<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 9)
Spelling Entertainment Group Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
847807104
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(CUSIP Number)
Thomas W. Hawkins Copy to:
Senior Vice President, Bryan D. Rosenberger
General Counsel and Secretary Eckert Seamans Cherin & Mellott
200 South Andrews Avenue 600 Grant Street, 42nd Floor
Fort Lauderdale, Florida 33301 Pittsburgh, Pennsylvania 15219
(305) 832-3000 (412) 566-6000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 28, 1994
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(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
Check the following box if a fee is being paid with the statement. [ ]
<PAGE> 2
SCHEDULE 13D
CUSIP No. 847807104
1. Name of Reporting Person: SEGI Holding Co.
I.R.S. Identification No.: 65-0418084
2. Check the Appropriate Box if a Member of a Group (a) [x]
(b) [ ]
3. SEC Use Only
4. Source of Funds: OO, AF
5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: Delaware
Number of 7. Sole Voting Power: 45,658,640*
Shares
Beneficially 8. Shared Voting Power: -0-
Owned by
Each 9. Sole Dispositive Power: 45,658,640*
Reporting
Person 10. Shared Dispositive Power: -0-
With
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: 45,658,640*
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares [x]
13. Percent of Class Represented by Amount in Row (11): 70.5%
14. Type of Reporting Person: CO
* Does not include shares which may be acquired pursuant to the
Letter Agreement described herein.
<PAGE> 3
SCHEDULE 13D
CUSIP No. 847807104
1. Name of Reporting Person: Repinvesco, Inc.
I.R.S. Identification No.: 51-0347052
2. Check the Appropriate Box if a Member of a Group (a) [x]
(b) [ ]
3. SEC Use Only
4. Source of Funds: OO, AF
5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: Delaware
Number of 7. Sole Voting Power: 1,337,148
Shares
Beneficially 8. Shared Voting Power: -0-
Owned by
Each 9. Sole Dispositive Power: 1,337,148
Reporting
Person 10. Shared Dispositive Power: -0-
With
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: 1,337,148
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares [x]
13. Percent of Class Represented by Amount in Row (11): 2.0%
14. Type of Reporting Person: CO
<PAGE> 4
SCHEDULE 13D
CUSIP No. 847807104
1. Name of Reporting Person: Blockbuster Entertainment Corporation
I.R.S. Identification No.: 75-1849418
2. Check the Appropriate Box if a Member of a Group (a) [x]
(b) [ ]
3. SEC Use Only
4. Source of Funds: OO
5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: Delaware
Number of 7. Sole Voting Power: -0-
Shares
Beneficially 8. Shared Voting Power: -0-
Owned by
Each 9. Sole Dispositive Power: -0-
Reporting
Person 10. Shared Dispositive Power: -0-
With
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: -0-*
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares [x]
13. Percent of Class Represented by Amount in Row (11): -0-
14. Type of Reporting Person: CO
* Does not include shares which may be acquired pursuant to the Letter
Agreement described herein.
<PAGE> 5
SCHEDULE 13D
CUSIP No. 847807104
1. Name of Reporting Person: Blockbuster Pictures Holding Corporation
I.R.S. Identification No.: 65-0418087
2. Check the Appropriate Box if a Member of a Group (a) [x]
(b) [ ]
3. SEC Use Only
4. Source of Funds: OO, AF
5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: Delaware
Number of 7. Sole Voting Power: -0-
Shares
Beneficially 8. Shared Voting Power: -0-
Owned by
Each 9. Sole Dispositive Power: -0-
Reporting
Person 10. Shared Dispositive Power: -0-
With
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: -0-
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares [x]
13. Percent of Class Represented by Amount in Row (11): -0-
14. Type of Reporting Person: CO
<PAGE> 6
This statement amends Items 3, 4, 5, 6 and 7 of the Schedule
13D of BEC, Holdings, SEGI and REPI dated March 7, 1993, as amended by
Amendment No. 1 dated March 31, 1993, Amendment No. 2 dated June 25, 1993,
Amendment No. 3 dated September 12, 1993, Amendment No. 4 dated September 17,
1993, Amendment No. 5 dated October 5, 1993, Amendment No. 6 dated December 8,
1993, Amendment No. 7 dated January 31, 1994 and Amendment No. 8 dated April
26, 1994 (as so amended, the "Schedule 13D"). All capitalized terms used
herein and not otherwise defined shall have the respective meanings ascribed to
such terms in the Schedule 13D.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 of the Schedule 13D is amended to reflect the following:
On June 28, 1994, the Company entered into a letter agreement
(the "Letter Agreement") with BEC in which the Company and BEC have agreed in
principle to an exchange transaction (the "Exchange") in which BEC will deliver
to the Company 7,168,702 ordinary shares, L.0.008 par value per share
("Ordinary Shares"), of Virgin Interactive Entertainment plc ("VIE") and
options to acquire 550,000 Ordinary Shares (collectively, the "VIE Interests")
in exchange for the delivery by the Company to BEC of shares of Common Stock.
