<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1994 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________________ TO ___________________
COMMISSION FILE NUMBER: 1-6739
SPELLING ENTERTAINMENT GROUP INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
FLORIDA 59-0862100
---------------------------------- --------------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5700 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90036
----------------------------------------- -------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (213) 965-5700
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 .
----- -----
On May 12, 1994, the registrant had outstanding 64,706,172 shares of
Common Stock, $.10 par value.
<PAGE> 2
SPELLING ENTERTAINMENT GROUP INC.
PART I. FINANCIAL INFORMATION
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PAGE
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ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets -
March 31, 1994 (Unaudited) and December 31, 1993 3
Condensed Consolidated Statements of
Operations - Three Months Ended
March 31, 1994 and 1993 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1994 and 1993 (Unaudited) 5
Notes to Unaudited Condensed Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 12
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 16
</TABLE>
2
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W SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31
1994 1993
---------- ----------
(Unaudited)
ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 19,696 $ 12,682
Accounts receivable, net 82,055 93,242
Film and television costs, net 199,628 204,232
Intangible assets 153,948 154,983
Other assets 22,772 9,332
---------- -----------
$ 478,099 $ 474,471
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payble and accrued expenses $ 18,060 $ 13,275
Accrued participation expense 54,217 57,547
Deferred revenue 6,796 14,425
Debt 40,000 49,580
Income taxes 16,276 8,121
Net liabilities related to discontinued operations 31,898 33,669
---------- -----------
Total Liabilities 167,247 176,617
---------- -----------
Commitments and contingent liabilities
Shareholders' Equity:
Preferred Stock, $.10 par value; authorized
20,000,000 shares; none outstanding - -
Common stock, $.10 par value; authorized
200,000,000 shares; issued and outstanding
64,644,534 and 64,504,838 shares,
respectively. 6,464 6,450
Capital in excess of par value 343,675 342,824
Accumulated deficit (39,287) (51,420)
---------- -----------
Total Shareholders' Equity 310,852 297,854
---------- -----------
$ 478,099 $ 474,471
========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
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SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1994 1993
------- -------
<S> <C> <C>
Revenue $80,413 $50,818
Costs and expenses:
Film and television costs 59,531 37,013
Selling, general and administrative 8,731 9,684
------- -------
Operating income 12,151 4,121
Interest income 524 901
Interest expense (656) (2,437)
Other income, net - 28
------- -------
Income from continuing operations
before income taxes 12,019 2,613
Provision for income taxes 5,165 1,674
------- -------
Income from continuing operations 6,854 939
Loss from discontinued operations, net - (5,515)
------- -------
Net income (loss) 6,854 (4,576)
Preferred dividend - 203
------- -------
Net income (loss) applicable to
common shares $ 6,854 $(4,779)
======= =======
Average number of common shares 64,579 50,859
======= =======
Net income (loss) per common share:
Continuing operations $ 0.11 $ 0.02
Discontinued operations - (0.11)
------- -------
Net income (loss) per common share $ 0.11 $ (0.09)
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
4
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SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
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<CAPTION>
Three Months Ended
March 31,
--------------------
1994 1993
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 6,854 $ (4,576)
Adjustments to reconcile net income (loss) to cash
flows from operating activities:
Amortization of film and television costs 39,875 20,485
Depreciation and amortization 1,289 1,232
Additions to film and television costs (35,271) (33,751)
Changes in operating assets and liabilities:
Decrease in accounts receivable 11,187 998
Increase (decrease) in accounts payable,
and accrued expenses 4,785 (327)
Decrease in accrued participation expenses (3,330) (807)
Increase (decrease) in deferred revenue (7,629) 11,922
Other, net 1,220 (146)
-------- --------
18,980 (4,970)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net (189) (100)
Changes in net liabilities related to
discontinued operations (1,771) 3,520
-------- --------
(1,960) 3,420
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from BEC 50,000 -
Repayments of borrowings (59,580) (13,500)
Cash dividends paid (1,291) (1,220)
Proceeds from the issuance of common stock 865 148
-------- --------
(10,006) (14,572)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7,014 (16,122)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 12,682 36,117
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 19,696 $ 19,995
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
5
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SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(000's omitted in all tables except per share data)
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements of
Spelling Entertainment Group Inc. and subsidiaries (the "Company") have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. The Company believes that the disclosures contained herein are
adequate to make the information presented not misleading; however, these
unaudited condensed consolidated financial statements should be read in
conjunction with the more detailed financial statements and notes thereto
included in the Company's most recent annual report to shareholders.
The financial statements reflect, in the opinion of management, all normal
recurring adjustments necessary to present fairly the Company's financial
position and results of operations. In order to maintain consistency and
comparability between periods presented, certain amounts have been reclassified
from the previously reported financial statements in order to conform with the
financial statement presentation in the current period.
Blockbuster Entertainment Corporation and subsidiaries ("BEC") owned
approximately 70.5% of the Company's outstanding common stock ("Common Stock")
at March 31, 1994. In January 1994, BEC entered into a merger agreement
pursuant to which BEC has agreed to merge with and into Viacom Inc. ("Viacom"),
with Viacom being the surviving corporation. Upon the closing of the merger,
which closing is subject to customary conditions, including approval of the
merger by BEC's shareholders, Viacom would own a majority of the Company's
Common Stock. BEC mailed a letter to its shareholders dated May 4, 1994 which
stated that since the date the merger agreement was entered into, there had
been a substantial drop in the market prices of Viacom stock. The letter
further stated that given the current price levels of the Viacom stock, there
could be no assurance that BEC's Board of Directors would be able to recommend
the transaction at the time of any shareholder meeting called to vote upon the
merger. The letter also stated that BEC was unable to say whether or not the
transaction would go forward or whether or not any special meeting of BEC's
shareholders would be called to vote on the merger.
2. FILM AND TELEVISION COSTS
Film and television costs include production or acquisition costs (including
advance payments to producers), capitalized overhead and interest, prints and
advertising expected to benefit future periods. These costs are amortized, and
third party participations and residuals are accrued, on an individual product
basis in the ratio that current year gross revenue bears to estimated future
gross revenue.
6
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SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(000's omitted in all tables except per share data)
(Continued)
Film and television costs are stated at the lower of cost less amortization or
estimated net realizable value on an individual film product basis. Estimates
of total gross revenue, costs and participations are reviewed quarterly and
revised as necessary. When estimates of total revenue and costs indicate that
a television program or feature film will result in an ultimate loss,
additional amortization is provided to fully recognize such loss in that
period.
Film and television costs consisted of the following:
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<CAPTION>
March 31, December 31,
1994 1993
--------- ------------
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Television costs:
Released $ 97,113 $ 92,533
In process and other 10,837 22,009
Film and television rights 91,678 89,690
-------- --------
$199,628 $204,232
======== ========
</TABLE>
3. DEBT
Debt consisted of the following:
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<CAPTION>
March 31, December 31,
1994 1993
--------- ------------
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Revolving credit facility,
interest at 4.35% at March 31, 1994 $40,000 $ -
Bank term loans,
interest at 5.62% at December 31, 1993 - 49,580
------- -------
$40,000 $49,580
======= =======
</TABLE>
In January 1994, the Company entered into a three-year credit agreement with
BEC (the "BEC Facility"). The BEC Facility provides for (i) a three-year term
loan facility of $100,000,000 to fund the Company's acquisition of Republic
Pictures Corporation ("Republic") (see Note 10) and (ii) a revolving credit
facility of $75,000,000 due June 1997 to fund the Company's working capital and
other requirements. Under the BEC Facility, the Company pays an annual fee of
0.175% of the unused portion of the revolving credit facility and certain
facility and administration fees; interest on the revolving facility is payable
at LIBOR plus 1.0%; and interest on the term loan will be at 6.625%.
7
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SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(000's omitted in all tables except per share data)
(Continued)
Borrowings under the BEC Facility are secured by all of the assets of the
Company. In addition, the Company has agreed to guarantee the obligations of
BEC under BEC's credit facility to the extent of the Company's borrowings from
BEC under the BEC Facility. The fees and interest rate applicable to the
revolving credit portion of the BEC Facility are subject to renegotiation
should BEC's facility be terminated, repaid or restructured, and the entire
amount outstanding under the BEC Facility may be accelerated if BEC's facility
is accelerated by its lenders. The events which might result in an
acceleration of BEC's facility include the closing of BEC's merger with Viacom
(see Note 1) without the receipt of a waiver from BEC's lenders. The Company
has not been informed as to whether such waiver will be granted by BEC's
lenders. However, the Company is currently exploring, and believes it can
obtain, arrangements with third parties under terms and conditions which are
not materially different from those contained in the BEC Facility.
4. SHAREHOLDERS' EQUITY
The following is a summary of the changes in the components of shareholders'
equity:
<TABLE>
<CAPTION>
Capital in
Common Excess of Accumulated
Stock Par Value Deficit Total
----- --------- ------- -----
<S> <C> <C> <C> <C>
Balance at December 31, 1993 $6,450 $342,824 $(51,420) $297,854
Sales of common stock 14 851 - 865
Unrealized holding gain, net - - 6,570 6,570
Cash dividends - - (1,291) (1,291)
Net income for the period - - 6,854 6,854
------ -------- -------- --------
Balance at March 31, 1994 $6,464 $343,675 $(39,287) $310,852
====== ======== ======== ========
</TABLE>
Cash dividends of two cents per common share were declared and paid during the
three months ended March 31, 1994.
Effective January 1, 1994, the Company adopted the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." This statement requires
8
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SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(000's omitted in all tables except per share data)
(Continued)
the Company to adjust the carrying value of a common stock investment, which is
classified as "available for sale" under the applicable provisions of SFAS
No. 115, to fair market value with a corresponding adjustment (net of tax) of
$6,570,000 to Shareholders' Equity. Such investment is included in other assets.
