<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
<PAGE> 2
SPELLING ENTERTAINMENT GROUP INC.
5700 WILSHIRE BOULEVARD, LOS ANGELES, CALIFORNIA 90036
____________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 23, 1995
____________________________________
You are cordially invited to attend the Annual Meeting of Shareholders
of Spelling Entertainment Group Inc. (the "Company") which will be held at The
Regent Beverly Wilshire, 9500 Wilshire Boulevard, Champagne Room, Beverly
Hills, California, on May 23, 1995 at 10:00 a.m., Pacific Time, for the
following purposes:
Proposal 1. To elect directors.
Proposal 2. To consider and vote upon a proposal to change the
Company's state of incorporation from Florida to
Delaware.
Proposal 3. To transact such other business as may properly come
before the Annual Meeting.
Only shareholders of record at the close of business on March 31, 1995
are entitled to vote at the Annual Meeting or any postponements or adjournments
thereof. A list of such shareholders will be available for examination by any
shareholder for any purpose germane to the meeting, during normal business
hours, at the principal office of the Company, 5700 Wilshire Boulevard, Los
Angeles, California, for a period of ten days prior to the Annual Meeting.
It is important that your shares be represented at the Annual Meeting
regardless of the size of your holdings. Whether or not you intend to be
present at the meeting in person, we urge you to please mark, date and sign the
enclosed proxy and return it in the envelope provided for that purpose, which
does not require postage if mailed in the United States.
____________________________________
SALLY SUCHIL
Secretary
Los Angeles, California
April __, 1995
YOU ARE URGED TO MARK, DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT PROMPTLY.
<PAGE> 3
SPELLING ENTERTAINMENT GROUP INC.
_________________________
PROXY STATEMENT
_________________________
ANNUAL MEETING OF SHAREHOLDERS
May 23, 1995
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Spelling Entertainment Group Inc. (the "Company")
of proxies for use at the Annual Meeting of Shareholders of the Company to be
held at The Regent Beverly Wilshire, 9500 Wilshire Boulevard, Champagne Room,
Beverly Hills, California, at 10:00 a.m., Pacific Time on May 23, 1995, and at
any postponements or adjournments thereof. Proxies properly executed and
returned in a timely manner will be voted at the Annual Meeting in accordance
with the directions noted thereon. If no direction is indicated, they will be
voted for the election of the nominees named herein as directors, and, on other
matters presented for a vote, in accordance with the judgment of the persons
acting under the proxies. If for any reason (which the Board of Directors does
not expect) a nominee is unable to serve, the proxies may use their discretion
to vote for a substitute proposed by the Board of Directors. Any shareholder
giving a proxy has the power to revoke it any time before it is voted, by
giving written notice to the Secretary of the Company at the address below so
that it is received no later than the closing of the polls at the Annual
Meeting, or by attending the Annual Meeting in person and voting thereat or by
executing a later-dated proxy delivered prior to the closing of the polls at
the Annual Meeting.
The Company's executive offices are located at 5700 Wilshire
Boulevard, Los Angeles, California 90036 (telephone 213-965-5700). Proxy
materials are being mailed to shareholders beginning on or about April ,
1995.
SHARES OUTSTANDING AND VOTING RIGHTS
Only shareholders of record at the close of business on March 31, 1995
(the "Record Date"), are entitled to vote at the Annual Meeting. The only
voting stock of the Company outstanding is its common stock, $.10 par value per
share (the "Common Stock"), of which 88,291,950 shares were outstanding of
record as of the close of business on March 31, 1995. Each share of Common
Stock issued and outstanding is entitled to one vote on each matter to be
presented at the Annual Meeting.
The presence, in person or by proxy, of the holders of a majority of
the total issued and outstanding shares of Common Stock entitled to vote at the
Annual Meeting is necessary to constitute a quorum for the transaction of
business at the Annual Meeting. Votes cast by proxy or in person at the Annual
Meeting will be tabulated by the election inspectors appointed for the Annual
Meeting, who will also determine whether or not a quorum is present. A proxy
submitted by a shareholder may indicate that all or a portion of the shares
represented by such proxy are not being voted by such shareholder with respect
to a particular matter. This could occur, for example, when a broker is not
permitted to vote shares held in street name on certain matters in the absence
of instructions from the beneficial owner of the shares. The shares subject to
any such proxy which are not being voted with respect to a particular matter
will be considered shares
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<PAGE> 4
not present and entitled to vote on such matter, although such shares may be
considered present and entitled to vote for other purposes and will count for
purposes of determining the presence of a quorum. Shares voted to abstain as to
a particular matter, and directions to "withhold authority" to vote for
directors, will be considered voted shares, and will count for purposes of
determining the presence of a quorum. Directors will be elected by a plurality
of the votes of the shares present or represented by proxy at the meeting and
entitled to vote on the election of directors. The affirmative vote of a
majority of the total number of shares of Common Stock outstanding and entitled
to vote at the Annual Meeting is required for approval of Proposal 2. If a
quorum is present, non-votes and abstentions will have no effect on the voting
for the election of directors.
