-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OMcqQDfdQ1pwyZhFfHIgvA2RO1AEf1S0rvxBqJx1L8mBGNoc3WvMBLCWOLh+7qku gzUxZwsRUbFrW8bRT22jDg== 0000950142-96-000130.txt : 19960430 0000950142-96-000130.hdr.sgml : 19960430 ACCESSION NUMBER: 0000950142-96-000130 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960429 SROS: AMEX SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: METROMEDIA INTERNATIONAL GROUP INC CENTRAL INDEX KEY: 0000039547 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ALLIED TO MOTION PICTURE PRODUCTION [7819] IRS NUMBER: 580971455 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-05706 FILM NUMBER: 96552838 BUSINESS ADDRESS: STREET 1: 945 E PACES FERRY RD STREET 2: STE 2210 CITY: ATLANTA STATE: GA ZIP: 30326 BUSINESS PHONE: 4042616190 MAIL ADDRESS: STREET 1: 4900 GEORGIA PACIFIC CTR CITY: ATLANTA STATE: GA ZIP: 30303 FORMER COMPANY: FORMER CONFORMED NAME: ACTAVA GROUP INC DATE OF NAME CHANGE: 19930723 FORMER COMPANY: FORMER CONFORMED NAME: FUQUA INDUSTRIES INC /DE/ DATE OF NAME CHANGE: 19920703 10-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A AMENDMENT NO. 1 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended December 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from _____________ to _____________ Commission File Number 1-5706 METROMEDIA INTERNATIONAL GROUP, INC. (Exact name of registrant, as specified in its charter) DELAWARE 58-0971455 (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) 945 EAST PACES FERRY ROAD, SUITE 2210, ATLANTA, GEORGIA 30326 (Address and zip code of principal executive offices) (404) 261-6190 (Registrant's telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED Common Stock, $1.00 par value American Stock Exchange Pacific Stock Exchange 9 1/2 % Subordinated Debentures, due August 1, 1998 New York Stock Exchange 9 7/8 % Senior Subordinated Debentures, due March 15, 1997 New York Stock Exchange 10% Subordinated Debentures, due October 1, 1999 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K The aggregate market value of voting stock of the registrant held by non- affiliates of the Registrant at April 22, 1996 computed by reference to the last reported sale price of the Common Stock on the composite tape on such date was $363,130,984. The number of shares of Common Stock outstanding as of April 22, 1996 was 42,658,240. Page 2 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Certain information concerning the executive officers of Metromedia International Group, Inc. (the "Company") is set forth in Part I of the Company's Annual Report on Form 10-K for the year ended December 31, 1995 and is incorporated by reference herein. MEMBERS OF THE BOARD OF DIRECTORS The following is a brief description of the business experience for at least the past five years of current members of the Board of Directors of the Company:
NAME, PRINCIPAL OCCUPATION FOR PAST FIVE YEARS AND AGE CLASS OF DIRECTOR CERTAIN DIRECTORSHIPS DIRECTORS SINCE John P. Imlay, Jr. 59 Class I 1993 Served since 1990 as Chairman of Dun & Bradstreet Software Services, Inc., an application software company located in Atlanta, Georgia. Mr. Imlay is the former Chairman of Management Science America, a mainframe applications software company. Management Science America was acquired by Dun & Bradstreet Software Services, Inc. in 1990. Mr. Imlay is also a director of the Atlanta Falcons, a National Football League team, and The Gartner Group. Mr. Imlay is a member of the Audit Committee and the Compensation Committee. John W. Kluge 81 Class I 1995 Chairman of the Board of Directors of the Company since November 1, 1995. Chairman of the Board and a director of Orion Pictures Corporation since 1992. Chairman and President of Metromedia Company and its predecessor-in-interest, Metromedia, Inc. for over five years. Director of The Bear Stearns Companies, Inc., WorldCom, Inc., Conair Corporation and Occidental Petroleum Corporation. Mr. Kluge is Chairman of the Executive Committee. Stuart Subotnick 54 Class I 1995 Vice Chairman of the Board of Directors of the Company since November 1, 1995. Vice Chairman of the Board and a director of Orion Pictures Corporation since 1992. Executive Vice President of Metromedia Company and its predecessor-in-interest, Metromedia, Inc., for over five years. Director of Carnival Cruise Lines, Inc. and WorldCom, Inc. Mr. Subotnick is Chairman of the Audit Committee and a member of the Executive and Nominating Committees. Page 3 John D. Phillips 53 Class II 1994 President and Chief Executive Officer of the Company since April 19, 1994. Elected to the Board of Directors of the Company and to the Executive Committee on the same date. Mr. Phillips served as Chief Executive Officer of Resurgens Communications Group, Inc. from May 1989 until Resurgens was merged with Metromedia Communications Corporation and LDDS Communications, Inc. (now known as WorldCom, Inc.) in September 1993. He is a director of Restor Industries, Inc. and Roadmaster Industries, Inc. ("Roadmaster") Richard J. Sherwin 52 Class II 1995 Co-President of the Company's Metromedia International Telecommunications, Inc. subsidiary ("MITI"). Mr. Sherwin has served as a President and director of MITI and its predecessor companies since October 1990. Prior to that, Mr. Sherwin served as the Chief Operating Officer of Graphic Scanning Corp., a paging and wireless telecommunications company. Leonard White 56 Class II 1992 President and Chief Executive Officer of the Company's Orion Pictures Corporation subsidiary ("Orion"). Mr. White has served in this capacity from March 1992 through November 1, 1995. Interim President and Chief Executive Officer of Orion from March 1992 until November 1992. Chairman of the Board and Chief Executive Officer of Orion Home Entertainment Corporation, a subsidiary of Orion ("OHEC"), from March 1991 until March 1992. President and Chief Operating Officer of Orion Home Video division of OHEC from March 1987 until March 1991. Clark