On June 22, 1994, BEC entered into (i) a Share Purchase Agreement (the "Share
Purchase Agreement") with certain shareholders of VIE (the "Vendors") pursuant
to which BEC has agreed to purchase certain of the VIE Interests and (ii) a
letter agreement (the "BEC/VIE Letter Agreement") with the Vendors relating to
certain matters following BEC's transfer of the Ordinary Shares which are the
subject of the Share Purchase Agreement. The aggregate cost to BEC of the VIE
Interests will be $162,779,610 plus the fees and expenses incurred by BEC in
connection with its acquisitions of the VIE Interests ("BEC's Cost"). Set
forth in this Item 3 and in Item 6 below are descriptions of selected
provisions of the Letter Agreement and the BEC/VIE Letter Agreement. Such
descriptions are qualified in their entirety by reference to the copies of such
agreements filed as Exhibits hereto, which are incorporated by reference herein
and are made a part hereof to the same extent as though set forth herein in
full.
Pursuant to the Letter Agreement, the Company and BEC have
agreed in principle to enter into a definitive agreement (the "Exchange
Agreement") providing for the delivery by BEC to the Company of the VIE
Interests in exchange for delivery by the Company to BEC of the number of
shares of Common Stock equal to (I) BEC's Cost, divided by (II) $8.95, which
represents the average closing price of the Common Stock on the New York Stock
Exchange Composite Tape, as reported in The Wall Street Journal (Southeast
Edition), on the five trading days ending June 27, 1994. BEC intends to assign
its rights under the Letter Agreement to a wholly-owned subsidiary.
Consummation of the Exchange (the "Closing") requires, among
other things, the negotiation, execution and delivery of the Exchange
Agreement, receipt by the Company of a fairness opinion from its financial
advisor, approval of a majority of the disinterested directors of the Company
and consummation of the transactions contemplated by the Share
<PAGE> 7
Purchase Agreement and related agreements (collectively, the "VIE Agreements").
As a result of the Exchange, the Company will own approximately 75% of the
outstanding Ordinary Shares. Consummation of the transactions contemplated by
the VIE Agreements is not contingent upon consummation of the Exchange.
VIE, a company organized under the laws of the United Kingdom,
develops and publishes video game and entertainment software compatible with
all leading consumer hardware systems, including Nintendo and Sega 8-bit and
16-bit consoles and portable systems, and personal computer and CD-ROM systems.
Its titles, which are developed by its internal staff and by third party
developers, feature proprietary content as well as intellectual properties
licensed from others, and are sold worldwide to retailers, distributors and
mass merchandisers.
See Item 6 for additional information that may be required by
this Item 3.
ITEM 4. PURPOSE OF TRANSACTION.
BEC currently owns 1,864,444 Ordinary Shares, or approximately
19.9% of the Ordinary Shares outstanding, which it purchased in January 1994.
In connection with such purchase, BEC was granted certain rights to acquire
additional Ordinary Shares. Consistent with such rights, BEC was afforded the
opportunity to increase its ownership of the outstanding Ordinary Shares to
approximately 75% through consummation of the transactions contemplated by the
VIE Agreements. BEC and the Company (as evidenced by the Letter Agreement)
desire the Company to obtain the majority ownership interest in VIE as both BEC
and the Company believe that such placement of the majority ownership interest
in VIE will provide the greatest level of business opportunities and benefits
to BEC and the Company. Because of the rights granted to BEC in connection
with its January 1994 purchase of Ordinary Shares, the Company is not in a
position to individually acquire the Ordinary Shares which are the subject of
the VIE Agreements. The transactions described herein, if consummated, will
enable the Company to acquire all of the VIE Interests.
See Items 3 and 6 for additional information that may be
required by this Item 4.
ITEM 5. INTEREST IN SECURITIES OF ISSUER.
Item 5 of the Schedule 13D is amended and restated in its
entirety as follows:
SEGI currently beneficially owns and has sole voting power
with respect to 45,658,640 shares of Common Stock, representing approximately
70.5% of the Common Stock issued and outstanding (based on the number of shares
of Common Stock issued and outstanding on May 12, 1994).
