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 [ ] Confidential, for
Use of the Com-
mission Only (as
permitted by Rule
14a-6(e)(2))
[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), or Item 22(a)(2) of Schedule 14A.
[ ] $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
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
(1) Amount previously paid: 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 2, 1996
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
Thursday, May 2, 1996, 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
300,000 shares and make certain technical changes to the
Plan.
(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, 1996.
(5) Such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed March 29, 1996 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,
RONALD B. CUSHEY
Secretary
April 2, 1996
Van Nuys, California
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 Thursday, May 2,
1996, 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 2,
1996. 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 29, 1996 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 2,418,417 shares of Common Stock,
4,197,302 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 four
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 four 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 75.34
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.
<PAGE>
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 four
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 four 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, 1996.
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 1995, Michael J. White and R. Timothy
O'Donnell have resigned from the Board. Their departure from the
Board was not the result of any dispute with the Company. The
Board appointed Ronald B. Cushey to fill the position left vacant
by the departure of Mr. White. The Director position vacated by
Mr. O'Donnell remains open. 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 Frans J. Afman, Ryuichi Noda, Masao Nomura and
Anthony J. Scotti are to expire at the 1996 Annual Meeting of
Stockholders. As Messrs. Afman and Scotti are not standing for
reelection as Directors, nominees for election at the 1996 Annual
Meeting of Stockholders are Melvin Pearl, Ryuichi Noda, Masao
Nomura and Michael Jay Solomon.
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 four 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 four 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
------------------------------------------- -----
Ryuichi Noda Until 1999 Annual Meeting
Masao Nomura Until 1999 Annual Meeting
Melvin Pearl Until 1999 Annual Meeting
Michael Jay Solomon Until 1999 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 four 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 1997 Annual Meeting
Jonathan D. Lloyd Until 1997 Annual Meeting
Irwin Roth Until 1997 Annual Meeting
Charles A. Yamarone Until 1997 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
------------------- -----
Makoto Koshiba Until 1997 Annual Meeting
Gregory R. Pierson Until 1997 Annual Meeting
Roger A. Burlage Until 1998 Annual Meeting
Ronald B. Cushey Until 1998 Annual Meeting
Roger R. Smith Until 1998 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 March 15, 1996.
Name Age Position
---- --- --------
Jay Burnham 33 Director
Makoto Koshiba 52 Director
Jonathan D. Lloyd 43 Director
Ryuichi Noda 61 Director
Masao Nomura 46 Director
Melvin Pearl 60 Nominee for Director
Gregory R. Pierson 37 Director
Irwin Roth 64 Nominee for Director
Roger R. Smith 53 Director
Michael Jay Solomon 58 Nominee for Director
Charles A. Yamarone 37 Nominee for Director
Roger A. Burlage 53 Director; Chairman of the
Board and Chief Executive
Officer of the Company and
LIVE Film and Mediaworks Inc.
("LFM")
Ronald B. Cushey 39 Director; Executive Vice
President/Chief
Financial Officer and
Corporate Secretary of the
Company and LFM
Paul Almond (1) 53 Executive Vice President/
Production and Acquisitions of LFM
Steven E. Mangel (1) 42 Executive Vice President/Legal
and Business Affairs/International
Sales and General Counsel of LFM
Elliot Slutzky (1) 47 Executive Vice President/Sales and
Marketing of LFM
Robert L. Denton (1) 36 Vice President/Chief
Accounting Officer of the
Company and LFM
- ------------------
(1) Executive officers of LFM who were determined by the Board to
be executive officers of the Company effective as of January
1, 1996 by virtue of the policy making functions that they
perform for the Company.
Mr. Burnham, a Director of the Company since June 1993, has
been an investment analyst with DDJ Capital Management ("DDJ"), a
diversified investment management firm, since March 1, 1996. From
January 1, 1995 until he joined DDJ, Mr. Burnham was a Vice
President of Libra Investments, Inc. ("Libra"), a specialized
investment banking firm. 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 a Director of the Company since May 1995
and has been General Manager of the Finance Division of Pioneer
Electronic Corporation ("PEC") 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 Managing Director of Mandeville Partners, LLC, a venture
capital and investment banking concern concentrating in
telecommunications and media. From 1993 to July 1995, Mr. Lloyd
was the Chairman, President and Chief Executive Officer of OpTel,
Inc. ("OpTel"), a company engaged in the provision of cable
television services. He is also the Chairman of Vanguard
Communications, L.P., a privately held developer and operator of
microwave cable television 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 he became
President of OpTel. From April 1988 to January 1990, Mr. Lloyd was
the Executive Vice President and Chief Financial Officer of Qintex.
From January 1986 to April 1988, Mr. Lloyd was Executive Vice
President and Chief Financial Officer of Hal Roach Studios, Inc.,
a producer and distributor of television programming and home video
product.
Mr. Noda became a Director of the Company in December 1994.
Mr. Noda became President of Pioneer LDC, Inc. ("PLDC"), a
subsidiary of PEC, in April 1991 and has been a Director of PEC
since December 1988. From October 1988 to April 1991, he was
Deputy General Manager of the International Division of PEC. 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 PEC. Mr. Noda also served as a Director of Carolco
Pictures Inc. ("Carolco"), a diversified entertainment company
engaged in the financing, production and leasing of motion picture
properties worldwide, until his resignation from Carolco's Board on
November 10, 1995. In November 1995, Carolco filed for
reorganization under Chapter 11 of the United States Bankruptcy
Code.
Mr. Nomura became a Director of the Company on November 9,
1993. He has served as Secretary, Treasurer and Chief Financial
Officer of Pioneer Entertainment (USA) L.P. ("Pioneer") since March
1987.
Mr. Pearl is a senior partner in the law firm of Katten Muchin
& Zavis and was one of its founding partners in June, 1974. In
1984, Mr. Pearl formed his own production company and has been an
active film producer in addition to his practice of law. Mr. Pearl
is Chairman of DDM Film Corp. which has produced both small and
large-budgeted films. He is a member of the Board of Directors,
the Executive Committee and former Chairman of the Compensation
Committee, of Cole Taylor Financial Group. He is also a member of
the Board of Guarantee Reserve Life Insurance Company.
Mr. Pierson became a Director of the Company 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 served as a Director of Carolco, until
his resignation from Carolco's Board on November 10, 1995. In
November 1995, Carolco filed for reorganization under Chapter 11 of
the United States Bankruptcy Code.
