<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 10)
Spelling Entertainment Group Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
847807104
-------------------
(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)
July 30, 1994
- --------------------------------------------------------------------------------
(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): 52.44%
14. Type of Reporting Person: CO
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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): 1.51%
14. Type of Reporting Person: CO
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SCHEDULE 13D
CUSIP No. 847807104
1. Name of Reporting Person: Blockbuster Interactive Entertainment, Inc.
I.R.S. Identification No.: 65-0446055
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: 22,015,062
Shares
Beneficially 8. Shared Voting Power: -0-
Owned by
Each 9. Sole Dispositive Power: 22,015,062
Reporting
Person 10. Shared Dispositive Power: -0-
With
11. Aggregate Amount Beneficially Owned by Each
Reporting Person: 22,015,062
12. Check Box if the Aggregate Amount in Row (11)
Excludes Certain Shares [x]
13. Percent of Class Represented by Amount in Row (11): 25.28%
14. Type of Reporting Person: CO
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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, 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
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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
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This statement amends Items 2, 3, 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, Amendment No. 8 dated April 26, 1994 and
Amendment No. 9 dated June 28, 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 2. IDENTITY AND BACKGROUND.
Item 2 of the Schedule 13D is amended as follows:
This statement is filed on behalf of BEC, Holdings, SEGI, REPI and
Blockbuster Interactive Entertainment, Inc. ("BIEI"), a Delaware corporation
and a wholly-owned subsidiary of Holdings. The principal place of business and
executive offices of BIEI is One Blockbuster Plaza, Fort Lauderdale, Florida
33301. BIEI is principally engaged in the business of investments. BEC,
Holdings, SEGI, REPI and BIEI are collectively referred to herein as the
"Reporting Persons."
The executive officers and directors of REPI listed on Schedule I to
the Schedule 13D also serve in identical capacities as the executive officers
and directors of BIEI. Filed as Schedule I to this statement is a supplement
to Schedule I to the Schedule 13D, which supplement is a list of recently
appointed executive officers of the Reporting Persons containing the following
information with respect to such persons: (i) name, (ii) business address and
(iii) present principal occupation or employment and the name and, if different
from such person's business address, the address of any other corporation or
other organization in which such employment is conducted. Each person listed
on Schedule I hereto is a United States citizen.
During the past five years, none of the persons named in Schedule I
hereto (based on information provided by such individuals) (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws, or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 of the Schedule 13D is amended to reflect the following:
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On July 30, 1994, the Company, BEC and BIEI entered into the Exchange
Agreement contemplated by the Letter Agreement, and consummated the
transactions contemplated by the Exchange Agreement. The transactions
contemplated by the VIE Agreements were consummated on July 29, 1994.
Set forth in this Item 3 and in Item 6 below are descriptions of
selected provisions of the Exchange Agreement. Such descriptions are qualified
in their entirety by reference to the copy of such agreement filed as an
Exhibit hereto, which is incorporated by reference herein and is made a part
hereof to the same extent as though set forth herein in full.
Subsequent to the date of the Letter Agreement, but prior to the
Closing, BEC acquired 1,518,282 Ordinary Shares not contemplated by the Letter
Agreement (the "Additional Ordinary Shares") from Hasbro, Inc. Pursuant to the
Exchange Agreement, BIEI delivered to the Company 8,686,984 Ordinary Shares
(which includes the Additional Ordinary Shares) and an option to acquire
550,000 Ordinary Shares (collectively, the "VIE Interests"), and the Company
delivered to BIEI 22,015,062 shares of Common Stock. The number of shares of
Common Stock delivered to BIEI pursuant to the Exchange Agreement was
determined by dividing (i) $197,034,805, which represents the aggregate cost of
the VIE Interests to BIEI and its affiliates (including the fees and expenses
incurred by BIEI and its affiliates in connection with their acquisitions of
the VIE Interests), by (ii) $8.95, which is the average of the closing sales
price per share of Common Stock, as reported on the New York Stock Exchange
Composite Tape and published in The Wall Street Journal (Southeast Edition),
for the five trading days ended June 27, 1994, which is the date prior to the
date on which BEC and the Company entered into the Letter Agreement.
As a result of the Exchange, the Company owns approximately 90% of the
outstanding Ordinary Shares of VIE.
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 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 of the Company, representing
approximately 52.44% of
<PAGE> 9
the Common Stock issued and outstanding (based on the number of shares of
Common Stock issued and outstanding on July 26, 1994 plus the 22,015,062 shares
of Common Stock delivered to BIEI pursuant to the Exchange Agreement). BIEI
currently owns and has sole voting power with respect to 22,015,062 shares of
Common Stock, representing approximately 25.28% of the Common Stock issued and
outstanding. The aggregate of 67,673,702 shares of Common Stock owned by SEGI
and BIEI represent approximately 77.72% of the Common Stock issued and
outstanding.
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 1.51% of the Common Stock issued and outstanding.
It is anticipated that SEGI, BIEI and REPI will be merged, with SEGI
being the surviving corporation. In such event SEGI will own 67,673,702 shares
of Common Stock and the Warrants.
SEGI, REPI, BIEI 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.
Item 6 of the Schedule 13D is amended to reflect the fact that the
Exchange has been consummated and to reflect the following:
The Exchange Agreement provides that immediately following the
Closing, the Company shall offer to each employee of VIE who, immediately prior
to the Closing, held an option or options to acquire Ordinary Shares (each, an
"Employee Option"), the opportunity to convert his Employee Options into the
right to receive upon payment of the exercise price thereunder (as adjusted by
multiplying such exercise price by .4244), 2.3562
<PAGE> 10
shares of Common Stock for each Ordinary Share into which such Employee
Option was exercisable immediately prior to the Closing. Certain adjustments
may be made to the foregoing conversion formula to accomodate individual
employees' situations. In connection with the Exchange, the Company also agreed
to grant new stock options under the Company's 1994 Stock Option Plan to
certain senior officers of VIE.
Except for the changes discussed below, the provisions relating to the
Spelling/VIE Option contained in the Exchange Agreement are as discussed in the
Schedule 13D.
The Company has the right to require BEC to exercise the BEC/VIE
Option, in which case, the Company has the obligation to purchase all, but not
less than all, of the VIE Option Shares so acquired for the Spelling/VIE Option
Price.
In the event that BEC acquires any or all of the VIE Option Shares
other than pursuant to the BEC/VIE Option at an average price per share (the
"Alternate BEC/VIE Option Price") substantially equivalent to, or less than,
the per share price that would have been payable pursuant to the formula used
to determine the BEC/VIE Option Price, then BEC may require the Company to
purchase from BEC and the Company may require BEC to sell to the Company, all,
but not less than all, of the VIE Option Shares so acquired for the Alternate
BEC/VIE Option Price.
Both the Spelling/VIE Option Price and the Alternate Spelling/VIE
Option Price include the fees and expenses incurred by BEC in connection with
its acquisition of the VIE Option Shares. 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 or the Alternate
Spelling/VIE Option Price, as the case may be, divided by (II) the market price
of the Common Stock prior to the closing of the Spelling/VIE Option.
