . . . . . 0 * 0 * 1,000 1,000 *
R. Timothy O'Donnell (17). . 3,000 * 3,000 * 14,074 17,074 *
Gregory R. Pierson (18). . . 0 * 0 * 1,000 1,000 *
Roger R. Smith (19). . . . . 152 * 152 * 18,900 19,052 *
Michael J. White (20). . . . 0 * 0 * 8,800 8,800 *
Paul Almond (21) . . . . . . 0 * 0 * 4,000 4,000 *
Steve Mangel (22). . . . . . 134 * 134 * 10,400 10,534 *
Elliot Slutzky (23). . . . . 6,000 * 6,000 * 3,800 9,800 *
Ivan R. Lipton . . . . . . . 0 * 0 * 0 0 *
All executive officers and
directors as a
group**(24). . . . . . . . . 12,115 * 12,115 * 112,715 124,830 4.9%
*Less than 1%
**17 persons comprised of all
of those named above
All of the persons listed in
the chart above have sole
voting power and sole
investment power over the
capital stock they
beneficially own unless
otherwise indicated in the
footnotes below.
<FN>
<PAGE>
(1) The number of shares and percentages are based upon 2,418,700
shares of Common Stock outstanding as of February 28, 1995.
The shares of Common Stock underlying immediately exercisable
options, warrants or rights, immediately convertible
securities, or options, warrants, rights or convertible
securities that become exercisable or convertible within 60
days of February 28, 1995 are deemed to be outstanding for the
purpose of calculating the number and percentage owned by the
holders of such options, warrants, rights or convertible
securities.
(2) Based upon 3,494,453 possible votes (comprised of (i) the
2,418,700 votes which may be cast by all holders of
outstanding Common Stock and (ii) the 1,075,753 votes which
may be cast by Pioneer as the sole holder of the Series C
Preferred Stock) as of February 28, 1995. Pioneer, as the
sole holder of the Series C Preferred Stock, has the same
voting rights (and thus is entitled to the same number of
votes) as it would be entitled to if it had converted the
Series C Preferred Stock into Common Stock.
(3) Includes 805,844 shares of Common Stock directly owned by
Pioneer, and 1,075,753 shares of Common Stock issuable upon
conversion of the 15,000 shares of Series C Preferred Stock
(plus accrued but unpaid dividends through February 28, 1995)
held by Pioneer.
(4) Includes 1,075,753 shares of Common Stock issuable upon
conversion of the 15,000 shares of Series C Preferred Stock
(plus accrued but unpaid dividends through February 28, 1995)
held by Pioneer. The Series C Preferred Stock is entitled to
vote together with the Common Stock on all matters coming
before the holders of the Common Stock as if its holder had
converted the Series C Preferred Stock into Common Stock. On
that basis, Pioneer is entitled to cast 1,075,753 votes on
matters coming before the holders of Common Stock pursuant to
its ownership of the Series C Preferred Stock. Includes
options to purchase 2,000 shares of Common Stock held by
Pioneer affiliated or nominated Directors. Pioneer Electronic
Corporation owns all of the outstanding shares of capital
stock of PNA which in turn owns all of the outstanding shares
of common stock of Pioneer. In their most recent Schedules
13D filed with the Securities and Exchange Commission (the
"Commission"), Pioneer Electronic Corporation and PNA also
claimed beneficial ownership over all of the securities of
LIVE held by Pioneer. The address of Pioneer and PNA is 2265
East 220th Street, Long Beach, California 90810. The address
of Pioneer Electronic Corporation is 4-1 Meguro, 1 Chome,
Meguro-ku, Tokyo 153, Japan.
(5) Represents shares of Common Stock indirectly owned by Le
Studio Canal+ S.A. ("Le Studio") through its wholly-owned
subsidiary Cinepole. In their most recent Schedules 13D filed
with the Commission, Cinepole claimed shared voting power and
shared investment power over all of its 236,006 shares of
Common Stock with Le Studio and Le Studio's corporate parent,
Canal+ S.A., and Le Studio claimed shared voting power and
shared investment power over all of its 21,600 shares of
Common Stock with Canal+ S.A. The address of Cinepole is
Surinameweg 2, NL - 2035 VA Haarlem, The Netherlands. The
address of Le Studio is 17, rue Dumont d'Urville, 75116 Paris,
France. The address of Canal+ S.A. is 85-89 Quai Andre
Citroen, 75015 Paris, France.
(6) RCS Editori S.p.A. directly owns 60% of the outstanding stock
of RCS Video International Services B.V. ("RCS") and
indirectly owns 40% of the outstanding stock of RCS. RCS
International Communications N.V. ("RCS Communications") is
100% owned by RCS Editori S.p.A. RCS Editori S.p.A. may
therefore be deemed to own beneficially all of the securities
owned by RCS and RCS Communications. Includes 21,600 shares
of Common Stock directly owned by RCS and 236,006 shares of
Common Stock directly owned by RCS Communications. In their
most recent Schedules 13D filed with the Commission, RCS
Editori S.p.A. claimed shared voting power and shared
investment power over all of its beneficially owned securities
with RCS and RCS Communications, RCS claimed shared voting
power and shared investment power over 21,600 shares of Common
Stock and RCS Communications claimed shared voting power and
shared investment power over 236,006 shares of Common Stock.
The address of RCS Editori S.p.A. is Via A. Rizzoli 2, 20132
Milan, Italy. The address of RCS and RCS Communications is
Museumplein 11, 1071 DJ Amsterdam, The Netherlands.
(7) Represents 391,176 shares of Common Stock which are issuable
upon exercise of presently exercisable warrants. FMR Corp. is
the parent of Fidelity Management & Research Company which
manages or advises funds that hold these warrants. The
address of FMR Corp. and Fidelity Management & Research
Company is 82 Devonshire Street, F7E, Boston, Massachusetts
02109.
(8) Includes 10,841 shares of Common Stock which are issuable to
Mr. Scotti upon exercise of presently exercisable options and
warrants. Does not include 33,475 shares of Common Stock held
by Scotti Brothers.
(9) Includes 30,000 shares of Common Stock which are issuable upon
exercise of presently exercisable options.
(10) Includes 4,900 shares of Common Stock which are issuable upon
exercise of presently exercisable options.
(11) Includes 2,000 shares of Common Stock which are issuable upon
exercise of presently exercisable options.
(12) Includes 1,000 shares of Common Stock which are issuable upon
exercise of presently exercisable options.
(13) Although Mr. Noda may be deemed to own beneficially the
securities owned by Pioneer, Mr. Noda has disclaimed
beneficial ownership of such securities.
(14) Although Mr. Koshiba may be deemed to own beneficially the
securities owned by Pioneer, Mr. Koshiba has disclaimed
beneficial ownership of such securities.
(15) Includes 2,000 shares of Common Stock which are issuable upon
exercise of presently exercisable options.
(16) Although Mr. Nomura may be deemed to own beneficially the
securities owned by Pioneer, Mr. Nomura has disclaimed
beneficial ownership of such securities. Includes 1,000
shares of Common Stock which are issuable to Mr. Nomura upon
exercise of presently exercisable options.
(17) Includes 4,900 shares of Common Stock which are issuable upon
exercise of presently exercisable options and 9,174 shares of
Common Stock underlying three warrants issued to Jefferson
Capital. Does not include 33,475 shares of Common Stock held
by Scotti Brothers.
(18) Although Mr. Pierson may be deemed to own beneficially the
securities owned by Pioneer, Mr. Pierson has disclaimed
beneficial ownership of such securities. Includes 1,000
shares of Common Stock which are issuable to Mr. Pierson upon
exercise of presently exercisable options.
(19) Includes 18,900 shares of Common Stock which are issuable upon
exercise of presently exercisable options, warrants and
rights.
(20) Includes 8,800 shares of Common Stock which are issuable (a)
upon exercise of presently exercisable options, warrants and
rights and (b) upon exercise of options, warrants and rights
that become exercisable within 60 days of February 28, 1995.
(21) Includes 4,000 shares of Common Stock which are issuable (a)
upon exercise of presently exercisable options, warrants and
rights and (b) upon exercise of options, warrants and rights
that become exercisable within 60 days of February 28, 1995.
(22) Includes 10,400 shares of Common Stock which are issuable (a)
upon exercise of presently exercisable options, warrants and
rights and (b) upon exercise of options, warrants and rights
that become exercisable within 60 days of February 28, 1995.
(23) Includes 3,800 shares of Common Stock which are issuable (a)
upon exercise of presently exercisable options, warrants and
rights and (b) upon exercise of options, warrants and rights
that become exercisable within 60 days of February 28, 1995.
(24) Includes shares of Common Stock which are issuable (a) upon
exercise of presently exercisable options, warrants and rights
and (b) upon exercise of options, warrants and rights that
become exercisable within 60 days of February 28, 1995.
</FN>
</TABLE>
The following table sets forth, as of December 31, 1994, the
beneficial ownership of shares of LIVE's Series B Preferred Stock,
by each stockholder who is known by LIVE to own more than 5% of the
outstanding shares of the Series B Preferred Stock based upon
5,600,000 shares of the Series B Preferred Stock outstanding as of
December 31, 1994. Although 6,000,000 shares of Series B Preferred
Stock were originally issued by LIVE, LIVE purchased 400,000 shares
in December 1994, leaving 5,600,000 shares outstanding as of that
date.
Shares of Percentage of
Name of Beneficial Series B Outstanding
Owner Preferred Series B
Stock Owned Preferred Stock
FMR Corp. (1) 2,832,756 50.6%
Metropolitan Life Insurance Company (2) 369,770 6.6%
(1) FMR Corp. is the parent of Fidelity Management & Research
Company which manages or advises various funds that hold
these shares of Series B Preferred Stock.
(2) Represents shares of Series B Preferred Stock indirectly
owned by Metropolitan Life Insurance Company
("Metropolitan") through its wholly-owned subsidiary State
Street Research & Management Company ("State Street
Research") and State Street Research's affiliate State
Street Research Investment Services, Inc. ("State Street
Services"). State Street Research and State Street
Services are investment advisers registered under the
Investment Advisers Act of 1940. In its most recent
Schedule 13G filed with the Commission, Metropolitan
claimed sole voting power and sole investment power over
all 369,770 shares of Series B Preferred Stock. In their
most recent Schedule 13G filed with the Commission, State
Street Research and State Street Services claimed that
various of their clients are the beneficial owners of all
369,770 shares of Series B Preferred Stock held by them and
State Street Research and State Street Services disclaimed
any beneficial interest in those securities. The address
of Metropolitan is One Madison Avenue, New York, New York
10010. The address of State Street Research and State
Street Services is One Financial Center, Boston,
Massachusetts 02111-2690.
As of February 28, 1995, none of the Directors or executive
officers of LIVE beneficially owned any shares of LIVE's Series B
Preferred Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Arrangements with Members of the Compensation Committee or Their
Affiliates
See "Executive Compensation - Compensation Committee Interlocks and
Insider Participation," above.
Arrangements with Le Studio
In July 1994, Carolco and an affiliate of Le Studio reached an
agreement whereby the Le Studio affiliate received the rights in
certain French-speaking territories to the motion picture Wagons
East. This agreement was performed by an affiliate of LHV after
such affiliate acquired rights to Wagons East pursuant to the
agreements described above in "Executive Compensation -
Compensation Committee Interlocks and Insider Participation."