BEC (or one of its wholly-owned subsidiaries) may be deemed to
be the beneficial owner of the shares of Common Stock subject to the Letter
Agreement. Unless and until the Exchange contemplated thereby
<PAGE> 8
is consummated, the Reporting Persons disclaim beneficial ownership of the
Common Stock subject to the Letter Agreement.
REPI presently holds the Warrants to acquire 1,337,148 shares
of Common Stock. The Warrants, which relate to 990,480 shares of Common Stock
and 346,668 shares of Common Stock, may be exercised in whole or in part at any
time until February 11, 1998. The purchase price for each share of Common
Stock purchasable pursuant to the Warrants is $6.9667. REPI may be deemed to
beneficially own the 1,337,148 shares of Common Stock underlying the Warrants,
representing approximately 2.0% of the Common Stock issued and outstanding.
REPI, SEGI and their parent entities, Holdings and BEC, may be
deemed to be a group under Section 13(d)(3) of the Exchange Act, such that the
shares of Common Stock beneficially owned by one such entity are deemed to be
beneficially owned by each of the other such entities. Neither Holdings nor
BEC beneficially own (or are deemed to beneficially own) any shares of capital
stock of the Company in addition to those reported above.
Except as indicated herein, neither the Reporting Persons nor
any of the persons listed on Schedule I to the Schedule 13D (based on
information provided by such individuals) presently beneficially owns any
Common Stock. Except as described herein, no transactions in Common Stock were
effected during the past 60 days by any person named in Item 2 of the Schedule
13D (based on information provided by such individuals).
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
The Letter Agreement contemplates that the Exchange Agreement
will provide that each outstanding option to acquire Ordinary Shares held by
employees of VIE will be converted into the right to receive, upon payment of
the exercise price (as adjusted as set forth below) the number of shares of
Common Stock determined by multiplying (I) the number of Ordinary Shares into
which such option was exercisable immediately prior to consummation of the
Exchange by (II) the quotient of (x) 21.50, divided by (y) the market price of
the Common Stock prior to the Closing. The exercise price for such employee
options will be adjusted by multiplying such exercise price by the quotient of
(I) one, divided by (II) the quotient of (x) 21.50, divided by (y) the market
price of the Common Stock prior to the Closing. To the extent required by, or
desirable under, the tax laws of the United Kingdom, certain options held by
VIE employees will be cancelled and regranted in accordance with the foregoing
formula. As of June 22, 1994, approximately 1,042,250 Ordinary Shares were
subject to VIE employee options.
The Letter Agreement also contemplates that the Exchange
Agreement will contain a put option and a call option (collectively, the
"Spelling/VIE Option") pursuant to which BEC may require the Company to
purchase from BEC and the Company may require BEC to sell to the Company,
respectively, the 936,907 Ordinary Shares (the "VIE Option
<PAGE> 9
Shares") that BEC may acquire from the Vendors pursuant to the put option or
the call option (collectively, the "BEC/VIE Option") contemplated by the Share
Purchase Agreement. The purchase price to the Company for the VIE Option
Shares (the "Spelling/VIE Option Price") will be the cost of such VIE Option
Shares to BEC (the "BEC/VIE Option Price"), minus certain amounts representing
an adjustment to the consideration delivered by BEC to the Vendors at the
closing of the transactions contemplated by the Share Purchase Agreement (the
"Initial Consideration Adjustment"), if any. The Company may pay the
Spelling/VIE Option price in cash or by delivery of a number of shares of
Common Stock equal to the quotient of (I) the Spelling/VIE Option Price,
divided by (II) the market price of the Common Stock prior to the exercise of
the Spelling/VIE Option.
The BEC/VIE Option Price, which will not be less than $27.50
per share, is subject to set-off by BEC for indemnification claims against the
Vendors. If the Exchange (or a similar transaction whereby the Company
acquires the Ordinary Shares which are the subject of the Share Purchase
Agreement) is consummated, then, pursuant to the BEC/VIE Letter Agreement, BEC
may, at its option, pay all or part of the BEC/VIE Option Price by delivery to
the Vendors of a number of shares of Common Stock equal to the quotient of (I)
the amount of the BEC/VIE Option Price to be paid in shares of Common Stock,
divided by (II) the market price of the Common Stock prior to the closing of
the BEC/VIE Option, or such other price as may be agreed between BEC and the
Vendors.