As discussed in the Schedule 13D, BEC may pay amounts due in
connection with the Note and the exercise of the BEC/VIE Option by delivery of
shares of Common Stock to the Vendors. BEC has agreed with the Vendors that
BEC will not so deliver shares of Common Stock, if, as a result of such
delivery, the Vendors (considered as a group) would beneficially own five
percent or more of the then outstanding shares of Common Stock, or, in the case
of an individual Vendor, if such Vendor is or is likely to become a director or
officer (as such term is defined in Rule 16a-1 under the Exchange Act) of the
Company. The Company has agreed to register for resale any shares of Common
Stock so delivered to the Vendors.
The identity of the Vendors is set forth on Schedule III to the
Schedule 13D.
See Items 3 and 5 for additional information that may be required by
this Item 6.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
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A. Agreement pursuant to Rule 13d-1(f)(1)(iii).
B. Exchange Agreement, dated July 30, 1994, among Spelling
Entertainment Group Inc., Blockbuster Entertainment
Corporation and Blockbuster Interactive Entertainment, Inc.
<PAGE> 12
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
August 4, 1994 By:/s/ Thomas W. Hawkins
- -------------- ---------------------
Date Thomas W. Hawkins
Senior Vice President, General
Counsel and Secretary
BLOCKBUSTER PICTURES HOLDING
CORPORATION
August 4, 1994 By:/s/ Thomas W. Hawkins
- -------------- ---------------------
Date Thomas W. Hawkins
Senior Vice President, General
Counsel and Secretary
SEGI HOLDING CO.
August 4, 1994 By:/s/ Thomas W. Hawkins
- -------------- ---------------------
Date Thomas W. Hawkins
Senior Vice President, General
Counsel and Secretary
REPINVESCO, INC.
August 4, 1994 By:/s/ Thomas W. Hawkins
- -------------- ---------------------
Date Thomas W. Hawkins
Senior Vice President, General
Counsel and Secretary
BLOCKBUSTER INTERACTIVE
ENTERTAINMENT, INC.
August 4, 1994 By:/s/ Thomas W. Hawkins
- -------------- ---------------------
Date Thomas W. Hawkins
Senior Vice President, General
Counsel and Secretary
<PAGE> 13
SCHEDULE I
The following is a list of recently appointed executive officers of
Blockbuster Entertainment Corporation. The business address of each of the
following executive officers is One Blockbuster Plaza, Fort Lauderdale, Florida
33301.
Executive Officers
------------------
Name and Principal Occupation
- -----------------------------
James J. Blosser
President - Blockbuster Park Division
Blockbuster Entertainment Corporation
Gerald R. Geddis
Senior Vice President - Domestic Video Division
Blockbuster Entertainment Corporation
Robert Henninger
Senior Vice President and Chief Administrative Officer
Blockbuster Entertainment Corporation
Additionally, Gerald W. B. Weber, formerly Senior Vice President -
Consumer Division, was recently appointed to the position of President -
Domestic Music with Blockbuster Entertainment Corporation.
<PAGE> 14
Exhibit Index
-------------
Description of Exhibit
- ----------------------
A. Agreement pursuant to Rule 13d-1(f)(1)(iii).
B. Exchange Agreement, dated July 30, 1994, among Spelling Entertainment
Group Inc., Blockbuster Entertainment Corporation and Blockbuster
Interactive Entertainment, Inc.
<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: August 4, 1994 By:/s/ Thomas W. Hawkins
----------------------------------------
Thomas W. Hawkins
Senior Vice President, General Counsel
and Secretary
BLOCKBUSTER PICTURES HOLDING
CORPORATION
Date: August 4, 1994 By:/s/ Thomas W. Hawkins
----------------------------------------
Thomas W. Hawkins
Senior Vice President, General Counsel
and Secretary
SEGI HOLDING CO.
Date: August 4, 1994 By:/s/ Thomas W. Hawkins
--------------------------------------
Thomas W. Hawkins
Senior Vice President, General Counsel
and Secretary
REPINVESCO, INC.
Date: August 4, 1994 By:/s/ Thomas W. Hawkins
-----------------------------------
Thomas W. Hawkins
Senior Vice President, General Counsel
and Secretary
BLOCKBUSTER INTERACTIVE
ENTERTAINMENT, INC.
Date: August 4, 1994 By:/s/ Thomas W. Hawkins
---------------------
Thomas W. Hawkins
Senior Vice President, General
Counsel and Secretary
<PAGE> 16
EXHIBIT B
---------
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement") is entered into as of July
30, 1994 by and among SPELLING ENTERTAINMENT GROUP INC., a Florida corporation
(the "Company"), BLOCKBUSTER ENTERTAINMENT CORPORATION, a Delaware corporation
("BEC"), and BLOCKBUSTER INTERACTIVE ENTERTAINMENT, INC., a Delaware
corporation ("BIEI").
RECITALS:
A. BIEI currently owns 8,686,984 ordinary shares (the "VIE Shares"),
L.0.008 par value per share ("Ordinary Shares"), of Virgin Interactive
Entertainment plc, a company organized under the laws of the United Kingdom
("VIE"), and an option to acquire 550,000 Ordinary Shares (collectively with
the VIE Shares, the "VIE Interests").
B. BIEI and the Company desire to enter into a transaction pursuant
to which BIEI will exchange the VIE interests for newly issued shares of common
stock, $0.10 par value per share, of the Company ("Spelling Stock").
C. The parties are willing to engage in such transaction as well as
enter into certain other arrangements on the terms and subject to the
conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants, agreements and conditions set forth
below, the parties hereto hereby agree as follows:
ARTICLE I
AGREEMENT TO EXCHANGE SHARES
On the terms and subject to the conditions set forth herein, at the
Closing (as defined in Section 3.1) the following transactions shall occur:
1.1 VIE INTERESTS. BIEI shall convey, transfer and deliver to the
Company, and the Company shall acquire and accept from BIEI, the VIE Interests.
1.2 SPELLING STOCK. Spelling shall issue, convey, transfer and
deliver to BIEI, and BIEI shall acquire and accept from the Company, 22,015,062
shares of Spelling Stock (the "Spelling Shares"), which is the number of shares
of Spelling Stock determined pursuant to Section 2.1.
<PAGE> 17
ARTICLE II
EXCHANGE CALCULATION
2.1 EXCHANGE CALCULATION. The aggregate number of shares (rounded to
the nearest whole share) of Spelling Stock to be delivered to BIEI pursuant to
Section 1.2 is equal to the number obtained by dividing (i) $197,034,805, which
represents the aggregate cost of the VIE Interests to BIEI and its affiliates
(including the fees and expenses, as set forth on Schedule 2.1, incurred and to
be incurred by BIEI and its affiliates in connection with their acquisitions of
the VIE Interests), by (ii) $8.95, which is the average of the closing sales
prices per share of Spelling Stock, as reported on the New York Stock Exchange
Composite Tape and published in The Wall Street Journal (Southeast Edition),
for the five trading days ended June 27, 1994, which is the date prior to the
date on which BEC and the Company entered into an agreement in principle to
enter into this Agreement.