5. INCOME TAXES
The Company adopted SFAS No. 109 effective January 1993. The effect of this
adoption did not have a material effect on the accompanying unaudited condensed
consolidated financial statements. Income taxes have been provided in each
period based on the Company's anticipated annual effective income tax rate.
6. NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share amounts are based on the weighted average
number of common shares outstanding during the respective periods. Primary and
fully-diluted net income (loss) per common share are not presented as they
result in a dilution of less than 3% from basic net income per common share.
7. DISCONTINUED OPERATIONS
In March 1993, the Company made a one-time payment of $5,000,000 for
insurance-type excess loss protection to cover certain costs the Company may
have to pay in resolving environmental and bankruptcy related claims over a
twelve year period. The indemnity covers up to $35,000,000 of such liabilities
in excess of a threshold of $25 million, subject to certain adjustments. The
$5,000,000 payment was expensed as part of discontinued operations in the first
quarter of 1993.
8. LEGAL MATTERS
Substantially all litigation and claims against the Company as of the dates of
its bankruptcy filings, other than disputed claims which remain pending, were
settled and discharged under settlement agreements or plans of reorganization
confirmed by the Bankruptcy Court. The Company continues to be involved in a
number of legal actions including threatened claims and pending litigation from
matters such as contract disputes, environmental clean-up assessments and
damages from alleged dioxin contamination. Some of the parties involved in
such actions seek significant amounts of damages. While the results of such
action cannot be predicted with certainty, based upon its knowledge of the
facts and circumstances and
9
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SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(000's omitted in all tables except per share data)
(Continued)
applicable laws as well as the insurance-type arrangement described in Note 7,
the Company believes that the ultimate resolution of all disputed claims,
pending litigation and threatened claims will not have a material adverse
effect on its financial condition and results of operations.
9. RELATED PARTY TRANSACTIONS
See Note 3 regarding the Company's credit facility with BEC. In addition, the
Company paid interest to BEC of $322,000 during the three months ended March
31, 1994 in connection with this facility.
As of March 31, 1994 the Company had a net payable to BEC of $436,000
principally for management services charged to the Company by BEC.
See Note 10 regarding the common stock and warrants of Republic held by BEC
prior to the merger of Republic with the Company.
At March 31, 1993, a director of the Company held $18,287,500 of the Company's
10% Senior Subordinated Notes ("Notes"). The Company repurchased such Notes in
the fourth quarter of 1993.
10. SUBSEQUENT EVENTS
On April 26, 1994, DE Acquisition Corporation, a wholly-owned subsidiary of the
Company merged with and into Republic (the "Merger"). As a result of the
Merger, Republic became a wholly-owned subsidiary of the Company. Republic is
engaged in the development and production of television programming and the
distribution of its extensive library of feature films and television
programming.
In connection with the Merger, each share of the common stock of Republic
("Republic Common Stock") outstanding immediately prior to the effective time
of the Merger (the "Effective Time") was converted into the right to receive
$13.00, without interest. The shareholders of Republic received a total cash
consideration of approximately $101,354,000. Options and warrants to acquire
Republic Common Stock outstanding immediately prior to the Effective Time were
converted into the right to receive, upon payment of the exercise price (as
adjusted as set forth below), 1.6508 shares of the Company's Common Stock for
each share of Republic Common Stock into which such option or warrant was
exercisable immediately prior to the Effective Time. The exercise price of
such options and warrants was adjusted by
10
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SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(000's omitted in all tables except per share data)
(Continued)
multiplying such exercise price by 0.6058.
Immediately, prior to the Merger, BEC, through a wholly-owned subsidiary,
owned 2,550,000 shares of Republic Common Stock and warrants to purchase
810,000 additional shares of Republic Common Stock at an exercise price of
$11.50 per share. In accordance with the terms of the Merger, such Republic
shares owned by BEC were purchased for $33,150,000 at the Merger date and such
warrants owned by BEC were converted into warrants to purchase the Company's
Common Stock covering an aggregate of 1,337,148 shares at an exercise price
of $6.97 per share.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
unaudited condensed consolidated financial statements and the related notes
thereto. References to Notes refer to the notes to such statements.
RESULTS OF CONTINUING OPERATIONS
The results of operations for any period are significantly affected by the
quantity and performance of the Company's filmed product which is licensed to,
and available for exhibition by, licensees in various media and territories.
Consequently, results of operations may vary significantly between periods, and
the results of operations in any one period may not be indicative of results of
operations in future periods.
REVENUE
The following table sets forth the components of revenue from the Company's
major markets for the three months ended March 31 (in thousands):
<TABLE>
<CAPTION>
1994 1993
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<S> <C> <C>
Network $34,594 $15,661
Home Video 4,019 2,522
International film distribution 2,104 943
Licensing and merchandising 4,964 2,219
Other distribution 34,732 29,473
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$80,413 $50,818
======= =======
</TABLE>
Television programming revenue is derived from network license fees, first run
syndication sales and fees arising from domestic and international television
licensing agreements. During the initial years of a television series, network
and international license fees normally approximate the production costs of the
series, and accordingly the Company recognizes only minimal profit or loss
during this period. Once a sufficient number of episodes of a series have been
produced, the Company is reasonably assured that it will also be able to sell
the series in the domestic off-network market, and the Company would then
expect to be able to realize a more substantial profit with respect to the
series.
Television programming network revenue increased $18,933,000 for the three
months ended March 31, 1994. A significant portion of the increase resulted
from the licensing of two new series, "Burke's Law" and "Winnetka Road."
12
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SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Continued)
As a result of the acquisition of Republic, the Company anticipates a
significant increase in revenue, particularly from its home video distribution
business.
FILM AND TELEVISION COSTS
Film and television costs consist primarily or the amortization of capitalized
product costs and third party participations. The increases in such costs of
$22,518,000 during the three months ended March 31, 1994, as compared to the
same period in 1993, resulted primarily from the increases in revenue described
above.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses decreased $953,000 during the
three months ended March 31, 1994, compared to the same period of 1993,
primarily due to lower legal and administrative costs incurred during 1994.
INTEREST EXPENSE
Interest expense decreased $1,781,000 during the three months ended
March 31, 1994 in comparison to the prior year period, as a result of lower
total indebtedness and lower average effective interest rates. In April 1994,
the Company borrowed $100,000,000 in connection with the Republic merger.
Consequently, the Company expects to maintain higher levels of total
indebtedness resulting in higher interest expense during the remainder of 1994
and later years.
PROVISION FOR INCOME TAXES
Effective January 1993 the Company adopted SFAS No. 109, which changed its
method of accounting for income taxes. The effect of this adoption did not
have a material effect on the accompanying unaudited condensed consolidated
financial statements. The increase in the provision for income taxes for the
three months ended March 31, 1994, in comparison to the similar period in 1993,
resulted primarily from the increase in income from continuing operations,
although the estimated annual effective income tax rate declined
in 1994 compared to 1993 due to a decrease in certain non-deductible expenses.
The effective rates of income tax expense for the periods presented are based
upon the Company's anticipated annual effective income tax rate.
LIQUIDITY AND CAPITAL RESOURCES
A substantial portion of the production costs of the Company's television
programming is financed through network license fees received during
production. The Company generally expects to recover any excess of its
production costs over the related network license fees from
13
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SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Continued)
initial international licensing revenue, with additional domestic and
international revenue to be expected in later years.
Obtaining the rights to distribute third party film product often
requires the Company to make advance payments to the third parties as a
guarantee of the net receipts to be earned by the third parties from such
distribution. The Company enters into license agreements during or shortly
after the production period for a specific film and thus expects to recoup its
entire investment within a reasonably short period of time. To the extent that
capital resources are required to cover working capital deficits arising from
internally produced television programming or advances for acquired product,
the Company has historically financed its requirements through operating cash
flow and borrowings under its credit facilities.
On October 5, 1993, the Company sold 13,362,215 shares of Common Stock to BEC
in exchange for 3,652,542 shares of BEC common stock. This sale was negotiated
in connection with the Company's proposed acquisition of Republic. The BEC
shares were subsequently resold, with the Company realizing approximately
$100,445,000 in cash. During 1993, the Company used such funds to redeem its
12% Subordinated Debentures and Preferred Stock, as well as to pay down a
substantial portion of its bank debt and prepay its 10% Senior Subordinated
Notes.
The Company has negotiated a new revolving credit facility with BEC, which the
Company used to complete its acquisition of Republic, as well as to fund its
ongoing operational requirements. The Company believes that cash provided by
operating activities, together with amounts available under the new credit
facility, will be sufficient to fund its anticipated operating and investing
requirements for the foreseeable future.
DISCONTINUED OPERATIONS
The Company previously sold its oil operations; accordingly, such operations
are reported as discontinued in the accompanying financial statements.
During the three months ended March 31, 1993, the Company made a one-time
payment of $5,000,000 for insurance-type excess loss protection to cover
certain costs the Company may have to pay in resolving environmental and
bankruptcy related claims over a twelve year period. Discontinued operations
in 1993 also included approximately $500,000 of legal and administrative costs
attributable to the Company's former oil operations. See Note 8 for a further
discussion of outstanding liabilities and reserves related to former
operations.
14
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SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Continued)
UNCERTAINTIES
The Company continues to be involved in a number of legal actions including
threatened claims and pending litigation from matters such as contract
disputes, environmental clean-up assessments and damages from alleged dioxin
contamination. Some of the parties involved in such actions seek significant
amounts of damages. While the results of such actions cannot be predicted with
certainty, based upon its knowledge of the facts and circumstances and
applicable laws as well as the insurance-type arrangement, management believes
that the ultimate resolution of all disputed claims, pending litigation and
threatened claims will not have a material adverse effect on the Company's
financial condition or results of operations.
15
<PAGE> 16
SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES
PART II.
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K
(a) Exhibits:
<TABLE>
<S> <C>
4.1 Credit Agreement dated as of January 31, 1994, by and among the Registrant, certain subsidiaries of the Registrant and
Blockbuster Entertainment Corporation (incorporated by the reference to Exhibit 99.1 to the Registrant's Current Report
on Form 8-K dated January 31, 1994).