As of the Record Date, Viacom Inc. ("Viacom") was the beneficial owner
of approximately 67,673,702 shares of Common Stock representing approximately
77% of the outstanding shares. Viacom has advised the Company of its intention
to vote such shares in favor of the below listed nominees for directors and for
Proposal 2.
ELECTION OF DIRECTORS
By resolution of the Board of Directors of the Company, the number of
directors constituting the Board is set at eight directors. Proxies may not be
voted for more than eight persons. In the election of directors, shareholders
do not have cumulative voting rights.
The persons named below have been designated by the Board as nominees
for election as directors for terms expiring at the Company's Annual Meeting of
Shareholders in 1996. All nominees are currently serving as directors.
H. WAYNE HUIZENGA, age 57, has been Chairman of the Board and a
Director of the Company since April 1993. Mr. Huizenga was Chairman of the
Board and Chief Executive Officer of Blockbuster Entertainment Corporation
("Blockbuster") from April 1987 until September 1994 when Blockbuster merged
with Viacom, at which time he became Chairman of Blockbuster Entertainment
Group, a division of Viacom ("BEG"). He also serves as Vice Chairman and a
Director of Viacom. From May 1984 to the present, Mr. Huizenga has been an
investor in other businesses and is the sole shareholder and Chairman of the
Board of Huizenga Holdings, Inc. ("Holdings"), a holding and management company
with various business interests. He also has a majority ownership interest in
Florida Marlins Baseball, Ltd., a Major League Baseball sports franchise, owns
the Florida Panthers Hockey Club, Ltd., a National Hockey League sports
franchise, the Miami Dolphins, Ltd., a National Football League sports
franchise, and Robbie Stadium Corporation, which owns and operates Joe Robbie
Stadium in South Florida. Mr. Huizenga is also a member of the Board of
Directors of Discovery Zone, Inc.
AARON SPELLING, age 72, has been Vice Chairman of the Board of the
Company since April 1993 and a Director since October 1992. Mr. Spelling has
been Chairman of the Board of Aaron Spelling Productions, Inc. ("ASP"), a
subsidiary of the Company, since its formation in 1965, and has served as its
Chief Executive Officer since July 1986. Mr. Spelling also serves as the
Chairman of the Board and Chief Executive Officer of Spelling Television Inc.
and most of the Company's other significant television production
subsidiaries. Mr. Spelling's career includes involvement as a writer, creator
and producer of over 100 movies-for-television and over 30 television series
including The Danny Thomas Hour, The Guns of Will Sonnett, The Mod Squad,
Charlie's Angels, The Rookies, Starsky & Hutch, Hart to Hart, Fantasy
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<PAGE> 5
Island," "Family," "The Love Boat," "Vegas," "Matt Houston," "Hotel,"
"Dynasty," "The Colbys," "Beverly Hills, 90210" and "Melrose Place,"
encompassing more than 3,000 hours of television programming over more than
30 years.
STEVEN R. BERRARD, age 40, has been President and Chief Executive
Officer and a Director of the Company since April 1993. Mr. Berrard was Vice
Chairman of the Board of Blockbuster from November 1989, and President and
Chief Operating Officer of Blockbuster from January 1993, until the merger with
Viacom in September 1994, at which time he became President and Chief Executive
Officer of BEG. He has served in various other executive positions with
Blockbuster since June 1987. He is also a limited partner of Florida Marlins
Baseball, Ltd. Mr. Berrard is also a member of the Board of Directors of
Viacom and Discovery Zone, Inc.
FRANK J. BIONDI, JR., age 50, has been a Director of the Company since
November 1994. Mr. Biondi has been President and Chief Executive Officer of
Viacom since July 1987. Mr. Biondi is also a member of the Board of Directors
of Viacom and Maybelline Inc.
PHILIPPE P. DAUMAN, age 41, has been a Director of the Company since
November 1994. Mr. Dauman has served as Executive Vice President, General
Counsel and Chief Administrative Officer of Viacom since March 1994. From
February 1993 to March 1994, Mr. Dauman served as Senior Vice President,
General Counsel and Secretary of Viacom. Prior thereto, Mr. Dauman was a
partner in the law firm of Shearman & Sterling in New York, which he joined in
1978. Mr. Dauman also serves on the Board of Directors of Viacom and National
Amusements, Inc. ("NAI").