ARTICLE III
CLOSING
3.1 TIME AND PLACE OF CLOSING. The closing of the transactions
contemplated hereby shall take place at the offices of BEC, in Ft. Lauderdale,
Florida, at 10:00 a.m., local time, on or as of July 30, 1994, subject to the
fulfillment or waiver at or prior to such time of closing of all of the
conditions set forth in Articles VIII and IX. In this Agreement, such event is
referred to as the "Closing" and such date and time are referred to as the
"Closing Date."
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
To induce BIEI and BEC to enter into this Agreement and to consummate
the transactions contemplated hereby, the Company makes the following
representations and warranties, which representations and warranties (except
for those set forth in Section 4.11) shall terminate at the Closing:
4.1 ORGANIZATION, GOOD STANDING AND POWER. The Company and each of
its significant subsidiaries (as defined in Section 4.6) is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation. The Company and each of its significant subsidiaries has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified to do
business and in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary other than in such jurisdictions where the failure to so qualify
would not have a material adverse effect on the Company and its subsidiaries
taken as a whole. Any reference in this Agreement to any event, change or
effect being "material" with respect to any entity or entities taken as a whole
means a material event, change or effect related to the financial
-2-
<PAGE> 18
condition, properties, assets, liabilities, businesses, prospects or operations
of such entity or entities taken as a whole other than changes generally
affecting the industry or industries in which the applicable entity operates.
4.2 AUTHORIZATION. The Company has full power and authority to enter
into this Agreement and to perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. Subject to compliance with
the requirements of Section 607.0832(1)(a) of the Florida 1989 Business
Corporation Act, as amended, the execution, delivery and performance of this
Agreement and all other agreements, instruments and documents contemplated
hereby to be executed by the Company and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
of the Company. This Agreement has been duly executed and delivered by the
Company, and this Agreement and all other agreements and instruments
contemplated hereby to be executed by the Company are (or upon execution and
delivery thereof by the Company will be) valid and binding agreements of the
Company, enforceable against the Company in accordance with their respective
terms except (i) as the same may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws of general application relating to or
affecting creditors' rights, including the effect of statutory or other laws
regarding fraudulent conveyances and preferential transfers, and (ii) for the
limitations imposed by general principles of equity. The foregoing exceptions
set forth in clauses (i) and (ii) are hereinafter referred to as the
"Enforceability Exceptions."
4.3 NO BREACH. The execution and delivery of this Agreement by the
Company do not, and the consummation of the transactions contemplated hereby
will not, (i) violate or conflict with the articles of incorporation, as
amended, of the Company (the "Articles of Incorporation") or the bylaws, as
amended, of the Company (the "Bylaws") or (ii) constitute a breach or default
(or an event that with notice or lapse of time or both would become a breach or
default), or give rise to any lien, third party right of termination,
cancellation, material modification or acceleration, under any material
agreement, understanding or undertaking to which the Company or any of its
significant subsidiaries is a party or by which it or any of them is bound or
any law, rule or regulation to which it or any of them is subject.
4.4 CONSENTS AND APPROVALS. Neither the execution and delivery of
this Agreement by the Company nor the consummation of the transactions
contemplated hereby will require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory authority
or any other person or entity, except (i) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent the Company from performing its obligations
under this Agreement without having a material adverse effect on the Company
and its subsidiaries; (ii) the filing of any reports or forms required by "blue
sky" regulations; (iii) the filing of reports required under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); and (iv) filings
required to be made by BEC and/or BIEI.
-3-
<PAGE> 19
4.5 CHARTER DOCUMENTS; CAPITAL STRUCTURE. The Company has delivered
to BEC true and complete copies of the Articles of Incorporation and the
Bylaws. The authorized capital stock of the Company consists of 300,000,000
shares of common stock, $.10 par value per share, and 20,000,000 shares of
preferred stock, $.10 par value per share, of which 65,060,465 shares and no
shares, respectively, were outstanding as of July 26, 1994. Except as set
forth in the SEC Documents (as defined in Section 4.6), there are no (i)
existing preemptive rights, options, warrants, calls, subscriptions or other
rights or other agreements or commitments obligating the Company or any of its
subsidiaries to issue, transfer or sell any shares of capital stock of the
Company or any of its subsidiaries or (ii) voting trusts or other agreements or
understandings to which the Company or any of its subsidiaries is a party with
respect to the voting of capital stock of the Company.
4.6 SEC DOCUMENTS. As of their respective dates, the SEC Documents
(as defined below) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. As used herein, "SEC Documents" means,
collectively, each report, schedule, registration statement and definitive
proxy statement, including exhibits filed therewith (but excluding exhibits
incorporated therein by reference and not attached thereto), filed by the
Company with the Securities and Exchange Commission (the "SEC") since January
1, 1993, which to the best knowledge of the Company, are all the documents
(other than preliminary materials) that the Company was required to file with
the SEC since such date. The financial statements of the Company included in
the SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles during the periods presented (except as may be indicated
in the notes thereto or, in the case of the unaudited statements, as permitted
by Form 10-Q of the SEC) and fairly present (subject, in the case of the
unaudited statements, to normal, recurring audit adjustments) the financial
position of the Company and its consolidated subsidiaries as of the date
thereof and the results of their operations and their cash flows for the
periods then ended.
4.7 LITIGATION. Except as disclosed in the SEC Documents there is no
suit, action or proceeding pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its subsidiaries that
will have a material adverse effect on the Company and its subsidiaries taken
as a whole, nor is there any judgment, decree, injunction, rule or order of any
governmental authority, court of competent jurisdiction or arbitrator
outstanding against the Company or any of its subsidiaries having, or which the
Company believes in the future would have, any such effect.
4.8 ABSENCE OF ADVERSE CHANGES. Except as disclosed in the SEC
Documents, since March 31, 1994 the Company and its significant subsidiaries
have conducted their respective businesses only in the ordinary course, and
there has not been (i) any damage, destruction or loss, whether covered by
insurance or not, which has or could
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<PAGE> 20
have a material adverse effect on the Company and its subsidiaries taken as a
whole or (ii) any transaction, commitment, dispute or other event or condition
of any character (whether or not in the ordinary course of business)
individually or in the aggregate having, or which the Company believes in the
future would have, a material adverse effect on the Company and its
subsidiaries taken as a whole.
4.9 THE SPELLING SHARES. The Spelling Shares have been duly and
validly authorized and, when issued in accordance with the terms hereof, will
be (i) duly and validly issued, fully paid and nonassessable and (ii) free and
clear of all liens, encumbrances, mortgages, pledges, security interests,
restrictions, prior assignments and claims of any kind or nature whatsoever
(collectively, "Liens"), except any created by this Agreement or by BIEI or
BEC.
4.10 COMPLIANCE WITH LAWS. To the knowledge of the Company, (a) the
Company and its subsidiaries are in compliance with all laws, regulations and
orders applicable to them except with respect to failures to comply with laws,
ordinances, rules or regulations which, if fully enforced, would not have a
material adverse effect on the Company and its subsidiaries taken as a whole
and (b) except as set forth on Schedule 4.10, or as disclosed in the SEC
Documents, since January 1, 1989, neither the Company nor its subsidiaries has
been cited, fined or otherwise notified of any asserted past or present failure
to comply with any laws, except with respect to failures to comply which, if
repeated, would not have a material adverse effect on the Company and its
subsidiaries taken as a whole, and, to the best knowledge of the Company, no
proceeding with respect to any such violation is contemplated.