4.2 Pledge and Security Agreement dated as of January 31, 1994, by and among the Registrant, certain subsidiaries of the
Registrant and Blockbuster Entertainment Corporation (incorporated by reference to Exhibit 99.2 to the Registrant's
Current Report on Form 8-K dated January 31, 1994).
4.3 Copyright Mortgage and Assignment: Power of Attorney dated as of January 31, 1994, by the Registrant and certain
subsidiaries of the Registrant in favor of Blockbuster Entertainment Corporation (incorporated by reference to Exhibit
99.3 to the Registrant's Current Report on Form 8-K dated January 31, 1994).
4.4 Guaranty dated as of January 31, 1994, by the Registrant and certain subsidiaries of the Registrant in favor of
Blockbuster Entertainment Corporation (incorporated by reference to Exhibit 99.4 to the Registrant's Current Report on
Form 8-K dated January 31, 1994).
4.5 Guaranty dated as of December 22, 1993, by the Registrant in favor of Bank of America National Trust and Savings
Association, as agent (incorporated by reference to Exhibit 99.5 to the Registrant's Current Report on Form 8-K dated
January 31, 1994).
10.1 Registrant's 1994 Stock Option Plan which is subject to shareholder approval (incorporated by reference to Annex A of
the Registrant's Notice of Meeting and Proxy Statement dated April 27, 1994).
10.2 Amended and Restated Warrant with respect to 825,400 shares of the Registrant's common stock, dated April 26, 1994,
granted to The Paragon Group, A California Limited Partnership.
10.3 Amended and Restated Warrant with respect to 990,480 shares of the Registrant's common stock, dated April 26, 1994,
granted to Repinvesco, Inc.
</TABLE>
16
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<TABLE>
<S> <C>
10.4 Amended and Restated Warrant with respect to 346,668 shares of the Registrant's common stock, dated April 26, 1994,
granted to Repinvesco, Inc.
11 Computation of net income (loss) per common share.
(b) Reports on Form 8-K:
(1) Form 8-K dated January 31, 1994 related to the Credit Agreement with Blockbuster Entertainment Corporation.
(2) Form 8-K dated April 26, 1994 regarding acquisition of Republic Pictures Corporation.
</TABLE>
17
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SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPELLING ENTERTAINMENT GROUP INC.
May 13, 1994 By: /s/ Thomas P. Carson
------------------------------------
Thomas P. Carson
Senior Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer)
By: /s/ Kathleen Coughlan
------------------------------------
Kathleen Coughlan
Vice President and Corporate
Controller
(Principal Accounting Officer)
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Exhibit 10.2
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
SECURITIES LAWS OF ANY STATE, HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT TO APPLICABLE PROVISIONS OF
FEDERAL AND STATE SECURITIES LAWS OR EXEMPT FROM THE REGISTRATION REQUIREMENTS
THEREOF.
AMENDED AND RESTATED WARRANT
VOID AFTER 5:00 P.M., Los Angeles, California time, on February 11, 1998.
Warrant to Purchase 825,400
Shares of Common Stock
WARRANT TO PURCHASE COMMON STOCK
OF
SPELLING ENTERTAINMENT GROUP INC.
This is to certify that, for valuable consideration, receipt of which
is hereby acknowledged, The Paragon Group, A California Limited Partnership, a
California limited partnership (the "Holder"), is entitled to purchase, subject
to the provisions of this Amended and Restated Warrant, from SPELLING
ENTERTAINMENT GROUP INC., a Florida corporation (the "Company"), 825,400 fully
paid and nonassessable shares of the Common Stock, $.10 par value per share, of
the Company (the "Stock"), subject to adjustment as hereinafter set forth at
such price, during such period and subject to such terms as hereinafter set
forth. Unless the context otherwise requires, the term "Warrant" or "Warrants"
as used herein includes this Warrant and any other Warrant or Warrants which
may be issued pursuant to the provisions of this Warrant, whether upon
transfer, assignment, partial exercise, divisions, combinations, exchange or
otherwise, and the term "Holder" includes any transferee or transferees or
assignee or assignees of the Holder named above, all of whom shall be subject
to the provisions of this Warrant, and, when used with reference to shares of
Stock, means the holder or holders of such shares of Stock. This Warrant was
originally issued pursuant to the terms of that certain Stock Purchase
Agreement dated as of August 21, 1986 between the original Holder and Republic
Pictures Corporation ("Republic") and is hereby amended and restated in its
entirety pursuant to that certain Agreement and Plan of Merger dated as of
December 8, 1993 among the Company, Republic and DE Acquisition Corporation to
effectuate the conversion of warrants to acquire shares of
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common stock, $.01 par value per share, of Republic into warrants to acquire
shares of Stock in connection with the merger of a subsidiary of the Company
with and into Republic.
SECTION 1. EXERCISE PRICE. Subject to the provisions with respect to
adjustment in Section 7, the purchase price for each share of Stock purchasable
pursuant hereto shall be $7.5725 per share (hereinafter, as adjusted from time
to time as herein required, the "Exercise Price")
SECTION 2. EXERCISE OF WARRANT. This Warrant may be exercised in
whole, or in part at any time or from time to time, on or prior to 5:00 p.m.,
Los Angeles, California time, on February 11, 1998 or if such date is a day on
which federal or state chartered banking institutions located in the State of
California are authorized by law to close, then on the next succeeding day
which shall not be such a day, by presentation and surrender to the Company at
its principal office in California of this Warrant and the purchase form
annexed hereto duly executed and accompanied by payment, in cash or certified
or cashier's check, payable to the order of the Company, of the Exercise Price
for the number of shares of Stock to be purchased upon exercise of this
Warrant. If this Warrant is exercised in part only, the Company shall,
promptly after presentation of this Warrant upon such exercise, execute and
deliver a new Warrant evidencing the rights of the Holder hereof to purchase
the unexercised balance of this Warrant. Upon and as of such receipt of this
Warrant and the purchase form by the Company at its principal office in
California, in proper form for exercise and accompanied by payment as herein
provided, the Holder shall be deemed to be the holder of record of the shares
of Stock issuable upon such exercise, notwithstanding that the stock transfer
books of the Company shall then be closed or that certificates representing
such shares of Stock shall not then be actually delivered to the Holder.
SECTION 3. COVENANTS OF THE COMPANY. The Company represents,
warrants, covenants and agrees as follows:
(a) The Company has the full corporate power and authority to enter
into and issue this Warrant. The execution, delivery and issuance by the
Company of this Warrant has been duly authorized by all necessary corporate
action on the part of the Company. This Warrant has been duly executed and
delivered by the Company, is validly issued and is a valid and binding
obligation of the Company, enforceable against the Company in accordance with
the terms hereof. The shares of Stock issuable upon exercise of this Warrant,
when issued in accordance with the terms of this Warrant, will constitute duly
authorized and issued, fully paid and nonassessable shares of the Stock. Such
shares have been reserved for issuance upon exercise of this Warrant.
(b) The Company will at all times until expiration of this Warrant
reserve and keep available, free from preemptive rights (other than preemptive
rights in favor of the Company), out of its authorized but unissued capital
stock (or capital stock held in treasury), a number of shares of Stock equal to
the total number of shares of Stock issuable upon exercise of this Warrant.
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(c) The Company shall file and use its best efforts to cause to be
declared effective as soon as practicable following the date hereof, a
registration statement on Form S-3 so that shares of Stock issued upon exercise
of this Warrant will be registered at the time of issuance under the Securities
Act of 1933, as amended, and the Rules and Regulations promulgated thereunder
(said Act and such Rules and Regulations being hereinafter collectively
referred to as the "Act"). The Company shall maintain effectiveness of such
registration statement until the Company is advised by its counsel that the
shares of Stock covered thereby may be resold without the need for registration
under the Act.
SECTION 4. FRACTIONAL SHARES. No fractional shares of Stock or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional shares to which the Holder would otherwise
be entitled upon exercise hereof, the Company shall pay to the Holder an amount
in cash equal to such fraction multiplied by the current market value of such
share, determined as follows:
A. If the Stock is listed on a national securities
exchange or admitted to unlisted trading privileges thereon, the current market
value shall be the last reported sale price of the Stock on such exchange on
the last trading day prior to the date of exercise of this Warrant or if no
such sale is made on such day, the average closing bid and asked prices of the
Stock for such day on such exchange;
B. If the Stock is not so listed or admitted to unlisted
trading privileges, the current market value shall be the last reported sale
price of the Stock reported by NASDAQ System or, if not so reported, a
comparable system selected by the Board of Directors of the Company, on the
last trading day prior to the date of the exercise of this Warrant; or
C. If the Stock is not so listed or admitted to unlisted
trading privileges and sale prices are not so reported, the current value shall
be the fair market value on the last business day prior to the date of exercise
of this Warrant, determined in such reasonable manner as may be prescribed by
the Board of Directors of the Company, but in no event less than the Exercise
Price.
SECTION 5. TRANSFER, EXCHANGE, ASSIGNMENT OR LOSS OF WARRANT.
5.1 This Warrant may not be assigned or transferred except as
provided in this Section 5 and in accordance with and subject to the provisions
of the Act. Any purported transfer or assignment made other than in accordance
with this Section 5 shall be null and void and of no force and effect.
5.2 Prior to any transfer of this Warrant, other than in an offering
registered under the Act, the Holder shall notify the Company in writing of its
intention to effect such transfer, indicating the circumstances of the proposed
transfer and furnish the Company with an opinion of its counsel, which counsel
and opinion shall be reasonably satisfactory to
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counsel for the Company, to the effect that the proposed transfer may be made
without registration under the Act or registration or qualification under any
applicable state securities laws, provided that if the Company receives at
least 10 business days' prior written notice of a proposed transfer, and such
proposed transfer is by a Holder which is a partnership, or any successor
thereto, to its members in accordance with applicable partnership provisions,
such opinion shall not be required unless specifically requested by the Company
in writing. The Company will promptly notify the Holder if the opinion of
counsel furnished to the Company is reasonably satisfactory to counsel for the
Company. Unless the Company notifies the Holder within 10 business days after
its receipt of such opinion that such opinion is not reasonably satisfactory to
counsel for the Company, the Holder may proceed to effect the transfer.