J. BRIAN MCGRATH, age 52, has been a Director of the Company since
November 1994. Mr. McGrath has served as the Commissioner of the Thoroughbred
Racing Associations since March 1994. He has also served as President of TRA
Enterprises, which is the managing general partner of Equibase Holding
Partners, LP, since March 1994. Prior thereto, he was President and Chief
Executive Officer of ISL Marketing AG, a sports marketing firm, from August 1991
to November 1993. Prior to August 1991, Mr. McGrath was an independent
consultant to the entertainment and investment banking industries.
JOHN L. MUETHING, age 72, has been a Director of the Company since
October 1992. He has been, for more than five years, Of Counsel to the law firm
of Keating, Muething & Klekamp, located in Cincinnati, Ohio.
SUMNER M. REDSTONE, age 71, has been a Director of the Company since
November 1994. Mr. Redstone has served as Chairman of the Board of Viacom
since June 1987 and as a member of its Board since 1986. Mr. Redstone also
serves as Chairman of the Compensation Committee of Viacom. He has served as
President, Chief Executive Officer of NAI since 1967 and as Chairman of the
Board of NAI since 1986. He served as the first Chairman of the Board of the
National Association of Theater Owners, and is currently a member of the
Executive Committee of that organization. During the Carter Administration,
Mr. Redstone was appointed a member of the Presidential Advisory Committee on
the Arts for the John F. Kennedy Center for the Performing Arts and, in 1984,
he was appointed a Director of the Kennedy Presidential Library Foundation.
Since 1982, Mr. Redstone has been a member of the faculty of Boston University
Law School, where he has lectured in entertainment law, and in 1994, he
accepted a proposal from Harvard Law School to lecture, as well as a Visting
Professorship from Brandeis University.
3
<PAGE> 6
EXECUTIVE OFFICERS
Set forth below is information regarding those persons who serve as executive
officers of the Company, but who do not serve as directors of the Company.
PETER H. BACHMANN, age 37, has been Executive Vice President, Office
of the President since October 1994. From August 1993 to October 1994, he
served as Senior Vice President - Business and Legal Affairs of the Company and
of Spelling Television Inc. From June 1987 to August 1993, Mr. Bachmann served
in various executive positions at Imagine Films Entertainment, Inc., most
recently as Executive Vice President, Business Affairs.
THOMAS P. CARSON, age 48, has been Executive Vice President, Office of
the President since October 1994. Mr. Carson has also served as the Chief
Financial Officer of the Company since September 1993 and Treasurer since
February 1994. He also served as Senior Vice President from November 1993 to
November 1994. Prior thereto, he served as Executive Vice President - Chief
Financial Officer of Metro-Goldwyn-Mayer Inc. ("MGM") from May 1991 to
September 1993 and Senior Vice President - Chief Financial Officer of MGM from
December 1985 to November 1990.
J. RONALD CASTELL, age 58, has been Executive Vice President, Office
of the President since November 1994. Mr. Castell joined the Company in June
1993 as Vice President, during which time he has also served as Senior Vice
President of Programming and Communications for Blockbuster, a position he has
held since 1991. Mr. Castell began his employment with Blockbuster in February
1989 as Senior Vice President of Programming and Merchandising.
KATHLEEN COUGHLAN, age 42, has been Senior Vice President and
Corporate Controller of the Company since November 1994. Prior thereto, she
served as Vice President and Corporate Controller of the Company from January
1994 to November 1994. From May 1991 to December 1993, Ms. Coughlan served as
Senior Vice President and Controller of MGM. From January 1986 to November
1990, Ms. Coughlan served as Vice President and Controller of MGM.
SALLY SUCHIL, age 44, has been Senior Vice President, General Counsel
and Secretary of the Company since January 1995. Ms. Suchil served as Senior
Vice President and Assistant General Counsel of MGM from June 1992 to December
1994. Prior thereto, she served as Senior Vice President - Corporate Legal
Affairs of MGM from July 1991 to June 1992, and Vice President - Corporate
Legal Affairs of MGM from 1986 to July 1991.
Under Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Company's directors, executive officers and any
persons holding more than ten percent of the Common Stock are required to
report their initial ownership of Common Stock and any changes in that
ownership to the Securities and Exchange Commission, the New York Stock
Exchange and the Pacific Stock Exchange. Specific due dates have been
established and the Company is required to disclose in this Proxy Statement any
failure to file by these dates. Based solely on a review of the copies of the
forms furnished to the Company, or written representations that no Form 5's
were required, the Company believes that in 1994 and through the date of this
Proxy Statement, all Section 16(a) filing requirements applicable to its
directors, executive officers and greater than ten percent shareholders were
complied with, except as set
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<PAGE> 7
forth below. Messrs. Bachmann and Carson each inadvertently filed one report
on Form 4 after the designated filing date. Each of the reports related to a
single grant of options which were granted to Messrs. Bachmann and Carson.