4.11 INVESTMENT INTENT. The Company is acquiring the VIE Interests
for its own investment and not with a view to, or for sale in connection with,
any distribution of any of the VIE Interests in violation of applicable
securities laws. The Company has sufficient business or financial experience
to have the capacity to protect its own interests in connection with the
acquisition of the VIE Interests and is able to bear the economic risk of its
investment.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BEC AND BIEI
To induce the Company to enter into this Agreement and to consummate
the transactions contemplated hereby, BEC and BIEI make the following
representations and warranties, which representations and warranties (except
for those set forth in Section 5.5) shall terminate at the Closing:
5.1 ORGANIZATION, GOOD STANDING AND POWER. Each of BEC and BIEI is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted.
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<PAGE> 21
5.2 AUTHORIZATION. Each of BEC and BIEI has full power and authority
to enter into this Agreement and to perform its respective obligations under
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and all other agreements,
instruments and documents contemplated hereby to be executed by BEC or BIEI and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action of BEC and BIEI, respectively.
This Agreement has been duly executed and delivered by BEC and BIEI, and this
Agreement and all other agreements and instruments contemplated hereby to be
executed by BEC or BIEI are (or upon execution and delivery thereof by BEC or
BIEI will be) valid and binding agreements of such respective party,
enforceable against such party in accordance with their respective terms,
subject to the Enforceability Exceptions.
5.3 NO BREACH. The execution and delivery of this Agreement by BEC
and BIEI do not, and the consummation of the transactions contemplated hereby
will not, (i) violate or conflict with the certificate of incorporation, as
amended, or the restated bylaws of BEC or the certificate of incorporation or
bylaws of BIEI or (ii) constitute a breach or default (or an event that with
notice or lapse of time or both would become a breach or default), or give rise
to any lien, third party right of termination, cancellation, material
modification or acceleration, under any material agreement, understanding or
undertaking to which BEC or BIEI is a party or by which either is bound or any
law, rule or regulation to which it is subject.
5.4 CONSENTS AND APPROVALS. Neither the execution and delivery of
this Agreement by BEC and BIEI nor the consummation of the transactions
contemplated hereby will require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory authority
or any other person or entity, except (i) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent BEC or BIEI from performing its obligations
under this Agreement without having a material adverse effect on BEC and its
subsidiaries taken as a whole; (ii) the filing of an appropriate amendment to
any applicable Schedule 13D and Form 4 by BEC and BIEI with the SEC; (iii) the
filing of reports required under the Exchange Act; and (iv) filings required to
be made by the Company.
5.5 INVESTMENT INTENT. BIEI is acquiring the Spelling Shares for its
own account for investment and not with a view to, or for sale in connection
with, any distribution of any of the Spelling Shares in violation of applicable
securities laws. Purchaser has sufficient business or financial experience to
have the capacity to protect its own interests in connection with the
acquisition of the Spelling Shares and is able to bear the economic risk of its
investment.
5.6 VIE INTERESTS. BIEI owns the VIE Interests free and clear of any
Liens, except as created by the Declaration of Trust (the "Declaration of
Trust") dated July 29, 1994 between the Company and BEC or this Agreement, and
will transfer the VIE Interests
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<PAGE> 22
to the Company free and clear of any Liens, except as created by this Agreement
or by the Company.
ARTICLE VI
ADDITIONAL COVENANTS OF THE COMPANY
6.1 BEST EFFORTS. The Company will use its reasonable best efforts
to cause to be satisfied as soon as practicable and prior to the Closing Date
all of the conditions set forth in Article VIII to the obligations of BEC and
BIEI to proceed with the transactions contemplated hereby.
6.2 CONDUCT OF BUSINESS PENDING THE CLOSING. From and after the
execution and delivery of this Agreement and until the Closing, except as
otherwise contemplated hereby or provided by the prior written consent of BEC,
the Company will and will cause its significant subsidiaries to conduct its and
their respective businesses and operations in the ordinary course of business
consistent with past practices.
6.3 ACCESS TO PROPERTIES AND RECORDS. From and after the execution
and delivery of this Agreement, the Company will afford to representatives of
BEC and BIEI access, during normal business hours and upon reasonable notice,
to its premises sufficient to enable BEC and BIEI to inspect the Company's
assets and liabilities or the operation of its businesses, and the Company will
furnish to such representatives during such period all such information
relating to the foregoing investigation as BEC and BIEI may reasonably request;
provided, however, that any furnishing of such information to BEC or BIEI and
any investigation by BEC or BIEI, whether prior to, on or subsequent to the
date hereof, shall not affect the right of BEC and BIEI to rely on the
representations and warranties made by the Company in this Agreement.
ARTICLE VII
ADDITIONAL COVENANTS OF BEC AND BIEI
7.1 BEST EFFORTS. BEC and BIEI shall each use their reasonable best
efforts to cause to be satisfied as soon as practicable and prior to the
Closing Date all of the conditions set forth in Article IX to the obligation of
the Company to proceed with the transactions contemplated hereby.
7.2 OPTION VENDOR'S DEEDS. BEC shall use its reasonable best efforts
to cause each of the Option Vendors (as defined below) to execute for delivery
to the Company on the Closing Date pursuant to Section 19.3 of that certain
Option Agreement (the "Option Agreement") dated as of November 9, 1993 by and
among BEC and the Vendors named therein (the "Option Vendors") a deed
(collectively, the "Option Vendors Deeds") under which the Option Vendor gives
to the Company the same warranties, indemnities, representations and
undertakings as the Warranties (as defined in the Option Agreement) given to
BEC under the Option Agreement.
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<PAGE> 23
7.3 SHARE VENDOR'S DEEDS. BEC shall use its reasonable best efforts
to cause each of the Share Vendors (as defined below) to execute for delivery
to the Company on the Closing Date pursuant to Section 19.3 of that certain
Share Purchase Agreement (the "Share Purchase Agreement") dated as of June 29,
1994 by and among BEC and the Vendors named therein (the "Share Vendors") a
deed (collectively, the "Share Vendors Deeds") under which the Share Vendor
gives to the Company the same warranties, indemnities, representations and
undertakings as the Warranties (as defined in the Share Purchase Agreement)
given to BEC under the Share Purchase Agreement. The Option Vendors Deeds and
the Share Vendors Deeds are collectively referred to herein as the "Deeds."
7.4 OPTION ASSIGNMENT AGREEMENT. BEC shall use its reasonable best
efforts to cause the Board of Directors of VIE to agree to vary the terms of an
option to acquire 550,000 ordinary shares of VIE granted to Robert H.F.
Devereux on January 5, 1994 (the "Devereux Option") in order to permit the
assignment to the Company of BEC's rights with respect to the Devereux Option
pursuant to that certain Option Assignment Agreement (the "Option Assignment
Agreement") dated as of June 29, 1994 by and between BEC and Robert H.F.