A. Johnson 64 Class III 1990 Director of the Company since April 27, 1990. He has served as chairman and Chief Executive Officer of Pier One Imports, Inc., a specialty retailer of decorative home furnishings, since August 1988. Mr. Johnson is a director of Albertson's, Inc., Anacomp, Inc., Heritage Media Corporation, InterTAN, Inc. and Pier One Imports, Inc. Mr. Johnson is a member of the Compensation and Audit Committees. Silvia Kessel 45 Class III 1995 Senior Vice President, Chief Financial Officer and Treasurer of the Company since the November 1, 1995. Executive Vice President and a director of Orion Pictures Corporation since January 1993. Senior Vice President of Orion from June 1991 to November 1992. Senior Vice President of Metromedia Company since January 1994. President of Kluge & Company from January 1994. Managing Director of Kluge & Company (and its predecessor) from April 1990 to January 1994. Director of WorldCom, Inc. Ms. Kessel is a member of the Nominating Committee. Page 4 Carl E. Sanders 70 Class III 1967 Engaged in the private practice of law as Chairman of Troutman Sanders, a law firm located in Atlanta, Georgia. Director of the Company since 1967, except for a one-year period from April 1970 to April 1971. Former Governor of the State of Georgia and a director of Carmike Cinemas, Inc., Norrell Corporation, Healthdyne, Inc., and Roadmaster Industries, Inc. Mr. Sanders is Chairman of the Compensation Committee. Arnold L. Wadler 52 Class III 1995 Senior Vice President, General Counsel and Secretary of the Company since November 1, 1995. Senior Vice President, Secretary and General Counsel of Metromedia Company and its predecessor- in-interest, Metromedia, Inc., for over five years. Director of Orion Pictures Corporation since 1992. Mr. Wadler is Chairman of the Nominating Committee. On and after December 11, 1991 (the "Filing Date"), Orion and certain of Orion's subsidiaries filed voluntary bankruptcy petitions under Chapter 11 of the United States Bankruptcy Code. The United States Bankruptcy Court for the Southern District of New York confirmed Orion's Modified Third Amended Joint Consolidated Plan of Reorganization (the "Plan") on October 10, 1992 and the Plan was consummated on November 5, 1992. Each of Silvia Kessel and Leonard White, current directors of the Company, served as Executive Officers of Orion on the Filing Date. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Section 16(a) of the Exchange Act requires the Company's directors and executive officers, and persons who beneficially own more than 10% of the outstanding Common Stock, to file with the Securities and Exchange Commission (the "Commission") and the American Stock Exchange initial reports of ownership and reports of changes in ownership of the Common Stock. Such officers, directors and greater than 10% beneficial owners are required by the regulations of the Commission to furnish the Company with copies of all reports that they file under Section 16(a). To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, all Section 16(a) filing requirements applicable to the Company's officers, directors and greater than 10% beneficial owners were complied with by such persons during the fiscal year ended December 31, 1995. Page 5 ITEM 11. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following Summary Compensation Table sets forth information on compensation awarded to, earned by or paid to the Chief Executive Officer and the four other most highly compensated executive officers during the fiscal years ended December 31, 1995, December 31, 1994 and December 31, 1993 for services rendered in all capacities to the Company and its subsidiaries. In addition, the Summary Compensation Table sets forth similar information for such periods with respect to Frederick B. Beilstein, III and Walter M. Grant, who would have been among the Company's four most highly compensated executive officers during 1995 but for the fact that such persons were not serving as executive officers of the Company at the end of 1995. The persons listed in the table below are referred to as the "Named Executive Officers." SUMMARY COMPENSATION
LONG-TERM COMPENSATION ANNUAL COMPENSATION AWARDS --------------------- ------------ NAME AND PRINCIPAL YEAR SALARY ($) BONUS ($) OTHER NUMBER OF ALL OTHER POSITION ANNUAL SECURITIES COMPENSATION COMPENSA- UNDERLYING ($)(2) TION($)(1) STOCK OPTIONS (#) John D. Phillips President and 1995 $624,984 $750,000 - -0- $15,096 Chief Executive 1994(3) $438,289 $438,289 - 300,000 $13,336 Officer 1993(3) - - - - - Frederick B. Beilstein, III(4) Former Senior Vice 1995 $274,992 $137,500 - -0- $ 4,480 President, 1994 $274,992 $165,000 - 95,000 $ 4,435 Treasurer and Chief Financial Officer 1993 $269,783 $ 41,250 - 19,100 $ 4,390 Walter M. Grant(5) Former Senior Vice 1995 $237,500 $118,750 - -0- $ 9,757 President, 1994 $237,500 $142,500 - 95,000 $12,623 General Counsel and Secretary 1993(6) $110,048 $ 16,875 - 20,000 $44,645 W. Tod Chmar 1995 $235,000 $235,000 - -0- $ 4,095 Senior Vice President 1994(3) $164,801 $ 98,881 - 70,000 6,866 1993(3) - - - - -