In July 1994, LHV and an affiliate of Le Studio executed a
definitive agreement whereby LHV licensed the United States and
Canadian video rights to the motion picture Stargate.
Arrangements with RCS
Pursuant to a pre-existing output agreement, an affiliate of
RCS received the rights in certain Italian-speaking territories in
Europe and Africa to the motion picture Wagons East. Certain of
Carolco's rights and obligations under the output agreement
relating to the motion picture Wagons East were performed by an
affiliate of LHV after such affiliate acquired rights to Wagons
East pursuant to the agreements described above in "Executive
Compensation - Compensation Committee Interlocks and Insider
Participation."
Transactions with FMR Corp.
In September and October 1994, the Company repaid the entire
amount of principal and accrued interest on the Company's
$37,000,000 of 12% Senior Secured Subordinated Notes (the "12%
Notes"). Funds managed or advised by Fidelity Management &
Research Company held approximately $31,250,000 in principal amount
of the 12% Notes. FMR Corp. is the parent of Fidelity Management
& Research Company.
On March 7, 1995, the Company acquired 1,400,000 shares of
Series B Preferred Stock from various funds managed or advised by
Fidelity Management & Research Company, at the market price in
effect on that date.
The Company believes that each transaction with an affiliate
of the Company was on terms at least as favorable to the Company as
would have prevailed in arms-length transactions between unrelated
parties. In addition, future transactions between the Company and
its affiliates will be referred to either the Company's Board of
Directors or a committee of disinterested Directors to ensure that
the interests of the Company are protected in any such transaction.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES ACT OF 1934
Section 16(a) of the Securities Act of 1934 requires the
Company's Directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity
securities, to file with the Commission and The Nasdaq Stock Market
initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers,
Directors and greater than ten percent stockholders are required by
Commission regulation to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, during the
year ended December 31, 1994 all Section 16(a) filing requirements
applicable to its officers, Directors and greater than ten-percent
beneficial owners were complied with except that Mr. Noda, a
Director of the Company, failed to file on a timely basis his
initial report on Form 3, which report was filed one day late.
EXECUTIVE COMPENSATION AND OTHER REMUNERATION
The following table sets forth the cash compensation paid by
the Company during the fiscal years ended December 31, 1994,
December 31, 1993 and December 31, 1992 to Mr. Burlage, who has
served as the Chief Executive Officer of the Company from January
1994 and to each of the other executive officers of the Company
during 1994 whose annual salary and bonus for such period was in
excess of $100,000. As of the end of the fiscal year ended
December 31, 1994, there were only two executive officers of the
Company (Mr. Burlage and Michael J. White). Rodney W. Trovinger,
formerly the Senior Vice President and Acting Chief Financial
Officer of the Company, passed away in April 1994 and his annual
salary and bonus between January 1, 1994 and April 17, 1994 was
less than $100,000. Ivan R. Lipton, the President of the Specialty
Retail Division, ceased serving as an executive officer of the
Company by virtue of the sale of the Specialty Retail Division in
August 1994; Mr. Lipton's annual salary and bonus between January
1, 1994 and August 31, 1994 was greater than $100,000. Messrs.
White and Lipton are referred to herein as the "Named Executives."
Ronald B. Cushey became Executive Vice President and Chief
Financial Officer of the Company in January 1995, and Paul Almond,
Steven Mangel and Elliot Slutzky - all executive officers of LHV -
were named as executive officers of the Company effective as of
January 1, 1995 by virtue of the policy making functions that they
perform for the Company.
Following the Summary Compensation Table are certain
additional charts and tables detailing other aspects of the
compensation of the Named Executives including (a) an Option Grants
Table that includes information regarding individual grants of
options made to the Named Executives during fiscal 1994 along with
the potential realizable values of such options and (b) a Fiscal
Year End Option Table that indicates whether any of the Named
Executives exercised options in fiscal 1994 and includes the number
and value of unexercised options held by the Named Executives at
December 31, 1994.
<PAGE>
<TABLE> SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Compensation
Annual Compensation Awards (1)
Other
Annual Securities All Other
Compen- Underlying Compen-
Name and sation Options/ sation
Principal Position Year Salary ($) Bonus ($) ($)(2) SARs (#)(3) ($)
<S> <C> <C> <C> <C> <C> <C>
Roger A. Burlage 1994 432,692 100,000 (5) 84,213 (6) 120,000 -
Chief Executive 1993 - - - - -
Officer (4) 1992 - - - - -
Michael J. White 1994 248,450 - - 4,000 3,288 (7)
Executive Vice 1993 236,385 50,000 (8) - 2,000 3,090 (9)
President/Chief 1992 220,423 95,000 - 6,000 3,404 (10)
Administrative
Officer and
General Counsel
Ivan R. Lipton 1994 113,333 25,000 (12) - 0 4,620 (7)
President/Straw- 1993 161,250 70,499 - 4,000 3,090 (9)
berries Inc. (11) 1992 150,000 124,250 (13) - 6,000 2,250 (10)
<FN>
<PAGE>
(1) The column for long-term incentive plan payouts has been
omitted because no such payouts were made to any of the Named
Executives during any fiscal year covered by this Table.
(2) Perquisites and other personal benefits are not included to
the extent they do not exceed the lesser of either $50,000 or
10% of the total of annual salary and bonus for the named
executive.
(3) Gives effect to the Reverse Stock Split.
(4) Mr. Burlage became Chief Executive Officer of the Company in
January 1994.
(5) Represents a signing bonus paid for signing a four year
employment agreement with the Company.
(6) Represents $35,000 paid for life insurance for Mr. Burlage's
benefit in addition to the life insurance benefits provided to
all employees of the Company, and other amounts, each equaling
less than 25% of the total prerequisites and other personal
benefits provided to Mr. Burlage, for the following costs:
reimbursement for automobile leasing costs, disability
insurance in addition to the disability insurance benefits
provided to all employees of the Company, country club dues,
reimbursement of legal fees and imputed interest on a loan of
$29,500 made by the Company to Mr. Burlage to enable Mr.
Burlage to obtain a country club membership, which loan is
repayable by Mr. Burlage upon any termination of his
employment relationship with the Company.
(7) Represents for Messrs. White and Lipton matching contributions
in the amount of $3,288 and $4,620, respectively, under the
LIVE Incentive Savings Plan, which is a 401(k) savings plan.
(8) Represents a bonus paid in recognition of Mr. White's efforts
in connection with the completion of the Company's financial
restructuring in March 1993.
(9) Represents for Messrs. White and Lipton matching contributions
in the amount of $3,090 each under the LIVE Incentive Savings
Plan.
(10) Represents for Messrs. White and Lipton matching contributions
in the amount of $3,404 and $2,250, respectively, under the
LIVE Incentive Savings Plan.
(11) For 1994, represents amount paid between January 1, 1994 and
August 31, 1994, the date of the sale of the Specialty Retail
Division.
(12) Represents amount awarded to Mr. Lipton following the sale of
the Specialty Retail Division in recognition of his special
and exceptional service on behalf of the Division while the
Division was owned by the Company.
(13) Includes a $50,000 signing bonus to extend Mr. Lipton's
employment agreement through January 1996.
</FN>
/TABLE
<PAGE>
The following table sets forth certain information regarding
the Chief Executive Officer and the other Named Executives
identified in the Summary Compensation Table.
<PAGE>
<TABLE> OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term
% of
Total
Options/
SARs
Options/ Granted to Exercise
SARs Employees or Base Expir-
Granted in Fiscal Price ation
Name (#) (1) Year (2) ($/Share) (3) Date 5% ($) (4) 10% ($) (4)
<S> <C> <C> <C> <C> <C> <C>
Roger A. Burlage 0 0% N/A N/A N/A N/A
Michael J. White 4,000 4.6% 15.625 2/18/04 39,306 99,607
Ivan R. Lipton 0 0% N/A N/A N/A N/A
<FN>
<PAGE>
(1) Gives effect to the Reverse Stock Split.
(2) Total of 86,570 granted.
(3) The closing price of the Company's Common Stock on the Nasdaq
Stock Market's SmallCap Market on December 31, 1994 was $2.75.
(4) Based upon the number of shares of the Company's Common Stock
outstanding as of December 31, 1994, a 5% and 10% increase in
the annual rates of stock price appreciation over the option
term would result in an aggregate increase of $4,183,080 and
$10,600,746, respectively, in the value of the Common Stock
held by all the Company's Common Stockholders (assuming no
exercise of warrants, other stock options or conversion of
Series B Preferred Stock or Series C Preferred Stock).
</FN>
/TABLE
<PAGE>
The following table sets forth certain information regarding
option exercises and option values for the Chief Executive Officer
and the other Named Executives identified in the Summary
Compensation Table.
AGGREGATE OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized Unexercisable* Unexercisable
Roger A. Burlage -0- - 30,000 (E) 0 (E)
90,000 (U) 0 (U)
Michael J. White -0- - 6,800 (E) 0 (E)
5,200 (U) 0 (U)
Ivan R. Lipton -0- - 0 (E) 0 (E)
0 (U) 0 (U)
(*) Gives effect to the Reverse Stock Split.
Employment and Consulting Agreements
Mr. Burlage is party to a December 1993 employment agreement
with LIVE which provides that he will serve as Chief Executive
Officer and President of LIVE from January 1994 until December
1997. Mr. Burlage's minimum salary was $450,000 per annum during
1994 and will be increased each calendar year thereafter by 5% of
the base salary in effect in the prior calendar year (or more at
the discretion of the Company's Board of Directors). Mr. Burlage
will also receive incentive compensation equal to two percent of
the Company's earnings before interest and taxes in excess of
$10,000,000 per annum, subject to certain exclusions, limited to
100% of his base salary for the applicable year. As part of the
agreement, the Company paid Mr. Burlage a signing bonus of $100,000
and agreed to pay for and/or provide a life insurance policy,
disability benefits, health insurance benefits, automobile
benefits, vacation benefits and a country club membership. In
addition, the Company granted Mr. Burlage options to acquire
120,000 shares of the Company's Common Stock at a price of $9.375
per share (the closing price of the Company's Common Stock on the
New York Stock Exchange on the date the Company and Mr. Burlage
reached agreement on his employment), with 30,000 of such options
vesting annually commencing December 31, 1994. LIVE also paid
approximately $11,000 in legal fees incurred by Mr. Burlage in
connection with his employment agreement with LIVE. If Mr.
Burlage's employment is terminated by LIVE for other than "good
cause," he will receive his salary, incentive compensation, life
insurance, health insurance and automobile benefits for the
remainder of the term of his employment agreement. All payments
pursuant to the provisions of the immediately preceding sentence
would be reduced, dollar for dollar, by the amount received by Mr.
Burlage from employment following termination of his agreement.
The stock option information contained in this paragraph has been
adjusted to give effect to the Reverse Stock Split.
Mr. White is party to a February 1994 employment agreement
with the Company which provides that he will serve as Executive
Vice President/Chief Administrative Officer and General Counsel of
the Company until such time that either the Company or Mr. White
gives notice of termination. The agreement provides that Mr. White
will receive a minimum annual salary of $250,000, plus such
incentive compensation as is determined from time to time by the
Board. As part of the agreement, the Company agreed to provide Mr.
White with health insurance, life insurance and vacation benefits.
If Mr. White's employment is terminated by LIVE for other than
"good cause," he will receive his salary for one year, along with
health insurance. All payments pursuant to the provisions of the
immediately preceding sentence would be reduced, dollar for dollar,
by the amount received by Mr. White from employment following
termination of his agreement.