Devereux.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF BEC AND BIEI
The obligations of BEC and BIEI to proceed with the transactions
contemplated hereby shall be subject to the fulfillment at or prior to the
Closing Date of each of the following conditions:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Company contained in
this Agreement shall have been true and correct at and as of the date hereof,
and they shall be true and correct in all material respects at and as of the
Closing Date with the same force and effect as though made at and as of that
time. The Company shall have performed and complied in all material respects
with all of its obligations required by this Agreement to be performed or
complied with at or prior to the Closing Date. The Company shall have
delivered to BEC and BIEI a certificate, dated the Closing Date and signed by
one of its senior officers, certifying that such representations and warranties
were true and correct at and as of the date hereof, and are true and correct in
all material respects at and as of the Closing Date with the same force and
effect as though made at and as of that time, and that all such obligations
have been thus performed and complied with.
8.2 NO MATERIAL ADVERSE CHANGES. Between the date hereof and the
Closing Date, (i) there shall have been no material adverse change in the
condition, financial or otherwise, of the Company and its subsidiaries, (ii)
there shall have been no adverse federal, state or local legislative or
regulatory change affecting in any material respect the services, products or
business of the Company and its subsidiaries, and (iii) none of the properties
and assets of the Company and its subsidiaries shall have been damaged by fire,
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<PAGE> 24
flood, casualty, act of God or the public enemy or other cause, regardless of
insurance coverage for such damage, which may have a material adverse effect on
the Company and its subsidiaries taken as a whole; and there shall have been
delivered to BEC and Purchaser a certificate to that effect, dated the Closing
Date and signed on behalf of the Company by one of its senior officers.
8.3 NO ADVERSE LITIGATION. No action, suit, investigation or
proceeding shall have been instituted or threatened by or before any court or
other governmental body which shall seek to restrain, prohibit, invalidate or
collect damages arising out of the transactions contemplated hereby, or which
might affect the right of BIEI to own the Spelling Shares, and which, in the
reasonable judgment of BEC, makes it inadvisable to proceed with the
transactions contemplated hereby. Neither BEC, BIEI nor any of their directors
or executive officers shall suggest, elicit, encourage or aid any such action,
suit, litigation or proceeding.
8.4 CORPORATE CERTIFICATES. The Company shall have delivered to BEC
and BIEI (a) true, correct and complete copies of the Articles of Incorporation
and Bylaws as in effect immediately prior to the Closing, (b) a certificate of
good standing of the Company issued by the appropriate officer of the state in
which the Company is incorporated and each state in which the Company is
qualified to do business, in each case dated as of a reasonably recent date,
and (c) certified copies of all resolutions duly adopted by the Disinterested
Directors (as defined in Section 8.7) in connection with the transactions
contemplated hereby.
8.5 SPELLING SHARES. The Company shall have delivered to BIEI a duly
executed stock certificate evidencing the Spelling Shares.
8.6 APPROVAL BY DISINTERESTED DIRECTORS. The execution, delivery and
performance of this Agreement and all other agreements, instruments and
documents contemplated hereby to be executed by the Company and the
consummation of the transactions contemplated hereby shall have been duly
authorized by a majority of those directors of the Company (the "Disinterested
Directors") who (i) are not also directors, officers or employees of BEC or any
subsidiary or other affiliate of BEC, (ii) were not nominated or designated as
a director by BEC or any subsidiary or other affiliate of BEC, and (iii) do not
otherwise have a financial or other interest in BEC.
8.7 FAIRNESS OPINION. The Disinterested Directors shall have
received an opinion from a reputable independent investment banking company or
similar advisor, satisfactory to the Disinterested Directors, that the
consideration to be paid by the Company in the transactions contemplated hereby
is fair to the Company and its stockholders (other than BEC) from a financial
point of view.
8.8 OPTION AGREEMENTS. The Company shall have executed and delivered
(i) those certain Option Agreements (the "Alper Option Agreements") to be dated
as of the Closing Date by and between the Company and Martin S. Alper, in the
form that the parties have agreed; (ii) those certain Option Agreements (the
"Chaney Option Agreements") to be dated as of the Closing Date by and between
the Company and Timothy M. Chaney, in the form that the parties
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have agreed; and (iii) that certain Stock Option Agreement to be dated as of
the Closing Date by and between the Company and Thomas Allen, in the form that
the parties have agreed.
8.9 REGISTRATION AND INDEMNITY AGREEMENT ETC. The Company shall have
executed and delivered to BEC (i) that certain Amended and Restated
Registration and Indemnity Agreement to be dated the Closing Date by and among
the Company, BEC and the Share Vendors, in the form that the parties have
agreed, (ii) that certain Letter Agreement to be dated the Closing Date by and
between the Company and the Share Vendors, in the form that the parties have
agreed, and (iii) that certain Letter Agreement to be dated the Closing Date by
and between the Company and the Share Vendors, in the form that the parties
have agreed.
8.10 DEED OF ADHERENCE AND ASSIGNMENT AND ASSUMPTION AGREEMENT. The
Company shall have executed and delivered (i) that certain deed of adherence to
be dated as of the Closing Date by and among the Company and the Share Vendors,
pursuant to which the Company shall agree to be bound by the terms of that
certain Shareholders Agreement (the "Shareholders Agreement"), dated July 29,
1994, by and among BEC, BIEI and the Share Vendors, and (ii) that certain
Assignment and Assumption Agreement (the "Assignment and Assumption
Agreement"), to be dated as of the Closing Date, by and among BEC, BIEI and the
Company, pursuant to which BEC and BIEI will assign to the Company, and the
Company will assume from BEC and BIEI, all of BEC's and BIEI's rights and
obligations under the Shareholders Agreement.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to proceed with the transactions
contemplated hereby shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions:
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS.
(a) The representations and warranties of BEC and BIEI contained in
this Agreement shall have been true and correct at and as of the date hereof,
and they shall be true and correct in all material respects at and as of the
Closing Date with the same force and effect as though made at and as of that
time. BEC and BIEI shall have performed and complied in all material respects
with all of their respective obligations required by this Agreement to be
performed or complied with at or prior to the Closing Date. BEC and BIEI shall
have delivered to the Company a certificate, dated as of the Closing Date and
signed by one of their respective senior officers, certifying that such
representations and warranties
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were true and correct at and as of the date hereof, and are true and correct in
all material respects at and as of the Closing Date with the same force and
effect as though made at and as of that time, and that all such obligations
have been thus performed and complied with.
(b) The representations and warranties of the Share Vendors in the
Share Purchase Agreement shall have been true and correct at and as of the date
of the Share Purchase Agreement and they shall have been true and correct in
all material respects at and as of the Completion (as defined in the Share
Purchase Agreement) and the Share Vendors shall have performed and complied in
all material respects with all of their obligations required by the Share
Purchase Agreement to be performed or complied with at or prior to the
Completion. The condition set forth in this Section 9.1(b) shall be deemed to
be waived by the Company unless, prior to the Completion, the Company notifies
BEC and BIEI that it believes that this that this condition has not been
satisfied.