_______________ (1) The Company provides perquisites and other personal benefits to the executive officers of the Company. The value of the perquisites and benefits provided to each Named Executive Officer during 1993, 1994 and 1995 did not exceed the lesser of $50,000 or 10% of such officer's salary plus annual bonus. (2) The amounts in this column include (i) premiums paid by the Company on behalf of its executive officers under life insurance policies providing death benefits to the designated beneficiaries of the executive officers, including premium payments of (A) $4,200 in each of 1993, 1994 and 1995 on behalf of Mr. Beilstein, (B) $1,312 in 1993 and $5,080 in 1994 on behalf of Mr. Grant, and (C) $2,159 in 1994 and $3,945 in 1995 on behalf of Mr. Chmar; (ii) a payment of $13,336 made by the Company to Mr. Phillips in 1994 and payments of $15,096 and $5,080 made by the Company to Mr. Phillips and Mr. Grant, respectively, in 1995 in lieu of their participation in the life insurance programs maintained by the Company for its executive officers; (iii) matching contributions made by the Company under its Employee Stock Purchase Plan totaling $3,333 in 1993 for the benefit of Mr. Grant, $5,000 and $4,582 in 1994 for the benefit of Messrs. Grant and Chmar, respectively, and $2,083 in 1995 for the benefit of Mr. Grant; (iv) matching contributions of $2,310 made by the Company in each of 1994 and 1995 for the benefit of Mr. Grant under a 401(K) savings plan sponsored by a subsidiary of the Company; and (v) a Page 6 relocation allowance of $40,000 provided by the Company to Mr. Grant in 1993. Under the Company's group universal life insurance program, each of the Company's executive officers is entitled to own $500,000 of universal life insurance on which the Company pays the premiums. In addition to the universal life insurance program, the Company also made premium payments for term life insurance policies of (i) $190 in 1993, $235 in 1994 and $280 in 1995 on behalf of Mr. Beilstein; (ii) $233 in 1994 and $284 in 1995 on behalf of Mr. Grant; and (iii) $125 in 1994 and $150 in 1995 on behalf of Mr. Chmar. (3) The amounts shown for 1994 reflect less than a full year of compensation for Messrs. Phillips and Chmar, both of whom were employed by the Company on April 19, 1994. (4) Mr. Beilstein served as Senior Vice President, Treasurer and Chief Financial Officer of the Company from May 31, 1991 until November 1, 1995. Following November 1, 1995, Mr. Beilstein remained as an employee of the Company until January 21, 1996. The amounts shown in the table for 1995 reflect all compensation paid to or accrued for Mr. Beilstein during 1995. Mr. Beilstein served as a consultant to the Company from January 22, 1996 through March 3, 1996 pursuant to the terms of a Post-Employment Consulting Agreement between the Company and Mr. Beilstein. See "-Certain Agreements Regarding Employment-Post-Employment Consulting Agreements with Walter M. Grant and Frederick B. Beilstein." (5) Mr. Grant served as Senior Vice President, General Counsel and Secretary of the Company from July 6, 1993 until the consummation of the mergers of the Company, Orion, MITI and MCEG Sterling Incorporated, which were consummated on November 1, 1995 (the "November 1 Mergers"). Following November 1, 1995, Mr. Grant has remained as an employee of the Company in order to assist in transition activities relating to the November 1 Mergers. The amounts shown in the table for 1995 reflect all compensation paid to or accrued for Mr. Grant during 1995. It is contemplated that Mr Grant will remain as an employee of the Company until June 15, 1996, after which he will serve as a consultant to the Company pursuant to the terms of a Post-Employment Consulting Agreement between the Company and Mr. Grant. See "-Certain Agreements Regarding Employment-Post-Employment Consulting Agreements with Walter M. Grant and Frederick B. Beilstein." (6) The amounts shown for 1993 reflect less than a full year of compensation for Mr. Grant, who was employed by the Company on July 6, 1993. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS The Company did not grant any stock options or limited stock appreciation rights ("SARs") to any of the Named Executive Officers during the fiscal year ended December 31, 1995. The following table sets forth information concerning the exercise of options or SARs by the Named Executive Officers during the last fiscal year and the number of unexercised options and SARs held by such officers as of the end of the 1995 fiscal year. FY End Value-$14.00 AGGREGATED OPTION AND SAR EXERCISES IN 1995 AND FISCAL YEAR-END OPTION AND SAR VALUES
NUMBER OF SECURITIES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN VALUE REALIZED OPTIONS/SARS AT FISCAL THE MONEY OPTIONS/SARS AT SHARES ($)(MARKET PRICE YEAR END(#) FISCAL YEAR END($) ACQUIRED ON AT EXERCISE LESS ----------------------- -------------------------- NAME EXERCISE(#) EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ---- ----------- ---------------- ----------- ------------- ----------- ------------- John D. Phillips -0- -0- 300,000 -0- $2,287,500 -0- Frederick B. 47,000 $417,000 49,825 52,275 $ 33,425$272,445 Beilstien, III Walter M. Grant 46,000 $409,430 16,500 52,500 $ 88,914 $296,876 W. Tod Chmar -0- -0- 36,542 36,542 $ 185,938 $185,938
Page 7 PENSION PLANS The Company maintains a qualified defined benefit pension plan and a nonqualified supplemental pension plan for the benefit of eligible participants, including certain of the Company's executive officers. The Company's nonqualified supplemental pension plan provides benefits that would otherwise be denied participants by reason of certain code limitations on qualified plan benefits and provides certain other supplemental pension benefits to certain of the Company's executive officers and highly compensated employees. On December 13, 1995, the Board of Directors of the Company amended the pension plan and the supplemental pension plan to cease benefit accruals after December 31, 1995. Accordingly, the only benefits that will be payable under these plans are those benefits that had accrued as of December 31, 1995. A participant's compensation covered by the Company's pension plan and supplemental pension plan is his or her average annual compensation for the five consecutive calendar plan years during the last ten years of the participant's career for which such average is the highest or, in the case of a participant who has been employed for less than five full calendar years, the period of his or her employment with the Company and its subsidiaries ("covered compensation"). A participant's covered compensation generally means the total taxable compensation required to be reported on the participant's Form W-2 for income tax purposes, except that this amount (excluding bonuses) is annualized for periods covering less than a full calendar year. Generally, a participant earns retirement benefits at the rate of 2% of his covered compensation for the first 20 years of service and 1% for each additional 20 years of service. Participants become vested in their retirement benefits after completing at least five years of servicing or attaining age 50 or upon retirement after age 62 with at least one year of service. The estimated years of service for each Named Executive Officer as of December 31, 1995 was as follows: Mr. Phillips: 1- 2/3 years; Mr. Beilstein: 4- 1/2 years; Mr. Grant - 2 1/2 Years; and Mr. Chmar: 1- 2/3 years. Based on these provisions and the number of years of service completed, the annual vested retirement benefits as of December 31, 1995 were $42,015 for Mr. Phillips and $24,189 for Mr. Grant. These benefits are based on a straight line annuity beginning at age 62. Mr. Beilstein and Mr. Chmar did not have a vested retirement benefit as of December 31, 1995, the date as of which the Company ceased benefit accruals under its pension plans. Accordingly, neither Mr. Beilstein nor Mr. Chmar is entitled to receive pension benefits under such plans upon retirement. A participant's covered compensation for purposes of the pension plan differs from compensation reported in the Summary Compensation Table (the "Table") in that (i) covered compensation includes certain taxable employee benefits not required to be reported in the Table and (ii) covered compensation includes all compensation received by the executive during the year (regardless of when it was earned), whereas the Table includes only compensation earned during the year. COMPENSATION OF DIRECTORS During 1995, each director of the Company who was not employed by the Company (the "Non-Employee Directors") received a $2,000 monthly retainer plus a separate attendance fee for each meeting of the Board of Directors or committee of the Board of Directors in which such director participated. During 1995, the attendance fees were $1,200 for each meeting of the Board of Directors attended by a Non-Employee Director in person Page 8 and $500 for each meeting of the Board of Directors in which a Non-Employee Director participated by conference telephone call. Members of committees of the Board of Directors are paid $500 for each meeting attended. Prior to December 13, 1995, Non-Employee Directors were entitled to receive options to purchase shares of the Company's Common Stock under the Company's 1991 Non-Employee Director Stock Option Plan (as amended, the "Director Plan"). Under the Director Plan, each Non-Employee Director who was a director of the Company on August 3, 1992 was granted an option to purchase 10,000 shares of the Company's Common Stock at an exercise price of $11.875, the closing price of the Common Stock on the trading day immediately preceding the date of grant. Options granted to these Non-Employee Directors became fully vested as to all 10,000 shares upon approval of certain amendments to the Director Plan at the Company's 1993 Annual Meeting of Stockholders. The Director Plan further provided that each person who became a Non-Employee Director of the Company after August 3, 1992 would receive an option to purchase 10,000 shares of the Company's Common Stock on the day such director is elected as a director, at an exercise price equal to the closing price of the Common Stock on the trading day preceding such director's election. Options granted to these Non-Employee Directors became fully vested and exercisable as to all 10,000 shares on March 31 in the year after the date the Non-Employee Director was elected, provided the Company had net income for the year in which the Non-Employee Director was elected or earnings equal to or better than budgeted results for such year. All options granted under the Director Plan had a term of ten years. The Director Plan had originally been scheduled to terminate on June 27, 2001. However, at a meeting of the Board of Directors held on December 13, 1995, the Board of Directors terminated the Director Plan. Options outstanding as of December 13, 1995 are unaffected by the termination of the Director Plan. In addition to establishing a stock option plan for its Non-Employee Directors, the Company implemented, during the first quarter of 1992, a group medical plan for its Non-Employee Directors (the "Non-Employee Director Medical Plan") which provided medical coverage at group premium rates to active Non-Employee Directors electing such coverage and to any Non-Employee Director who retired from the Board of Directors after attaining age 65 and who either participated in the plan for the entire period that the individual served as a director since March 1, 1992 or participated in the plan for the three consecutive years immediately prior to the individual's retirement as a director. The medical plan paid for 100% of a Non-Employee Director's single coverage premium and between 25% and 50% of the dependent coverage premium. At the meeting of the Board of Directors of the Company held on December 13, 1995, the Company's Board of Directors terminated the Non-Employee Director Medical Plan. Page 9 CERTAIN AGREEMENTS REGARDING EMPLOYMENT PHILLIPS EMPLOYMENT AGREEMENT Mr. Phillips and the Company are parties to an employment agreement dated as of April 19, 1994, as amended on November 1, 1995 (the "Phillips Employment Agreement"), under which the Company has agreed to employ Mr. Phillips as its President and Chief Executive Officer reporting directly to the Vice Chairman of the Company. The Phillips Employment Agreement provides that Mr. Phillips will be entitled to receive a base salary at an annual rate of $625,000 per year. Mr. Phillips also is entitled to participate in the Company's Senior Officer Bonus Plan and to receive other benefits provided by the Company to its senior corporate officers. Both the Company and Mr. Phillips have the