Mr. Lipton and Strawberries were parties to a December 1992
employment agreement which provided that he would serve as
President of Strawberries though January 1996. The agreement
provided that Mr. Lipton would receive a minimum annual salary of
$161,250 through the term of the agreement, plus such incentive
compensation as is determined from time to time by the Board of
Directors of Strawberries. As part of the agreement, Strawberries
paid Mr. Lipton a $50,000 signing bonus and agreed to provide Mr.
Lipton with health insurance, life insurance, automobile benefits
and vacation benefits. If more than 50% of the stock or assets of
Strawberries was sold above a minimum price during the term of Mr.
Lipton's contract and, in certain circumstances, within two years
after such term, then Mr. Lipton would have been entitled to
additional compensation based upon the net proceeds received in
connection with such sale; no amounts were paid to Mr. Lipton as a
result of this clause of his agreement upon the Company's sale of
the Specialty Retail Division in August 1994. Mr. Lipton's
employment agreement was cancelled and replaced by the new owners
concurrently with the sale of the Specialty Retail Division.
COMPENSATION COMMITTEE REPORT
A report of the Compensation Committee of the Board of
Directors of the Company discussing the Committee's compensation
policies applicable to the Company's executive officers, including
those officers named in the Summary Compensation Table, and
including the specific relationship of corporate performance to
executive compensation for the most recent fiscal year, is attached
as Appendix A.
PERFORMANCE GRAPH
The following graph assumes $100 invested on December 31, 1989
in each of LIVE Entertainment Inc., the Standard & Poor's 500 Stock
Index, and companies included in the Paul Kagan Associates Video
Supplier Index (the "Video Supplier Index"). The Video Supplier
Index, prepared by Paul Kagan Associates, Inc. ("Kagan"), includes
twelve entertainment companies that also supply home video
programming. Kagan is an independent analyst of the motion picture
and home video industries.
<PAGE>
[Performance Graph submitted by hard copy]
December 31,
1989 1990 1991 1992 1993 1994
LIVE Entertainment 100 75 20 11 14 3
S&P 500 100 97 126 136 150 152
Kagan Index 100 81 94 134 164 157
<PAGE>
PROPOSAL NO. 2
(Common Stockholders and Series C Preferred Stockholders Only)
AMENDMENT TO THE 1988 STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
Background and Reasons for the 1988 Plan Amendment
The 1988 Plan was adopted by the Company's Board of Directors
on September 20, 1988, approved by the stockholders at the 1988
Annual Meeting of the stockholders of the Company, amended by the
stockholders of the Company at the 1989 and 1990 Annual Meetings of
the stockholders of the Company, and further amended by the Board
of Directors in June 1993. The 1988 Plan was established to
provide incentive compensation for Directors, key employees and
consultants of the Company and its subsidiaries and other persons.
As of the Record Date, approximately 45 of the Company's and its
subsidiaries' current employees and Directors were participating in
the 1988 Plan and approximately 125 of the Company's and its
subsidiaries' current employees and Directors were eligible to
participate in the 1988 Plan. A copy of the 1988 Plan as it is
proposed to be amended is attached to this Proxy Statement as
Appendix B and incorporated herein by reference.
Description of the 1988 Plan
The 1988 Plan is administered by a committee of the Board of
Directors (the "Stock Option Committee"). At present, a committee
of two members of the Compensation Committee of the Board of
Directors serves as the Stock Option Committee. The Stock Option
Committee has the authority to determine to whom, and the time or
times at which, options and stock appreciation rights ("SARs") will
be granted, the number of shares of Common Stock subject to each
option and the number of SARs, the time or times at which each
option or SAR granted under the 1988 Plan may be exercised, and the
exercise price of options or the Initial Value of SARs. The Board
of Directors or Stock Option Committee also has authority to
interpret the 1988 Plan and to prescribe, amend and rescind rules
and regulations relating to it, and to make all other
determinations necessary or advisable for the administration of the
1988 Plan. The amounts and prices of options granted under the
1988 Plan described herein have been adjusted to take into account
the effect of the Reverse Stock Split.
The 1988 Plan provides for the grant of both "incentive stock
options" ("ISOs") and "non-qualified stock options" to acquire
Common Stock. ISOs may only be issued to employees of LIVE and its
subsidiaries whereas non-qualified stock options may be issued to
employees and Directors, consultants other persons who are not
regular salaried employees of LIVE or its subsidiaries. ISOs will
be granted with an exercise price not less than the fair market
value (as defined in the 1988 Plan) of the Common Stock at the time
of the grant, but if granted to stockholders owning stock
representing more than 10% of the total combined voting power of
all outstanding classes of the Company's stock, such options will
be granted with an exercise price equal to 110% of the fair market
value of the Common Stock at the time of grant and may not be
exercisable more than five years after the date of grant. The
exercise price of non-qualified stock options will be specified by
the Stock Option Committee at a price greater than, equal to or
less than the fair market value of the Common Stock at the time of
grant. The shares purchased upon the exercise of an option granted
under the 1988 Plan are to be paid for: (i) in cash or by certified
or cashier's check payable to the order of the Company, (ii) by
cancellation of indebtedness, (iii) through the delivery of other
shares of Common Stock, or through authorizing the Company to
retain shares of Common Stock otherwise issuable upon exercise of
an option, having an aggregate fair market value equal to the total
exercise price of the option being exercised, (iv) with the
approval of the Stock Option Committee administering the 1988 Plan,
by a promissory note made by the optionee in favor of the Company
upon the terms and conditions to be determined by the Stock Option
Committee and secured by the shares issuable upon exercise of such
option, (v) through any combination thereof or (vi) in such other
manner as the Stock Option Committee may specify in order to
facilitate the exercise of options by the holders thereof.
SARs granted under the Plan may, at the discretion of the
Stock Option Committee, enable the recipient on exercise to receive
payment based upon increases in the market value of the Common
Stock from the date of grant (the "Initial Value") to the date of
exercise. SARs may be issued to regular salaried employees of LIVE
and its subsidiaries, and Directors, consultants and other persons
who are not regular salaried employees of LIVE or its subsidiaries.
A maximum of 120,000 SARs may be granted under the 1988 Plan.
Payment of appreciation for a SAR may be made at the option of the
Stock Option Committee in cash or in Common Stock. SARs may be
granted in tandem with options under the 1988 Plan, in which event
the exercise of one will extinguish the other. The Initial Value
of SARs granted under the 1988 Plan may not be less than 100% of
the fair market value of the Common Stock on the date the SAR is
granted.
Consideration for the options or SARs to be granted under the
1988 Plan is provided by the recipient's past, present and expected
future contributions to the management of the Company. No monetary
consideration is provided by the recipient with respect to the
grant of options or SARs. To date, no SARs have been granted under
the 1988 Plan.
No option or SAR granted under the 1988 Plan will be
transferable, except in the event of a recipient's death. ISOs may
be exercised by the holder during the period: (a) while he or she
is an employee of the Company, or (b) within three months after
termination of his or her employment if such termination is due to
normal retirement or voluntary resignation with the consent of the
Board of Directors of LIVE or one of its subsidiaries, expressed in
the form of a written resolution, but in any event prior to the
expiration of the ISOs. In the event of a recipient's death or
permanent disability, his or her ISOs may be exercised (in the
event of death, by the person entitled to do so under his or her
will or by his or her legal representative) at any time not later
than one year after the date of his or her death or permanent
disability, but in any event prior to expiration of the ISOs.
Termination of employment or other relationship with LIVE by a
holder of a non-qualified stock option or a SAR will have the
effect specified by the Stock Option Committee. The Stock Option
Committee may at any time suspend or terminate the 1988 Plan.
Termination or suspension of the 1988 Plan, however, will not,
without the consent of the holder, affect rights under any option
or SARs granted but not exercised as of the date of termination.
The 1988 Plan provides for adjustment of the number of SARs
and shares subject to outstanding options, and the aggregate number
of SARs and shares available under the 1988 Plan, in the event a
stock dividend is paid or in the event the shares of Common Stock
are changed into or exchanged for a different number or kind of
shares or other securities. The 1988 Plan provides that if any
option or SAR granted under the 1988 Plan expires or terminates for
any reason without having been exercised in full, the unpurchased
shares subject to such option will again be available for options
to be granted under the 1988 Plan and the unexercised SARs will
again be available for SARs or options to be granted under the 1988
Plan.
The 1988 Plan provides that the Stock Option Committee may, at
any time, or from time to time, amend the 1988 Plan; provided,
however, that without stockholder approval, the Stock Option
Committee may not:
(i) Increase the maximum number of shares of Common Stock
for which options may be granted or the maximum number
of SARs which may be granted;
(ii) change the method of determining the exercise price
for options or the Initial Value for SARs;
(iii) increase the maximum term for which any options or
SARs may be granted; or
(iv) change the designation of persons eligible to receive
options or SARs under the 1988 Plan.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or
more corporations as a result of which the Company is not the
surviving corporation, or upon the sale of substantially all of the
property or more than 80% of the then outstanding stock of the
Company to another corporation, the 1988 Plan will terminate, and
any SARs and options granted pursuant to the 1988 Plan will
terminate. Notwithstanding the foregoing, the Stock Option
Committee may provide in writing in connection with such
transaction for any or all of the following alternatives
(separately or in combinations): (i) for the SARs and options
theretofore granted to become immediately exercisable; (ii) for the
assumption by the successor corporation of the SARs and options
theretofore granted or the substitution by such corporation for
such SARs and options of new SARs and options covering the stock of
the successor corporation, or a parent or subsidiary thereof, with
appropriate adjustment as to the number and kind of shares and
prices; or (iii) for the continuance of the 1988 Plan by such
successor corporation in which event the 1988 Plan and the SARs and
options theretofore granted will continue in the manner and under
the terms so provided. The 1988 Plan further provides that no
amendment, suspension or termination of the 1988 Plan will, without
the consent of the holder, alter or impair any rights or
obligations under any option or SAR theretofore granted under the
1988 Plan.
In January 1992, the LIVE Board of Directors, acting as the
Stock Option Committee, granted to current employees and Directors
of LIVE, LHV and the Specialty Retail Division who were holders of
options pursuant to the 1988 Plan, the right to agree to cancel
certain options ("Cancelled LIVE Options") and to receive in return
therefor additional options ("New LIVE Options") pursuant to the
1988 Plan, all on the following terms and conditions: (i) the
exercise price for the New LIVE Options would equal $2.875, the
closing price of LIVE Common Stock on the NYSE on January 16, 1992,
(ii) fifty percent (50%) of the New LIVE Options would vest on
January 16, 1993 and the remainder would vest on January 16, 1994;
(iii) no New LIVE Options would vest earlier than the scheduled
vesting date for the corresponding Cancelled LIVE Options and (iv)
all New LIVE Options would expire on January 15, 2002. In
connection with this arrangement, options to purchase 547,200
shares of LIVE Common Stock were exchanged for New LIVE Options.