9.2 VIE INTERESTS. BIEI shall have delivered to the Company (i) a
certificate representing the VIE Shares, together with duly executed
declarations of trust and powers of attorney and stock transfers, and (ii) a
duly executed assignment of the Devereux Option.
9.3 CORPORATE CERTIFICATES. BEC and BIEI shall have delivered to the
Company (i) true, correct and complete copies of the respective certificates of
incorporation and bylaws of BEC and BIEI, as in effect immediately prior to the
Closing, (ii) a certificate of good standing of each of BEC and BIEI issued by
the Secretary of State of the State of Delaware, dated as of a reasonably
recent date, and (iii) certified copies of resolutions duly adopted by BEC's
and BIEI's respective boards of directors in connection with the transactions
contemplated hereby.
9.4 NO ADVERSE LITIGATION. No action, suit, investigation or
proceeding, shall have been instituted or threatened by or before any court or
other governmental body which shall seek to restrain, prohibit, invalidate or
collect damages arising out of the transactions contemplated hereby, or which
might affect the right of the Company to own the VIE Interests, and which, in
the reasonable judgment of the Company, makes it inadvisable to proceed with
the transactions contemplated hereby. Neither the Company nor its directors or
executive officers shall suggest, solicit, encourage or aid any such action,
suit, litigation or proceeding.
9.5 APPROVAL BY DISINTERESTED DIRECTORS. The execution, delivery and
performance of this Agreement and all other agreements, instruments and
documents contemplated hereby to be executed by the Company and the
consummation of the transactions contemplated hereby shall have been duly
authorized and approved by a majority of the Disinterested Directors.
9.6 FAIRNESS OPINION. The Disinterested Directors of the Company
shall have received an opinion from a reputable independent investment banking
company or
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similar advisor, satisfactory to the Disinterested Directors, that the
consideration to be paid by the Company in the transactions contemplated hereby
is fair to the Company and its stockholders (other than BEC) from a financial
point of view.
9.7 VENDOR'S DEEDS; ASSIGNMENT OF CERTAIN WARRANTIES ETC. BEC shall
have delivered to the Company (i) the Deeds; (ii) an assignment pursuant to
which BEC will assign to the Company all of its rights under the Option
Assignment Agreement; (iii) an assignment pursuant to which BEC will assign to
the Company the Devereux Option, together with a copy of a resolution of the
Board of Directors of VIE, certified as to its authenticity and completeness by
the Secretary of VIE, modifying the Devereux Option to permit such assignment;
(iv) an assignment pursuant to which BEC will assign to the Company all of its
rights under that certain Share Purchase Agreement dated as of July 29, 1994 by
and among BIEI, Martin S. Alper and Timothy M. Chaney; (v) an assignment
pursuant to which BEC will assign to the Company all of its rights under that
certain Stock Purchase Agreement dated as of July 29, 1994 by and between BEC
and Hasbro, Inc.; and (vi) the Assignment and Assumption Agreement.
ARTICLE X
CERTAIN ACTIONS AFTER THE CLOSING
10.1 EXECUTION OF FURTHER DOCUMENTS. From and after the Closing, upon
the reasonable request of a party hereto, the other parties shall execute,
acknowledge and deliver all such further acts and assurances as may be
reasonably requested (i) to convey and transfer to and vest in BIEI and protect
its right, title and interest in all of the Spelling Shares, (ii) to convey and
transfer to and vest in the Company its right, title and interest in the VIE
Interests and (iii) as may be required or otherwise appropriate to carry out
the transactions contemplated by this Agreement.
10.2 PLEDGE OF VIE SHARES. Promptly following the Closing, the
Company will pledge the VIE Shares to BEC pursuant to Section 4 of that certain
Pledge and Security Agreement, dated as of January 31, 1994, by and among the
Company and certain of its subsidiaries and BEC.
10.3 EMPLOYEE OPTIONS.
(a) Immediately following the Closing, the Company shall offer to
each employee of VIE who, immediately prior to the Closing, held an option or
options to acquire Ordinary Shares (each, an "Employee Option"), the
opportunity to convert his Employee Options into the right to receive upon
payment of the exercise price thereunder (as adjusted by multiplying such
exercise price by .4244), 2.3562 shares of Spelling Stock for each Ordinary
Share into which such Employee Option was exercisable immediately prior to the
Closing. With respect to employees of VIE who are citizens of the United
Kingdom, appropriate accommodations will be made to provide such employees with
the full economic
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<PAGE> 28
benefit of the foregoing option conversions as realized by employees of VIE who
are citizens of the United States.
(b) Immediately following the Closing, the Company shall grant to
each of Sean Brennan, Hilary Cranny and Keith Greer, an option to acquire
shares of Spelling Stock in accordance with the terms of those Amendments to
Employment Agreements listed on Schedule 10.3.
10.4 SPELLING REGISTRATION STATEMENT. Prior to August 31, 1994, the
Company shall file and, if applicable, use its best efforts to cause to be
declared effective by the SEC as soon thereafter as practicable, a registration
statement or statements so that shares of Spelling Stock to be issued pursuant
to the Alper Option Agreements and the Chaney Option Agreements will be
registered at the time of issuance under the Securities Act of 1933, as
amended.
10.5 BEC'S PUT RIGHT.
(a) In the event that, pursuant to the call option or the put option
contemplated by Section 11 of the Share Purchase Agreement (the "BEC/VIE
Option"), BEC acquires the 936,907 Ordinary Shares (the "Option Shares")
subject to the BEC/VIE Option, then BEC shall have the right to require the
Company to purchase all, but not less than all, of the Option Shares for a
purchase price equal to the aggregate cost of the Option Shares to BEC as
provided in the Share Purchase Agreement (the "Option Price"), plus the fees
and expenses incurred by BEC in connection with the acquisition of the Option
Shares, minus the Initial Consideration Stock Deficit (as defined in the Share
Purchase Agreement), if any (the "Option Purchase Price").
(b) In the event that BEC acquires any or all of the Option Shares
other than pursuant to the BEC/VIE Option at an average price per share (the
"Alternate Option Price") substantially equivalent to, or less than, the per
share price that would have been payable pursuant to the formula used to
determine the Option Price, then BEC shall have the right to require the
Company to purchase all, but not less than all, of the Option Shares so
acquired for the Alternate Option Price, plus the fees and expenses incurred by
BEC in connection with the acquisition of such Option Shares (the "Alternate
Option Purchase Price").
(c) The options provided for in this Section 10.5 are collectively
referred to herein as the "Put Right". The Put Right may be exercised by BEC
at any time within the 30-day period following BEC's acquisition of the Option
Shares by delivery to the Company of written notice thereof (the "Put Notice").