Mr. Roth is currently Chairman, Chief Executive Officer and a
Director of Advanced Communication Exchange Inc. and Online
Entertainment Network Inc., and has been a practicing attorney for
over 37 years in New York City, where he specializes in securities
and entertainment law. He is presently a Director of Personal
Computer Products, Inc., in San Diego, California and Chairman and
Chief Executive Officer of Color Q, Inc. in Dayton, Ohio. He is
also Chairman and Chief Executive Officer of Platinum Entertainment
Group, Inc., in Hollywood, California.
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. Solomon is Chairman and Chief Executive Officer of Solomon
International Enterprises ("SIE"), a Beverly Hills, California-
based international communications company he founded in 1994. SIE
consists of a network of worldwide production and distribution
companies, as well as broadcasting, satellite and cable program
delivery services in various parts of the world. From 1989 to
1994, Mr. Solomon was President of Warner Bros. International
Television and from 1985 until its 1989 merger with Warner Bros.,
he served as President of Lorimar Telepictures Corporation
("Lorimar"). In 1978, Mr. Solomon founded Telepictures Corporation
and held the position of Chairman and Chief Executive Officer,
prior to its merger with Lorimar.
Mr. Yamarone has been Executive Vice President and Research
Director of Libra Investments, Inc., a broker-dealer located in Los
Angeles, California, since July 1994. Mr. Yamarone was Senior Vice
President and General Counsel of Libra Investments, Inc. from
October 1991 to June 1994. Mr. Yamarone was Senior Vice President-
Legal of Columbia Savings and Loan, Beverly Hills, California, from
January 1990 to October 1991 and was also Secretary of Columbia
Savings and Loan from January 1990 to January 1991. Mr. Yamarone
also serves as a Director of Continental Airlines, Inc. and El Paso
Electric Company.
Mr. Burlage has served as President and Chief Executive
Officer of LIVE and LFM since January 1994 and became a Director of
the Company in December 1994 and Chairman of the Board in March
1996. From 1989 until joining LIVE, Mr. Burlage served as
President and Chief Executive Officer of Trimark Holdings, Inc.
("Trimark"), a diversified entertainment company. 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 LFM since January 1995. He became a
Director of the Company on November 9, 1993 and served in that
capacity until May 9, 1995, when he was replaced by Mr. Koshiba.
Mr. Cushey subsequently was reappointed as a Director in June 1995,
when Mr. White resigned from the Board. Mr. Cushey was an
Executive Consultant for PNA from April 1992 until December 1994.
He 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. Almond was named Executive Vice President, Acquisitions
and Productions, of LFM in January 1994. From 1986 until joining
LFM, Mr. Almond was Senior Vice President, Worldwide Acquisitions
at ITC Entertainment Group, an international motion picture
production and distribution company.
Mr. Mangel has served as Executive Vice President of LFM and
its subsidiaries since July 1994 and currently supervises the
Company's international sales division and its legal and business
affairs department, and acts as its General Counsel. 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 LFM, 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 LFM in February 1994. From 1989 until his appointment
at LFM, Mr. Slutzky was President, Marketing and Distribution, for
Epic Productions, Inc. and Vision International.
Mr. Denton has served as Vice President of Finance and Chief
Accounting Officer of LIVE and LFM since July of 1990. From 1982
until joining LIVE, Mr. Denton was employed by the accounting firm
of Ernst & Young LLP, most recently as Senior Manager.
Board Meetings
During 1995, the Board met five times. Messrs. Scotti, Noda
and Koshiba attended less than 75% of the meetings of the Board and
the Committees thereof on which they served during those portions
of 1995 when such individuals were members of the Board.
Executive Committee
The Executive Committee of the Board consists of Messrs.
Burlage, Scotti and Noda, and included Mr. O'Donnell prior to his
resignation in February 1996. The Committee currently has one
vacancy. 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 one
time in 1995.
Compensation Committee
The Compensation Committee of the Board consists of Messrs.
Afman and Pierson, and included Mr. O'Donnell prior to his
resignation in February 1996. The Compensation Committee, which
determines executive remuneration, met two times in 1995. The
Committee currently has one vacancy.
Stock Option Committee
The Stock Option Committee of the Board consists of Mr. Afman,
and included Mr. O'Donnell prior to his resignation in February
1996. 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 two times in 1995 and currently has one
vacancy.
Independent Committee
The Independent Committee of the Board consists of Messrs.
Burnham, Lloyd and Scotti, and included Mr. O'Donnell prior to his
resignation in February 1996. 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 two times in 1995 and currently has one
vacancy.
Audit Committee
The Audit Committee of the Board consists of Messrs. Nomura
and Smith, and included Mr. O'Donnell prior to his resignation in
February 1996. 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 one
time in 1995 and currently has one vacancy.
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 four Directors of
the Company, and more in certain events. Messrs. Burnham and Lloyd
have been elected as Directors , and Messrs. Yamarone and Roth have
been nominated for election as Directors, by the holders of the
Series B Preferred Stock.
Board Fees
Directors Fees
During 1995, 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, and will receive
$25,000 per month through June 1997 for services as a consultant to
the Chairman of the Board after his resignation as Chairman in
March 1996. Mr. Scotti receives no other Annual Meeting or
committee fees for his service on the Board.
Arrangements with Board Members
On March 6, 1995, the Stock Option Committee of the Board
granted to all current employees and Directors of LIVE and LFM
(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 (iii) 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, 1995, the following
Board members served on the Company's Compensation Committee: Mr.
Afman, Mr. O'Donnell and Mr. Pierson. During the fiscal year
ended December 31, 1995, 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 Board and 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.
The agreement was amended in March 1996 upon Mr. Scotti's
resignation to provide for his consulting services to the Chairman
of the Board through June 1997 at the same rate.
Arrangements with Mr. O'Donnell or Affiliates
In a May 1992 agreement, amended in July and August 1992 and
terminated in May 1995, the Company had 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 LFM and to
make recommendations with respect to the Company's capital
structure. As part of their engagement, in 1995 the Financial
Advisors assisted the Company in obtaining film project financing
from a bank and in August 1995 received a total fee of $50,000 for
such services. LIVE had also agreed to reimburse the Financial
Advisors for their reasonable out-of-pocket expenses, including
legal fees, in connection with such engagement.