On March 6, 1995, the Stock Option Committee of the Board of
Directors granted to all current employees and Directors of LIVE
and LHV (other than members of the Stock Option Committee) who were
holders of options pursuant to the 1988 Plan, the option to agree
to cancel certain options (the "Canceled Options") and to receive
in return therefor new options (the "New Options") pursuant to the
1988 Plan, all on the following terms and conditions: (i) the
exercise price for the New Options would equal $3.50, the closing
price of the Common Stock on The Nasdaq Stock Market's SmallCap
Market on March 6, 1995, (ii) fifty percent (50%) of the New
Options would vest on March 6, 1996; the remainder would vest on
March 6, 1997, provided that no New Options would vest earlier than
the scheduled vesting date for the corresponding Canceled Options,
and (iv) all New Options would expire on the expiration date of the
corresponding Canceled Options.
The 1988 Plan, as amended through June 1993, provided that a
total of 300,000 shares of Common Stock may be granted as options
or SARs under the 1988 Plan. On March 3, 1994, the Board of
Directors and the Stock Option Committee initially approved an
amendment to the 1988 Plan to increase the number of shares of LIVE
Common Stock which may be granted under the 1988 Plan by an
additional 100,000 shares, and such amendment was reauthorized by
the Board of Directors on March 6, 1995 (the "1988 Plan
Amendment"). The Board of Directors and the Stock Option Committee
approved the 1988 Plan Amendment to increase the number of shares
of LIVE Common Stock for which options may be granted under the
1988 Plan because of the need to grant additional options. Options
have in the past been a significant factor in inducing outstanding
individuals to enter into and remain in the service of LIVE. The
1988 Plan Amendment will allow the Stock Option Committee to
continue to award options to Directors, officers and key employees
of LIVE as both compensation for past services and as incentives
for future services. At the annual meeting, holders of Common
Stock and Series C Preferred Stock are being requested to consider
and to approve the 1988 Plan Amendment. Appendix B to this Proxy
Statement contains the full text of the 1988 Plan as it is proposed
to be amended.
If the 1988 Plan Amendment is approved by the holders of
Common Stock and Series C Preferred Stock, the table that follows
shows the amount and value of stock options as of February 28, 1995
held by the Named Executives, all nominees for Director, all
individuals holding in excess of 20,000 options (5% of the total to
be available for grant), all executive officers of the Company as
a group, all current Directors of LIVE who are not executive
officers, and all current employees of the Company who are not
executive officers.
<PAGE>
NEW PLAN BENEFITS
1988 Plan
Name and Position Dollar Value ($) (1) Number of Options
Roger A. Burlage, Nominee
for Director and CEO 0 120,000
Michael J. White, Nominee for Director
and Executive Vice President 0 12,000
Ivan R. Lipton, Former President,
Specialty Retail Group 0 0
Makoto Koshiba, Nominee for Director 0 0
Gregory R. Pierson, Nominee for Director 0 1,000
R. Timothy O'Donnell, Nominee for Director 500 4,900
Roger R. Smith, Nominee for Director 0 18,900
Jay Burnham, Nominee for Director 0 2,000
Jonathan D. Lloyd, Nominee for Director 0 2,000
David A. Mount, Holder of in excess of 5%
of all outstanding options 0 27,900
Executive Officers as a Group (6 individuals) 2,500 179,000
Directors as a Group (Other than
Executive Officers) (9 individuals) 1,000 42,600
Non-Executive Officer Employees 0 38,440
All Option Holders (2) 3,500 300,200
- ----------------
(1) On February 28, 1995, the closing price of the
Company's Common Stock on the Nasdaq SmallCap Market
was $3.25 per share.
(2) All of the options to purchase 300,200 shares were
granted at exercise prices which ranged from $2.75 -
$15.625 per share, the market value of the Company's
Common Stock on the dates of grant.
Federal Income Tax Consequences of the 1988 Plan
The following is a summary discussion of certain federal
income tax consequences of the 1988 Plan. Holders of options and
SARs granted under the 1988 Plan are urged to consult their tax
advisors before exercising any such option or SAR and before
disposing of any shares of Common Stock acquired through the
exercise of an option or a SAR.
Incentive Stock Options. All ISOs granted under the 1988
Plan are intended to be incentive stock options for federal
income tax purposes. The federal income tax consequences of ISOs
under the present law generally are as follows. An optionee
receiving an ISO will not be in receipt of taxable income upon
the grant of the ISO or upon its timely exercise for regular
income tax purposes, but the excess of the fair market value of
the Common Stock on the date of exercise over the exercise price
will constitute an adjustment in determining a person's
alternative minimum taxable income for the taxable year in which
the ISO is exercised. Generally, exercise of an ISO will be
timely if made during its term and if the optionee remains an
employee of the Company or a subsidiary at all times during the
period beginning on the date of grant of the ISO and ending on
the date of exercise (or three months before the date of exercise
in the case of normal retirement or certain voluntary
resignations or one year before the date of exercise in the case
of death or disability). Upon ultimate sale of the Common Stock
received upon such exercise, except in the case of a
Disqualifying Disposition as noted below, the optionee will
recognize long-term capital gain or loss (if the Common Stock is
a capital asset in the hands of the optionee) equal to the
difference between the amount realized upon such sale and the
option price. The Company will not be entitled to any federal
income tax deductions in connection with either the grant or
exercise of the ISO or the sale of such shares of Common Stock by
the optionee, except in the case of a Disqualifying Disposition
as noted below.
However, if the Common Stock acquired pursuant to the
exercise of an ISO is disposed of by the optionee prior to the
later of two years from the date of grant of the ISO or one year
from the date such Common Stock is transferred upon exercise of
the ISO (a "Disqualifying Disposition"), any gain realized by the
optionee generally will be bifurcated into an ordinary income
component and a capital gains component at the time of such
Disqualifying Disposition. Generally, the optionee's gain will
be taxed as ordinary income in the amount equal to the difference
between the option price and the fair market value of the Common
Stock on the date the ISO was exercised; provided, however, that
if the sale of the Common Stock at a profit could subject the
optionee to suit under Section 16(b) of the Exchange Act, then
pursuant to the provisions of Section 83 of the Code the fair
market valuation would occur on the date the potential Section
16(b) liability lapses (unless the optionee makes an election to
be taxed earlier as described below). The balance of the
optionee's gain, if any, will be taxed as short-term or long-term
capital gain if the Common Stock is a capital asset in the hands
of the optionee. If the amount realized on the Disqualifying
Disposition is less than the fair market value on the date of
exercise, the ordinary income component will be limited to the
difference between the option price and the sale price. In the
event of a Disqualifying Disposition, the Company may claim a
federal tax deduction at the time and in the amount taxable to
the optionee as ordinary income, provided the Company furnishes a
Form W-2 or Form W-2c to the optionee and files such Form with
the federal government on or before the date the Company files
the tax return claiming such deduction, and subject to the rules
of Section 162(m) of the Code which generally disallows
deductions for compensation paid to a covered employee in excess
of $1,000,000 per year.
Non-Qualified Options. In the case of a non-qualified stock
option, the optionee will not recognize any income upon grant of
any such option. Rather, at the time of exercise of the non-
qualified stock option the optionee, except as noted below, will
recognize ordinary income for federal income tax purposes in an
amount equal to the excess of the fair market value of the Common
Stock at the time of exercise over the option price. The Company
will generally be entitled to a tax deduction as such time and in
the amount taxable to the optionee as ordinary income, provided
the Company timely complies with the applicable Form W-2 or Form
1099 reporting requirements under the Code, and subject to the
rules of Section 162(m) of the Code which disallows deductions
for compensation paid to a covered employee in excess of
$1,000,000 per year.
As stated above, income generally is recognized by an
optionee upon exercise of non-qualified stock options. However,
with respect to shares of Common Stock received upon such
exercise, the optionee will not recognize ordinary income at the
time of such exercise if an immediate sale of such shares at a
profit would subject such optionee to potential liability under
Section 16(b) of the Exchange Act. In that case, the optionee
will not be taxed pursuant to the provisions of Section 83 of the
Code until the date the potential Section 16(b) liability lapses.
However, an optionee may elect (not later than 30 days after
acquiring such shares) to include in income currently the
difference between the fair market value of such shares at the
time of exercise and the option price, notwithstanding the fact
that an immediate sale of such shares at a profit would subject
such optionee to potential liability under Section 16(b). If
such election is made, no additional taxable income will be
recognized by such optionee at the time the potential liability
under Section 16(b) lapses. Certain optionees may be subject to
potential liability under Section 16(b) of the Exchange Act if an
option is exercised within six months of the date of the grant.
Accordingly, all options exercised more than six months after the
date of the grant will result in the optionee recognizing income
equal to the excess of (a) the fair market value of the Common
Stock on the date of exercise over (b) the option price. The
Company generally will be entitled to a tax deduction as
described in the preceding paragraph.
Stock Appreciation Rights. A participant who is granted
SARs (either in conjunction with an option grant or separately)
will not recognize income at the time of grant but generally will
recognize ordinary income at the time payment for the SAR is
received. The amount of the ordinary income recognized will be
equal to the sum of (a) the then fair market value of the shares
of stock received, if any, and (b) the amount of cash received,
if any. In the case of a participant who is subject to the
restrictions of Section 16(b) of the Exchange Act, the
recognition of income attributable to the shares received (and
the date on which the amount of such income is measured) will be
subject to the provisions of Section 83 of the Code as described
above. The Company generally will be entitled to a tax deduction
at such time in the amount taxable to the optionee, provided the
Company timely complies with the applicable Form W-2 or Form 1099
reporting requirements under the Code and subject to the rules of
Section 162(m) of the Code which disallows deductions for
compensation paid to a covered employee in excess of $1,000,000
per year.
Exercise With Shares. Based upon a published ruling of the
IRS, an optionee who surrenders Common Stock in payment, in whole
or in part, of the exercise price of a non-qualified stock option
will recognize no gain or loss on the Common Stock surrendered,
but such optionee otherwise will be taxed according to the rules
described above for non-qualified stock options. To the extent
of the number of shares surrendered in payment of the exercise
price, the basis of the shares received upon exercise will be
equal to the basis of the shares surrendered, and the holding
period of such shares received will include the holding period
for the shares surrendered. The basis of additional shares
received upon exercise will be equal to the fair market value of
such shares on the date which governs the optionee's recognition
of ordinary income, and the holding period for such shares will
commence on the exercise date. However, if the surrendered
Common Stock was previously acquired upon exercise of an ISO and
if the date of surrender takes place within the requisite holding
period for such Common Stock (i.e., within two years of the grant
of the option or one year of the date shares were transferred
pursuant to the exercise), then such surrender will constitute a
Disqualifying Disposition of the Common Stock surrendered, and
will be taxed according to the rules described above for
Disqualifying Dispositions.
Section 280G of the Code. In the event that the Stock
Option Committee provides that SARs and options become
immediately exercisable as a result of a change in control, all
or a portion of the value of such acceleration in ability to
exercise may be treated as a "parachute payment" within the
meaning of Section 280G of the Code. The amount of any parachute
payments considered to be "excess parachute payments" within the
meaning of Section 280G of the Code that are made to
"disqualified individuals" as defined in that same Section (which
includes officers and certain shareholders and certain highly
compensated individuals) will not be deductible by the Company,
and the optionee would be subject to a nondeductible 20 percent
excise tax under Section 4999 of the Code with respect to any
such excess parachute payment.
Section 162(m) of the Code. Section 162(m) of the Code
generally limits the amount that a publicly held corporation is
allowed each year to deduct for the compensation it pays to each
of its chief executive officer and its other four most highly
compensated officers ("covered employees") to $1,000,000.