SECURITIES OWNERSHIP OF MANAGEMENT
Information concerning the Common Stock of the Company beneficially
owned by each director, each Named Officer in the Summary Compensation Table
below, each person (or group) known to the Company to beneficially own more
than five percent of the outstanding Common Stock, and the directors and
executive officers as a group on March 31, 1995, is shown in the following
table:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
NAME OF DIRECTOR, EXECUTIVE COMMON STOCK PERCENT
OFFICER OR SHAREHOLDER BENEFICIALLY OWNED (1) OF CLASS
- ---------------------- ---------------------- --------
<S> <C> <C>
H. Wayne Huizenga(2) -- --
Aaron Spelling 348,500(3) *
Steven R. Berrard(2) -- --
Frank J. Biondi(2) -- --
Philippe P. Dauman(2) -- --
J. Brian McGrath 5,000 *
John L. Muething 2,000 *
Sumner M. Redstone 69,043,850(4)(5) 77%
Peter H. Bachmann 10,000(6) *
Thomas P. Carson 25,000(6) *
J. Ronald Castell -- --
Kathleen Coughlan 12,500(5) *
Viacom Inc. 69,043,850 77%
All directors and executive officers
as a group (12 persons) (3)(6)(7) *
</TABLE>
____________________________
*Less than one percent of the class of securities
(1) Unless otherwise indicated, each holder named has sole voting and
investment power with respect to the shares of Common Stock owned by such
holder.
(2) Does not include any shares of Common Stock beneficially owned by
Viacom. (See "Election of Directors.")
(3) Includes 300,000 shares of Common Stock which may be acquired within
60 days of __________ by Mr. Spelling upon exercise of stock options.
(4) Consists of shares of Common Stock owned by Viacom (see above). NAI
owns approximately 61% of Viacom's Class A Common Stock and approximately 26% of
Viacom's Class B Common Stock. Mr. Redstone is the controlling shareholder of
NAI and is its Chairman of the Board, President and Chief Operating Officer.
(5) Includes 1,370,148 shares of Common Stock which may be acquired by
Viacom pursuant to a warrant converted to and right to acquire shares of Common
Stock.
(6) Consists of shares of Common Stock which may be acquired
within 60 days of __________ by Messrs. Bachmann and Carson and Ms. Coughlan.
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<PAGE> 8
(7) Does not include shares of Common Stock attributed to Mr. Redstone.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors has, pursuant to its powers, designated several
committees of the Board, including an Executive Committee, Audit Committee,
Compensation Committee and Nominating Committee, the functions and membership
of which are described below.
The Executive Committee is permitted under Florida law and the
Company's by-laws to perform substantially all of the functions of the Board of
Directors, except: to approve or recommend to shareholders actions or proposals
required to be approved by shareholders, to fill Board or committee vacancies,
to adopt, amend or repeal the by-laws, to authorize reacquisition of the
Company's shares, or to authorize the issuance or to contract for the sale of
shares or to determine rights of the Company's shares, except within limits
specifically prescribed by the Board. The Audit Committee is responsible for
certain financial affairs of the Company and its subsidiaries, including the
selection of the Company's auditors, the review of the adequacy of internal
controls and reporting, and the performance of any other duties or functions
deemed appropriate by the Board. The Compensation Committee is responsible for
the matters discussed under the heading "Report of the Compensation Committee"
set forth below. The Nominating Committee's function is to identify and propose
to the full Board nominees to fill vacancies as they occur. The Nominating
Committee will consider persons brought to its attention by officers, directors
and shareholders. Proposals may be addressed to the Nominating Committee at the
address shown on the cover of this Proxy Statement, attention of the Secretary
of the Company. Messrs. Huizenga, Berrard and Spelling are currently members
of the Executive Committee; Messrs. McGrath and Muething are currently members
of the Audit Committee and the Nominating Committee; Messrs. Berrard, Dauman,
Muething and McGrath are currently members of the Compensation Committee.
During 1994, the Executive Committee met, or took action by unanimous written
consent, three times, the Compensation Committee met four times and the Audit
Committee met one time. In addition, a Special Committee of the Board,
consisting of the independent directors, met ___ times, during 1994 to consider
the Republic merger, the Virgin Interactive Acquisition and the Viacom Credit
Facility (see "Certain Transactions").