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, Mr. Noda, Mr. Koshiba and Mr.
Nomura, or their Affiliates
PEC and Pioneer
Pursuant to an agreement dated October 1995, which amended and
extended an original agreement dated October 1991, LFM granted
Pioneer a license for United States laser videodisc rights to LFM's
library of motion pictures (subject to certain reserved rights) for
a term ending in September 1998. Pioneer will pay LFM a total of
$4,600,000 ($2,300,000 upon signing and $2,300,000 on January 1,
1997) under this agreement as a non-returnable advance recoupable
on a cross-collateralized basis from all royalties payable to LFM
under the agreement.
On February 8, 1996, the Company and PLDC entered into an
Output Deal Agreement (the "Pioneer Output Agreement") for the
distribution of the Company's theatrical productions in Japan. The
three year agreement includes all theatrical films that LIVE
produces and acquires over the period, excluding LIVE's two
features currently in post-production, The Substitute and The
Arrival. PLDC has agreed to pay a specified percentage of the
applicable film's production or acquisition cost to obtain such
Japanese distribution rights.
PEC 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 and July 1, 1994 and
1995, and January 1, 1996 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, 1996, unpaid dividends totalling
$2,206,833 from July 1, 1993 through January 1, 1996 had been added
to the liquidation preference resulting in a total liquidation
preference of $17,206,833.
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 $17,206,833
as of January 1, 1996. 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.
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 January 1, 1996, the Series C Preferred Stock
was convertible into 1,130,170 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 PEC, Le Studio Canal+ S.A. ("Le
Studio") and RCS Video International Services B.V., a former
shareholder, ("RCS") the right to require LIVE to use its best
efforts to register all Common Stock in the Company owned by either
PEC, 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.
In July 1994, a subsidiary of LIVE and an affiliate of PEC
reached an agreement whereby an affiliate of Pioneer received the
Japanese theatrical, video and television distribution rights to
the films Wagons East, Top Dog, The Beans of Egypt, Maine and Goldy
III.
Carolco
PEC 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. On
November 10, 1995 Carolco filed for protection from its creditors
under the provisions of the United States Bankruptcy Court.
LIVE was party to an agreement with Carolco entitling LIVE to
acquire home video rights in the United States and Canada for most
motion pictures produced or controlled by Carolco on which
principal photography had commenced prior to July 31, 1995 or for
which LIVE had paid an advance to Carolco prior to such date, under
a series of agreements. In 1995, LFM made no payments to Carolco
and at December 31, 1995 had no recorded contractual obligations
under the Domestic Master Agreement, other than nominal normal
royalty overage amounts.
LIVE, through its former subsidiary, LIVE Entertainment
International Inc. ("LEII"), was party to an agreement with 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 had commenced prior to July 31, 1995 or for which LFM
had 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"). In 1995, LEII did not pay any advances to CII and at
December 31, 1995 had no recorded contractual obligations under the
German Master Agreement.
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. If
Carolco is unable to pay its share of such legal costs due to its
bankruptcy filing, LIVE will ultimately be responsible for those
costs.
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 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 29, 1996,
certain information concerning the ownership of shares of Common
Stock and Series C Preferred Stock. 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 29, 1996 the Series C Preferred
Stock was convertible into 1,130,170 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 29, 1996. 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 29, 1996. 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 29, 1996, 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 29, 1996, 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 29, 1996, 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 29, 1996, 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.
<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 29, 1996 (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>
5% Owners <C> <C> <C> <C> <C> <C> <C>
PEC. . . . . . . . . . . . . . . 1,768,014(3) 49.8% 637,844 26.4% 1,130,170 1,777,014(4) 50.1%
Le Studio (5). . . . . . . . . . 257,606 7.3% 257,606 10.7% 0 257,606 7.3%
FMR Corp (6) . . . . . . . . . . 0 * 0 * 391,176 391,176 11.0%
Management
Anthony J. Scotti (7). . . . . . 2,829 * 2,829 * 5,950 8,779 *
Roger A. Burlage (8) . . . . . . 0 * 0 * 47,000 47,000 1.3%
Frans J. Afman (9) . . . . . . . 0 * 0 * 5,900 5,900 *
Jay Burnham (10) . . . . . . . . 0 * 0 * 3,000 3,000 *
Ronald B. Cushey (11). . . . . . 0 * 0 * 5,000 5,000 *
Ryuichi Noda (12). . . . . . . . 0 * 0 * 2,000 2,000 *
Makoto Koshiba (13). . . . . . . 0 * 0 * 2,000 2,000 *
Jonathan D. Lloyd (14) . . . . . 0 * 0 * 3,000 3,000 *
Masao Nomura (15). . . . . . . . 0 * 0 * 2,500 2,500 *
Melvin Pearl . . . . . . . . . . 0 * 0 * 0 0 *
Gregory R. Pierson (16). . . . . 0 * 0 * 2,500 2,500 *
Irwin Roth . . . . . . . . . . . 0 * 0 * 0 0 *
Roger R. Smith (17). . . . . . . 152 * 152 * 11,450 11,602 *
Michael Jay Solomon. . . . . . . 0 * 0 * 0 0 *
Charles A. Yamarone. . . . . . . 0 * 0 * 0 0 *
Paul Almond (18) . . . . . . . . 0 * 0 * 6,000 6,000 *
Steve Mangel (19). . . . . . . . 134 * 134 * 7,000 7,134 *
Elliot Slutzky (20). . . . . . . 6,000 * 6,000 * 5,700 11,700 *
Robert L. Denton (21). . . . . . 0 * 0 * 1,800 1,800 *
All Executive Officers,
Directors and Nominees for
Directors as a group**(22) . . . 9,115 * 9,115 * 110,800 119,915 3.4%
*Less than 1%
**19 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>
(1) The number of shares and percentages are based upon 3,548,587
possible votes (comprised of (i) the 2,418,417 votes which may
be cast by all holders of outstanding Common Stock and (ii)
the 1,130,170 votes which may be cast by PEC as the sole
holder of the Series C Preferred Stock) as of February 29,
1996. 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 29, 1996 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 3,548,587 possible votes (comprised of (i) the
2,418,417 votes which may be cast by all holders of
outstanding Common Stock and (ii) the 1,130,170 votes which
may be cast by PEC as the sole holder of the Series C
Preferred Stock) as of February 29, 1996. PEC, 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 637,844 shares of Common Stock directly owned by PEC,
and 1,130,170 shares of Common Stock issuable upon conversion
of the 15,000 shares of Series C Preferred Stock (plus accrued
but unpaid dividends through February 29, 1996) held by PEC.