5.3 Each certificate for shares of Stock or for any other security
issued or issuable upon exercise of this Warrant shall contain the following
legend unless the Company shall have received an opinion of counsel reasonably
satisfactory to it that such legend is not required to assure compliance with
the Act:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR SECURITIES LAWS OF ANY STATE, HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY
DISTRIBUTION AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS
REGISTERED PURSUANT TO APPLICABLE PROVISIONS OF FEDERAL AND STATE
SECURITIES LAWS OR EXEMPT FROM THE REGISTRATION REQUIREMENTS THEREOF.
The Holder, by accepting this Warrant, agrees and represents that,
unless the shares of Stock to be issued to such Holder upon exercise hereof
shall have been registered under the Act prior to the delivery thereof to such
Holder, it will acquire such shares for investment and not with a view to their
distribution.
5.4 Any assignment permitted hereunder shall be made by surrender of
this Warrant to the Company at its principal office in California with the
assignment form annexed hereto duly completed and executed. In such event the
Company shall, without charge for any issuance or transfer tax or other cost
incurred by the Company with respect to such transfer, execute and deliver a
new Warrant in the name of the assignee named in such instrument of assignment
and this Warrant shall promptly be cancelled. This Warrant may be divided or
combined with other Warrants which carry the same rights upon presentation
thereof at the principal office of the Company in California together with a
written notice signed by the Holder thereof, specifying the names and
denominations in which new Warrants are to be issued.
5.5 Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant (provided that an
affidavit of the Holder shall be
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satisfactory for such purpose), and of indemnity satisfactory to it and upon
surrender and cancellation of this Warrant, if mutilated, the Company will
execute and deliver a new Warrant of like tenor and date and any such lost,
stolen or destroyed Warrant shall thereupon become void.
SECTION 6. RIGHTS OF HOLDER. Any Holder of this Warrant shall not,
by virtue hereof, be entitled to any rights of a shareholder in the Company,
either at law or in equity, and the rights of any such Holder are limited to
those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
SECTION 7. ADJUSTMENT IN THE NUMBER OF WARRANT SHARES
PURCHASABLE AND EXERCISE PRICE.
7.1 The number of shares of Stock or other securities or property for
which this Warrant may be exercised and the Exercise Price shall be subject to
adjustment as follows:
A. If the Company, at any time or from time to time,
effects a subdivision or combination, by stock split, reverse stock split or
otherwise, of its outstanding shares of Stock into a larger or smaller number
of shares of Stock, the number of shares of Stock for which this Warrant may be
exercised immediately prior to such subdivision or combination shall be
increased or reduced in the same proportion as the increase or decrease in the
outstanding shares of Stock and the then applicable Exercise Price shall be
adjusted by multiplying such Exercise Price by a fraction, the numerator of
which shall be the number of shares of Stock purchasable upon exercise hereof
immediately prior to such subdivision or combination and the denominator of
which shall be the number of shares of Stock purchasable immediately following
such subdivision or combination. Any adjustment under this Paragraph A shall
become effective at the close of business on the date the subdivision or
combination becomes effective.
B. If the Company, at any time or from time to time,
declares a dividend on Stock payable in Stock or securities convertible into
Stock, the number of shares of Stock for which this Warrant may be exercised
shall be increased, as of the close of business on the record date for
determining which holders of Stock shall be entitled to receive such dividend,
in proportion to the increase in the number of outstanding shares of Stock as a
result of such dividend (treating for this purpose any securities convertible
into Stock as so converted) and the then applicable Exercise Price shall be
adjusted by multiplying such Exercise Price by a fraction, the numerator of
which shall be the number of shares of Stock purchasable upon exercise hereof
immediately prior to the record date for such dividend and the denominator of
which shall be the number of shares of Stock purchasable immediately following
the record date for such dividend (treating for this purpose any securities
convertible into Stock as so converted).
C. If the Company at any time or from time to time
makes, or fixes a record date for the determination of holders of Stock
entitled to receive, a dividend or other
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distribution payable in securities of the Company other than shares of Stock or
securities convertible into Stock, then and in each such event provision shall
be made so that the Holder shall receive upon exercise hereof, in addition to
the number of shares of Stock receivable thereupon, the amount of securities of
the Company which it would have received had this Warrant been exercised on the
date of such event and had it thereafter, during the period from the date of
such event to and including the date of exercise, retained such securities
receivable by it as aforesaid during such period, subject to all other
adjustments called for during such period under this Section 7 with respect to
the right of the Holder.
D. If the Stock issuable upon the exercise of this
Warrant is changed into the same or a different number of shares of any class
or classes of stock of the Company or property, whether by recapitalization,
reclassification or other exchange (other than a subdivision or combination of
shares, or a stock dividend, or a reorganization, merger, consolidation or sale
of assets provided for elsewhere in this Section 7.1), then and in any such
event the Holder shall have the right thereafter to purchase the kind and
amount of stock and other securities and property receivable upon such
recapitalization, reclassification or other exchange by holders of the number
of shares of Stock with respect to which this Warrant might have been exercised
immediately prior to such recapitalization, reclassification or other exchange,
all subject to further adjustments as provided herein.
E. If at any time or from time to time there is a
capital reorganization of the Stock (other than a subdivision or combination of
shares or a stock dividend or recapitalization, reclassification or exchange of
shares provided for elsewhere in this Section 7) or a consolidation or merger
of the Company with or into another entity or the sale of all or substantially
all of the Company's assets to another person, then, as part of such capital
reorganization, consolidation, merger or sale, provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this
Warrant the same kind and number of shares of Stock and other securities, cash
or other property as would have been distributed to the Holder upon such
reorganization, reclassification, consolidation, merger or sale had the Holder
exercised this Warrant immediately prior to such reorganization,
reclassification, consolidation, merger or sale. The Holder shall pay upon
such exercise the Exercise Price that otherwise would have been payable
pursuant to the terms of this Warrant. Appropriate adjustment shall be made in
the application of the provisions of this Section 7 with respect to the rights
of the Holder after the reorganization, consolidation, merger or sale to the
end that the provisions of this Section 7 (including adjustment of the Exercise
Price then in effect and the number of shares or securities deliverable upon
exercise of this Warrant) shall be applicable after that event and shall be
nearly equivalent to the provisions hereof as may be practicable. If any such
reorganization, reclassification, consolidation, merger or sale results in a
cash distribution in excess of the Exercise Price provided by this Warrant, the
Holder may, at the Holder's option, exercise this Warrant without making
payment of the Exercise Price, and in such case the Company shall, upon
distribution to the Holder, consider the Exercise Price to have been paid in
full, and in making settlement to the Holder, shall deduct an amount equal to
the Exercise Price from the amount payable to the Holder.
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7.2 If the Company shall, other than as provided in Paragraph E of
Section 7.1, dissolve, liquidate or wind up its affairs, the Holder shall
thereafter have the right to receive upon exercise of this Warrant, in lieu of
the shares of Stock of the Company that the Holder otherwise would have been
entitled to receive, the same kind and amount of securities or assets as would
have been issued, distributed or paid to the Holder upon any such dissolution,
liquidation or winding up with respect to such shares of Stock of the Company
had the Holder been the holder of record of such shares of Stock receivable
upon exercise of this Warrant on the date for determining those entitled to
receive any such distribution.
7.3 In each case of an adjustment or readjustment of the Exercise
Price or the number of shares of Stock or other securities issuable upon
exercise of this Warrant, the Company, at its expense, shall promptly cause
independent public accountants of recognized standing selected by the Company
(who may be the independent public accountants then auditing the books of the
Company) to compute such adjustment or readjustment in accordance with the
provisions hereof and prepare a certificate showing such adjustment or
readjustment, and shall promptly mail such certificate, by first class mail,
postage prepaid, to the Holder at the Holder's address as shown in the
Company's books. The certificate shall set forth such adjustment or
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based.
SECTION 8. NOTICES TO WARRANT HOLDER. In the event of: (i) any
taking by the Company of a record of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution or any right to subscribe for, purchase or
otherwise acquire any shares of Stock of any class or any other securities or
property, or to receive any other rights; (ii) any capital reorganization of
the Company, any reclassification or recapitalization of the Stock of the
Company or any transfer of all or substantially all of the assets of the
Company to any other person or any consolidation or merger involving the
Company and any other person; or (iii) any voluntary or involuntary
dissolution, liquidation or winding-up of the Company; then the Company shall
give to the Holder of this Warrant a notice specifying the date or expected
date of any such taking of a record or other event and describing the same in
reasonable detail. Such notice shall be given at least 20 days prior to the
date therein specified.
SECTION 9. GOVERNING LAW. This Warrant shall be construed in
accordance with the laws of the State of Delaware applicable to contracts
executed and to be performed wholly within such state.
SECTION 10. NOTICE. Notices and other communications to be given to
the Holder of this Warrant or to the Company shall be deemed to be sufficiently
given if delivered by hand or mailed, registered or certified mail, postage
prepaid, to the following address:
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If to the Holder: The Paragon Group, A California
Limited Partnership
1901 Avenue of the Stars
Suite 850
Los Angeles, California 90067
Attn: Russell Goldsmith
If to the Company: Spelling Entertainment Group Inc.
5700 Wilshire Boulevard
Los Angeles, California 90036
Attn: Thomas P. Carson
with a copy to:
Spelling Entertainment Group Inc.
One Blockbuster Plaza
Fort Lauderdale, Florida 33301
Attn: Thomas W. Hawkins
or such other address as the Holder or the Company shall have designated by
written notice to the other as herein provided. Notice by mail shall be deemed
given when deposited in the United States mail, postage prepaid, as herein
provided.