right to terminate the Phillips Employment Agreement at any time. If the Company terminates the Phillips Employment Agreement without cause (as defined in the Phillips Employment Agreement) or by request for resignation by the Chairman of Vice Chairman of the Company or if Mr. Phillips terminates the Phillips Employment Agreement for good reason (as defined in the Phillips Employment Agreement), the Company will be required to continue to pay Mr. Phillips' base salary and other benefits and to provide Mr. Phillips with an office and a secretary designated by the Company for one year following such termination. If the Company terminates the Phillips Employment Agreement with cause or if Mr. Phillips terminates the Phillips Employment Agreement, Mr. Phillips will be entitled to receive his base salary and other benefits only through the date of termination. In connection with his employment, Mr. Phillips also received from the Company an option (the "Phillips Option") to purchase 300,000 shares of Common Stock at a price of $6.375 per share. The Phillips Option may be exercised at any time until the Phillips Option terminates on April 18, 2001. Mr. Phillips has the right to transfer the Phillips Option in whole or in part at any time. The Company has entered into a Registration Rights Agreement with Mr. Phillips pursuant to which the Company has agreed to register with the Commission any shares purchased upon the exercise of the Option. POST-EMPLOYMENT AGREEMENTS WITH WALTER M.GRANT AND FREDERICK B. BEILSTEIN The Company has entered into Post-Employment Consulting Agreements (the "Post-Employment Agreements") with two former officers, Frederick B. Beilstein, III, former Senior Vice President and Chief Financial Officer, and Walter M. Grant, former Senior Vice President and General Counsel. The Post-Employment Agreements provide that if an executive's employment with the Company is terminated by the Company (other than for cause) or if the executive's employment is terminated by the executive for "good reason," then the Company will retain the executive as a consultant for a period of two years following the date of termination of his employment. An executive may terminate his employment for "good reason" in the event of (i) a reduction in his base salary or benefits other than an across-the-board reduction involving similarly situated employees; (ii) the relocation of his full-time office to a location greater than 50 miles from the Company's current corporate office; or (iii) a reduction in his corporate title. The Post-Employment Agreements provide that the Company, in exchange for the executive's post-employment consulting services, will pay a monthly consulting fee to the executive in an amount equal to the executive's monthly base salary at the time of the termination of his employment. The Post-Employment Page 10 Agreements also provide for the continuation of certain medical and other employee benefits during the two-year consulting period. In connection with its approval of the November 1 Mergers, the Board of Directors of the Company agreed that Mr. Beilstein and Mr. Grant would each be permitted to terminate his employment with the Company and receive the payments and other benefits due under his Post-Employment Agreement if he did not wish to remain with the Company following the consummation of the November 1 Mergers. The Company's Board of Directors has agreed that Mr. Grant can terminate his employment with the Company at any time on or before June 15, 1996 and thereafter receive the payments and other benefits due under his Post- Employment Agreement. The maximum amount payable to Mr. Grant under his Post-Employment Agreement (including the Company's share of the medical and other benefits to which Mr. Grant will be entitled) is $485,851. This amount, however, will be reduced in the event that Mr. Grant has "earned income" (as defined in his Post-Employment Agreement) during his two year consulting period. The minimum amount payable to Mr. Grant under his Post-Employment Agreement is $237,500. Mr. Beilstein's employment with the Company was terminated on January 21, 1996, and his consulting period under his Post-Employment Agreement began on that date. Mr. Beilstein's Post-Employment Agreement was terminated on March 3, 1996 when Mr. Beilstein accepted employment with another company. The amount paid by the Company to Mr. Beilstein to satisfy the Company's obligation to Mr. Beilstein under his Post- Employment Agreement totaled $291,263.44. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Prior to September 15, 1995, the Compensation Committee consisted of John E. Aderhold, John P. Imlay, Jr., J.M. Darden, III and Richard Nevins. On September 15, 1995, Clark A. Johnson replaced J.M. Darden, III. After October 1995, the Compensation Committee consisted of John P. Imlay, Jr., Clark A. Johnson and Carl E. Sanders. Mr. Sanders is Chairman of Troutman Sanders, a law firm which provided legal services to the Company. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table sets forth, as of April 22, 1996, certain information regarding each person (including any "group" as that term is used in Section 13(d)(3) of the Exchange Act) known (based solely upon filings with the Commission prior to such date pursuant to Sections 13(d) or 13(g) of the Exchange Act) to own beneficially (as such term is defined in Rule 13d-3 under the Exchange Act) more than 5% of the outstanding Common Stock. In accordance with the rules promulgated by the Commission, such ownership includes shares currently owned as well as shares which the named person has the right to acquire beneficial ownership of within 60 days, including, but not limited to, shares which the named person Page 11 has the right to acquire through the exercise of any option, warrant or right, or through the conversion of a security. Accordingly, more than one person may be deemed to be a beneficial owner of the same securities.