10.6 THE COMPANY'S CALL RIGHT.
(a) In the event that BEC acquires the Option Shares pursuant to the
BEC/VIE Option or otherwise, then the Company shall have the right to purchase
all, but not
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<PAGE> 29
less than all, of the Option Shares so acquired for the Option Purchase Price
or the Alternate Option Purchase Price, respectively. In addition, BEC shall
exercise its rights and acquire the Option Shares pursuant to the BEC/VIE
Option at the request of the Company, in which case the Company shall have the
obligation to purchase all, but not less than all, of the Option Shares so
acquired for the Option Purchase Price within 90 days; provided, however, that
BEC shall be entitled to postpone the closing of its exercise of the BEC/VIE
Option for such period of time that, in the reasonable opinion of BEC, is
necessary to permit BEC to comply with the Securities Act or the Exchange Act
and the rules thereunder and to avoid incurring any liability under Section
16(b) of the Exchange Act.
(b) The options provided for in this Section 10.6 are referred to
herein as the "Call Right". The Call Right may be exercised by the Company at
any time within the 30-day period following BEC's acquisition of the Option
Shares by delivery to BEC of written notice thereof (the "Call Notice"). BEC
shall notify the Company upon exercise of the BEC/VIE Option and upon BEC's
acquisition of the Option Shares.
10.7 CLOSING OF THE PUT RIGHT OR THE CALL RIGHT. If the Put Right is
exercised by BEC or the Call Right is exercised by the Company, a closing shall
occur at the offices of BEC on the date specified in the Put Notice or the Call
Notice, as the case may be, but in no event later than the 15th business day
following the delivery of the Put Notice or the Call Notice. At such closing
(a) BEC shall deliver to the Company a certificate or certificates representing
the Option Shares, together with duly executed declarations of trust and powers
of attorney and stock transfers, and (b) the Company shall (x) pay to BEC by
wire transfer of immediately available funds to an account designated by BEC,
the Option Purchase Price or the Alternate Option Purchase Price, as the case
may be (the "Exercise Price"), minus any amounts credited to the Company
pursuant to Section 11.4, or (y) in the Company's sole discretion, deliver to
BEC such number of shares of Spelling Stock equal to the quotient of (I) the
Exercise Price, minus any amounts credited to the Company pursuant to Section
11.4, divided by (II)(A) the average closing price of Spelling 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 the date of the closing of the Put Right or the Call Right or, (B) in
the case of a transfer of Option Shares where shares of Spelling Common Stock
were delivered by BEC to the Share Vendors pursuant to the Share Purchase
Agreement in connection with the acquisition of such Option Shares, the price
per share of the Spelling Common Stock at which such shares were transferred if
such price is greater than the market price determined in accordance with
clause (A) above.
10.8 AGREEMENT TO NEGOTIATE. In the event that BEC acquires any
Option Shares other than in accordance with transactions contemplated by
Sections 10.5(a) or (b), then the Company and BEC agree to negotiate in good
faith the terms of a transaction pursuant to which BEC will transfer to the
Company, and the Company will acquire from BEC, the Option Shares.
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ARTICLE XI
SET-OFF AND INDEMNIFICATION
11.1 ACKNOWLEDGMENT OF RIGHTS. BEC acknowledges that, following
the Closing, the Company is the intended beneficiary of BEC's set-off rights
under the Share Purchase Agreement and that pursuant to Section 10.2 of the
Share Purchase Agreement, BEC is entitled to exercise its set-off rights as an
agent of, and for the benefit of, the Company.
11.2 CLAIMS OF THE COMPANY. If the Company should have a Claim
(as such term is defined in the Share Purchase Agreement), the Company shall as
soon as reasonably practicable give written notice (the "Set-Off Notice") to
BEC of the Claim, specifying in reasonable detail the matters giving rise to
the Claim. Such notice shall request BEC to effect a set-off under the Share
Purchase Agreement on behalf of the Company and shall instruct BEC to set-off
the amount of such Claim first against the amounts due under the promissory
note delivered by BEC to the Share Vendors in connection with consummation of
the transactions contemplated by the Share Purchase Agreement (the "Note") for
so long as the Note is outstanding and to the extent of the remaining principal
balance and then against the amounts to be paid by BEC to the Share Vendors in
connection with the exercise of the BEC/VIE Option.
11.3 SET-OFF. Following receipt by BEC of the Set-Off Notice,
BEC shall, in accordance with the terms of the Share Purchase Agreement, effect
a set-off of amounts as instructed by the Company pursuant to Section 11.2.
11.4 CREDITING OF SET-OFF. To the extent BEC has been
instructed by the Company to, and has effected a set-off against amounts due
under the Note or in connection with the exercise of the BEC/VIE Option, the
amount of such set-off that has become final pursuant to Section 10.7.1 of the
Share Purchase Agreement, less the amount of interest, if any, that BEC may owe
to the Share Vendors pursuant to Section 10.8 of the Share Purchase Agreement,
will be credited (i) in the case of a set-off against amounts due under the
Note, against the Exercise Price upon the closing of the first exercise of the
Put Right or the Call Right following the set-off and (ii) in the case of a
set-off against amounts due in connection with the exercise of the BEC/VIE
Option, against the Option Purchase Price. Promptly following the last date
for exercise of the Put Right or the Call Right, BEC shall pay to the Company,
in cash or marketable securities, any of such amount that has not been credited
to the Company pursuant to clause (i) or (ii) of this Section. In the case of
a set-off against the Note, the amount credited to the Company pursuant to
clause (i) of this Section or paid to the Company in accordance with the
foregoing sentence will bear interest at LIBOR plus 1% from the time of the
set-off until such amount is so credited or paid.
11.5 LIABILITY OF BEC. BEC, acting as an agent for the Company
pursuant to this Article 11, undertakes to perform only such duties as are
expressly set forth in this Article 11. BEC shall incur no liability whatever
in acting as an agent for the
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Company pursuant to this Article XI or Section 10.2 of the Share Purchase
Agreement, except by reason of its willful misconduct or gross negligence. BEC
may in good faith: (i) act in reliance upon any writing or instrument or
signature which it, in good faith, believes to be genuine; (ii) assume the
validity and accuracy of any statement or assertion contained in such a writing
or instrument; and (iii) assume that any person purporting to give any writing,
notice, advice or instructions in connection with the provisions of this
Article 11 has been duly authorized to do so.
11.6 INDEMNIFICATION OF BEC. The Company hereby agrees to
indemnify, defend and hold harmless BEC from and against all losses, damages,
costs, charges, payments, liabilities, and expenses, including the costs of
litigation, investigation and reasonable legal fees incurred by BEC and arising
directly or indirectly out of its role as agent for the Company pursuant to
this Article 11 and Section 10.2 of the Share Purchase Agreement, except as
caused by the willful misconduct or gross negligence of BEC. BEC may consult
with counsel of its own choice and shall have full and complete authorization
and protection for any action taken or suffered by it under this Article 11 in
good faith and in accordance with the opinion of such counsel. The provisions
of this Section 11.6 shall survive termination of the agency arrangement
contemplated by this Article 11.
ARTICLE XII
MISCELLANEOUS
12.1 DECLARATION OF TRUST. The parties hereto agree that the
Declaration of Trust shall be terminated immediately prior to the Closing.