(4) Includes 1,130,170 shares of Common Stock issuable upon
conversion of the 15,000 shares of Series C Preferred Stock
(plus accrued but unpaid dividends through February 29, 1996)
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, PEC is entitled to cast 1,130,170 votes on matters
coming before the holders of Common Stock pursuant to its
ownership of the Series C Preferred Stock. Includes options
to purchase 9,000 shares of Common Stock held by PEC
affiliated or nominated Directors. The address of Pioneer and
PNA is 2265 East 220th Street, Long Beach, California 90810.
The address of PEC is 4-1 Meguro, 1 Chome, Meguro-ku, Tokyo
153, Japan.
(5) Represents shares of Common Stock indirectly owned by 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) 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.
(7) Includes 5,950 shares of Common Stock which are issuable (i)
upon exercise of presently exercisable options, warrants and
rights and (ii) upon exercise of options, warrants and rights
that become exercisable within 60 days of February 29, 1996.
Does not include 33,475 shares of Common Stock held by Scotti
Brothers Entertainment Industries ("Scotti Brothers").
(8) Includes 47,000 shares of Common Stock which are issuable (i)
upon exercise of presently exercisable options, warrants and
rights and (ii) upon exercise of options, warrants and rights
that become exercisable within 60 days of February 29, 1996.
(9) Includes 5,900 shares of Common Stock which are issuable (i)
upon exercise of presently exercisable options, warrants and
rights and (ii) upon exercise of options, warrants and rights
that become exercisable within 60 days of February 29, 1996.
(10) Includes 3,000 shares of Common Stock which are issuable (i)
upon exercise of presently exercisable options, warrants and
rights and (ii) upon exercise of options, warrants and rights
that become exercisable within 60 days of February 29, 1996.
(11) Includes 5,000 shares of Common Stock which are issuable (i)
upon exercise of presently exercisable options, warrants and
rights and (ii) upon exercise of options, warrants and rights
that become exercisable within 60 days of February 29, 1996.
(12) Although Mr. Noda may be deemed to own beneficially the
securities owned by PEC, Mr. Noda has disclaimed beneficial
ownership of such securities. Includes 2,000 shares of Common
Stock which are issuable (i) upon exercise of presently
exercisable options, warrants and rights and (ii) upon
exercise of options, warrants and rights that become
exercisable within 60 days of February 29, 1996.
(13) Although Mr. Koshiba may be deemed to own beneficially the
securities owned by PEC, Mr. Koshiba has disclaimed beneficial
ownership of such securities. Includes 2,000 shares of Common
Stock which are issuable (i) upon exercise of presently
exercisable options, warrants and rights and (ii) upon
exercise of options, warrants and rights that become
exercisable within 60 days of February 29, 1996.
(14) Includes 3,000 shares of Common Stock which are issuable (i)
upon exercise of presently exercisable options, warrants and
rights and (ii) upon exercise of options, warrants and rights
that become exercisable within 60 days of February 29, 1996.
(15) Although Mr. Nomura may be deemed to own beneficially the
securities owned by PEC, Mr. Nomura has disclaimed beneficial
ownership of such securities. Includes 2,500 shares of Common
Stock which are issuable (i) upon exercise of presently
exercisable options, warrants and rights and (ii) upon
exercise of options, warrants and rights that become
exercisable within 60 days of February 29, 1996.
(16) Although Mr. Pierson may be deemed to own beneficially the
securities owned by PEC, Mr. Pierson has disclaimed beneficial
ownership of such securities. Includes 2,500 shares of Common
Stock which are issuable (i) upon exercise of presently
exercisable options, warrants and rights and (ii) upon
exercise of options, warrants and rights that become
exercisable within 60 days of February 29, 1996.
(17) Includes 12,450 shares of Common Stock which are issuable (i)
upon exercise of presently exercisable options, warrants and
rights and (ii) upon exercise of options, warrants and rights
that become exercisable within 60 days of February 29, 1996.
(18) Includes 6,000 shares of Common Stock which are issuable (i)
upon exercise of presently exercisable options, warrants and
rights and (ii) upon exercise of options, warrants and rights
that become exercisable within 60 days of February 29, 1996.
(19) Includes 7,000 shares of Common Stock which are issuable (i)
upon exercise of presently exercisable options, warrants and
rights and (ii) upon exercise of options, warrants and rights
that become exercisable within 60 days of February 29, 1996.
(20) Includes 5,700 shares of Common Stock which are issuable (i)
upon exercise of presently exercisable options, warrants and
rights and (ii) upon exercise of options, warrants and rights
that become exercisable within 60 days of February 29, 1996.
(21) Includes 1,800 shares of Common Stock which are issuable (i)
upon exercise of presently exercisable options, warrants and
rights and (ii) upon exercise of options, warrants and rights
that become exercisable within 60 days of February 29, 1996.
(22) Includes shares of Common Stock which are issuable (i) upon
exercise of presently exercisable options, warrants and rights
and (ii) upon exercise of options, warrants and rights that
become exercisable within 60 days of February 29, 1996.
</FN>
</TABLE>
The following table sets forth, as of December 31, 1995, 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
4,200,000 shares of the Series B Preferred Stock outstanding as of
December 31, 1995. Although 6,000,000 shares of Series B Preferred
Stock were originally issued by LIVE, LIVE purchased a total of
1,800,000 shares through December 1995, leaving 4,200,000 shares
outstanding as of that date. In addition, in March 1996, the
Company purchased 377,500 shares of the Series B Preferred Stock at
an average price of approximately $6.00 per share.
Shares of Percentage of
Name of Beneficial Series B Outstanding
Owner Preferred Series B
Stock Owned Preferred Stock
------------------ ----------- ---------------
Elliott Associates, L.P.(1) 414,485 9.9%
Metropolitan Life Insurance Company (2) 285,000 6.8%
(1) Elliott Associates, L.P. ("Elliott") is a Delaware limited
partnership and its principal business is to purchase,
sell, trade and invest in securities. In its most recent
Schedule 13D filed with the Commission, Elliott claimed
beneficial ownership over all 414,485 shares of Series B
Preferred Stock owned by them and indicated it has sole
power to vote or direct the vote of, and to dispose or
direct the disposition of, the shares owned. The address
of Elliott is 712 Fifth Avenue, 36th Floor, New York, New
York 10019.