During 1994, the Board of Directors took action by unanimous written
consent on three occasions and held four Board meetings. Each director
attended at least 75% of the combined number of meetings held by the Board of
Directors and the committee(s) thereof on which each such director served.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation for services rendered
in all capacities to the Company for the years ended December 1994, 1993 and
1992, of those persons who were (i) the Company's Chief Executive Officer
during 1994 and (ii) the executive officers of the Company at December 31, 1994
whose 1994 salary and bonus exceeded $100,000 (such persons being referred to
herein collectively as the "Named Officers").
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<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
COMPENSATION
------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- --------------------------- ---- ---------------- ------------- ------------ ----------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Steven R. Berrard 1994 200,000(a) $ - $ - - $ -
President and Chief 1993 43,987(a) 7,763(a)
Executive Officer
Peter H. Bachmann 1994 281,250 150,000 13,400(b) 160,000
Executive Vice President, 1993 96,154 10,000 2,875(c) 40,000
Office of the President
Thomas P. Carson 1994 289,424 150,000 15,400(b) 100,000 -
Executive Vice President, 1993 67,308 - 2,800(c) 100,000 -
Office of the President
Chief Financial Officer and
Treasurer
J. Ronald Castell 1994 125,000(a) - - - -
Executive Vice President, 1993
Office of the President
Kathleen Coughlan 1994 168,270 52,700 (d) 50,000 -
Senior Vice President and
Corporate Controller
</TABLE>
(a) Represents amounts received from Blockbuster allocable to Messrs. Berrard
and Castell's services to the Company in 1994 and 1993, respectively, which
amounts were reimbursed to Blockbuster by the Company (see "Certain
Transactions").
(b) Consists of car allowance in the amount of $7,400 and $9,400, and $6,000
and $6,000 accrued under a Company profit sharing plan, for Messrs. Bachmann
and Carson, respectively.
(c) Consists of car allowance.
(d) Amount accrued under a Company profit sharing plan.
STOCK OPTION GRANT TABLE
Set forth below is information with respect to grants of stock options
during the fiscal year ended December 31, 1994, to the Named Officers. Stock
appreciation rights are not available under the Company's stock option plans.
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<PAGE> 10
<TABLE>
<CAPTION>
Potential Realizable
Value At
Assumed Annual Rates of
Individual Grants Stock Price Appreciation
Number of % of Total for Option Term
Securities Options Granted ------------------------
Underlying to Employees Exercise Expiration
Options Granted in Fiscal Year Price Date 5% 10%
--------------- --------------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Steven R. Berrard -- -- -- -- -- --
Peter H. Bachmann 160,000(1) $9.375 9/01/04 $943,342 $2,390,614
Thomas P. Carson 100,000(1) $9.375 9/01/04 $589,589 $1,494,134
J. Ronald Castell -- -- -- --
Kathleen Coughlan 50,000(2) -- $10.375 1/10/04
</TABLE>
(1) Grant vests in equal amounts over a period of three years.
(2) Grant vests in equal amounts over a period of four years.
As required by the Securities and Exchange Commission, the dollar
amounts in the last two columns represent the hypothetical gain or "option
spread" that would exist for the options based on assumed 5% and 10% annual
compounded rates of stock price appreciation over the full option term.
These prescribed rates are not intended to forecast possible future
appreciation, if any, of the Common Stock.
STOCK OPTION EXERCISES AND YEAR-END HOLDINGS
The following table sets forth certain information pertaining to stock
options (i) exercised during the fiscal year ended 1994 and (ii) held as of
December 31, 1994 by the Named Officers. The Company has no plans pursuant to
which stock appreciation rights may be awarded.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT DECEMBER 31, 1994 DECEMBER 31, 1994
ACQUIRED VALUE ------------------------------ ------------------------------
NAMED OFFICERS ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Steven R. Berrard -- -- -- -- -- --
Peter H. Bachmann -- -- 10,000 190,000 $33,750 $321,250
Thomas P. Carson -- -- 25,000 175,000 $87,500 $400,000
J. Ronald Castell -- -- -- --
Kathleen Coughlan -- -- -- 50,000
</TABLE>
DIRECTOR COMPENSATION
Each member of the Board (excluding Messrs. Huizenga, Berrard,
[Redstone, Biondi and Dauman]) is currently paid an annual fee of $15,000 plus
$750 for each meeting attended, including committee meetings.
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<PAGE> 11
EMPLOYMENT CONTRACTS
Pursuant to an Employment Agreement dated as of March 1, 1989, as
amended (the "Employment Agreement"), Aaron Spelling is employed as Chairman of
the Board and Chief Executive Officer of most significant subsidiaries involved
in television production, and serves as Executive Producer or Producer of
substantially all television programs and filmed entertainment produced by the
Company's significant subsidiaries. As compensation for serving as an officer of
such subsidiaries, Mr. Spelling currently receives an annual base salary of
$1,089,000 which will increase ten percent on March 1, 1996. As compensation
for serving as an Executive Producer or Producer, Mr. Spelling receives certain
producer fees consistent with industry standards for producers of similar
stature in relation to the applicable budget.