The Share Purchase Agreement provides that BEC shall deliver
to the Vendors, in partial consideration for the Ordinary Shares to be acquired
by BEC thereunder, a promissory note (the "Note") in the principal amount of
$57,575,617. If the Exchange (or a similar transaction whereby the Company
acquires the Ordinary Shares which are the subject of the Share Purchase
Agreement) is consummated, then, pursuant to the BEC/VIE Letter Agreement, the
Note is payable by BEC, at its option, in whole or in part, by delivery to the
Vendors of a number of shares of Common Stock equal to the quotient of (I) the
amount of the Note to be paid in shares of Common Stock, divided by (II) the
market price of the Common Stock prior to the date BEC notifies the Vendors of
its intention to prepay all or part of the Note or, as the case may be, the
maturity date of the Note, which will be one year following the closing of the
transactions contemplated by the Share Purchase Agreement. The amount due
under the Note will be subject to set-off by BEC for indemnification claims
against the Vendors.
In the event that the Vendors receive shares of Common Stock
in payment of the BEC/VIE Option Price or the Note, and the Vendors, subject to
certain conditions, sell such shares, the BEC/VIE Letter Agreement provides
certain assurances that the Vendors will realize the full amount of the BEC/VIE
Option Price or the principal amount of the Note paid in shares of Common Stock
through, at BEC's Option, delivery to the Vendors of additional shares of
Common Stock.
The identity of the Vendors is set forth on Schedule III
hereto.
See Items 3 and 5 for additional information that may be
required by this Item 6.
<PAGE> 10
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
A. Agreement pursuant to Rule 13d-1(f)(1)(iii).
B. Letter Agreement, dated June 28, 1994, between Spelling
Entertainment Group Inc. and Blockbuster Entertainment
Corporation.
C. Letter Agreement, dated June 22, 1994, among Blockbuster
Entertainment Corporation and the Vendors named therein.
D. Press Release, dated June 29, 1994.
<PAGE> 11
SIGNATURES.
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
BLOCKBUSTER ENTERTAINMENT
CORPORATION
June 29, 1994 By: /s/ Thomas W. Hawkins
- ------------- -----------------------------
Date Thomas W. Hawkins
Senior Vice President, General
Counsel and Secretary
BLOCKBUSTER PICTURES HOLDING
CORPORATION
June 29, 1994 By: /s/ Thomas W. Hawkins
- ------------- -----------------------------
Date Thomas W. Hawkins
Senior Vice President, General
Counsel and Secretary
SEGI HOLDING CO.
June 29, 1994 By: /s/ Thomas W. Hawkins
- ------------- -----------------------------
Date Thomas W. Hawkins
Senior Vice President, General
Counsel and Secretary
REPINVESCO, INC.
June 29, 1994 By: /s/ Thomas W. Hawkins
- ------------- -----------------------------
Date Thomas W. Hawkins
Senior Vice President, General
Counsel and Secretary
<PAGE> 12
SCHEDULE III
The following is a list of the Vendors:
NAMES AND
ADDRESSES
Niall MacGregor Ritchie
George Sharon Loraine and
Abacus (C.I.) Ltd a/c Aquarius
La Motte Chambers
St Helier
Jersey
Channel Islands
Niall MacGregor Ritchie
George Sharon Loraine and
Abacus (C.I.) Ltd a/c Aries
La Motte Chambers
St Helier
Jersey
Channel Islands
Niall MacGregor Ritchie
George Sharon Loraine and
Abacus (C.I.) Ltd a/c Capricorn
La Motte Chambers
St Helier
Jersey
Channel Islands
Niall MacGregor Ritchie
George Sharon Loraine and
Abacus (C.I.) Ltd a/c Pisces
La Motte Chambers
St Helier
Jersey
Channel Islands
Niall MacGregor Ritchie
George Sharon Loraine and
Abacus (C.I.) Ltd a/c Saturn
La Motte Chambers
St Helier
Jersey
Channel Islands
<PAGE> 13
John Christopher Mann,
John Kenneth Blewett and
Morgan Grenfell Trustee Services
(C.I.) Limited a/c Virgo
Lefevre Street
St Peter Port
Guernsey
Channel Islands
John Christopher Mann,
John Kenneth Blewett and
Morgan Grenfell Trustee Services
(C.I.) Limited a/c Libra
Lefevre Street
St Peter Port
Guernsey
Channel Islands
John Christopher Mann,
John Kenneth Blewett and
Morgan Grenfell Trustee Services
(Guernsey) Limited a/c Jupiter
Lefevre Street
St Peter Port
Guernsey
Channel Islands
John Christopher Mann,
John Kenneth Blewett and
Morgan Grenfell Trustee Services
(Guernsey) Limited a/c Mars
Lefevre Street
St Peter Port
Guernsey
Channel Islands
Morgan Grenfell Trustee Services
(Guernsey) Limited a/c Venus
Lefevre Street
St. Peter Port
Guernsey
Channel Islands
Richard Charles Nicholas Branson
186 Campden Hill Road
London W8 7TH
England
Trevor Michael Abbott
186 Campden Hill Road
London W8 7TH
England
Robert Harold Ferrers Devereux
186 Campden Hill Road
London W8 7TH
England
<PAGE> 14
Exhibit Index
Description of Exhibit
A. Agreement pursuant to Rule 13d-1(f)(1)(iii).
B. Letter Agreement, dated June 28, 1994, between Spelling Entertainment
Group Inc. and Blockbuster Entertainment Corporation.