(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 285,000 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
285,000 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 29, 1996, none of the Directors or executive
officers of LIVE beneficially owned any shares of LIVE's Series B
Preferred Stock.
<PAGE>
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, LFM and an affiliate of Le Studio executed a
definitive agreement whereby LFM licensed the United States and
Canadian video rights to the motion picture Stargate.
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 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 EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange 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, 1995 all Section 16(a) filing requirements
applicable to its officers, Directors and greater than ten-percent
beneficial owners were complied with.
EXECUTIVE COMPENSATION AND OTHER REMUNERATION
The following table sets forth the cash compensation paid by
the Company during the fiscal years ended December 31, 1995, 1994
and 1993 to Mr. Burlage, who has served as the Chief Executive
Officer of the Company from January 1994 and to its four most
highly compensated executive officers other than the Chief
Executive Officer at December 31, 1995. As of the end of the
fiscal year ended December 31, 1995, there were only two executive
officers of the Company (Mr. Burlage and Ronald B. Cushey). Mr.
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 LFM - 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. Messrs. Burlage, Cushey, Almond, Mangel and Slutzky are
referred to herein as the "Named Executives."
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 1995 along with
the potential realizable values of such options, (b) a Fiscal Year
End Option Table that indicates whether any of the Named Executives
exercised options in fiscal 1995, and including the number and
value of unexercised options held by the Named Executives at
December 31, 1995, and (c) a Ten-Year Option/SAR Repricing table
concerning stock options repriced for those named executives.
<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 (#) ($)
<S> <C> <C> <C> <C> <C> <C>
Roger A. Burlage 1995 493,269 25,000 (4) 47,064 (5) 121,000 -
Chief Executive 1994 432,692 100,000 (6) 84,213 (7) - -
Officer (3) 1993 - - - - -
Ronald B. Cushey 1995 182,692 15,000 (8) - 22,000 -
Executive Vice President/ 1994 - - - 5,000 -
Chief Financial Officer 1993 - - - - -
and Corporate Secretary
Elliot Slutzky 1995 283,846 25,000 (9) - 15,000 -
Executive Vice President/ 1994 - - - - -
Sales and Marketing of LFM 1993 - - - - -
Steven E. Mangel 1995 266,000 25,000 (10) - 14,000 15,156(11)
Executive Vice President/ 1994 - - - - -
Legal and Business Affairs 1993 - - - - -
and General Counsel of LFM
Paul Almond 1995 203,654 15,000 (12) - 12,000 -
Executive Vice President/ 1994 - - - - -
Production and 1993 - - - - -
Acquisitions of LFM
<FN>
(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) Mr. Burlage became Chief Executive Officer of the Company in
January 1994.
(4) Represents a bonus paid in recognition of the Named
Executive's efforts in connection with the collection of a
previously written off bad debt by the Company. Does not
include a cash bonus payment of $250,000 made to Mr. Burlage
in February 1996 in recognition of the Company's improved
profits for the year ended December 31, 1995.
(5) Represents $19,000 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 perquisites 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 and country club
dues.
(6) Represents a signing bonus paid for signing a four year
employment agreement with the Company.
(7) 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 perquisites 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.
(8) Represents a bonus paid in recognition of the Named
Executive's efforts in connection with the collection of a
previously written off bad debt by the Company. Does not
include a cash bonus payment of $55,650 made to Mr. Cushey in
February 1996 under the Company's Fiscal 1995 Corporate
Incentive Cash Compensation Program (the "1995 Bonus
Program"). Mr. Cushey was not a Named Executive officer prior
to January of 1995.
(9) Represents a bonus paid in recognition of the Named
Executive's efforts in connection with the collection of a
previously written off bad debt by the Company. Does not
include a cash bonus payment of $75,525 made to Mr. Slutzky in
February 1996 under the Company's 1995 Bonus Program. Mr.
Slutzky was not a Named Executive officer prior to January of
1995.
(10) Represents a bonus paid in recognition of the Named
Executive's efforts in connection with the collection of a
previously written off bad debt by the Company. Does not
include a cash bonus payment of $72,345 made to Mr. Mangel in
February 1996 under the Company's 1995 Bonus Program. Mr.
Mangel was not a Named Executive officer prior to January of
1995.
(11) Represents matching contribution in the amount of $4,500 under
the LIVE incentive Savings Plan and a $10,656 cash payment in
lieu of taking accrued vacation time.
(12) Represents a bonus paid in recognition of the Named
Executive's efforts in connection with the collection of a
previously written off bad debt by the Company. Does not
include a cash bonus payment of $54,325 made to Mr. Almond in
February 1996 under the Company's 1995 Bonus Program. Mr.
Almond was not a Named Executive officer prior to January of
1995.
</FN>
</TABLE>
<PAGE>
The following table sets forth certain information regarding
the Chief Executive Officer and the other Named Executives
identified in the Summary Compensation Table.
<TABLE> OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term
- --------------------------------------------------------------------- ----------------------------
% of
Total
Options/
SARs
Options/ Granted to Exercise
SARs Employees or Base Expir-
Granted in Fiscal Price ation
Name (#) Year (1) ($/Share)(2) Date (3) 5% ($) (4) 10% ($) (4)
<S> <C> <C> <C> <C> <C> <C>
Roger A. Burlage 121,000 (5) 44.0% 3.50 3/06/05 266,337 674,950
Ronald B. Cushey 22,000 8.0% 3.50 3/06/05 48,425 122,718
Elliot Slutzky 15,000 (6) 5.5% 3.50 1/31/04 33,017 83,671
Steven E. Mangel 14,000 (6) 5.1% 3.50 7/01/04 30,815 78,093
Paul Almond 12,000 (6) 4.4% 3.50 1/20/04 26,414 66,937
<FN>
(1) Total of 275,140 granted.
(2) The closing price of the Company's Common Stock on The Nasdaq
Stock Market's SmallCap Market on December 31, 1995 was $3.50.
(3) Dates indicated represent latest expiration date of any option
granted to this individual in the fiscal year ended December
31, 1995.