Mr. Spelling has the right to terminate the Employment Agreement
effective upon seven (7) days written notice in the event that the Company
materially breaches its obligations under the Employment Agreement or upon
certain circumstances involving a change of control of the Company (such
provision was waived by Mr. Spelling with respect to the Viacom merger with
BEG). If such termination is premised solely on a change in control, the Company
has the right to retain Mr. Spelling as a consultant for a period of time
thereafter. Compensation for such consulting services would be based on a
percentage of the compensation that Mr. Spelling would have received but for
termination of the Employment Agreement. If Mr. Spelling terminates the
Employment Agreement based on a material breach by the Company, Mr. Spelling has
the right to cease providing services and receive a lump sum payment equal to
the present value of his base salary for the remainder of the term as well as
service fees payable in accordance with a formula provided in the Employment
Agreement. Mr. Spelling's Employment Agreement extends through April 30, 1996.
The Company has a three-year employment agreement with Peter Bachmann,
dated as of September 26, 1994, wherein he is employed as Executive Vice
President, Office of the President at an annual salary of $375,000. Such
salary will increase to $475,000 on September 30, 1995 and to $550,000 on
September 30, 1996. In addition, Mr. Bachmann received a $25,000 bonus upon
execution of his agreement. Further, he is entitled to receive, at the
Company's discretion, incentive compensation up to 35% of his salary based on
the Company's performance and his individual performance. Mr. Bachmann was
also granted 160,000 stock options vesting one-third each year over the term of
the agreement. However, if the Company engages in a going private transaction
(a "Rule 13e-3 transaction"), any outstanding options become immediately
exercisable one day prior to the closing of such transaction.
The Company has a three-year employment agreement with Thomas P.
Carson, dated as of September 1, 1994, wherein he is employed as Executive
Vice President, Office of the President at an annual salary of $375,000. Such
salary will increase to $475,000 on September 30, 1995 and to $550,000 on
September 30, 1996. In addition, Mr. Carson received a $25,000 bonus upon
execution of his agreement. Further, he is entitled to receive, at the
Company's discretion, incentive compensation up to 35% of his salary based on
the Company's performance and his individual performance. Mr. Carson was also
granted 100,000 stock options vesting one-third each year over the term of the
agreement. However, if the Company engages in a Rule 13e-3 transaction, any
outstanding options become immediately exercisable one day prior to the closing
of such transaction.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors at March 31, 1995
consisted of four directors: Steven R. Berrard, Philippe P. Dauman, J. Brian
McGrath (Chairman) and John L. Muething. John T. Lawrence, III and Alfred W.
Martinelli, former directors of the Company, served as members of
9
<PAGE> 12
the Compensation Committee through November 1994. The Compensation Committee's
functions include reviewing and recommending compensation arrangements for
executive officers of the Company and administering the Company's stock option
plans, including determining eligibility, the number of shares to be granted
under the options and the terms of such grants.
Compensation Philosophy
The Company's executive compensation policies relating to executive
officers have been designed to provide a total compensation program that will
attract, retain and motivate superior executive personnel while integrating
such compensation with Company performance and shareholder interests. The
Company's compensation program for executive officers has three principal
components: annual base salary, annual incentive bonuses and stock option
grants. Under this program, a portion of an executive's compensation, in both
the short term and the long term, is linked to the Company's performance. In
addition, each of the Company's employees including its executive officers is
permitted, when eligible, to participate in the Company's 401(k) Savings Plan
by making voluntary contributions to his or her account. The Company
contributes to individual employee accounts based upon the amount of the
employee's contributions. In addition, the Company annually contributes to the
plan an amount equal to [two percent] of the total compensation paid to
participants in such plan, which amount is distributed ratably to participants'
individual accounts based on the participants' base salaries.
Base Salary
Annual salaries are established after a review of industry, peer group
and national surveys of total compensation packages, as well as evaluation of
the individual executive's past and expected future performance. The Company
has upon occasion utilized the services of independent executive compensation
consultants in conducting this review. Annual salary levels are generally
targeted to, and in 1994 corresponded to, the lower end of the range of salaries
paid to executives with comparable qualifications, experience and
responsibilities at other similarly situated companies. In establishing salary
levels against such range, the competitiveness of the executive's entire
compensation package is considered rather than limiting its review to salary
levels.
Certain executive officers are employed pursuant to employment
agreements. The terms of these employment agreements were approved by the
Board of Directors after consideration by the Board of the individual
executive's business experience, capabilities and likely contribution to the
Company's competitiveness and profitability. In approving the salary levels
provided in the employment agreements, the Board focused upon the importance of
attracting and retaining the individual executives and accordingly took into
account compensation levels which would be available to such executive from
other employers.