Certain types of compensation paid to such executives are not
subject to the $1,000,000 deduction limit. One such type is
"performance-based" compensation. To qualify as performance-
based compensation, certain requirements must be satisfied.
Based on certain proposed regulations, income described above as
being received by persons with respect to options and SARs will
not qualify as "performance-based" compensation or qualify for
any other exception from the $1,000,000 deduction limit.
Therefore, any such amounts received by a person while that
person is a covered employee will, together with other
compensation received by that person which is subject to the
$1,000,000 deduction limit, not be deductible by the Company to
the extent that it exceeds $1,000,000 in any year. No executive
of the Company currently receives annual compensation in excess
of the $1,000,000 deduction limit.
Vote Required for Approval
An affirmative vote of the holders of at least a
majority of the combined voting power of the Common Stock and
Series C Preferred Stock entitled to vote and present at the
annual meeting is necessary for approval of the 1988 Plan
Amendment. Pursuant to Delaware law, abstentions and broker non-
votes will have the effect of a vote against the 1988 Plan
Amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS
PROPOSAL.
PROPOSAL NO. 3
(Common Stockholders and Series C Preferred Stockholders Only)
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board recommends that Common Stockholders and Series C
Preferred Stockholders vote for the approval of the appointment
of Ernst & Young LLP as the Company's independent auditors for
the current fiscal year. Ernst & Young LLP served as the
Company's independent auditors for the fiscal year ended December
31, 1994. Representatives of Ernst & Young LLP are expected to
be present at the meeting with the opportunity to make a
statement if they desire to do so and to respond to appropriate
questions.
Vote Required for Approval
An affirmative vote of the holders of at least a
majority of the combined voting power of the Common Stock and
Series C Preferred Stock entitled to vote and present at the
annual meeting is necessary for approval of the appointment of
Ernst & Young LLP as the Company's independent auditors for the
fiscal year ended December 31, 1995. Pursuant to Delaware law,
abstentions and broker non-votes will have the effect of a vote
against the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ended December 31, 1995.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS
PROPOSAL.
OTHER MATTERS
The Board is not aware of any other matter that may properly
come before the meeting. If any matter not mentioned in this
Proxy Statement is brought before the meeting, the persons named
in the enclosed form of proxy will have discretionary authority
to vote all proxies with respect thereto in accordance with their
judgment.
STOCKHOLDER PROPOSALS
Stockholders are advised that any stockholder proposals
intended for consideration at the 1996 Annual Meeting of
Stockholders must be received by the Company at its principal
executive offices on or before December 9, 1995 in order to be
included in the proxy materials for the 1996 Annual Meeting. It
is recommended that stockholders submitting proposals direct them
to the Secretary of the Company and utilize certified mail -
return receipt requested.
FORM 10-K
A copy of this proxy statement, as well as the Company's
Annual Report on Form 10-K, exclusive of exhibits, will be mailed
without charge to any stockholder entitled to vote at the
meeting, upon written request to: Michael J. White, Senior Vice
President and General Counsel, LIVE Entertainment Inc., 15400
Sherman Way, Van Nuys, California 91406.
By Order of the Board of Directors,
MICHAEL J. WHITE
Secretary
April 3, 1995
Van Nuys, California
COMMON STOCKHOLDERS, SERIES B PREFERRED STOCKHOLDERS AND
SERIES C PREFERRED STOCKHOLDERS ARE URGED TO COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. PROMPT
RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE APPRECIATED.
<PAGE>
APPENDIX A
To: The Stockholders of
LIVE Entertainment Inc.
From: Frans J. Afman
R. Timothy O'Donnell
Gregory R. Pierson
As members of the Compensation Committee
of the Board of Directors of LIVE Entertainment Inc.
The Compensation Committee of the Board of Directors of the
Company (the "Committee") is responsible for establishing the
compensation of the Chief Executive Officer and the other
executive officers of the Company. The purpose of this Report is
to inform the stockholders of the Company of the bases for the
Chief Executive Officer's compensation for the last fiscal year
as well as the compensation policies used in the compensation of
the other executive officers of the Company.
Philosophy
The Committee recognizes that talented, committed employees are
the Company's most valuable resource. The Company is therefore
dedicated to providing its employees with an equitable
compensation and benefits program that recognizes individual
responsibilities and performance, rewards outstanding
contributions, motivates success and affords a measure of
protection against undue financial hardship. The Committee
believes that there are three basic components of compensation,
namely base salary, short term incentive compensation and long
term incentive compensation, and makes its decisions regarding
executive officer compensation based on the following:
Base Salary - Base salaries are based on experience
and scope of responsibility of an
individual upon hire, with
consideration given to the base salary
of the immediate predecessor in the
job, if any, and, thereafter, upon
individual performance and changes in
level of responsibility.
Short Term Incentive
Compensation
(Bonuses) - Those management employees who have a
measurable impact on profitability
should have a significant portion of
their total compensation "at risk",
with a corresponding potential for
significant rewards. Bonus programs
are based primarily on the Company
achieving operating profits that are
close to or exceed the results
planned at the beginning of a fiscal
year. In extraordinary cases,
bonuses are granted as awards for
exceptional performance with respect
to specific transactions.
Long Term Incentive
Compensation
(Stock Options) - The Committee believes that it is not
only important to provide incentives
based on short term (year-to-year)
profitability, but also to provide
incentives for senior management to
increase the long term accretion of
value to the stockholders of the
Company. Thus, the Company has
established a stock option program
whereby options vest over a period of
time (usually, in equal amounts for a
two or three year period after the
date of the grant). The compensation
of executives is thereby tied
directly to changes in the price of
the Company's Common Stock.
The Committee believes that the compensation offered to the
Company's Chief Executive Officer and its executive officers is
consistent with this philosophy.
Chief Executive Officer Compensation for Fiscal 1994
Mr. Burlage's $450,000 base salary for fiscal 1994
represented an increase of $25,000 above the base salary paid to
Mr. Burlage's predecessor as President and Chief Executive
Officer of the Company. Mr. Burlage's base compensation was
determined by the employment agreement that was entered into
between the Company and Mr. Burlage in December 1993.
As part of the negotiations on his employment agreement, Mr.
Burlage received a signing bonus of $100,000, and the Company
made the following monetary agreements with Mr. Burlage (i) the
Company agreed to pay approximately $15,000 per year for life
insurance for Mr. Burlage's benefit in addition to the life
insurance benefits provided to all employees of the Company, (ii)
the Company agreed to reimburse Mr. Burlage for automobile
leasing costs, (iii) the Company agreed to pay approximately
$7,000 per year to provide Mr. Burlage with disability insurance
in addition to the disability insurance benefits provided to all
employees of the Company, (iv) the Company agreed to provide Mr.
Burlage with an interest free loan to acquire a country club
membership and also agreed to pay Mr. Burlage's country club
dues. With the exception of the disability insurance benefit,
the benefits summarized in clauses (i) through (iv) of the
immediately preceding sentence were identical to the benefits
provided to Mr. Burlage's predecessor as President and Chief
Executive Officer of the Company.
Mr. Burlage's contract also entitles him to receive a bonus
equal to two percent (2%) of the Company's operating income in
excess of $10,000,000. The $10,000,000 threshold was set based
upon the conclusion of the Committee members that Mr. Burlage's
primary goal was to return the Company to profitability, the
analysis by the Committee members of the Company's operating
profit levels for fiscal 1992 and 1993, and the opinion of the
individual Committee members that a minimum operating profit of
$10,000,000 was needed to increase the public value of the
Company's securities.
As part of the negotiations for his employment agreement,
Mr. Burlage received options to purchase 120,000 shares of the
Company's Common Stock, at a price of $9.375 per share (adjusted
for the Reverse Stock Split), vesting equally over the four year
term of Mr. Burlage's employment agreement. As of December 31,
1994, the exercise price of Mr. Burlage's options was greater
than the market price of the Company's Common Stock. Should the
Company's financial performance continue to improve, the
Committee would expect the price of the Company's Common Stock to
rise and therefore provide real value for Mr. Burlage's stock
options.
In determining Mr. Burlage's total compensation package, the
Committee took the following factors into account:
a. The compensation that was paid to Mr. Burlage's
predecessor;
b. The Company's need to fill the Chief Executive Officer
position that had been vacant since October 1994.
c. Mr. Burlage's experience in those entertainment
software distribution areas into which the Company
planned to expand its operations beyond United States
and Canada home video distribution.
d. The subjective experience of the Committee members.
e. The fact that Mr. Burlage was not unemployed at the
time that his contract was being negotiated.
Another important factor in determining Mr. Burlage's
compensation was the normal give and take of negotiations.
Policies for Compensation of Other Named Executives
The Committee's policies for compensation of executive
officers are very similar to the policies that it has established
with respect to Chief Executive Officer compensation, namely:
- Base salary is primarily a function of individual
performance.
- Short term incentive compensation is tied almost
exclusively to operating profitability. In fiscal
1994, as was the case in prior years, the Company's
short term incentive cash compensation program (the
"1994 Bonus Program"), was designed to award cash
bonuses to the Company's employees, including the Named
Executives, based on achievement of profit goals set
forth in business plans reviewed and approved by the
Board of Directors early in the applicable fiscal year.
In 1994, those operating profit goals were not reached,
and therefore no employee received a payment under the
1994 Bonus Program.
- One time, ad hoc, payments, also are occasionally
provided in lump sums to employees to induce them to
join the Company, to renew contracts, to cover
relocation costs or to reward employees for exceptional
performance with respect to specific transactions. In
fiscal 1994, such an award was made to Mr. Lipton
following the sale of the Specialty Retail Division in
recognition of his special and exceptional service on
behalf of the Division while the Division was owned by
the Company.
- Long term incentive compensation is reflected by the
Company's stock option plan, in which all of the
Company's executive officers participate. The
Company's executive officers received stock option
grants in 1994, based on a combination of an evaluation
by the Company's Chief Executive Officer of the
performance of the executive officers as well as a
comparison of total options granted to individuals
holding positions of similar authority and
responsibility within the Company. The vesting of the
options over a period of years provides an incentive
for the executive officer to remain with the Company
and establishes a direct linkage between individual
compensation and long term stockholder value.
The main difference between the Committee's compensation
policies with respect to the Chief Executive Officer and its
policies with respect to other executive officers is that the
Committee places a great deal of reliance upon the salary, bonus
and stock option recommendations of the Company's Chief Executive
Officer, who observes and evaluates the performance of his
executive officers on a daily basis.
The Committee has approved management's recommendations for
a short term incentive cash compensation program (the "1995 Bonus
Program"). Like the 1994 Bonus Program, the 1995 Bonus Program
was designed to award cash bonuses to the Company's employees,
including the Named Executives, based on achievement of profit
goals set forth in business plans reviewed and approved by the
Board of Directors early in the applicable fiscal year. The
Company's President and Chief Executive Officer is not eligible
to participate in the 1995 Bonus Program.
Policy Regarding Section 162(m) of the Internal Revenue Code
Section 162(m) of the Code generally limits the amount that
a publicly held corporation is allowed each year to deduct for
the compensation it pays to each of its chief executive officer
and its other four most highly compensated officers ("covered
employees") to $1,000,000. Certain types of compensation paid to
such executives are not subject to the $1,000,000 deduction
limit. One such type is "performance-based" compensation. To
qualify as performance-based compensation, certain requirements
must be satisfied. Based on certain proposed regulations, income
described above as being received by persons with respect to
options and SARs will not qualify as "performance-based"
compensation or qualify for any other exception from the
$1,000,000 deduction limit. Therefore, any such amounts received
by a person while that person is a covered employee will,
together with other compensation received by that person which is
subject to the $1,000,000 deduction limit, not be deductible by
the Company to the extent that it exceeds $1,000,000 in any year.