PERCENTAGE OF NUMBER OF SHARES OF COMMON OUTSTANDING COMMON NAME AND ADDRESS OF BENEFICIAL OWNER STOCK BENEFICIALLY OWNED(1) STOCK - ------------------------------------ --------------------------- ------------------ John W. Kluge, Stuart Subotnick and Metromedia Company 15,252,128(2) 35.8% One Meadowlands Plaza E. Rutherford, NJ 07073 Mellon Bank Corporation, Mellon Bank, N.A., Franklin Portfolio Associates Trust, Mellon Capital Management Corporation and The Dreyfus Corporation 2,130,000(3) 5.22% c/o Mellon Bank Corporation One Mellon Bank Center Pittsburgh, PA 15258
___________ (1) Unless otherwise indicated by footnote, the named individuals have sole voting and investment power with respect to the shares of Common Stock beneficially owned. (2) Metromedia Company, a Delaware general partnership, ("Metromedia Company") is owned and controlled by John W. Kluge and Stuart Subotnick, each of whom is a director of the Company. The amount set forth in the table above includes 2,605,448 and 231,225 shares of Common Stock owned directly by a trust affiliated with Mr. Kluge and by Mr. Subotnick, respectively; the balance is owned by Mr. Kluge and Mr. Subotnick beneficially through Metromedia Company and Met Telcell, Inc. ("Met Telcell"), a corporation owned and controlled by Messrs. Kluge and Subotnick. (3) Based on Schedule 13G dated January 22, 1996 in which Mellon Bank Corporation reported that its subsidiaries, Mellon Bank, N.A., Franklin Portfolio Associates Trust, Mellon Capital Management Corporation and The Dreyfus Corporation, had sole voting power with respect to 2,130,000 shares of Common Stock and sole dispositive power with respect to 241,000 shares of Common Stock. SECURITIES BENEFICIALLY OWNED BY DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth beneficial ownership of Common Stock as of April 22, 1996 with respect to (i) each director of the Company, (ii) each executive officer named in the Summary Compensation Table under "Executive Compensation" and (iii) all directors and executive officers of the Company as a group. Page 12
NUMBER OF SHARES OF COMMON PERCENTAGE STOCK BENEFICIALLY OF COMMON NAME OF BENEFICIAL OWNER OWNED(1)(10) STOCK - ------------------------ -------------------------- ---------- Frederick B. Beilstein, III - * W. Tod Chmar 735,542(2)(6)(7) 1.7% Walter M. Grant 45,832(2)(6) * John P. Imlay, Jr. 10,000 * Clark A. Johnson 18,000(2) * John W. Kluge 15,020,903(3) 35.2% Silvia Kessel 3,085 * John D. Phillips 1,000,000(4) 2.3% Carl E. Sanders 22,097(2)(8) * Richard J. Sherwin 912,605(11) 2.1% Stuart Subotnick 12,646,680(5) 29.7% Arnold L. Wadler 15,416 * Leonard White - * All Directors and Executive Officers as a group (13 persons) 17,289,605(9) 39.5% ------------- -----
__________ * Holdings do not exceed one percent of the total outstanding shares of Common Stock. (1) Unless otherwise indicated by footnote,the named individuals have sole voting and investment power with respect to the shares of Common Stock beneficially owned. (2) Includes shares subject to purchase within the next 60 days under the Company's 1989 Stock Option Plan and under the Company's 1991 Non- Employee Director Stock Option Plan. (3) Represents 12,415,455 shares beneficially owned through Metromedia Company and Met Telcell and 2,605,448 shares of Common Stock owned directly by a trust affiliated with Mr. Kluge. (4) Includes 1,000 shares owned by Mr. Phillips directly, 699,000 shares owned by Renaissance Partners, a Georgia general partnership in which Mr. Phillips is a general partner, and 300,000 shares subject to purchase by Mr. Phillips within the next 60 days pursuant to the exercise of a stock option. Mr. Phillips disclaims beneficial ownership of the shares owned by Renaissance Partners except to the extent of his interest in Renaissance Partners. (5) Represents 12,415,455 shares beneficially owned through Metromedia Company and Met Telcell and 231,225 shares owned directly by Mr. Subotnick. Page 13 (6) Includes shares allocated to the Named Executive Officer's account under the Employees Stock Purchase Plan as of the date hereof. (7) Includes 699,000 shares owned by Renaissance Partners, a Georgia general partnership in which a corporation owned by Mr. Chmar serves as general partner. Mr. Chmar disclaims beneficial ownership of the shares owned by Renaissance Partners except to extent of his interest in Renaissance Partners. (8) Includes 600 shares subject to purchase by Mr. Sanders within the next 60 days pursuant to the conversion of the $25,000 face amount (less than 1%) of the Company's 6 1/2 % Convertible Subordinated Debentures due 2002 beneficially owned by Mr. Sanders, which are convertible into Common Stock at a conversion price of $41 5/8 per share. (9) The number of shares shown for directors and executive officers as a group includes an aggregate of 1,103,884 shares which are subject to purchase within 60 days of the date hereof pursuant to stock options and other convertible securities. (10) Does not include options issued under the Metromedia International Group, Inc. 1996 Incentive Stock Plan as such options are not presently exercisable and will not become exercisable within 60 days of the date hereof. (11) Includes options to purchase 601,892 shares of Common Stock exercisable within 60 days of the date hereof. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS RELATIONSHIP WITH METROMEDIA COMPANY The Company is a party to a number of agreements and arrangements with Metromedia Company and its affiliates, the material terms of which are summarized below. HISTORICAL RELATIONSHIP As described above, Metromedia Company and its affiliates are collectively the largest single stockholder of the Company and currently own approximately 35.8% of the issued and outstanding shares of Common Stock. Prior to the November 1 Mergers, Metromedia Company and its affiliates were the principal stockholders of Orion and MITI, two of the parties to the November 1 Mergers. In addition, prior to the November 1 Mergers, Orion, MITI and Sterling were party to a number of material contracts and other arrangements with Metromedia Company and certain affiliates of Metromedia Company pursuant to which Metromedia Company and certain of its affiliates made loans or provided financing to, or paid obligations on behalf of, each of Orion, MITI and Sterling (collectively, the "Metromedia Obligations"). A condition to the consummation of the November 1 Mergers was that the Metromedia Obligations be refinanced, repaid or converted into equity of the Company in the manner provided in the agreements relating to the November 1 Mergers. Page 14 A portion of the Metromedia Obligations ($20,400,000 owed by Orion, $34,076,000 owed by MITI and $524,000 owed by Sterling) was financed by Metromedia Company through borrowings under a $55 million credit agreement between the