C. Letter Agreement, dated June 22, 1994, among Blockbuster Entertainment
Corporation and the Vendors named therein.
D. Press Release, dated June 29, 1994.
<PAGE> 15
Exhibit A
Pursuant to Rule 13d-1(f)(1)(iii) of Regulation 13D-G of the
Securities and Exchange Commission under the Securities Exchange Act of 1934,
as amended, each of the undersigned entities agrees that the statement to which
this Exhibit is attached is filed on its behalf.
BLOCKBUSTER ENTERTAINMENT CORPORATION
Date: June 29, 1994 By: /s/ Thomas W. Hawkins
----------------------------------
Thomas W. Hawkins
Senior Vice President, General Counsel
and Secretary
BLOCKBUSTER PICTURES HOLDING CORPORATION
Date: June 29, 1994 By: /s/ Thomas W. Hawkins
-------------------------------------
Thomas W. Hawkins
Senior Vice President, General Counsel
and Secretary
SEGI HOLDING CO.
Date: June 29, 1994 By: /s/ Thomas W. Hawkins
-------------------------------------
Thomas W. Hawkins
Senior Vice President, General Counsel
and Secretary
REPINVESCO, INC.
Date: June 29, 1994 By: /s/ Thomas W. Hawkins
-------------------------------------
Thomas W. Hawkins
Senior Vice President, General Counsel
and Secretary
<PAGE> 16
Exhibit B
June 28, 1994
Blockbuster Entertainment Corporation
One Blockbuster Plaza
200 South Andrews Avenue
Ft. Lauderdale, FL 33301
Attention: Steven R. Berrard
Gentlemen:
We understand that Blockbuster Entertainment Corporation, a
Delaware corporation ("BEC"), has entered into the following agreements with
respect to the Ordinary Shares (the "Ordinary Shares") of Virgin Interactive
Entertainment plc, a company organized under the laws of the United Kingdom
("VIE"):
(i) a Share Purchase Agreement, dated June 22,
1994 (the "Share Purchase Agreement"), with certain
shareholders of VIE (the "Vendors") pursuant to which BEC has
agreed to purchase 5,049,434 Ordinary Shares for an aggregate
purchase price of $122,256,901; and
(ii) an Option Assignment Agreement, dated June
22, 1994 (the "Devereux Agreement"), with Robert Devereux
pursuant to which BEC has agreed to purchase for the purchase
price of $4,840,000 options held by him to acquire 550,000
Ordinary Shares from VIE.
We also understand that BEC purchased 1,864,444 Ordinary Shares for an
aggregate purchase price of $30,203,993 pursuant to an Option Agreement, dated
as of November 9, 1993 (the "Option Agreement"), by and among BEC and certain
of the Vendors, and that BEC will enter into a Share Purchase Agreement (the
"Management Share Purchase Agreement") with certain senior executives of VIE
pursuant to which BEC will purchase 254,824 Ordinary Shares from such
individuals for an aggregate purchase price of $5,478,716. Thus, upon
consummation of the transactions contemplated by the Share Purchase Agreement,
the Devereux Agreement and the Management Share Purchase Agreement
(collectively, the "VIE Agreements"), BEC would own 7,168,702 Ordinary Shares
as well as options to acquire 550,000 Ordinary Shares from VIE (collectively,
"BEC's VIE Interests"), with an aggregate cost of $162,779,610 plus the fees
and expenses incurred by BEC in connection with its acquisitions of BEC's VIE
Interests ("BEC's Cost"). In connection with the consummation of the
transactions contemplated by the Share Purchase Agreement, BEC and the Vendors
will enter into a Shareholders Agreement (the "Shareholders Agreement").
<PAGE> 17
This letter sets forth the terms and conditions of our
agreement in principle with respect to the exchange by Spelling of shares of
its common stock, $.10 par value per share ("Spelling Common Stock"), for BEC's
VIE Interests (the "Spelling Exchange").