12.2 TRANSACTION EXPENSES; BROKERS' FEES. Each party shall pay its
own legal, accounting and other transaction expenses (including brokers' fees)
in connection with the transactions contemplated hereby. The Company shall
indemnify and hold harmless BEC and BIEI from the commission, fee or claim of
any person, firm or corporation employed or retained or claiming to be employed
or retained by the Company to bring about, or to represent it in, the
transactions contemplated hereby. BEC and BIEI shall indemnify and hold
harmless the Company from the commission, fee or claim of any person, firm or
corporation employed or retained or claiming to be employed or retained by BEC
or BIEI to bring about, or to represent either of them in, the transactions
contemplated hereby.
12.3 AMENDMENT AND MODIFICATION. The parties hereto may amend, modify
and supplement this Agreement in such manner as may be agreed upon by them in
writing.
12.4 TERMINATION.
12.4.1 Anything to the contrary herein notwithstanding, this
Agreement may be terminated and the transactions contemplated hereby
may be abandoned:
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(a) by the mutual written consent of the parties hereto at
any time prior to the Closing Date; or
(b) by any party hereto in the event of the material breach
by any other party hereto of any provision of this Agreement,
which breach is not remedied by the breaching party within 20
days after receipt of notice thereof from the terminating
party.
If this Agreement is terminated pursuant to clause (a) of this
paragraph 12.4.1, no party shall have any liability for any costs,
expenses, loss of anticipated profit or any further obligation for
breach of warranty or otherwise to any other party to this Agreement.
Any termination of this Agreement pursuant to clause (b) of this
paragraph 12.4.1 shall be without prejudice to any other rights or
remedies of the respective parties.
12.4.2 This Agreement may be terminated by any party hereto upon
written notice to all other parties hereto, without liability for any
costs, expenses, loss of anticipated profit or any further obligation
for breach of warranty or otherwise to any party to this Agreement, if
the Closing does not occur on or prior to September 30, 1994 (the
"Termination Date"). The right to terminate this Agreement shall not
be available to any party whose breach of any provision of this
Agreement shall have been the cause of, or resulted in, the failure of
the Closing to occur prior to the Termination Date.
12.5 ADJUSTMENTS. In the event that prior to the Closing the
outstanding shares of Spelling Stock or the outstanding Ordinary Shares shall
have been increased, decreased or changed into or exchanged for a different
number or kind of shares or securities by reorganization, recapitalization,
reclassification, stock dividend, stock split or other like changes in the
Company's capitalization, then an appropriate and proportionate adjustment
shall be made in the number and kind of shares of Spelling Stock or Ordinary
Shares, as the case may be, to be thereafter delivered pursuant to this
Agreement.
12.6 INVESTMENT REPRESENTATIONS. Each party hereto expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party
has had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's-length negotiations conducted by and among the
parties hereto, the Disinterested Directors and their respective counsel.
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12.7 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
12.8 ENTIRE AGREEMENT. This Agreement, including the exhibits and
schedules, contains the entire agreement of the parties hereto with respect to
the transactions contemplated hereby, and supersedes all prior understandings
and agreements (oral or written) of the parties with respect to the subject
matter hereof. The parties expressly represent and warrant that in entering
into this Agreement they are not relying on any prior representations made by
any other party concerning the terms, conditions or effects of this Agreement
which terms, conditions or effects are not expressly set forth herein. Any
reference herein to this Agreement shall be deemed to include the exhibits and
schedules.
12.9 INTERPRETATION. When a reference is made in this Agreement to
an article, section, paragraph, clause, schedule or exhibit, such reference
shall be to an article, section, paragraph, clause, schedule or exhibit of this
Agreement unless otherwise indicated. The headings contained herein and on the
schedules are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement or the schedules. References to
pronouns shall be deemed to include the masculine, feminine and neuter versions
thereof. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Time shall be of the essence in this Agreement.
12.10 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which taken together shall constitute one and the same instrument.
12.11 NOTICES. Any notice, consent, approval, request,
acknowledgment, other communications or information to be given or made
hereunder to any of the parties by any other party shall be in writing and
delivered personally, sent by express delivery service or certified mail,
postage prepaid, or sent by telecopy, as follows:
If to the Company, addressed to:
Spelling Entertainment Group Inc.
5700 Wilshire Boulevard
Los Angeles, CA 90036
Attn: Peter H. Bachmann
Fax: (213) 965-5840
with copies to:
John L. Muething
1800 Provident Tower
One East Fort Street
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<PAGE> 34
Cincinnati, OH 45202
Fax: (513) 579-6457
and
Taft, Stettinius & Hollister
1800 Star Bank Center
425 Walnut Street
Cincinnati, OH 45202-3597
Attn: Timothy E. Hoberg
Fax: (513) 381-0205
If to BEC or BIEI, addressed to:
Blockbuster Entertainment Corporation
One Blockbuster Plaza
Fort Lauderdale, Florida 33301
Attn: Thomas W. Hawkins
Fax: (305) 832-3929
with a copy to:
Eckert Seamans Cherin & Mellott
600 Grant Street, 42nd Floor
Pittsburgh, Pennsylvania 15219
Attn: Bryan D. Rosenberger
Fax: (412) 566-6099
Any party may change the address or fax number to which notices hereunder are
to be sent to it by giving written notice of such change in the manner herein
provided for giving notice. Any notice delivered personally shall be deemed to
have been given on the date it is so delivered, any notice delivered by express
delivery service or certified mail shall be deemed to have been given on the
date it is received, and any notice sent by telecopy shall be deemed to have
been given on the date it is faxed (so long as a hard copy is sent by regular
U.S. mail).
12.12 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed therein.
12.13 CONFIDENTIALITY; PUBLICITY. No press release or other public
announcement related to this Agreement or the transactions contemplated hereby
will be issued by the Company without the prior approval of BEC, except that
the Company may make such public disclosure which it believes in good faith to
be required by law or by the
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terms of any listing agreement with a securities exchange (in which case the
Company will consult with BEC prior to making such disclosure). No press
release or other public announcement related to this Agreement or the
transactions contemplated hereby will be issued by BEC or BIEI without the
prior approval of the Company, except that BEC may make such public disclosure
which it believes in good faith to be required by law or by the terms of any
listing agreement with a securities exchange (in which case BEC will consult
with the Company prior to making such disclosure).
12.14 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the greatest extent
possible.
12.15 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior consent of the other parties.
12.16 NO THIRD-PARTY BENEFICIARIES. This Agreement shall inure to
the benefit of, be binding upon and be enforceable by and against, the parties
hereto and their respective successors and permitted assigns, and nothing
herein expressed or implied shall be construed to give any other person any
legal or equitable rights hereunder except as provided in Section 10.3 with
respect to the rights of holders of Employee Options.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the day and year first above written.
SPELLING ENTERTAINMENT GROUP INC.
By:
-----------------------------------------------
Title:
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BLOCKBUSTER ENTERTAINMENT CORPORATION
By:
-----------------------------------------------
Title:
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BLOCKBUSTER INTERACTIVE ENTERTAINMENT, INC.
By:
-----------------------------------------------
Title:
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INDEX OF SCHEDULES AND EXHIBITS
TO
EXCHANGE AGREEMENT
Schedule 2.1 - Fees and Expenses of Acquisition of VIE Interests
Schedule 4.10 - Compliance with Laws
Schedule 10.3 - Amendments to Employment Agreements