(4) Based upon the number of shares of the Company's Common Stock
outstanding as of December 31, 1995, a 5% and 10% increase in
the annual rates of stock price appreciation over the option
term would result in an aggregate increase of $5,323,253 and
$13,490,169 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).
(5) Does not include 30,000 options granted to Mr. Burlage in
February 1996 under a stock option grant program to certain
current employees of LIVE and LFM (the "1996 Employee Option
Grant"). Such options vest 50% on December 31, 1996 and 50%
on December 31, 1997, and are at an exercise price of $3.50
per share, the closing price of the Common Stock on The Nasdaq
Stock Market's SmallCap Market on that day.
(6) Does not include 8,000 options granted to each of Messrs.
Slutzky, Mangel and Almond under the 1996 Employee Option
Grant. Such options vest equally over three years from the
grant date, and are at an exercise price of $3.50 per share,
the closing price of the Common Stock on The Nasdaq Stock
Market's SmallCap Market on that day.
</FN>
</TABLE>
<PAGE>
The following table sets forth certain information regarding
option exercises and option values for the Chief Executive Officer
and the other Named Executives identified in the Summary
Compensation Table.
AGGREGATE OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized Unexercisable Unexercisable
Roger A. Burlage -0- - 1,000 (E) 0 (E)
120,000 (U) 0 (U)
Ronald B. Cushey -0- - 3,500 (E) 8,750 (E)
23,500 (U) 0 (U)
Elliot Slutzky -0- - 0 (E) 0 (E)
15,000 (U) 0 (U)
Steven E. Mangel -0- - 0 (E) 0 (E)
14,000 (U) 0 (U)
Paul Almond -0- - 0 (E) 0 (E)
12,000 (U) 0 (U)
<PAGE>
The following table sets forth information concerning stock
options repriced during 1995 for those persons who, at any time
during the year ended December 31, 1995, were the Named Executives
of the Company, and all stock options repriced for all executive
officers for the last ten years.
<TABLE> TEN-YEAR OPTION/SAR REPRICINGS
<CAPTION>
Length of
Market Price Exercise Original
Number of of Stock at Price At Option Term
Options/ Time of Time of Remaining
SARs Repricing or Repricing or New at Date of
Repriced or Amendment Amendment Exercise Repricing or
Name Date Amended (#) ($) ($) Price ($) Amendment
<S> <C> <C> <C> <C> <C> <C>
Wayne H. Patterson 11/16/90 200,000 10.250 14.375 10.250 10.500 years
Chairman
Devendra Mishra 1/16/92 26,500 2.875 14.000 2.875 7.750 years
President 1/16/92 1,000 2.875 10.500 2.875 8.750 years
David A Mount 1/16/92 12,000 2.875 6.670 2.875 6.125 years
Chief Executive Officer 1/16/92 21,500 2.875 14.000 2.875 7.750 years
1/16/92 20,000 2.875 10.500 2.875 8.750 years
David H. Campbell 1/16/92 15,000 2.875 14.000 2.875 8.000 years
Senior Vice President 1/16/92 5,000 2.875 10.500 2.875 8.750 years
Robert L. Denton 1/16/92 7,000 2.875 17.125 2.875 8.500 years
Chief Accounting 1/16/92 1,000 2.875 10.500 2.875 8.750 years
Officer
Ivan R. Lipton 1/16/92 5,000 2.875 14.000 2.875 7.750 years
President 1/16/92 5,000 2.875 10.500 2.875 8.625 years
Michael J. White 1/16/92 25,000 2.875 16.250 2.875 8.625 years
Executive Vice 1/16/92 5,000 2.875 10.500 2.875 8.750 years
President
Paul Almond 3/6/95 12,000 3.500 11.250 3.500 8.875 years
Executive Vice
President
Roger A. Burlage 3/6/95 120,000 3.500 9.375 3.500 8.750 years
Chief Executive
Officer
Ronald B. Cushey 3/6/95 1,000 3.500 15.625 3.500 8.875 years
Executive Vice
President
Robert L. Denton 3/6/95 1,600 3.500 14.375 3.500 6.875 years
Chief Accounting 3/6/95 640 3.500 9.375 3.500 8.125 years
Officer 3/6/95 1,360 3.500 15.625 3.500 8.875 years
Steven E. Mangel 3/6/95 7,500 3.500 14.375 3.500 6.875 years
Executive Vice 3/6/95 2,000 3.500 9.375 3.500 8.125 years
President 3/6/95 4,500 3.500 15.625 3.500 8.875 years
Anthony J. Scotti 3/6/95 5,900 3.500 14.375 3.500 6.875 years
Chairman 3/6/95 1,000 3.500 11.250 3.500 8.000 years
3/6/95 1,000 3.500 15.625 3.500 8.875 years
Elliot Slutzky 3/6/95 15,000 3.500 11.875 3.500 8.875 years
Executive Vice
President
Michael J. White 3/6/95 6,000 3.500 14.375 3.500 6.875 years
Executive Vice 3/6/95 2,000 3.500 9.375 3.500 8.125 years
President 3/6/95 4,000 3.500 15.625 3.500 8.875 years
</TABLE>
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. In March 1996 Mr. Burlage was named Chairman of the Board of
the Company. 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). Mr. Burlage's base
salary for 1995, as approved by the Company's Board, was $495,000.
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
originally vesting annually commencing December 31, 1994. Pursuant
to a cancellation and reissuance plan offered to all stock option
holders on March 6, 1995, the above options were canceled (the
"Canceled Options") and Mr. Burlage received 120,000 new options
("New Options") under the following 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 (iii) all
New Options would expire on the expiration date of the
corresponding Canceled Options. LIVE also paid approximately
$11,000 in legal fees in 1994 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.
Mr. Cushey entered into a two-year employment agreement with
the Company effective December 31, 1994 and subsequently amended it
on December 31, 1995 to extend the term through December 31, 1997.
Mr. Cushey is entitled to receive an annual base salary of $210,000
and $220,000 during 1996 and 1997, respectively. The agreement
provides that Mr. Cushey will be eligible for a year-end bonus, at
the discretion of LIVE's management. If Mr. Cushey's employment is
terminated other than for cause, or in certain instances of a
change in ownership control (as defined in the contract), he will
be entitled to be paid the remaining balance of his salary in
accordance with its terms until he shall become employed, in which
case in certain circumstances he shall be paid the difference (if
less) between his new salary and his compensation hereunder. Mr.