Although the Company is committed to maximizing the deductibility
of performance-based compensation in excess of the $1,000,000
deduction limit to the extent it is practicable and in the best
interests of the Company and its stockholders, no executive of
the Company currently receives annual compensation in excess of
the $1,000,000 deduction limit, and the Company is reluctant to
make changes at this time to the composition of its Compensation
Committee or to its executive compensation programs solely for
tax purposes.
Conclusion
The Committee believes that the compensation provided to the
Chief Executive Officer and the Company's other executive
officers is fair, reasonable, consistent with past practice and
in the best interest of the stockholders of the Company.
<PAGE>
APPENDIX B
1988 STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
OF LIVE ENTERTAINMENT INC.
(As Amended through March 6, 1995 [Subject to Stockholder
Approval])
(Amounts Adjusted to Reflect December 1994 One-For-Five Reverse
Stock Split)
1. Purpose.
The purpose of this 1988 Stock Option and Stock Appreciation
Rights Plan (the "Plan") of LIVE Entertainment Inc., a Delaware
corporation (the "Company"), is to secure for the Company and its
stockholders the benefits arising from stock ownership and
participation in stock appreciation by selected key employees of
the Company or its subsidiaries, directors, consultants or other
persons ("Participants") as an independent committee of the
Company's Board of directors (the "Board of directors") may from
time to time determine. The Plan will provide a means whereby
(i) such employees may purchase shares of the Common Stock of the
Company pursuant to options that will qualify as "incentive stock
options" under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), (ii) such employees, directors,
consultants or other persons, may purchase shares of the Common
Stock of the Company pursuant to "non-qualified stock options"
and (iii) such employees, directors, consultants or other persons
may acquire the right to participate in the appreciation of the
Common Stock of the Company pursuant to "stock appreciation
rights." Incentive stock options and non-qualified stock options
are sometimes referred to collectively as "options."
2. Administration.
2.1 The Plan shall be administered by a committee (the
"Committee") consisting of at least two directors, each of whom
is a "disinterested person" as that term is defined in Rule 16B-
3(c)(2) of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Any
action of the Committee with respect to administration of the
Plan shall be taken by a majority vote or written consent of its
members.
2.2 Subject to the provisions of the Plan, the Committee
shall have authority (i) to construe and interpret the Plan, (ii)
to define the terms used therein, (iii) to prescribe, amend and
rescind rules and regulations relating to the Plan, (iv) to
determine the individuals to whom and the time or times at which
options or stock appreciation rights shall be granted, whether
any options granted will be incentive stock options or non-
qualified stock options, the number of shares to be subject to
each option or stock appreciation right, the exercise price of an
option or the Initial Value of a stock appreciation right, the
number of installments, if any, in which each option or stock
appreciation right may be exercised, and the duration of each
option or stock appreciation right, (v) to approve and determine
the duration of leaves of absence which may be granted to
Participants without constituting a termination of their
employment for the purposes of the Plan, and (vi) to make all
other determinations necessary or advisable for the
administration of the Plan. All determinations and
interpretations made by the Committee shall be binding and
conclusive on all Participants in the Plan and their legal
representatives and beneficiaries. The Committee may delegate
some or all of its power and authority to the Chief Executive
Officer of the Company or the other executive officer, as the
Committee deems appropriate; provided, however, that the
Committee may not delegate its authority with regard to any
matter or action affecting any director or officer who is subject
to Section 16 of the Exchange Act.
3. Shares Subject to the Plan.
Subject to adjustments as provided in Paragraph 15 hereof,
the shares to be issued under the Plan shall consist of the
Company's authorized but unissued Common Stock. Subject to
adjustment as provided in Paragraph 15 hereof, the aggregate
number of stock appreciation rights that may be granted under the
Plan shall not exceed 120,000. The authorized, unissued stock
appreciation rights may be issued as stock options,
notwithstanding anything contained in this paragraph to the
contrary. If any stock appreciation rights granted under the
Plan should expire or terminate for any reason without having
been exercised in full, the unexercised stock appreciation rights
shall again be available to be granted under the Plan either as
stock appreciation rights or stock options. The aggregate amount
of stock which may be issued upon exercise of all options under
the Plan shall not exceed 280,000 shares plus the 120,000 shares
if all of the stock appreciation rights that may be granted under
the Plan are issued as stock options, for a total of 400,000
shares. If any option granted under the Plan shall expire or
terminate for any reason without having been exercised in full,
the unpurchased shares subject thereto shall again be available
for options to be granted under the Plan.
4. Eligibility and Participation.
4.1 All regular salaried employees of the Company or any
subsidiary corporation (as defined in Section 425(f) of the Code)
shall be eligible to receive incentive stock options, non-
qualified stock options and stock appreciation rights. directors
of the Company or any subsidiary corporation, consultants and
other persons who are not regular salaried employees of the
Company or any subsidiary corporation are not eligible to receive
incentive stock options, but are eligible to receive non-
qualified stock options and stock appreciation rights.
4.2 No incentive stock options may be granted to any
employee, at the time the incentive stock option is granted, owns
shares possessing more than ten percent of the total combined
voting power of all classes of stock of the Company (or of its
subsidiary corporations as defined in Section 425(f) of the
Code), unless the exercise price of such incentive stock option
is at least one hundred ten percent of the fair market value of
the stock subject to the incentive stock option determining fair
market value as of the date each respective option is granted in
accordance with Paragraph 8 hereof, and such incentive stock
option by its terms is not exercisable after the expiration of
five years from the date such incentive stock option is granted.
4.3 The aggregate fair market value of the Common Stock for
which incentive stock options granted to any one employee under
this Plan or any other incentive stock option plan of the Company
may by their terms first become exercisable during any calendar
year shall not exceed $100,000, determining the fair market value
as of the date each respective option is granted.
4.4 All options and stock appreciation rights granted under
the Plan shall be granted within ten years from September 20,
1988.
4.5 directors who are members of the Committee shall not be
eligible to receive any grants of stock options or stock
appreciation rights granted pursuant to the Committee's
discretion under the Plan. Such directors shall be granted
options to purchase 1,000 shares of Common Stock per calendar
year at the fair market value of the Common Stock, pursuant to
option grants of equal amount on the first business day following
January 1 of each calendar year. Each option granted pursuant to
this Paragraph 4.5 shall be fully exercisable on the date of
grant and shall be exercisable for a period of ten years from the
date of grant.
5. Duration of Options and Stock Appreciation Rights.
Each option and stock appreciation right and all rights
associated therewith shall expire on such date as the Committee
may determine, but in no event later than ten years from the date
on which the option or stock appreciation right is granted, and
shall be subject to earlier termination as provided herein;
provided, however, that options granted in accordance with
Paragraph 4.5 shall be exercisable for a period of ten years from
the date on which such an option is granted.
6. Price and Exercise of Options.
6.1 All options shall be evidenced by a stock option
agreement. Subject to Paragraph 4.2 and 4.5, the purchase price
of the Common Stock covered by each option shall be determined by
the Committee, but in the case of an incentive stock option shall
not be less than one hundred percent of the fair market value of
such Common Stock on the date the incentive stock option is
granted. The purchase price of the Common Stock upon exercise of
an option shall be paid in full at the time of exercise (i) in
cash or by certified cashier's check payable to the order of the
Company, (ii) by cancellation of indebtedness owed by the Company
to the Participant, (iii) by delivery of shares of Common Stock
of the Company already owned by, and in the possession of, the
Participant or by authorizing the Company to retain shares of
Common Stock otherwise issuable upon exercise of an option, (iv)
if authorized by the Committee or if specified in the option
being exercised, by a promissory note made by the Participant in
favor of the Company, subject to terms and conditions determined
by the Committee, secured by the Common Stock issuable upon
exercise, and in compliance with applicable law (including,
without limitation, state, corporate and federal requirements),
(v) by any combination thereof or (vi) in such other manner as
the Committee may specify in order to facilitate the exercise of
options by the holders thereof. Shares of Common Stock used to
satisfy the exercise price of an option shall be valued at their
fair market value determined in accordance with Paragraph 8
hereof.
6.2 No option granted under this Plan shall be exercisable
if such exercise would involve a violation of any applicable law
or regulation (including, without limitation, federal and state
securities laws and regulations). Subject to Section 4.5, each
option shall be exercisable in such installments during the
period prior to its expiration date as the Committee shall
determine; provided, however, that unless otherwise determined by
the Committee, if the Participant shall not in any given
installment period purchase all of the shares which the
Participant is entitled to purchase in such installment period,
then such Participant's right to purchase any shares not
purchased in such installment period shall continue until the
expiration date or sooner termination of the Participant's
option. No option may be exercised for a fraction of a share and
no partial exercise of any option may be for fewer than ten
shares unless fewer than ten shares remain unpurchased.
7. Terms and Conditions of Stock Appreciation Rights.
All stock appreciation rights shall be evidenced by a
Certificate of Grant (sometimes referred to herein as the
"Certificate") in such form as the Board of directors or the
Committee shall from time to time approve. A grant of stock
appreciation rights shall be subject to the following terms and
conditions.
7.1 Each stock appreciation right shall entitle a
Participant to an amount (the "Appreciation") equal to the excess
of the Exercise Value of one share of Common Stock over the
Initial Value of one share of Common Stock. The Initial Value of
each stock appreciation right shall be specified in the
Certificate of Grant. The Exercise Value of each stock
appreciation right shall be the fair market value of a share of
Common Stock on the date the stock appreciation right is
exercised, determined as set forth in Paragraph 8. The total
Appreciation available to a Participant from the exercise of any
stock appreciation right is a method of incentive compensation
for key employees, directors, consultants and other persons and
does not constitute an offering or sale of Common Stock to
anyone.
7.2 The Appreciation available to a Participant upon
exercise of the Participant's stock appreciation rights shall be
paid to the Participant in cash or Common Stock as determined by
the Committee. If payment is made in Common Stock of the
Company, then the fair market value of the Common Stock for
purposes of calculating the number of shares of Common Stock that
shall be issued to pay the Appreciation of a stock appreciation
right shall be based upon the fair market value of the Common
Stock as determined in Paragraph 8 on the date of exercise of the
stock appreciation right. If the total Appreciation is paid in
Common Stock, the total Appreciation will be reduced to the
largest amount divisible by the fair market value of one share of
Common Stock. Appreciation shall be paid as compensation and
without interest by the Company as specified in the Certificate
of Grant.
7.3 All stock appreciation rights must have an Initial
Value no less than the fair market value of a share of Common
Stock as determined in Paragraph 8 as of the date of grant of the
stock appreciation right.