Company (then known as "The Actava Group Inc.") and Metromedia Company (the "Actava-Metromedia Credit Agreement"). On November 1, 1995, Orion, MITI and Sterling each repaid such amounts to Metromedia Company and Metromedia Company repaid the amounts owed by it to the Company under the Actava-Metromedia Credit Agreement ($55 million). Because on November 1, 1995, Orion, Sterling and MITI had been merged with the Company, there was no net addition to the assets of the Company as a result of these transactions. In addition, prior to the November 1 Mergers, Metromedia Company and John W. Kluge, the Chairman and Chief Executive Officer of Metromedia Company, had guaranteed (the "Orion Guarantee") certain amounts owed by Orion under its then existing credit facility and certain amounts owed to Sony Pictures Entertainment Corp. ("Sony") by Orion. Metromedia Company and Mr. Kluge were majority stockholders of Orion and issued guarantees in 1991 as part of Orion's reorganization plan. As consideration for the guarantees and the contribution to Orion by Metromedia Company and Mr. Kluge of $15 million in cash and certain rights in a film, Metromedia and Mr. Kluge received a total of 10,020,000 shares of Orion common stock. Pursuant to the Orion Guarantee, Metromedia Company made payments on behalf of Orion to the banks and to Sony in the amount of $59,592,446 during 1994 and 1995. Under a Reimbursement Agreement between Orion and Metromedia Company, Orion was required to reimburse Metromedia Company in full for all payments made pursuant to the Orion Guarantee by Metromedia Company on Orion's behalf. Accordingly, at the effective time of the November 1 Mergers, Orion repaid Metromedia Company $63,296,514 pursuant to the Reimbursement Agreement. Of the payments made by Metromedia Company on behalf of Orion and repaid by Orion to Metromedia Company pursuant to the Reimbursement Agreement, $20,400,000 was financed by borrowings by Metromedia Company under the Actava-Metromedia Credit Agreement described above. Prior to the November 1 Mergers, Metromedia Company, through an affiliate, provided Orion and its affiliates with non-recourse financing (which was not financed by Metromedia Company pursuant to the Actava-Metromedia Credit Agreement) to acquire certain theatrical and home video product (the "MetProductions Indebtedness"). Pursuant to a Contribution Agreement entered into in connection with the November 1 Mergers, all of the MetProductions Indebtedness ($10,426,552 at November 1, 1995, including accrued interest) was converted into 993,005 shares of Common Stock at the effective time of the November 1 Mergers. In addition, Metromedia Company, through its affiliates, provided MITI and its affiliates with certain loans (which were not financed by Metromedia Company pursuant to the Actava-Metromedia Credit Agreement) to fund MITI's operations and repay certain of its indebtedness (the "MITI Indebtedness"). Pursuant to the Contribution Agreement, all of the MITI Indebtedness ($26,641,744 at November 1, 1995, including accrued interest) was converted into 2,537,309 shares of Common Stock at the effective time of the November 1 Mergers. ONGOING RELATIONSHIP WITH THE COMPANY ORION CREDIT FACILITY. On November 1, 1995, Orion entered into a Credit Agreement with Chemical Bank ("Chemical") under which Chemical agreed to provide Orion with a five- Page 15 year secured credit facility in an aggregate amount of $185 million, consisting of a term loan of $135 million and a revolving credit loan of $50 million to finance Orion's development, production, acquisition and worldwide distribution and exploitation of motion pictures, video product and made-for-television product. In order to induce Chemical to provide the revolving credit facility, John W. Kluge and Metromedia Company agreed to guarantee the due and punctual payment of all funds due under the revolving credit loan portion of such credit facility, including all related costs and attorneys' fees. As of December 31, 1995, the amount owed by Orion under its revolving credit facility was $12 million, plus $9 million reserved for outstanding letters of credit. In addition, Metromedia Company guaranteed the payment by Orion to Chemical of certain fees payable in connection with the execution of the commitment letter with Chemical for Orion's Credit Facility. All such fees were paid by Orion on January 2, 1996. Furthermore, Metromedia Company guaranteed the payment of certain third party accounts receivable owed to Orion so that the entire face amount of such accounts could be included in the borrowing base for Orion's credit facility. Neither Mr. Kluge nor Metromedia Company received any consideration for guaranteeing Orion's obligations under this credit facility. Their guarantees were, however, a condition to Chemical's agreeing to provide the revolving credit facility. MIG CREDIT FACILITY. Mr. Kluge has guaranteed the payment by MIG of the difference between the amount outstanding under MIG's existing revolving credit facility (which fluctuates from time to time) and the maximum available amount permitted to be outstanding under such credit facility, which is based on a percentage of the market value of the shares of Roadmaster held by MIG. MITI BRIDGE LOAN AGREEMENT. Metromedia Company has made available to MITI up to $15 million of revolving credit in order to satisfy its commitments and working capital requirements pursuant to a Bridge Loan Agreement dated as of February 29, 1996 (the "MITI Bridge Loan"). MITI may use the proceeds of loans under such agreement for general corporate and working capital purposes. As of March 1, 1996, MITI had not borrowed any monies under the MITI Bridge Loan. MANAGEMENT AGREEMENT. The Company is a party to a management agreement with Metromedia Company dated November 1, 1995 (the "Management Agreement"), pursuant to which Metromedia Company provides the Company with management services, including legal, insurance, payroll and financial accounting systems and cash management, tax and benefit plans. The Management Agreement terminates on October 31, 1996, and is automatically renewed for successive one year terms unless either party terminates upon 60 days prior written notice. The management fee under the Management Agreement is $1.5 million per year, payable monthly at a rate of $125,000 per month. The Company is also obligated to reimburse Metromedia Company all its out-of-pocket costs and expenses incurred and advances paid by Metromedia Company in connection with the Management Agreement. Pursuant to the Management Agreement, the Company has agreed to indemnify and hold Metromedia Company harmless from and against any and all damages, liabilities, losses, claims, actions, suits, proceedings, fees, costs or expenses (including reasonable attorneys' fees and other costs and expenses incident to