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IN WITNESS WHEREOF, the Company has executed this Warrant as
of April 26, 1994.
SPELLING ENTERTAINMENT GROUP INC.
By: ______________________________
Title:____________________________
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PURCHASE FORM
Dated _________________________, 19___
The undersigned hereby irrevocably elects to exercise the within Warrant to the
extent of purchasing ____________________ shares of Stock and hereby makes
payment of $______________________in payment of the actual exercise price
thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name________________________________________________________________________
(Please typewrite or print in block letters)
Address_____________________________________________________________________
____________________________________________________________________________
Signature: ___________________________
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ASSIGNMENT FORM
FOR VALUE RECEIVED, _________________________ hereby sells, assigns and
transfers unto
Name________________________________________________________________________
(Please typewrite or print in block letters)
Address_____________________________________________________________________
the right to purchase Stock represented by this Warrant to the extent
of___________________ shares of Stock and does hereby irrevocably constitute
and appoint _______________________________________, attorney, to transfer the
same on the books of the Company with full power of substitution in the
premises.
Signature:____________________________
Dated: _________________, 19___
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Exhibit 10.3
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
SECURITIES LAWS OF ANY STATE, HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT TO APPLICABLE PROVISIONS OF
FEDERAL AND STATE SECURITIES LAWS OR EXEMPT FROM THE REGISTRATION REQUIREMENTS
THEREOF.
NO. 1 AMENDED AND RESTATED WARRANT
VOID AFTER 5:00 p.m., Los Angeles, California time, on February 11, 1998.
Warrant to Purchase 990,480
Shares of Common Stock
WARRANT TO PURCHASE COMMON STOCK
OF
SPELLING ENTERTAINMENT GROUP INC.
This is to certify that, for valuable consideration, receipt of which
is hereby acknowledged, REPINVESCO, INC., a Delaware corporation (the
"Holder"), is entitled to purchase, subject to the provisions of this Amended
and Restated Warrant, from SPELLING ENTERTAINMENT GROUP INC., a Florida
corporation (the "Company"), 990,480 fully paid and nonassessable shares of the
Common Stock, $.10 par value per share, of the Company (the "Stock"), subject
to adjustment as hereinafter set forth, at such price, during such period and
subject to such terms as hereinafter set forth. Unless the context otherwise
requires, the term "Warrant" or "Warrants" as used herein includes this Warrant
and any other Warrant or Warrants which may be issued pursuant to the
provisions of this Warrant, whether upon transfer, assignment, partial
exercise, divisions, combinations, exchange or otherwise, and the term "Holder"
includes any transferee or transferees or assignee or assignees of the Holder
named above, all of whom shall be subject to the provisions of this Warrant,
and, when used with reference to shares of Stock, means the holder or holders
of such shares of Stock. This Warrant was originally issued pursuant to the
terms of that certain Purchase Agreement dated as of January 21, 1993 between
Blockbuster Entertainment Corporation (the "Original Holder") and Republic
Pictures Corporation ("Republic") and is hereby amended and restated in its
entirety pursuant to that certain Agreement and Plan of Merger dated as of
December 8, 1993 among the Company, Republic and DE Acquisition Corporation to
effectuate the conversion of warrants to acquire shares of common stock, $.01
par value per share, of Republic into warrants to acquire shares of Stock in
connection with the merger of a subsidiary of the Company with and into
Republic.
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SECTION 1. EXERCISE PRICE. Subject to the provisions with respect to
adjustment in Section 7, the purchase price for each share of Stock purchasable
pursuant hereto shall be $6.9667 per share (hereinafter, as adjusted from time
to time as herein required, the "Exercise Price").
SECTION 2. EXERCISE OF WARRANT. This Warrant may be exercised, in
whole or in part at any time or from time to time, on or prior to 5:00 p.m.,
Los Angeles, California time, on February 11, 1998 or if such date is a day on
which federal or state chartered banking institutions located in the State of
California are authorized by law to close, then on the next succeeding day
which shall not be such a day, by presentation and surrender to the Company at
its principal office in California of this Warrant and the purchase form
annexed hereto duly executed and accompanied by payment, in cash or certified
or cashier's check payable to the order of the Company, of the Exercise Price
for the number of shares of Stock to be purchased upon exercise of this
Warrant. If this Warrant is exercised in part only, the Company shall,
promptly after presentation of this Warrant upon such exercise, execute and
deliver a new Warrant evidencing the rights of the Holder hereof to purchase
the unexercised balance of this Warrant. Upon and as of such receipt of this
Warrant and the purchase form by the Company at its principal office in
California, in proper form for exercise and accompanied by payment as herein
provided, the Holder shall be deemed to be the holder of record of the shares
of Stock issuable upon such exercise, notwithstanding that the stock transfer
books of the Company shall then be closed or that certificates representing
such shares of Stock shall not then be actually delivered to the Holder.
SECTION 3. COVENANTS OF COMPANY. The Company represents, warrants,
covenants and agrees as follows:
(a) The Company has the full corporate power and authority to enter
into and issue this Warrant. The execution, delivery and issuance by the
Company of this Warrant has been duly authorized by all necessary corporate
action on the part of the Company. This Warrant has been duly executed and
delivered by the Company, is validly issued and is a valid and binding
obligation of the Company, enforceable against the Company in accordance with
the terms hereof. The shares of Stock issuable upon exercise of this Warrant,
when issued in accordance with the terms of this Warrant, will constitute duly
authorized and issued, fully paid and nonassessable shares of the Stock. Such
shares have been reserved for issuance upon exercise of this Warrant.
(b) The Company will at all times until expiration of this Warrant
reserve and keep available, free from preemptive rights (other than preemptive
rights in favor of the Company), out of its authorized but unissued capital
stock (or capital stock held in treasury), a number of shares of Stock equal to
the total number of shares of Stock issuable upon exercise of this Warrant.
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(c) Until the expiration of this Warrant, the Company will provide
to or make available to, as the case may be, the Holder the same information,
reports and notices as it shall provide to, or make available to, all holders
of its capital stock.
(d) For so long as any rights represented by this Warrant may be
exercised, the Company shall give written notice to the Holder by certified or
registered mail of any change in the address of the principal office of the
Company.
SECTION 4. FRACTIONAL SHARES. No fractional shares of Stock or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional shares to which the Holder would otherwise
be entitled upon exercise hereof, the Company shall pay to the Holder an amount
in cash equal to such fraction multiplied by the current market value of such
share, determined as follows:
(a) If the Stock is listed on a national securities exchange or
admitted to unlisted trading privileges thereon, the current market value shall
be the last reported sale price of the Stock on such exchange on the last
trading day prior to the date of exercise of this Warrant or if no such sale is
made on such day, the average closing bid and asked prices of the Stock for
such day on such exchange;
(b) If the Stock is not so listed or admitted to unlisted trading
privileges, the current market value shall be the last reported sale price of
the Stock reported by NASDAQ System or, if not so reported, a comparable system
selected by the Board of Directors of the Company, on the last trading day
prior to the date of the exercise of this Warrant; or
(c) If the Stock is not so listed or admitted to unlisted trading
privileges and sale prices are not so reported, the current value shall be the
fair market value on the last business day prior to the date of exercise of
this Warrant, determined in such reasonable manner as may be prescribed by the
Board of Directors of the Company, but in no event less than the Exercise
Price.
SECTION 5. TRANSFER, EXCHANGE, ASSIGNMENT OR LOSS OF WARRANT.
5.1 This Warrant may not be assigned or transferred except as
provided in this Section 5 and in accordance with and subject to the provisions
of the Securities Act of 1933, as amended, and the Rules and Regulations
promulgated thereunder (said Act and such Rules and Regulations being
hereinafter collectively referred to as the "Act"). Any purported transfer or
assignment made other than in accordance with this Section 5 shall be null and
void and of no force and effect.
5.2 Prior to any transfer of this Warrant, other than in an offering
registered under the Act, the Holder shall notify the Company in writing of its
intention to effect such transfer, indicating the circumstances of the proposed
transfer and furnish the
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Company with an opinion of its counsel, which counsel and opinion shall be
reasonably satisfactory to the Company, to the effect that the proposed
transfer may be made without registration under the Act or registration or
qualification under any applicable state securities laws; provided, however,
that if the Company receives at least 5 business days' prior written notice of
a proposed transfer, and such proposed transfer is by a Holder which is a
corporation and a direct or indirect wholly owned subsidiary of the Original
Holder, or any successor thereto, to a direct or indirect wholly owned
subsidiary of the Original Holder in accordance with applicable corporate law,
such opinion shall not be required. The Company will promptly notify the
Holder if the opinion of counsel furnished to the Company is reasonably
satisfactory to the Company. Unless the Company notifies the Holder within 10
business days after its receipt of such opinion that such opinion is not
reasonably satisfactory to counsel for the Company, the Holder may proceed to
effect the transfer.
5.3 Each certificate for shares of Stock or for any other security
issued or issuable upon exercise of this Warrant shall contain the following
legend (unless the Company shall have received an opinion of counsel reasonably
satisfactory to it that such legend is not required to assure compliance with
the Act):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR SECURITIES LAWS OF ANY STATE, HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY
DISTRIBUTION AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS
REGISTERED PURSUANT TO APPLICABLE PROVISIONS OF FEDERAL AND STATE
SECURITIES LAWS OR EXEMPT FROM THE REGISTRATION REQUIREMENTS THEREOF.
The Holder, by accepting this Warrant, agrees and represents that,
unless the shares of Stock to be issued to such Holder upon exercise hereof
shall have been registered under the Act prior to the delivery thereof to such
Holder, it will acquire such shares for investment and not with a view to their
distribution.