7.4 A stock appreciation right (a "Related Right") may be
granted under this Plan pursuant to a Certificate of Grant
providing that the exercise of the stock appreciation right
affects the exercise of an option granted pursuant to this Plan
(the "Related Option"). Unless the Certificate of Grant pursuant
to which the Related Right is granted provides otherwise, the
Related Right may be exercised only to the extent to which the
Related Option is exercisable. Upon the exercise or termination
of the related Right, the Related Option shall cease to be
exercisable and shall be canceled to the extent of the number of
shares with respect to which the Related Right was exercised or
terminated. Upon exercise or termination of the Related Option,
the Related Right shall cease to be exercisable and shall be
canceled to the extent of the number of shares to which the
Related Option was exercised or terminated. In addition to the
foregoing, if the Related Option is an "incentive stock option"
granted pursuant to the Plan, then the Related Right must satisfy
the following conditions:
(i) The Related Right must be granted only at the
time of grant of the Related Option;
(ii) The Related Right must expire no later than
the expiration of the Related Option;
(iii) The Related Right must be granted for an
amount of Appreciation equal to or less than one hundred percent
of the difference between the exercise price of the Related
Option and the market price of the Common Stock subject to the
Related Option at the time the Related Right is exercised;
(iv) The Related Right may be transferable only
when the Related Option is transferable, and only under the same
conditions;
(v) The Related Right may be exercised only when
the Related Option is eligible to be exercised; and
(vi) The Related Right may be exercised only when
the market price of the Stock subject to the Related Option
exceeds the exercise price of the Related Option.
7.5 No stock appreciation right granted under this Plan
shall be exercisable if such exercise would involve a violation
of any applicable law or regulation (including, without
limitation, federal and state securities laws and regulations).
Each stock appreciation right shall be exercisable in such
installments during the period prior to its expiration date as
the Committee shall determine; provided, however, that, unless
otherwise determined by the Committee, if the Participant shall
not in any given installment period exercise all of the stock
appreciation rights which the Participant is entitled to exercise
in such installment period, then the Participant's right to
exercise any stock appreciation rights not exercised in such
installment period shall continue until the expiration date or
sooner termination of the Participant's stock appreciation
rights.
8. Fair Market Value of Common Stock.
The fair market value of a share of Common Stock of the
Company shall be determined for purposes of this Plan by
reference to the mean between the bid and asked price of a share
as supplied by the National Association of Securities Dealers
through NASDAQ (or its successor function) or, if such shares are
then traded on a principal stock exchange, by reference to the
closing price of a share on the principal stock exchange on which
such shares are traded, in each case as reported by the Wall
Street Journal for the business day immediately preceding the
date on which the fair market value is determined (or, if for any
reason no such price is available, in such other manner as the
Committee may deem appropriate to reflect the then fair market
value thereof).
9. Withholding Tax.
Upon (i) the disposition of shares of Common Stock acquired
pursuant to the exercise of an incentive stock option granted
pursuant to the Plan within two years of the granting of the
incentive stock option or within one year after exercise of the
incentive stock option, (ii) the exercise of a non-qualified
stock option, or (iii) the exercise of a stock appreciation
right, the Company shall have the right to require such employee
or other person, and such employee or other person by accepting
the options or stock appreciation rights granted under the Plan
agrees, to pay the Company the amount of taxes which the Company
may be required to withhold with respect thereto. In the event
of (i) or (ii), or in the event of (iii) if the Appreciation is
paid with Common Stock, then such employee or other person may
elect to pay the amount of any taxes which the Company may be
required to withhold by delivering to the Company shares of the
Company's Common Stock having a fair market value determined in
accordance with Paragraph 8 equal to the withholding tax
obligation determined by the Company. Such shares so delivered
may be either shares withheld by the Company upon the exercise of
the option stock appreciation right or other shares. Such
election must be made by those persons subject to the provisions
of Section 16 of the Exchange Act in accordance with the General
Rules and Regulations under the Exchange Act, but in no event
later than the date as of which the amount of tax to be withheld
is determined.
10. Non-transferability.
An option or stock appreciation right granted under the Plan
shall, by its terms, be nontransferable by the holder either
voluntarily or by operation of law, other than by will or the
laws of descent and distribution, and shall be exercisable during
the holder's lifetime only by the holder, regardless of any
community property interest therein of the spouse of the holder,
or such spouse's successors in interest. If the spouse of the
holder shall have acquired a community property interest in an
option or stock appreciation right, the holder, or the holder's
permitted successors in interest, may exercise the option or
stock appreciation right on behalf of the spouse of the holder or
such spouse's successors in interest.
11. Holding of Stock After Exercise of Option.
At the discretion of the Committee, any option or stock
appreciation right may provide that the Participant, by accepting
such option or stock appreciation right, represents and agrees,
for the Participant and the Participant's permitted transferees,
that none of the shares acquired upon exercise of an option or
stock appreciation right will be acquired with a view to any
sale, transfer or distribution of said shares in violation of the
Securities Act of 1933, as amended, (the "Act"), and the rules
and regulations promulgated thereunder and the person entitled to
exercise the same shall furnish evidence satisfactory to the
Company (including a written and signed representation) to that
effect in form and substance satisfactory to the Company,
including an indemnification of the Company in the event of any
violation of the Act by such person.
12. Termination of Employment.
If a holder of an incentive stock option ceases to be
employed by the Company or one of its subsidiary corporations (as
defined in Section 425(f) of the Code) for any reason other than
the holder's death or permanent disability (within the meaning of
Section 105(d)(4) of the Code), the holder's incentive stock
options shall immediately become void and of no further force or
effect; provided, however, that if such cessation of employment
shall be due to the holder's voluntary resignation with the
consent of the Board of directors of the Company or such
subsidiary, expressed in the form of a written resolution, or
shall be due to the holder's retirement under the provisions of
any pension or retirement plan of the Company or such subsidiary
then in effect, then within three months after the date the
holder ceases to be an employee of the Company or such subsidiary
such incentive stock option may be exercised to the extent
exercisable on the date of such cessation of employment. A leave
of absence approved in writing by the Board of directors or the
Committee shall not be deemed a termination of employment for the
purposes of this Paragraph 12, but no incentive stock option may
be exercised during any such leave of absence, except during the
first three months thereof. Termination of employment or other
relationship with the Company by the holder of a non-qualified
stock option or stock appreciation right will have the effect
specified in the individual option agreement or Certificate of
grant as determined by the Committee; provided, however, that an
option granted pursuant to Paragraph 4.5 shall be exercisable for
a period of 12 months following termination of employment or
other relationship with the Company to the extent exercisable on
the date of such cessation of employment or other relationship.
13. Death or Permanent Disability of Option Holder.
If the holder of an incentive stock option dies or becomes
permanently disabled while the option holder is employed by the
Company or one of its subsidiary corporations (as defined in
Section 425(f) of the Code), the holder's option shall expire one
year after the date of such death of permanent disability unless
by its terms it expires sooner. During such period after death,
such incentive stock option may, to the extent that it remains
unexercised (but exercisable by the holder according to such
option's terms) upon the date of such death, be exercised by the
person or persons to whom the option holder's rights under the
incentive stock option shall pass by the option holder's will or
by the laws of descent and distribution. The death or permanent
disability of a holder of a non-qualified stock option or stock
appreciation right will have the effect specified in the
individual option agreement or Certificate of Grant as determined
by the Committee; provided, however, that a vested option granted
pursuant to Paragraph 4.5 shall be exercisable for a period of 12
months following death or permanent disability of a holder of
such an option to the extent exercisable on the date of death or
permanent disability.
14. Privileges of Stock Ownership.
No person entitled to exercise any option or stock
appreciation right granted under the Plan shall have any of the
rights or privileges of a stockholder of the Company in respect
of any shares of Common Stock issuable upon exercise of such
option or stock appreciation right until certificates
representing such shares shall have been issued and delivered.
No shares shall be issued and delivered upon exercise of any
option or stock appreciation right unless and until in the
opinion of counsel for the Company there shall have been full
compliance with any applicable registration requirements of the
Exchange Act, any applicable listing requirements of any national
securities exchange on which the Common Stock is then listed, and
any other requirements of law or of any regulatory bodies having
jurisdiction over such issuance and delivery.
15. Adjustments.
15.1 If the outstanding shares of the Common Stock of the
Company are increased, decreased, changed into or exchanged for a
different number or kind of shares or securities as a result of a
reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar
transaction, an appropriate and proportionate adjustment shall be
made in the maximum number and kind of stock appreciation rights
and shares as to which options may be granted under this Plan. A
corresponding adjustment changing the number or kind of stock
appreciation rights and shares allocated to unexercised options
or portions thereof, which shall have been granted prior to any
such change, shall likewise be made. Any such adjustment in the
outstanding options shall be made without change to the aggregate
purchase price applicable to the unexercised portion of the
option but with a corresponding adjustment in the purchase price
for each share covered by the option. Any such adjustment in the
outstanding stock appreciation rights shall be made without
change in the aggregate Initial Value applicable to the
unexercised portion of the stock appreciation rights but with a
corresponding adjustment in the Initial Value for each share
covered by the stock appreciation right.
15.2 Upon the dissolution or liquidation of the Company, or
upon a reorganization, merger or consolidation of the Company
with one or more corporations as a result of which the Company is
not the surviving corporation, or upon the sale of substantially
all the property or more than eighty percent of the then
outstanding stock of the Company to another corporation, the Plan
shall terminate, and any stock appreciation rights and options
granted hereunder shall terminate.
15.3 Notwithstanding the foregoing, the Committee may
provide in writing in connection with such transaction for any or
all of the following alternatives (separately or in
combinations): (i) for the stock appreciation rights and options
theretofore granted to become immediately exercisable; (ii) for
the assumption by the successor corporation for the stock
appreciation rights and options theretofore granted or the
substitution by such corporation for such stock appreciation
rights and options or new stock appreciation rights and options
covering the stock of the successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number
and kind of shares and prices; or (iii) for the continuance of
the Plan by such successor corporation in which event the Plan
and the stock appreciation rights and options theretofore granted
shall continue in the manner and under the terms so provided.
15.4 Adjustments under this Paragraph 15 shall be made by
the Committee, whose determination as to what adjustments shall
be made, and the extent thereof, shall be final, binding and
conclusive. No fractional share of stock shall be issued under
the Plan on any such adjustment.
16. Amendment and Termination of Plan.
16.1 The Committee may at any time suspend or terminate the
Plan. The Committee may also at any time amend or revise the
terms of the Plan provided that the number of shares subject to
an option granted to non-employee directors pursuant to Paragraph
4.5, the purchase price therefor, the date of grant of any such
option, the termination provisions relating thereto and the
category of persons eligible to be granted such options shall not
be amended more than once every six months, other than to comport
with changes in the Code or the Employee Retirement Income
Security Act of 1974, as amended, or the rules and regulations
thereunder and provided further that no amendment or revision
shall, unless appropriate stockholder approval of such amendment
or revision is obtained, (i) increase the maximum number of
shares which may be acquire pursuant to options, and the maximum
number of stock appreciation rights granted under the Plan,
except as permitted under the provisions of Paragraph 15, (ii)
change the minimum purchase price set forth in Paragraphs 4.2 and
6 or the Initial Value set forth in Paragraph 7, (iii) increase
the maximum term of options or stock appreciation rights provided
for in Paragraph 5, or (iv) change the designation of persons
eligible to receive options or stock appreciation rights as
provided in Paragraph 4.
16.2 No amendment, suspension or termination of the Plan
shall, without the consent of the holder, alter or impair any
rights or obligations under any option or stock appreciation
right theretofore granted under the Plan.
17. Effective Date of Plan.
No option or stock appreciation right may be granted under
the Plan unless and until (i) the options and underlying shares
and stock appreciation rights have been registered under the Act
and qualified with the appropriate state regulatory agencies, or
(ii) the Company has been advised by counsel that such options,
shares and stock appreciation rights are exempt from such
registration and/or qualification. An amendment to the Plan to
comply with certain provisions of the Code was adopted by the
Board of directors on June 30, 1993. The next most recent
amendment and restatement of the Plan was approved on July 19,
1990 by the holders of the outstanding voting stock of the
Company.