Cushey received a total of 25,000 stock options under provisions of
his employment contract and amendment, 5,000 of such options are
exercisable at $2.75 per share and 20,000 are exercisable at $3.50
per share over various time periods to December 1998.
Mr. Mangel entered into a three year employment agreement with
LFM effective July 1, 1994. Mr. Mangel is entitled to receive an
annual base salary of $260,000 during the first year of the
agreement with annual increase of no less than 5%. His current
annual salary is $273,000. The agreement provides that Mr. Mangel
will be eligible for a year-end bonus, at the discretion of LIVE's
management and that premiums of a life insurance policy will be
paid by LFM on behalf of Mr. Mangel. If Mr. Mangel's employment is
terminated other than for cause, he will be entitled to be paid the
remaining balance of his salary in accordance with its terms until
he shall become employed, in which case in certain circumstances he
shall be paid the difference (if less) between his new salary and
his compensation hereunder.
Mr. Slutzky entered into a three-year employment agreement
with LFM effective on January 31, 1994 and expiring on December 31,
1997. Mr. Slutzky is entitled to an annual base salary of $300,000
in 1996 and $310,000 in 1997. The agreement provides that Mr.
Slutzky will be eligible for a year-end bonus, at the discretion of
LIVE's management, and Mr. Slutzky also received 15,000 stock
options at an exercise price of $3.50 per share under the
agreement. If Mr. Slutzky's employment is terminated other than
for cause, he will be entitled to be paid the remaining balance of
his salary in accordance with its terms until he shall become
employed, in which case in certain circumstances he shall be paid
the difference (if less) between his new salary and his
compensation hereunder.
Mr. Almond entered into a three-year employment agreement
effective January 20, 1994. Mr. Almond is entitled to receive an
annual base salary of $200,000 during each year of the agreement,
to be reviewed annually. His current annual base salary is
$205,000. The agreement provides that Mr. Almond will be eligible
for a year-end bonus, at the discretion of LIVE's management, and
Mr. Almond also received 12,000 stock options at an exercise price
of $3.50 per share under the agreement. If Mr. Almond's employment
is terminated other than for cause, he will be entitled to be paid
the remaining balance of his salary in accordance with its terms
until he shall become employed, in which case in certain
circumstances he shall be paid the difference (if less) between his
new salary and his compensation hereunder.
COMPENSATION COMMITTEE REPORT
A report of the Compensation Committee of the Board 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.
<PAGE>
PERFORMANCE GRAPH
The following graph assumes $100 invested on December 31, 1990
in each of LIVE Entertainment Inc., the Standard & Poor's 500 Stock
Index, the Nasdaq Stock Market Index, and companies included in a
peer group of similar types of entertainment companies (the "Peer
Group"). The Peer Group, prepared by Research Data Group ("RDG"),
includes ten entertainment companies that also supply entertainment
programming similar to that of the Company. RDG is an independent
analyst that provides such research data and performance
comparisons.
[Performance Graph submitted by hard copy]
Cumulative Total Return
---------------------------------------------
12/90 12/91 12/92 12/93 12/94 12/95
LIVE Entertainment 100 26 15 19 22 28
Peer Group 100 118 171 207 197 243
S&P 500 100 130 140 155 157 215
Nasdaq Stock Market-US 100 161 187 214 210 297
<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 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, 1990 and 1995 Annual Meetings of the
stockholders of the Company, and further amended by the Board in
June 1993 and in February 1996. 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 57 of the Company's and its
subsidiaries' current employees and Directors were participating in
the 1988 Plan and approximately 128 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.
The 1988 Plan, as amended through May 1995, provided that a
total of 400,000 shares of Common Stock may be granted as options
or stock appreciation rights ("SARs") under the 1988 Plan. On
February 7, 1996, the Board and the Stock Option Committee 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 300,000 shares (the "1988 Plan Amendment"). The Board
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.
Description of the 1988 Plan
The 1988 Plan is administered by a committee of the Board (the
"Stock Option Committee"). At present, a committee of one member
of the Compensation Committee of the Board 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 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
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 in 1994.
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 and/or 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.
Stock Option Committee members are automatically granted, on
the first business day of each calendar year, non-qualified options
to purchase 1,000 shares of Common Stock at an option exercise
price per share equal to the fair market value of a share of Common
Stock on the date of grant. Such options will be fully exercisable
on the date of grant and will expire ten years after the date of
grant.
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: (i) while he or she
is an employee of the Company, or (ii) 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 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, acting as the Stock Option
Committee, granted to current employees and Directors of LIVE, LFM
and the Specialty Retail Division who were holders of options
pursuant to the 1988 Plan, the right to agree to cancel certain
options ("Canceled 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 Canceled 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
granted to all current employees and Directors of LIVE and LFM
(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 (iii) all New
Options would expire on the expiration date of the corresponding
Canceled Options.
On February 7, 1996, the Stock Option Committee of the Board
granted to certain current employees of LIVE and LFM a total of
92,400 options at the exercise price of $3.50, the closing price of
the Common Stock on The Nasdaq Stock Market's SmallCap Market on
that day. The options vest ratably over periods ranging from two
to three years.
If the 1988 Plan Amendment is approved by the holders of
Common Stock and Series C Preferred Stock, the table that follows
shows the amount and value of stock options as of February 29, 1996
held by the Named Executives, all nominees for Director, all
individuals holding in excess of 35,000 options (5% of the total to
be available for grant), all executive officers of the Company as
a group, all current Directors of LIVE who are not executive
officers, and all current employees of the Company who are not
executive officers.
NEW PLAN BENEFITS
1988 Plan
---------------------------------------
Name and Position Dollar Value($)(1) Number of Options
Roger A. Burlage, CEO 0 152,000
Ronald B. Cushey, Executive Vice President 625 28,000
Elliot Slutzky, Executive Vice President 0 23,000
Steven E. Mangel, Executive Vice President 0 22,000
Paul Almond, Executive Vice President 0 20,000
Ryuichi Noda, Nominee for Director 0 2,000
Masao Nomura, Nominee for Director 0 3,000
Melvin Pearl, Nominee for Director 0 0
Michael Jay Solomon, Nominee for Director 0 0
Jay Burnham, Nominee for Director 0 4,000
Jonathan D. Lloyd, Nominee for Director 0 4,000
Charles A. Yamarone, Nominee for Director 0 0
Irwin Roth, Nominee for Director 0 0
Executive Officers as a Group
(6 individuals) 625 249,850
Directors as a Group (other than
Executive Officers) (9 individuals) 250 54,700
Non-Executive Officer Employees 500 129,490
All Option Holders (2) 1,125 379,340
- ----------------
(1) On February 29, 1996, the closing price of the Company's
Common Stock on The Nasdaq SmallCap Market was $3.00 per
share.