5.4 Any assignment permitted hereunder shall be made by surrender of
this Warrant to the Company at its principal office in California with the
assignment form annexed hereto duly completed and executed. In such event the
Company shall, without charge for any issuance or transfer tax or other costs
incurred by the Company with respect to such transfer, execute and deliver a
new Warrant in the name of the assignee named in such instrument of assignment
and this Warrant shall promptly be cancelled. This Warrant may be divided or
combined with other Warrants which carry the same rights upon presentation
thereof at the principal office of the Company in California together with a
written notice signed by the Holder thereof, specifying the names and
denominations in which new Warrants are to be issued.
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<PAGE> 5
5.5 Upon receipt by the Company of evidence satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant (provided that an
affidavit of the Holder shall be satisfactory for such purpose), and of
indemnity satisfactory to it and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor and date and any such lost, stolen or destroyed Warrant shall
thereupon become void.
SECTION 6. RIGHTS OF HOLDER. Any Holder of this Warrant shall not, by
virtue hereof, be entitled to any rights of a stockholder in the Company,
either at law or in equity, and the rights of any such Holder are limited to
those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
SECTION 7. ADJUSTMENT IN THE NUMBER OF WARRANT SHARES PURCHASABLE AND
EXERCISE PRICE.
7.1 The number of shares of Stock or other securities or property
for which this Warrant may be exercised and the Exercise Price shall be subject
to adjustment as follows:
(a) If the Company, at any time or from time to time, effects a
subdivision or combination, by stock split, reverse stock split or otherwise,
of its outstanding shares of Stock into a larger or smaller number of shares of
Stock, the number of shares of Stock for which this Warrant may be exercised
immediately prior to such subdivision or combination shall be increased or
reduced in the same proportion as the increase or decrease in the outstanding
shares of Stock and the then applicable Exercise Price shall be adjusted by
multiplying such Exercise Price by a fraction, the numerator of which shall be
the number of shares of Stock purchasable upon exercise hereof immediately
prior to such subdivision or combination and the denominator of which shall be
the number of shares of Stock purchasable immediately following such
subdivision or combination. Any adjustment under this Paragraph (a) shall
become effective at the close of business on the date the subdivision or
combination becomes effective.
(b) If the Company, at any time or from time to time, declares a
dividend on Stock payable in Stock or securities convertible into Stock the
number of shares of Stock for which this Warrant may be exercised shall be
increased, as of the close of business on the record date for determining which
holders of Stock shall be entitled to receive such dividend, in proportion to
the increase in the number of outstanding shares of Stock as a result of such
dividend (treating for this purpose any securities convertible into Stock as so
converted) and the then applicable Exercise Price shall be adjusted by
multiplying such Exercise Price by a fraction, the numerator of which shall be
the number of shares of Stock purchasable upon exercise hereof immediately
prior to the record date for such dividend and the denominator of which shall
be the number of shares of Stock purchasable immediately following the record
date for such dividend (treating for this purpose any securities convertible
into Stock as so converted).
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<PAGE> 6
(c) If the Company at any time or from time to time makes, or fixes
a record date for the determination of holders of Stock entitled to receive, a
dividend or other distribution payable in securities of the Company other than
shares of Stock or securities convertible into Stock, then and in each such
event provision shall be made so that the Holder shall receive upon exercise
hereof, in addition to the number of shares of Stock receivable thereupon, the
amount of securities of the Company which it would have received had this
Warrant been exercised on the date of such event and had it thereafter, during
the period from the date of such event to and including the date of exercise,
retained such securities receivable by it as aforesaid during such period,
subject to all other adjustments called for during such period under this
Section 7 with respect to the right of the Holder.
(d) If the Stock issuable upon the exercise of this Warrant is
changed into the same or a different number of shares of any class or classes
of stock of the Company or property, whether by recapitalization,
reclassification or other exchange (other than a subdivision or combination of
shares, or a stock dividend, or a reorganization, merger, consolidation or sale
of assets provided for elsewhere in this Section 7), then and any in such event
the Holder shall have the right thereafter to purchase the kind and amount of
stock and other securities and property receivable upon such recapitalization,
reclassification or other exchange by holders of the number of shares of Stock
with respect to which this Warrant might have been exercised immediately prior
to such recapitalization, reclassification or other exchange, all subject to
further adjustments as provided herein.
(e) If at any time or from time to time there is a capital
reorganization of the Stock (other than a subdivision or combination of shares
or a stock dividend or recapitalization, reclassification or exchange of shares
provided for elsewhere in this Section 7) or a consolidation or merger of the
Company with or into another entity or the sale of all or substantially all of
the Company's assets to another person, then, as part of such capital
reorganization, consolidation, merger or sale, provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this
Warrant the same kind and number of shares of Stock and other securities, cash
or other property as would have been distributed to the Holder upon such
reorganization, reclassification, consolidation, merger or sale had the Holder
exercised this Warrant immediately prior to such reorganization,
reclassification, consolidation, merger or sale. The Holder shall pay upon
such exercise the Exercise Price that otherwise would have been payable
pursuant to the terms of this Warrant. Appropriate adjustment shall be made in
the application of the provisions of this Section 7 with respect to the rights
of the Holder after the reorganization, consolidation, merger or sale to the
end that the provisions of this Section 7 (including adjustment of the Exercise
Price then in effect and the number of shares or securities deliverable upon
exercise of this Warrant) shall be applicable after that event and shall be
nearly equivalent to the provisions hereof as may be practicable. If any such
reorganization, reclassification, consolidation, merger or sale results in a
cash distribution in excess of the Exercise Price provided by this Warrant, the
Holder may, at the Holder's option, exercise this Warrant without making
payment of the Exercise Price, and in such case the Company shall, upon
distribution to the Holder, consider the Exercise Price to have been paid in
full, and in making settlement to the
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<PAGE> 7
Holder, shall deduct an amount equal to the Exercise Price from the amount
payable to the Holder.
7.2 If the Company shall, other than as provided in Paragraph (e) of
Section 7.1, dissolve, liquidate or wind up its affairs, the Holder shall
thereafter have the right to receive upon proper exercise of this Warrant, in
lieu of the shares of Stock of the Company that the Holder otherwise would have
been entitled to receive, the same kind and amount of securities or assets as
would have been issued, distributed or paid to the Holder upon any such
dissolution, liquidation or winding up with respect to such shares of Stock of
the Company had the Holder been the holder of record of such shares of Stock
receivable upon exercise of this Warrant on the date for determining those
entitled to receive any such distribution.
7.3 In each case of an adjustment or readjustment of the Exercise
Price or the number of shares of Stock or other securities issuable upon
exercise of this Warrant, the Company, at its expense, shall promptly cause
independent public accountants of recognized standing selected by the Company
(who may be the independent public accountants then auditing the books of the
Company) to compute such adjustment or readjustment in accordance with the
provisions hereof and prepare a certificate showing such adjustment or
readjustment, and shall promptly mail such certificate, by first class mail,
postage prepaid, to the Holder at the Holder's address as shown in the
Company's books. The certificate shall set forth such adjustment or
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based.
7.4 At the request of the Holder and upon surrender of this Warrant,
the Company shall reissue this Warrant in a form conforming to the adjustment
or change made pursuant to this Section 7.
SECTION 8. NOTICES TO WARRANT HOLDER. In the event of: (i) any
taking by the Company of a record of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution or any right to subscribe for, purchase or
otherwise acquire any shares of Stock of any class or any other securities or
property, or to receive any other rights; (ii) any capital reorganization of
the Company, any reclassification or recapitalization of the Stock of the
Company or any transfer of all or substantially all of the assets of the
Company to any other person or any consolidation or merger involving the
Company and any other person; or (iii) any voluntary or involuntary
dissolution, liquidation or winding-up of the Company; then the Company shall
give to the Holder of this Warrant a notice specifying the date or expected
date of any such taking of a record or other event and describing the same in
reasonable detail. Such notice shall be given at least 20 days prior to the
date therein specified.
SECTION 9. GOVERNING LAW. This Warrant shall be construed in
accordance with the laws of the State of Delaware applicable to contracts
executed and to be performed wholly within such state.
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<PAGE> 8
SECTION 10. NOTICE. Notices and other communications to be given to
the Holder of this Warrant or to the Company shall be deemed to be sufficiently
given if delivered by hand or mailed, registered or certified mail, postage
prepaid, to the following address:
If to the Holder: Repinvesco, Inc.
c/o Blockbuster Entertainment Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
Attn: Thomas W. Hawkins
If to the Company: Spelling Entertainment Group Inc.
5700 Wilshire Boulevard
Los Angeles, California 90036
Attn: Thomas P. Carson
or such other address as the Holder or the Company shall have designated by
written notice to the other as herein provided. Notice by mail shall be deemed
given when deposited in the United States mail, postage prepaid, as herein
provided.
SECTION 11. AMENDMENT. No amendment to this Warrant shall be valid
unless contained in a writing duly executed by the Holder and the Company.
IN WITNESS WHEREOF, the Company has executed this Warrant as of April
26, 1994.
SPELLING ENTERTAINMENT GROUP INC.
By: ______________________________
Title:______________________________
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<PAGE> 9
PURCHASE FORM
Dated ____________, 19__
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing __________ shares of Stock and hereby makes
payment of $__________ in payment of the actual exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name_________________________________________________________________________
(Please typewrite or print in block letters)
Address______________________________________________________________________
______________________________________________________________________
Signature:____________________________________
<PAGE> 10
ASSIGNMENT FORM
FOR VALUE RECEIVED, ____________________ hereby sells, assigns and
transfers unto
Name_________________________________________________________________________
(Please typewrite or print in block letters)
Address
________________________________________________________________________________
the right to purchase Stock represented by this Warrant to the extent of
__________ shares of Stock and does hereby irrevocably constitute and appoint
____________________, attorney, to transfer the same on the books of the
Company with full power of substitution in the premises.
Signature:____________________
Dated:____________, 19__
<PAGE> 1
EXHIBIT 10.4
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
SECURITIES LAWS OF ANY STATE, HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT TO APPLICABLE PROVISIONS OF
FEDERAL AND STATE SECURITIES LAWS OR EXEMPT FROM THE REGISTRATION REQUIREMENTS
THEREOF.