1. Closing Date. The closing of the Spelling Exchange
(the "Closing") will occur immediately following the consummation of the
transactions contemplated by the VIE Agreements.
2. The Exchange. At the Closing, BEC (or the wholly
owned subsidiary of BEC having purchased the Ordinary Shares pursuant to the
VIE Agreements) will deliver to Spelling BEC's VIE Interests in exchange for a
number of shares of Spelling Common Stock equal to the quotient of (I) BEC's
Cost, divided by (II) $8.95, which represents the average closing price of
Spelling Common Stock on the New York Stock Exchange Composite Tape, as
reported in The Wall Street Journal (Southeast Edition), on the five trading
days ending June 27, 1994.
3. Definitive Agreement. Spelling and BEC will
negotiate in good faith a definitive agreement (the "Definitive Agreement")
with respect to the transaction contemplated by paragraph 2 above mutually
satisfactory to the parties hereto. The Definitive Agreement will contain
customary representations and warranties; provided that BEC shall make no
representations and warranties concerning the businesses, assets or properties
of VIE. The Definitive Agreement will also contain covenants and conditions
customary for transactions of this type, including, without limitation, the
following conditions to closing:
(a) approval by a majority of Spelling's disinterested
directors, collectively constituting the Special
Committee of the Board of Directors of Spelling (the
"Special Committee");
(b) the receipt by the Special Committee of an opinion
from its financial advisor that the Spelling Purchase
is fair to all of Spelling's stockholders (other than
BEC and its affiliates) from a financial point of
view; and
(c) consummation of the transactions contemplated by the
VIE Agreements.
The Definitive Agreement will also contain provisions pursuant to which (i) BEC
will assign to Spelling at the Closing all of its indemnification rights under
the Option Agreement and the VIE Agreements, it being understood that it is the
intent of BEC and Spelling that Spelling receive the benefit of such
indemnification rights, and (ii) BEC will assign to Spelling at the Closing all
of its rights and obligations under the Shareholders Agreement. The Definitive
Agreement will also contain a put option and a call option (collectively, the
"Option") pursuant to which BEC may require Spelling to purchase from BEC and
Spelling may require BEC to sell to Spelling, respectively, all Ordinary Shares
(the "Option Shares") acquired by BEC pursuant to the Put
-2-
<PAGE> 18
Option or the Call Option (as defined in the Share Purchase Agreement). The
purchase price to Spelling for the Option Shares (the "Option Price") will be
the cost of such Option Shares to BEC, minus the Initial Consideration Stock
Deficit (as defined in the Share Purchase Agreement), if any. Spelling may pay
the Option Price in cash or a number of shares of Spelling Common Stock equal
to the quotient of (I) the Option Price, divided by (II) the average closing
price of Spelling Common Stock on the New York Stock Exchange Composite Tape,
as reported in The Wall Street Journal (Southeast Edition), on the ten trading
days immediately preceding the day prior to exercise of the Option. The
Definitive Agreement will also provide that each outstanding option to acquire
Ordinary Shares held by employees of VIE will be converted into the right to
receive, upon payment of the exercise price (as adjusted as set forth below)
the number of shares of Spelling Common Stock determined by multiplying (I) the
number of Ordinary Shares into which such option was exercisable immediately
prior to the Closing by (II) the quotient of (x) 21.50, divided by (y) the
average closing price of Spelling Common Stock on the New York Stock Exchange
Composite Tape, as reported in The Wall Street Journal (Southeast Edition), on
the five trading days immediately preceding the day prior to the Closing (the
"Average Price"). The exercise price for such employee options will be
adjusted by multiplying such exercise price by the quotient of (I) one, divided
by (II) the quotient of (x) 21.50, divided by (y) the Average Price. To the
extent required by, or desirable under, the tax laws of the United Kingdom,
certain options held by VIE employees will be cancelled and regranted in
accordance with the foregoing formula.
4. Governing Law. This agreement in principle shall be
governed by and construed in accordance with the laws of the State of Delaware.
5. Letter Non-binding. Except for the first sentence of
paragraph 3 (which shall be a legally binding obligation of the parties
hereto), this letter is an expression of our mutual intention with respect to
the transactions contemplated hereby and does not constitute a binding
obligation.
6. Termination. This agreement in principle shall
terminate on July 31, 1994, without liability or obligation on the part of any
party hereto other than for a breach of the obligations under the first
sentence of paragraph 3; provided that this agreement may be terminated prior
to such date by written notice to the other party hereto upon a breach of the
other party of its obligations hereunder.