(2) All of the options to purchase 379,340 shares were
granted at exercise prices which ranged from $2.750 -
$14.375 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: (i) the performance goals
must be determined by a committee consisting solely of two or more
"outside directors", (ii) the material terms under which the
compensation is to be paid, including the performance goals, are
approved by a majority of the corporation's stockholders, and (iii)
the committee certifies that the applicable performance goals were
satisfied before payment of any performance-based compensation is
made. Based on certain proposed regulations, income described
above as being received by persons with respect to options and SARs
may 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 may, 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.
<PAGE>
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, 1995.
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, 1996. 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, 1996.
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 1997 Annual Meeting of
Stockholders must be received by the Company at its principal
executive offices on or before December 1, 1996 in order to be
included in the proxy materials for the 1997 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: Ronald B. Cushey, Executive Vice President
and Chief Financial Officer, LIVE Entertainment Inc., 15400 Sherman
Way, Van Nuys, California 91406.
By Order of the Board of Directors,
RONALD B. CUSHEY
Secretary
April 2, 1996
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
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 basis 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's executive
compensation programs are designed to (i) relate the level of
compensation paid to the Company's success in meeting its annual
and long-term business objectives and performance goals, (ii)
reward individual achievement, and (iii) enable it to recruit,
retain, and motivate talented and diverse executives. This is
essential for the Company to achieve its business objectives,
performance goals, and to improve stockholder returns. As a
result, the Committee has determined that executive compensation
opportunities, including those for the Company's Chief Executive
Officer and other executives of the Company, should create
incentives for superior performance and consequences for below
target performance.
The Committee feels that the Company's executive compensation
programs have met their objectives. The Company has (i) met most
annual business objectives and is on target for meeting its long-
term objectives, (ii) been able to attract and retain the executive
talent necessary to support a corporation which has survived an
industry consolidation, (iii) redirected its efforts to other
industry lines, and (iv) created significant opportunities for new
business and profit potential.
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.
<PAGE>
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 1995
Mr. Burlage's $495,000 base salary for fiscal 1995 represented
an increase of $45,000 above the base salary paid to Mr. Burlage in
fiscal 1994. Mr. Burlage's base compensation was determined by the
employment agreement that was entered into between the Company and
Mr. Burlage in December 1993, and has been adjusted annually based
upon the operating results of the Company after being approved by
the Compensation Committee and Board.
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, and
(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.
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. Mr. Burlage received a cash bonus payment of $250,000
in February 1996 related to the Company's improved operating
performance in 1995.
As part of the negotiations for his employment agreement, Mr.
Burlage had received options to purchase 120,000 shares of the
Company's Common Stock, at a price of $9.375 per share, vesting
equally over the four year term of Mr. Burlage's employment
agreement. Pursuant to a cancellation and reissuance plan offered
to all stock option holders on March 6, 1995, the above options
were canceled (the "Canceled Options") and Mr. Burlage received
120,000 new options ("New Options") under the following 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 (iii) all New Options would expire on the expiration
date of the corresponding Canceled Options. As of December 31,
1994, the exercise price of Mr. Burlage's options was equal to or
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.
<PAGE>
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 1995,
as was the case in prior years, the Company's short term
incentive cash compensation 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 early
in the applicable fiscal year. In 1995, those operating
profit goals were exceeded, and all employees of the
Company received a payment as calculated under the
approved 1995 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 1995,
such an award was made to several executives following
the successful collection of a previously written off bad
debt.
- Long term incentive compensation is reflected by the
Company's stock option plan, in which all of the
Company's executive officers participate. Certain of the
Company's executive officers received stock option grants
in 1995, 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 "1996 Bonus
Program"). Like the 1995 Bonus Program, the 1996 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 early in the applicable fiscal year. The Company's President
and Chief Executive Officer is not eligible to participate in the
1996 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, AS AMENDED,
OF LIVE ENTERTAINMENT INC.
(As Amended through February 7, 1996 [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, as amended (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") 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 580,000 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
700,000 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, who
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 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 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 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 increase the
number of options available was approved on May 9, 1995 by the
holders of the outstanding voting stock of the Company. The next
most recent amendment and restatement of the Plan to comply with
certain provisions of the Code was adopted by the Board on June 30,
1993.
<PAGE>
LIVE ENTERTAINMENT INC.
ANNUAL MEETING OF SERIES C CONVERTIBLE PREFERRED STOCKHOLDERS
May 2, 1996
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 2, 1996 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 Third Succeeding
Annual Meeting. Electing Ryuichi Noda, Masao Nomura, Melvin Pearl
and Michael Jay Solomon 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.)
2. 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 300,000 shares.
FOR [] AGAINST [] ABSTAIN []
3. 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, 1996.
FOR [] AGAINST [] ABSTAIN []
(Continued)
<PAGE>
4. 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 PROPOSAL 1 AND A VOTE OF "FOR" ON PROPOSALS 2 AND 3. 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 ELECTRONIC CORPORATION
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 2, 1996
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 2, 1996 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 Third Succeeding Annual
Meeting. Electing Ryuichi Noda, Masao Nomura, Melvin Pearl and
Michael Jay Solomon 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.)
2. 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 300,000 shares.
FOR [] AGAINST [] ABSTAIN []
3. Approving the selection of Ernst & Young LLP to serve as independent
auditors of the Company for the fiscal year ending December 31, 1996.
FOR [] AGAINST [] ABSTAIN [] (To be signed on the reverse side.)
<PAGE>
4. 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
PROPOSAL 1 AND A VOTE OF "FOR" ON PROPOSALS 2 AND 3. 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 2, 1996
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 2, 1996 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, Jonathan D. Lloyd, Irwin Roth and Charles A. Yamarone
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 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 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.)
<PAGE>
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.