NO. 2 AMENDED AND RESTATED WARRANT
VOID AFTER 5:00 p.m., Los Angeles, California time, on February 11, 1998.
Warrant to Purchase 346,668
Shares of Common Stock
WARRANT TO PURCHASE COMMON STOCK
OF
SPELLING ENTERTAINMENT GROUP INC.
This is to certify that, for valuable consideration,
receipt of which is hereby acknowledged, REPINVESCO, INC., a Delaware
corporation (the "Holder"), is entitled to purchase, subject to the provisions
of this Amended and Restated Warrant, from SPELLING ENTERTAINMENT GROUP INC., a
Florida corporation (the "Company"), 346,668 fully paid and nonassessable
shares of the Common Stock, $.10 par value per share, of the Company (the
"Stock"), subject to adjustment as hereinafter set forth, at such price, during
such period and subject to such terms as hereinafter set forth. Unless the
context otherwise requires, the term "Warrant" or "Warrants" as used herein
includes this Warrant and any other Warrant or Warrants which may be issued
pursuant to the provisions of this Warrant, whether upon transfer, assignment,
partial exercise, divisions, combinations, exchange or otherwise, and the term
"Holder" includes any transferee or transferees or assignee or assignees of the
Holder named above, all of whom shall be subject to the provisions of this
Warrant, and, when used with reference to shares of Stock, means the holder or
holders of such shares of Stock. This Warrant was originally issued pursuant
to the terms of that certain Purchase Agreement dated as of January 21, 1993
between Blockbuster Entertainment Corporation (the "Original Holder") and
Republic Pictures Corporation ("Republic") and is hereby amended and restated
in its entirety pursuant to that certain Agreement and Plan of Merger dated as
of December 8, 1993 among the Company, Republic and DE Acquisition Corporation
to effectuate the conversion of warrants to acquire shares of common stock,
$.01 par value per share, of Republic into warrants to acquire shares of Stock
in connection with the merger of a subsidiary of the Company with and into
Republic.
<PAGE> 2
SECTION 1. EXERCISE PRICE. Subject to the
provisions with respect to adjustment in Section 7, the purchase price for each
share of Stock purchasable pursuant hereto shall be $6.9667 per share
(hereinafter, as adjusted from time to time as herein required, the "Exercise
Price").
SECTION 2. EXERCISE OF WARRANT. This Warrant
may be exercised, in whole or in part at any time or from time to time, on or
prior to 5:00 p.m., Los Angeles, California time, on February 11, 1998 or if
such date is a day on which federal or state chartered banking institutions
located in the State of California are authorized by law to close, then on the
next succeeding day which shall not be such a day, by presentation and
surrender to the Company at its principal office in California of this Warrant
and the purchase form annexed hereto duly executed and accompanied by payment,
in cash or certified or cashier's check payable to the order of the Company, of
the Exercise Price for the number of shares of Stock to be purchased upon
exercise of this Warrant. If this Warrant is exercised in part only, the
Company shall, promptly after presentation of this Warrant upon such exercise,
execute and deliver a new Warrant evidencing the rights of the Holder hereof to
purchase the unexercised balance of this Warrant. Upon and as of such receipt
of this Warrant and the purchase form by the Company at its principal office in
California, in proper form for exercise and accompanied by payment as herein
provided, the Holder shall be deemed to be the holder of record of the shares
of Stock issuable upon such exercise, notwithstanding that the stock transfer
books of the Company shall then be closed or that certificates representing
such shares of Stock shall not then be actually delivered to the Holder.
SECTION 3. COVENANTS OF COMPANY. The Company
represents, warrants, covenants and agrees as follows:
(a) The Company has the full corporate power and
authority to enter into and issue this Warrant. The execution, delivery and
issuance by the Company of this Warrant has been duly authorized by all
necessary corporate action on the part of the Company. This Warrant has been
duly executed and delivered by the Company, is validly issued and is a valid
and binding obligation of the Company, enforceable against the Company in
accordance with the terms hereof. The shares of Stock issuable upon exercise
of this Warrant, when issued in accordance with the terms of this Warrant, will
constitute duly authorized and issued, fully paid and nonassessable shares of
the Stock. Such shares have been reserved for issuance upon exercise of this
Warrant.
(b) The Company will at all times until expiration
of this Warrant reserve and keep available, free from preemptive rights (other
than preemptive rights in favor of the Company), out of its authorized but
unissued capital stock (or capital stock held in treasury), a number of shares
of Stock equal to the total number of shares of Stock issuable upon exercise of
this Warrant.
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<PAGE> 3
(c) Until the expiration of this Warrant, the
Company will provide to or make available to, as the case may be, the Holder
the same information, reports and notices as it shall provide to, or make
available to, all holders of its capital stock.
(d) For so long as any rights represented by this
Warrant may be exercised, the Company shall give written notice to the Holder
by certified or registered mail of any change in the address of the principal
office of the Company.
SECTION 4. FRACTIONAL SHARES. No fractional
shares of Stock or scrip representing fractional shares shall be issued upon
the exercise of this Warrant. In lieu of any fractional shares to which the
Holder would otherwise be entitled upon exercise hereof, the Company shall pay
to the Holder an amount in cash equal to such fraction multiplied by the
current market value of such share, determined as follows:
(a) If the Stock is listed on a national
securities exchange or admitted to unlisted trading privileges thereon, the
current market value shall be the last reported sale price of the Stock on such
exchange on the last trading day prior to the date of exercise of this Warrant
or if no such sale is made on such day, the average closing bid and asked
prices of the Stock for such day on such exchange;
(b) If the Stock is not so listed or admitted to
unlisted trading privileges, the current market value shall be the last
reported sale price of the Stock reported by NASDAQ System or, if not so
reported, a comparable system selected by the Board of Directors of the
Company, on the last trading day prior to the date of the exercise of this
Warrant; or
(c) If the Stock is not so listed or admitted to
unlisted trading privileges and sale prices are not so reported, the current
value shall be the fair market value on the last business day prior to the date
of exercise of this Warrant, determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company, but in no event less than
the Exercise Price.
SECTION 5. TRANSFER, EXCHANGE, ASSIGNMENT OR
LOSS OF WARRANT.
5.1 This Warrant may not be assigned or
transferred except as provided in this Section 5 and in accordance with and
subject to the provisions of the Securities Act of 1933, as amended, and the
Rules and Regulations promulgated thereunder (said Act and such Rules and
Regulations being hereinafter collectively referred to as the "Act"). Any
purported transfer or assignment made other than in accordance with this
Section 5 shall be null and void and of no force and effect.
5.2 Prior to any transfer of this Warrant, other
than in an offering registered under the Act, the Holder shall notify the
Company in writing of its intention to effect such transfer, indicating the
circumstances of the proposed transfer and furnish the
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<PAGE> 4
Company with an opinion of its counsel, which counsel and opinion shall be
reasonably satisfactory to the Company, to the effect that the proposed
transfer may be made without registration under the Act or registration or
qualification under any applicable state securities laws; provided, however,
that if the Company receives at least 5 business days' prior written notice of
a proposed transfer, and such proposed transfer is by a Holder which is a
corporation and a direct or indirect wholly owned subsidiary of the Original
Holder, or any successor thereto, to a direct or indirect wholly owned
subsidiary of the Original Holder in accordance with applicable corporate law,
such opinion shall not be required. The Company will promptly notify the
Holder if the opinion of counsel furnished to the Company is reasonably
satisfactory to the Company. Unless the Company notifies the Holder within 10
business days after its receipt of such opinion that such opinion is not
reasonably satisfactory to counsel for the Company, the Holder may proceed to
effect the transfer.
5.3 Each certificate for shares of Stock or for
any other security issued or issuable upon exercise of this Warrant shall
contain the following legend (unless the Company shall have received an opinion
of counsel reasonably satisfactory to it that such legend is not required to
assure compliance with the Act):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR SECURITIES LAWS OF ANY
STATE, HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH
A VIEW TO OR FOR SALE IN CONNECTION WITH ANY
DISTRIBUTION AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED UNLESS REGISTERED PURSUANT TO APPLICABLE
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR
EXEMPT FROM THE REGISTRATION REQUIREMENTS THEREOF.
The Holder, by accepting this Warrant, agrees and
represents that, unless the shares of Stock to be issued to such Holder upon
exercise hereof shall have been registered under the Act prior to the delivery
thereof to such Holder, it will acquire such shares for investment and not with
a view to their distribution.
5.4 Any assignment permitted hereunder shall be
made by surrender of this Warrant to the Company at its principal office in
California with the assignment form annexed hereto duly completed and executed.
In such event the Company shall, without charge for any issuance or transfer
tax or other costs incurred by the Company with respect to such transfer,
execute and deliver a new Warrant in the name of the assignee named in such
instrument of assignment and this Warrant shall promptly be cancelled. This
Warrant may be divided or combined with other Warrants which carry the same
rights upon presentation thereof at the principal office of the Company in
California together with a written notice signed by the Holder thereof,
specifying the names and denominations in which new Warrants are to be issued.
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<PAGE> 5
5.5 Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant (provided that an affidavit of the Holder shall be satisfactory for
such purpose), and of indemnity satisfactory to it and upon surrender and
cancellation of this Warrant, if mutilated, the Company will execute and
deliver a new Warrant of like tenor and date and any such lost, stolen or
destroyed Warrant shall thereupon become void.
SECTION 6. RIGHTS OF HOLDER. Any Holder of this
Warrant shall not, by virtue hereof, be entitled to any rights of a stockholder
in the Company, either at law or in equity, and the rights of any such Holder
are limited to those expressed in this Warrant and are not enforceable against
the Company except to the extent set forth herein.
SECTION 7. ADJUSTMENT IN THE NUMBER OF WARRANT
SHARES PURCHASABLE AND EXERCISE PRICE.