-3-
<PAGE> 19
Please acknowledge your acceptance of and agreement with the
terms of this letter by signing and returning the enclosed copy.
Very truly yours,
SPELLING ENTERTAINMENT GROUP INC.
/s/ Thomas P. Carson
---------------------------------------
By: Thomas P. Carson
Its: Senior Vice President, Treasurer
and Chief Financial Officer
Accepted and agreed to this
28th day of June, 1994:
BLOCKBUSTER ENTERTAINMENT CORPORATION
/s/ Steven R. Berrard
- -------------------------------------
By: Steven R. Berrard
Its: Vice Chairman, President and
Chief Operating Officer
-4-
<PAGE> 20
Exhibit C
To: Blockbuster Entertainment Corporation
1 Blockbuster Plaza
Fort Lauderdale
Florida 33301
USA
Attention: S.R. Berrard
Dear Sir,
We refer to a Share Purchase Agreement entered into between ourselves (1) and
yourselves (2) of even date (the "Share Purchase Agreement") whereby
Blockbuster has agreed to acquire 5,049,434 Ordinary Shares in the Company in
the terms therein contained and has agreed to issue a Promissory Note in the
principal sum of US$57,575,617 (the "Note").
Capitalised terms and expressions defined in this letter shall have the
meanings given to them in the Share Purchase Agreement.
We hereby acknowledge and confirm your right to transfer Ordinary Shares
acquired pursuant to the Share Purchase Agreement to another member of the
Blockbuster Group in accordance with the provisions of Clause 19.2 and 19.3 of
the Share Purchase Agreement.
We hereby confirm in the event that you (or any of your subsidiaries) choose to
transfer or re-sell the Sale Shares to Spelling Entertainment Group Inc. (or
any of its subsidiaries) then:
1. we will each execute a deed in accordance with our obligations under
Clause 19.3 as soon as reasonably practicably and otherwise upon the
terms of the said Clause 19.3;
2. notwithstanding the provisions of the Share Purchase Agreement and the
Note, Blockbuster may, at its sole discretion, discharge all or any
part of the sums due under the Note or all or any part of the
consideration payable by Blockbuster pursuant to Clause 11.6 either by
the issuance of BEC Stock or by the delivery by Blockbuster to the
Vendors of common stock of US$0.10 par value of Spelling (the
"Spelling Consideration Stock") provided that the provisions or Clause
7.2.1 and 7.2.2, 7.3 and Schedule 5 of the Share Purchase Agreement
and paragraph 3 of the Note shall apply, mutatis mutandis, to the
deliveries of the Spelling
-1-
<PAGE> 21
Consideration Stock as if all references to BEC Stock or Further
Consideration Stock was a reference to Spelling Consideration Stock;
and
3. the provisions of Clause 10.2 of the Share Purchase Agreement shall
apply in respect of any Claims made by Spelling under the Share
Purchase Agreement or the deed referred to in paragraph 1.
Yours sincerely,
SIGNED by
duly authorised for and on behalf of )
ABACUS C.I. LIMITED in its capacity )
as trustee of each of the Aquarius, Aries, )
Capricorn, Pisces and Saturn Trusts )
SIGNED by NIALL MacGREGOR RITCHIE )
trustee of each the Aquarius, Aries, )
Capricorn, Pisces and Saturn Trusts, )
SIGNED by GEORGE SHARON LORAINE as )
trustee of each of the Aquarius, Aries, )
Capricorn, Pisces and Saturn Trusts )
SIGNED by )
on behalf of MORGAN GRENFELL )
TRUSTEE SERVICES (C.I.) LIMITED )
in its capacity as trustee of each of the )
Libra and Virgo Trusts )
-2-
<PAGE> 22
SIGNED by )
on behalf of MORGAN GRENFELL )
TRUSTEE SERVICES (GUERNSEY) )
LIMITED in its capacity as trustee of )
each of Jupiter, Mars, Venus, Gemini, )
Leo, Laver and McEnroe Trusts )
SIGNED by JOHN CHRISTOPHER MANN )
as trustee for each of the Libra, Virgo, )
Jupiter, Mars, Gemini, and Leo Trusts )
SIGNED by JOHN KENNETH BLEWETT as )
trustee for each of the Libra, Virgo, Jupiter, )
Mars, Gemini, Leo, Laver and McEnroe Trusts )
SIGNED by JOHN FARLEY McKELLER as )
trustee for each of the Laver and McEnroe )
Trusts )
SIGNED by RICAHRD CHARLES )
NICHOLAS BRANSON )
SIGNED by TREVOR MICHAEL ABBOTT )
SIGNED by ROBERT HAROLD FERRERS )
DEVEREUX )
3
<PAGE> 23
Exhibit D
FOR IMMEDIATE RELEASE
BLOCKBUSTER, SPELLING AND VIRGIN ANNOUNCE
ACQUISITION OF VIRGIN INTERACTIVE ENTERTAINMENT
FORT LAUDERDALE, FL, June 29, 1994 -- Blockbuster Entertainment
Corporation (NYSE:BV), Spelling Entertainment Group Inc. (NYSE:SP) and the
Virgin Group of Companies jointly announced today the acquisition of Virgin
Interactive Entertainment plc (VIE), one of the world's leading developers,
publishers and distributors of interactive entertainment software.