<PAGE>
LIVE ENTERTAINMENT INC.
ANNUAL MEETING OF SERIES C CONVERTIBLE PREFERRED STOCKHOLDERS
May 9, 1995
The undersigned Series C Convertible Preferred Stockholder
of LIVE Entertainment Inc. (the "Company") hereby nominates,
constitutes and appoints Steven Mangel and Elliot Slutzky, and
each of them, the agent and proxy of the undersigned, each with
full power of substitution, to vote all shares of Series C
Convertible Preferred Stock of the Company which the undersigned
is entitled to vote at the Annual Meeting of Common Stockholders,
Series B Cumulative Convertible Preferred Stockholders and Series
C Convertible Preferred Stockholders of the Company to be held at
The Peninsula Beverly Hills, 9882 Little Santa Monica Boulevard,
Beverly Hills, California 90212, on May 9, 1995 at 10:00 a.m. and
at any and all adjournments thereof, as fully and with the same
force and effect as the undersigned might or could do if
personally present thereat, as follows:
1. The Election of Directors to Serve Until Second
Succeeding Annual Meeting. Electing Makoto Koshiba, Gregory R.
Pierson and R. Timothy O'Donnell to serve on the Board of
Directors of the Company until the second annual meeting
following their election and until their successors are elected
and have qualified.
AUTHORITY GIVEN [] AUTHORITY WITHHELD []
(INSTRUCTION: To grant authority to vote for all of the
nominees named above check the "Authority Given" box; to withhold
authority for any individual nominee check the "Authority Given"
box and cross out the name(s) of such individual(s) above; to
withhold authority for all nominees check the "Authority
Withheld" box.)
2. The Election of Directors to Serve Until Third
Succeeding Annual Meeting. Electing Roger A. Burlage, Roger R.
Smith and Michael J. White to serve on the Board of Directors of
the Company until the third annual meeting following their
election and until their successors are elected and have
qualified.
AUTHORITY GIVEN [] AUTHORITY WITHHELD []
(INSTRUCTION: To grant authority to vote for all of the
nominees named above check the "Authority Given" box; to withhold
authority for any individual nominee check the "Authority Given"
box and cross out the name(s) of such individual(s) above; to
withhold authority for all nominees check the "Authority
Withheld" box.)
3. Amendment to the Company's 1988 Stock Option and Stock
Appreciation Rights Plan. Approving an amendment to the
Company's 1988 Stock Option and Stock Appreciation Rights Plan to
increase the number of shares of the Company's Common Stock for
which options may be granted by an additional 100,000 shares.
FOR [] AGAINST [] ABSTAIN []
(Continued)
<PAGE>
4. Ratification of Selection of Independent Auditors.
Approving the selection of Ernst & Young LLP to serve as
independent auditors of the Company for the fiscal year ending
December 31, 1995.
FOR [] AGAINST [] ABSTAIN []
5. Other Business. To transact such other business as may
properly come before the meeting or any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "AUTHORITY
GIVEN" ON PROPOSALS 1 AND 2 AND A VOTE OF "FOR" ON PROPOSALS 3
AND 4. THIS PROXY CONFERS AUTHORITY TO AND SHALL BE VOTED IN
ACCORDANCE WITH SUCH RECOMMENDATIONS OF THE BOARD OF DIRECTORS
UNLESS A CONTRARY INSTRUCTION IS INDICATED, IN WHICH CASE THE
PROXY SHALL BE VOTED IN ACCORDANCE WITH SUCH INSTRUCTIONS. IN
ALL OTHER MATTERS, IF ANY ARE PRESENTED AT THE MEETING, THIS
PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS.
PLEASE SIGN AND DATE BELOW
DATED: ___________________________
I do ______ do not ______ expect to attend the meeting.
PIONEER LDCA, INC.
By: ___________________________
Title: ________________________
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS,
AND MAY BE REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE
SECRETARY OF THE COMPANY AN INSTRUMENT REVOKING THIS PROXY OR A
DULY EXECUTED PROXY BEARING A LATER DATE OR BY APPEARING AND
VOTING IN PERSON AT THE MEETING.
- 2 -
<PAGE>
LIVE ENTERTAINMENT INC.
ANNUAL MEETING OF COMMON STOCKHOLDERS
May 9, 1995
The undersigned holder of Common Stock of LIVE Entertainment Inc. (the
"Company") hereby nominates, constitutes and appoints Steven Mangel and Elliot
Slutzky, and each of them, the agent and proxy of the undersigned, each with
full power of substitution, to vote all shares of Common Stock of the Company
which the undersigned is entitled to vote at the Annual Meeting of Common
Stockholders, Series B Cumulative Convertible Preferred Stockholders and
Series C Convertible Preferred Stockholders of the Company to be held at The
Peninsula Beverly Hills, 9882 Little Santa Monica Boulevard, Beverly Hills,
California 90212, on May 9, 1995 at 10:00 a.m. and at any and all adjournments
thereof, as fully and with the same force and effect as the undersigned might
or could do if personally present thereat, as follows:
1. The Election of Directors to Serve Until Second Succeeding Annual
Meeting. Electing Makoto Koshiba, Gregory R. Pierson and R. Timothy O'Donnell
to serve on the Board of Directors of the Company until the second annual
meeting following their election and until their successors are elected and
have qualified.
AUTHORITY GIVEN [] AUTHORITY WITHHELD []
(INSTRUCTION: To grant authority to vote for all of the nominees named
above check the "Authority Given" box; to withhold authority for any individual
nominee check the "Authority Given" box and cross out the name(s) of such
individual(s) above; to withhold authority for all nominees check the
"Authority Withheld" box.)
2. The Election of Directors to Serve Until Third Succeeding Annual
Meeting. Electing Roger A. Burlage, Roger R. Smith and Michael J. White to
serve on the Board of Directors of the Company until the third annual meeting
following their election and until their successors are elected and have
qualified.
AUTHORITY GIVEN [] AUTHORITY WITHHELD []
(INSTRUCTION: To grant authority to vote for all of the nominees named
above check the "Authority Given" box; to withhold authority for any individual
nominee check the "Authority Given" box and cross out the name(s) of such
individual(s) above; to withhold authority for all nominees check the
"Authority Withheld" box.)
3. Approving an amendment to the Company's 1988 Stock Option and Stock
Appreciation Rights plan to increase the number of shares of the Company's
Common Stock for which options may be granted by an additional 100,000 shares.
FOR [] AGAINST [] ABSTAIN []
4. Approving the selection of Ernst & Young LLP to serve as independent
auditors of the Company for the fiscal year ending December 31, 1995.
FOR [] AGAINST [] ABSTAIN [] (To be signed on the reverse side.)
<PAGE>
5. To transact such other business as may properly come before the
meeting or any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "AUTHORITY GIVEN" ON
PROPOSALS 1 AND 2 AND A VOTE OF "FOR" ON PROPOSALS 3 AND 4. THIS PROXY
CONFERS AUTHORITY TO AND SHALL BE VOTED IN ACCORDANCE WITH SUCH
RECOMMENDATIONS OF THE BOARD OF DIRECTORS UNLESS A CONTRARY INSTRUCTION
IS INDICATED, IN WHICH CASE THE PROXY SHALL BE VOTED IN ACCORDANCE WITH
SUCH INSTRUCTIONS. IN ALL OTHER MATTERS, IF ANY ARE PRESENTED AT THE
MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS
OF THE BOARD OF DIRECTORS.
PLEASE SIGN AND DATE BELOW
__________________________________
Signature
__________________________________
Signature, if held jointly
__________________________________
Title or Authority
__________________________________
Date of Signature
Sign your name exactly as it
appears on your stock
certificate(s). When shares are
held by joint tenants or other
co-owners, both should sign.
When signing as trustee,
executor, administrator,
guardian, attorney-in-fact,
corporate officer, etc., please
give full title as such. If a
partnership, please sign in
partnership name by an
authorized person.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, AND MAY BE
REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE SECRETARY OF THE COMPANY AN
INSTRUMENT REVOKING THIS PROXY OR A DULY EXECUTED PROXY BEARING A LATER DATE
OR BY APPEARING AND VOTING IN PERSON AT THE MEETING.
<PAGE>
LIVE ENTERTAINMENT INC.
ANNUAL MEETING OF SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCKHOLDERS
May 9, 1995
The undersigned Series B Cumulative Convertible Preferred Stockholder of
LIVE Entertainment Inc. (the "Company") hereby nominates, constitutes and
appoints Steven Mangel and Elliot Slutzky, and each of them, the agent and
proxy of the undersigned, each with full power of substitution, to vote all
shares of Series B Cumulative Convertible Preferred Stock of the Company which
the undersigned is entitled to vote at the Annual Meeting of Common
Stockholders, Series B Cumulative Convertible Preferred Stockholders and Series
C Convertible Preferred Stockholders of the Company to be held at The
Peninsula Beverly Hills, 9882 Little Santa Monica Boulevard, Beverly Hills,
California 90212, on May 9, 1995 at 10:00 a.m. and at any and all adjournments
thereof, as fully and with the same force and effect as the undersigned might
or could do if personally present thereat, as follows:
1. The Election of Directors to Serve Until Next Annual Meeting.
Electing Jay Burnham and Jonathan D. Lloyd to serve on the Board of Directors
of the Company until the next annual meeting following their election and
until their successors are elected and have qualified.
AUTHORITY GIVEN [] AUTHORITY WITHHELD []
(INSTRUCTION: To grant authority to vote for both of the nominees named
above check the "Authority Given" box; to withhold authority for any individual
nominee check the "Authority Given" box and cross out the name of the
individual above; to withhold authority for all nominees check the "Authority
Withheld" box.)
2. Other Business. To transact such other business as may properly come
before the meeting or any adjournments thereof.
(To be signed on the reverse side.)
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "AUTHORITY GIVEN" ON
PROPOSAL 1. THIS PROXY CONFERS AUTHORITY TO AND SHALL BE VOTED IN ACCORDANCE
WITH SUCH RECOMMENDATION OF THE BOARD OF DIRECTORS UNLESS A CONTRARY
INSTRUCTION IS INDICATED, IN WHICH CASE THE PROXY SHALL BE VOTED IN ACCORDANCE
WITH SUCH INSTRUCTIONS. IN ALL OTHER MATTERS, IF ANY ARE PRESENTED AT THE
MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS
OF THE BOARD OF DIRECTORS.
PLEASE SIGN AND DATE BELOW
__________________________________
Signature
__________________________________
Signature, if held jointly
__________________________________
Title or Authority
__________________________________
Date of Signature
Sign your name exactly as it
appears on your stock
certificate(s). When shares
are held by joint tenants or
other co-owners, both should
sign. When signing as
trustee, executor,
administrator, guardian,
attorney-in-fact, corporate
officer, etc., please give
full title as such. If a
partnership, please sign in
partnership name by an
authorized person.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, AND MAY BE
REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE SECRETARY OF THE COMPANY AN
INSTRUMENT REVOKING THIS PROXY OR A DULY EXECUTED PROXY BEARING A LATER DATE
OR BY APPEARING AND VOTING IN PERSON AT THE MEETING.