7.1 The number of shares of Stock or other
securities or property for which this Warrant may be exercised and the Exercise
Price shall be subject to adjustment as follows:
(a) If the Company, at any time or from time to
time, effects a subdivision or combination, by stock split, reverse stock split
or otherwise, of its outstanding shares of Stock into a larger or smaller
number of shares of Stock, the number of shares of Stock for which this Warrant
may be exercised immediately prior to such subdivision or combination shall be
increased or reduced in the same proportion as the increase or decrease in the
outstanding shares of Stock and the then applicable Exercise Price shall be
adjusted by multiplying such Exercise Price by a fraction, the numerator of
which shall be the number of shares of Stock purchasable upon exercise hereof
immediately prior to such subdivision or combination and the denominator of
which shall be the number of shares of Stock purchasable immediately following
such subdivision or combination. Any adjustment under this Paragraph (a) shall
become effective at the close of business on the date the subdivision or
combination becomes effective.
(b) If the Company, at any time or from time to
time, declares a dividend on Stock payable in Stock or securities convertible
into Stock the number of shares of Stock for which this Warrant may be
exercised shall be increased, as of the close of business on the record date
for determining which holders of Stock shall be entitled to receive such
dividend, in proportion to the increase in the number of outstanding shares of
Stock as a result of such dividend (treating for this purpose any securities
convertible into Stock as so converted) and the then applicable Exercise Price
shall be adjusted by multiplying such Exercise Price by a fraction, the
numerator of which shall be the number of shares of Stock purchasable upon
exercise hereof immediately prior to the record date for such dividend and the
denominator of which shall be the number of shares of Stock purchasable
immediately following the record date for such dividend (treating for this
purpose any securities convertible into Stock as so converted).
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<PAGE> 6
(c) If the Company at any time or from time to
time makes, or fixes a record date for the determination of holders of Stock
entitled to receive, a dividend or other distribution payable in securities of
the Company other than shares of Stock or securities convertible into Stock,
then and in each such event provision shall be made so that the Holder shall
receive upon exercise hereof, in addition to the number of shares of Stock
receivable thereupon, the amount of securities of the Company which it would
have received had this Warrant been exercised on the date of such event and had
it thereafter, during the period from the date of such event to and including
the date of exercise, retained such securities receivable by it as aforesaid
during such period, subject to all other adjustments called for during such
period under this Section 7 with respect to the right of the Holder.
(d) If the Stock issuable upon the exercise of
this Warrant is changed into the same or a different number of shares of any
class or classes of stock of the Company or property, whether by
recapitalization, reclassification or other exchange (other than a subdivision
or combination of shares, or a stock dividend, or a reorganization, merger,
consolidation or sale of assets provided for elsewhere in this Section 7), then
and any in such event the Holder shall have the right thereafter to purchase
the kind and amount of stock and other securities and property receivable upon
such recapitalization, reclassification or other exchange by holders of the
number of shares of Stock with respect to which this Warrant might have been
exercised immediately prior to such recapitalization, reclassification or
other exchange, all subject to further adjustments as provided herein.
(e) If at any time or from time to time there is a
capital reorganization of the Stock (other than a subdivision or combination of
shares or a stock dividend or recapitalization, reclassification or exchange of
shares provided for elsewhere in this Section 7) or a consolidation or merger
of the Company with or into another entity or the sale of all or substantially
all of the Company's assets to another person, then, as part of such capital
reorganization, consolidation, merger or sale, provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this
Warrant the same kind and number of shares of Stock and other securities, cash
or other property as would have been distributed to the Holder upon such
reorganization, reclassification, consolidation, merger or sale had the Holder
exercised this Warrant immediately prior to such reorganization,
reclassification, consolidation, merger or sale. The Holder shall pay upon
such exercise the Exercise Price that otherwise would have been payable
pursuant to the terms of this Warrant. Appropriate adjustment shall be made in
the application of the provisions of this Section 7 with respect to the rights
of the Holder after the reorganization, consolidation, merger or sale to the
end that the provisions of this Section 7 (including adjustment of the Exercise
Price then in effect and the number of shares or securities deliverable upon
exercise of this Warrant) shall be applicable after that event and shall be
nearly equivalent to the provisions hereof as may be practicable. If any such
reorganization, reclassification, consolidation, merger or sale results in a
cash distribution in excess of the Exercise Price provided by this Warrant, the
Holder may, at the Holder's option, exercise this Warrant without making
payment of the Exercise Price, and in such case the Company shall, upon
distribution to the Holder, consider the Exercise Price to have been paid in
full, and in making settlement to the
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<PAGE> 7
Holder, shall deduct an amount equal to the Exercise Price from the amount
payable to the Holder.
7.2 If the Company shall, other than as provided
in Paragraph (e) of Section 7.1, dissolve, liquidate or wind up its affairs,
the Holder shall thereafter have the right to receive upon proper exercise of
this Warrant, in lieu of the shares of Stock of the Company that the Holder
otherwise would have been entitled to receive, the same kind and amount of
securities or assets as would have been issued, distributed or paid to the
Holder upon any such dissolution, liquidation or winding up with respect to
such shares of Stock of the Company had the Holder been the holder of record of
such shares of Stock receivable upon exercise of this Warrant on the date for
determining those entitled to receive any such distribution.
7.3 In each case of an adjustment or readjustment
of the Exercise Price or the number of shares of Stock or other securities
issuable upon exercise of this Warrant, the Company, at its expense, shall
promptly cause independent public accountants of recognized standing selected
by the Company (who may be the independent public accountants then auditing the
books of the Company) to compute such adjustment or readjustment in accordance
with the provisions hereof and prepare a certificate showing such adjustment or
readjustment, and shall promptly mail such certificate, by first class mail,
postage prepaid, to the Holder at the Holder's address as shown in the
Company's books. The certificate shall set forth such adjustment or
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based.
7.4 At the request of the Holder and upon
surrender of this Warrant, the Company shall reissue this Warrant in a form
conforming to the adjustment or change made pursuant to this Section 7.
SECTION 8. NOTICES TO WARRANT HOLDER. In the
event of: (i) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution or any right to
subscribe for, purchase or otherwise acquire any shares of Stock of any class
or any other securities or property, or to receive any other rights; (ii) any
capital reorganization of the Company, any reclassification or recapitalization
of the Stock of the Company or any transfer of all or substantially all of the
assets of the Company to any other person or any consolidation or merger
involving the Company and any other person; or (iii) any voluntary or
involuntary dissolution, liquidation or winding-up of the Company; then the
Company shall give to the Holder of this Warrant a notice specifying the date
or expected date of any such taking of a record or other event and describing
the same in reasonable detail. Such notice shall be given at least 20 days
prior to the date therein specified.
SECTION 9. GOVERNING LAW. This Warrant shall be
construed in accordance with the laws of the State of Delaware applicable to
contracts executed and to be performed wholly within such state.
-7-
<PAGE> 8
SECTION 10. NOTICE. Notices and other
communications to be given to the Holder of this Warrant or to the Company
shall be deemed to be sufficiently given if delivered by hand or mailed,
registered or certified mail, postage prepaid, to the following address:
If to the Holder: Repinvesco, Inc.
c/o Blockbuster Entertainment Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
Attn: Thomas W. Hawkins
If to the Company: Spelling Entertainment Group Inc.
5700 Wilshire Boulevard
Los Angeles, California 90036
Attn: Thomas P. Carson
or such other address as the Holder or the Company shall have designated by
written notice to the other as herein provided. Notice by mail shall be deemed
given when deposited in the United States mail, postage prepaid, as herein
provided.
SECTION 11. AMENDMENT. No amendment to this
Warrant shall be valid unless contained in a writing duly executed by the
Holder and the Company.
IN WITNESS WHEREOF, the Company has executed this Warrant as of April 26, 1994.
SPELLING ENTERTAINMENT GROUP INC.
By: ______________________________
Title:______________________________
-8-
<PAGE> 9
PURCHASE FORM
Dated ____________, 19__
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing __________ shares of Stock and hereby makes
payment of $__________ in payment of the actual exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name______________________________________________________________________
(Please typewrite or print in block letters)
Address ___________________________________________________________________
___________________________________________________________________
Signature:____________________________________
<PAGE> 10
ASSIGNMENT FORM
FOR VALUE RECEIVED, ____________________ hereby sells, assigns and transfers
unto
Name ______________________________________________________________________
(Please typewrite or print in block letters)
Address____________________________________________________________________
the right to purchase Stock represented by this Warrant to the extent of
__________ shares of Stock and does hereby irrevocably constitute and appoint
____________________, attorney, to transfer the same on the books of the
Company with full power of substitution in the premises.
Signature________________________
Dated:____________, 19__
<PAGE> 1
Exhibit 11
SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES
Exhibit 11 - Computation of Net Income (Loss) Per Common Share
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1994 1993
------- --------
<S> <C> <C>
Net income (loss):
Income from continuing operations $ 6,854 $ 939
Dividend on preferred stock - 203
------- -------
Income from continuing operations
applicable to common stock 6,854 736
Loss from discontinued operations - (5,515)
------- -------
Net income (loss) applicable to common stock $ 6,854 $(4,779)
======= =======
Shares:
Basic shares - weighted average of
common shares outstanding 64,579 50,859
Additional shares, when dilutive, assuming
conversion of stock options 1,505 -
------- -------
Primary shares 66,084 50,859
Additional shares assuming
full dilution of stock options - -
------- -------
Fully-diluted shares 66,084 50,859
======= =======
Basic, primary, and fully-diluted net
income (loss) per common share:
Continuing operations $ 0.11 $ 0.02
Discontinued operations - (0.11)
------- -------
Net income (loss) per common share $ 0.11 $ (0.09)
======= =======
</TABLE>
Note 1: This calculation is submitted in accordance with the Securities
Exchange Act of 1934 although not required by footnote 2 to
paragraph 14 of APB Opinion No. 15 because the calculation of
primary and fully-diluted net income per share results in a dilution
of less than 3%.