any suit, proceeding or investigation of any kind) imposed on, incurred by or asserted against Metromedia Company in connection with Page 16 the Management Agreement. In fiscal 1995, Metromedia Company received no money for its out-of-pocket costs and expenses or interest on advances extended by it to the Company pursuant to the Management Agreement. TRADEMARK LICENSE AGREEMENT. The Company is a party to a license agreement with Metromedia Company (the "Metromedia License Agreement"), pursuant to which Metromedia Company has granted the Company a non- exclusive, non-transferable, non-assignable right and license, without the right to grant sublicenses, to use the trade name, trademark and corporate name "Metromedia" in the United States and with respect to MITI, worldwide, royalty-free for a term of 10 years. The Metromedia License Agreement can be terminated by Metromedia Company upon one month's prior written notice in the event that (i) Metromedia Company or its affiliates own less than 20% of the Common Stock; (ii) a Change in Control of the Company (as defined below) occurs; or (iii) any of the stock or all or substantially all of the assets of any of the subsidiaries of the Company are sold or transferred, in which case, the Metromedia License Agreement shall terminate with respect to such subsidiary. A Change in Control of the Company is defined as (a) a transaction in which a person or "group" (within the meaning of Section 13(d)(3) of the Exchange Act) not in existence at the time of the execution of the Metromedia License Agreement becomes the beneficial owner of stock entitling such person or group to exercise 50% or more of the combined voting power of all classes of stock of the Company; (b) a change in the composition of the Company's Board of Directors whereby a majority of the members thereof are not directors serving on the board at the time of the Metromedia License Agreement or any person succeeding such director who was recommended or elected by such directors; (c) a reorganization, merger or consolidation whereby following consummation thereof, Metromedia Company would hold less than 20% of the combined voting power of all classes of the Company's stock; (d) a sale or other disposition of all or substantially all of the assets of the Company; or (e) any transaction the result of which would be that the Common Stock would not be required to be registered under the Exchange Act and the holders of Common Stock would not receive common stock of the survivor to the transaction which is required to be registered under the Exchange Act. In addition, Metromedia Company has reserved the right to terminate the Metromedia License Agreement in its entirety immediately upon written notice to the Company if, in Metromedia Company's sole judgment, the Company's continued use of "Metromedia" as a trade name would jeopardize or be detrimental to the good will and reputation of Metromedia Company. Pursuant to the License Agreement, the Company has agreed to indemnify and hold harmless Metromedia Company against any and all losses, claims, suits, actions, proceedings, investigations, judgments, deficiencies, damages, settlements, liabilities and reasonable legal (and other expenses related thereto) arising in connection with the Metromedia License Agreement. The Company believes that the terms of each of the transactions described above were no less favorable to the Company then could have been obtained from non-affiliated parties. IMAGE OUTPUT AGREEMENT. Mr. Kluge beneficially owns more than 10% of the common stock of Image Investors Co., a Delaware corporation. Image Investors owns Page 17 approximately 40% of the common stock of Image Entertainment, Inc. ("Image"). OHEC was a party to an output license agreement with Image which terminated on December 31, 1992 pursuant to which OHEC granted to Image the rights to manufacture, market and sell on laserdiscs for private in-home use certain feature length programs released by Orion on videocassette for a period of three years from the date of first release by Image on laserdisc in consideration of a royalty payment payable with respect to each program. For the year ended December 31, 1995, Image paid to Orion approximately $719,310 under the agreement. Orion, OHEC and Image have recently entered into a new output agreement. WORLDCOM. Orion is a customer of WorldCom, Inc. (formerly known as LDDS Metromedia Communications ("WorldCom")), which provides lon g distance telephone services to Orion. Mr. Kluge, the Chairman of the Company, is Chairman of the Board of WorldCom; Mr. Subotnick, the Vice Chairman of the Board of the Company, is a Director of WorldCom; and Silvia Kessel, a Senior Vice President and Director of the Company serves on WorldCom's Board of Directors. For the fiscal year ended December 31, 1995, Orion paid $164,583 to WorldCom. MISCELLANEOUS. Orion reimbursed Metromedia Company $95,000 for the services of Silvia Kessel during 1995, a Senior Vice President of Metromedia Company who also serves as Executive Vice President of Orion. Mr. Phillips is the sole stockholder of JDP Aircraft II, Inc., a Georgia corporation ("JDP Aircraft"). On October 21, 1994, the Company and JDP Aircraft entered into a lease agreement under which JDP Aircraft provides the Company with the use of a Citation Jet owned by JDP Aircraft. The lease agreement can be terminated by either party by giving 30 days' notice to the other party. The Company paid $298,367 to JDP Aircraft under the lease agreement for services provided during 1995. On April 19, 1994, Mr. Phillips was elected President and Chief Executive Officer of the Company. He was elected to the Board of Directors of the Company on the same date. At the same time, Renaissance Partners, an investment partnership in which Mr. Phillips serves as a general partner, purchased 700,000 shares of Common Stock from the Company for $4,462,500, representing a price of $6.375 per share. This price represents the last sale price of the Common Stock on the New York Stock Exchange (on which the Common Stock was traded prior to the November 1 Mergers) on April 11, 1994, the date before the Company announced that it had received an investment proposal from Mr. Phillips. The Company has entered into a Registration Rights Agreement with Renaissance Partners pursuant to which the Company agreed to register with the Commission the 700,000 shares of Common Stock purchased by Renaissance Partners. Such shares were registered with the Commission in November 1995. Page 18 SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf of the undersigned, thereunto duly authorized. METROMEDIA INTERNATIONAL GROUP, INC. By: /S/ SILVIA KESSEL --------------------------- Silvia Kessel Senior Vice President, Chief Financial Officer and Treasurer Date: April 29, 1996 -----END PRIVACY-ENHANCED MESSAGE-----