Blockbuster has entered into a definitive agreement to acquire 55 percent
of VIE from Richard Branson's Family Trusts and certain other shareholders of
VIE. The acquisition will increase Blockbuster's ownership of VIE to
approximately 75 percent. The Blockbuster acquisition is subject to customary
conditions and is expected to close in July 1994. Virgin shareholders will
retain a 10 percent interest in VIE which may be acquired by Blockbuster under
certain circumstances pursuant to a put/call arrangement.
Separately, Spelling has entered into a non-binding letter of intent with
Blockbuster to acquire Blockbuster's entire interest in VIE, including the
additional shares which Blockbuster will purchase, at Blockbuster's cost. The
letter of intent contemplates that Spelling will purchase Blockbuster's VIE
interest by issuing Blockbuster approximately $165 million of Spelling common
stock. The letter of intent also contemplates that Spelling may acquire from
Blockbuster the 10 percent interest in VIE which is subject to the put/call
arrangements. The Spelling acquisition is subject to negotiation of a
definitive agreement, approval by the Spelling Board of Directors (including
the disinterested Directors), receipt of a fairness opinion and other customary
closing
<PAGE> 24
-more-
conditions. Subject to such conditions, it is intended that the acquisition by
Spelling will close shortly after Blockbuster acquires its additional 55
percent interest in VIE. Upon completion of the Spelling acquisition, Spelling
would own approximately 75 percent of VIE and Blockbuster would increase its
ownership of Spelling common stock from approximately 70.5 percent to
approximately 77 percent.
Steven R. Berrard, Blockbuster's President and Chief Operating Officer
and Spelling's President and Chief Executive Officer, said: "The superior
quality of VIE's senior management team, its employees and developers and its
broad distribution network are a perfect complement to our creative talent
base, substantial programming library and global multimedia distribution
capabilities. This transaction gives us the ability to realize the enormous
potential synergies between the development of filmed entertainment products
and interactive software."
He added: "We fully intend to use the marketing expertise of Blockbuster
and its more than 4,250 retail locations worldwide to strengthen the
distribution of VIE products throughout the world. This transaction signifies
Spelling's commitment to expand the breadth of its businesses as a public
company."
Robert Devereux, the Chairman of Virgin Communications Limited, said:
"Blockbuster and Spelling are uniquely qualified to enhance VIE's position as
one of the world's leading interactive software companies. At a time when the
industry is facing many new exciting opportunities, the competitive advantage
presented by this association gives us great confidence that VIE's business
will flourish. The significant stake being retained by Virgin is strong
evidence of our belief in the future prospects of the company."
VIE develops, publishes and distributes video game and entertainment
software compatible with all leading consumer hardware systems, including
Nintendo and Sega 8-bit and 16-bit consoles and portable systems, personal
computers and CD-ROM systems. Its titles feature proprietary content as well
as intellectual properties licensed from others, and are sold worldwide to
retailers, distributors and mass merchants.
Last year, VIE published 31 titles across a variety of product
categories, including best-selling titles such as Monopoly Deluxe, Cool Spot,
Terminator, Aladdin, Robocop vs Terminator and The Seventh Guest, the most
successful CD-ROM title of 1993. VIE will
-more-
<PAGE> 25
soon release games based on Walt Disney's Jungle Book and the newly-released
The Lion King, an animated feature film which is expected by industry experts
to be the year's biggest box office hit, as well as The Eleventh Hour, the
much-anticipated sequel to The Seventh Guest. Over 200 versions of more than
90 entertainment titles have been published by VIE, with more than 13 million
copies of its entertainment software products having been sold since July 1990.
VIE plans to continue operating its business under the "Virgin" brand
name after the completion of these transactions.
-30-
Contact:
Steven R. Berrard
Wally Knief
Blockbuster
(305) 832-3000
Thomas P. Carson
Spelling
(213) 965-5820
Paul Downes
Georgeson & Co.
071-454-7100