Certain executive officers of the company are employed by BEG and
furnish services to the Company pursuant to loan out agreements between the
Company and BEG. The Company reimburses BEG for an allocable portion of the
compensation paid to such executive officers by BEG. The Company believes that
the amounts paid to BEG pursuant to such loan-out agreements are lower than the
amounts which the Company would have to pay in order to directly engage
executive officers of comparable skill and experience.
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<PAGE> 13
Annual Incentive Bonuses
The Company's executive officers are eligible to receive annual
incentive bonuses. In approving such bonuses, consideration is given to the
operating results of the Company as a whole, the performance of the individual
executive's division and the contributions made by the individual during the
course of the year. The Company accords approximately equal weight to each of
these three factors. The Company does not have specific performance criteria
which are utilized to determine the amount of annual bonuses which may be
granted. Rather, the evaluation is conducted from a more generalized
consideration of each of the three factors with a view towards rewarding
outstanding performance and encouraging executives to contribute to the overall
success of their operating division and the Company as a whole.
Stock Options
Stock options represent an important part of the Company's
compensation program. The Committee believes that the Company's shareholders'
interests are well served by aligning the Company's senior executives'
interests with those of the shareholders through the grant of stock options.
Options under the Company's stock option plan are granted at exercise prices
equal to the fair market value of the Common Stock on the date of the grant,
and will only have value if the Company's stock price increases. Options granted
subsequent to July 1993 generally become exercisable at the rate of 25% per
year and executives generally must be employed at the time options vest in
order to exercise the options. The Compensation Committee believes that these
features provide the optionee with substantial incentives to maximize the
Company's long term success. Grants of stock options generally are based upon
the executive's position with the Company and an evaluation of the executive's
past and expected future performance, without regard to the executive's stock
ownership or grants made to the executive in prior years. The number of shares
subject to a stock option grant is generally determined by dividing a multiple
of the executive's base salary by the market price of the Common Stock on the
date of the grant.
Compensation of the Chief Executive Officer
Mr. Berrard acts as Chief Executive Officer of the Company pursuant to
a loan-out agreement between BEG and the Company. In 1994, the Company paid
BEG $200,000 as reimbursement for Mr. Berrard's services. The Company believes
that the amount paid to BEG as reimbursement for Mr. Berrard's services is
substantially below the competitive market rates for chief executive officers
of companies of similar size that have achieved operating results comparable
to those of the Company in 1994.
Deductibility of Executive Compensation
The Omnibus Budget Reconciliation Act of 1993 added a provision to the
Internal Revenue Code limiting to $1,000,000 the deductibility of compensation
(including stock-based compensation, such as stock options) paid to certain
executives by public companies. The tax law change includes an exclusion for
"performance-based" compensation, provided such compensation meets certain
requirements, including outside director and shareholder approval of the
performance goals. The Company will continue to consider the deductibility of
compensation payments when establishing its compensation practices and
programs.
11
<PAGE> 14
The Compensation Committee continually evaluates the Company's
compensation policies and procedures with respect to executives. Although the
Compensation Committee believes that current compensation policies have been
successful in aligning the financial interests of executive officers with those
of the Company's shareholders and with Company performance, it continues to
examine what modifications, if any, should be implemented to further link
executive compensation with both individual and Company performance.
The foregoing report of the Compensation Committee and the Stock Price
Performance Graph below shall not be deemed to be "soliciting material" or to
be "filed" with the Securities and Exchange Commission (the "Commission") or
subject to Regulations 14A or 14C of the Commission or the liabilities of
Section 18 of the Securities Exchange Act of 1934 and shall not be deemed
incorporated by reference into any filing under the Securities Act of 1933 or
the Securities Exchange Act of 1934, notwithstanding any general incorporation
by reference of this Proxy Statement into other documents.
The Compensation Committee
Steven R. Berrard
Philippe P. Dauman
J. Brian McGrath (Chairman)
John L. Muething
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Steven R. Berrard, Philippe P. Dauman, J. Brian McGrath (Chairman) and
John L. Muething were elected members of the Company's Compensation Committee
in November 1994. John T. Lawrence, III and Alfred N. Martinelli, former
directors of the Company, served as members of the Compensation Committee
through November 1994. Accordingly, Mr. Berrard has served as a member of the
Company's Compensation Committee while serving as its President and Chief
Executive Officer. In addition, Mr. Berrard has served as a Director of Viacom
since November 1994. During the period from November 1994, Philippe P. Dauman,
an executive officer and Director of Viacom, has served as a member of the
Company's Compensation Committee. Mr. Berrard did not receive compensation from
the Company but the Company reimbursed BEG $200,000 pursuant to a loan-out
agreement described above in the "Report of the Compensation Committee on
Executive Compensation - Compensation of the Chief Executive Officer". For
further information regarding certain relationships of Messrs. Berrard and
Dauman see "Election of Directors" and "Certain Transactions.
STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total return on investment
(based on change in year end stock price and assuming reinvestment of all
dividends) assuming a $100 investment in the Common Stock of the Company, the
Standard & Poor's 500 Stock Index and an index of peer companies selected by
the Company (the "Peer Group Index") for the five year period commencing
January 1, 1990 and ending December 31, 1994.
COMPARISON 5-YEAR CUMULATIVE TOTAL RETURN
AMONG SPELLING ENTERTAINMENT GROUP,
S&P 500 INDEX AND PEER GROUP INDEX
[CHART]
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
COMPANY 1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
SPELLING ENTERTAINMENT GROUP 100 90.00 189.78 143.29 231.93 250.78
PEER GROUP 100 91.08 128.56 199.60 291.19 274.01
BROAD MARKET 100 96.88 126.42 136.08 149.80 151.78
</TABLE>
ASSUMES $100 INVESTED ON JAN. 1, 1990
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1994
12
<PAGE> 15
The Peer Group Index consists of the common stock of Acclaim Entertainment,
Dick Clark Productions, Electronic Arts, Inc., King World Productions,
Kushner-Locke Co. and Silicon Graphics Inc. The Peer Group Index used in the
Company's 1993 Proxy Statement ("the 1993 Index") consisted of Carolco Pictures
Inc., International Movie Group Inc., AMC Entertainment Inc., Samuel Goldwyn
Company, Paramount Communications Inc., King World Productions Inc., American
Film Technologies Inc., Congress Video Group, International Broadcast Systems
Ltd., Kushner-Locke Company, Lancit Media Productions Ltd., Live Entertainment
Inc., Sandy Corporation, Unitel Video Inc., RBI Entertainment Inc., Prism
Entertainment Corporation, New Line Cinema Corp., Carmike Cinemas Inc., CST
Entertainment Imaging Inc. and the Company. These companies previously
composed the Bridge Information Systems Inc. Motion Picture Index. Many of the
companies that were in the 1993 Index are no longer publicly held. The Company
believes that the remaining companies from the 1993 Index were not an
appropriate peer group. Accordingly, the Board determined to establish a new
peer group index which would be composed of companies whose business is more
closely comparable to that of the Company.
Companies from the 1993 Index which continue to be publicly traded are
AMC Entertainment Inc., Carmike Cinemas Inc., CST Entertainment Imaging Inc.,
International Movie Group Inc., King World Productions Inc., Kushner-Locke
Company, Prism Entertainment Corporation, Sandy Corporation and Unitel Video
Inc. If those companies comprised the current peer group index, then the
levels for that index, instead of those reflected in the chart above, would
have been as follows: 1989, $100; 1990, $84; 1991, $90; 1992, $120; 1993, $146
and 1994, $130.
CERTAIN TRANSACTIONS
In this section references to Blockbuster are to Blockbuster and its
subsidiaries for the period ending September 29, 1994 and to BEG and its
subsidiaries thereafter.
On April 26, 1994, pursuant to an Agreement and Plan of Merger (the
"Merger Agreement") by and among the Company, Republic Pictures and DE
Acquisition Corporation, a wholly owned subsidiary of the Company ("Merger
Sub"), Republic Pictures was merged with and into Merger Sub (the "Merger"),
and Republic Pictures became a wholly-owned subsidiary of the Company. At the
time the Merger became effective (the "Effective Time") each share of Republic
Pictures common stock outstanding immediately prior to the Effective Time was
converted into the right to receive $13.00 in cash, without interest (the "Cash
Merger Consideration"). Options and warrants to acquire Republic Pictures
common stock outstanding immediately prior to the Effective Time were converted
into the right to receive, upon payment of the exercise price (as adjusted as
set forth below), 1.6508 shares of Common Stock for each share of Republic
Pictures common stock into which such option or warrant was exercisable
immediately prior to the Effective Time. The exercise price of such options and
warrants was adjusted by multiplying such exercise price by 0.6058. Messrs.
Huizenga and Berrard, directors of the Company and of Republic Pictures,
abstained from voting in their capacity as such on approval of the Merger
Agreement.
Immediately prior to the Effective Time, Blockbuster owned 2,550,000
shares of Republic Pictures common stock and warrants to acquire an aggregate
of 810,000 shares of Republic Pictures common stock at an exercise price of
$11.50 per share, which shares and warrants, as a result of the Merger, were
converted into the right to receive an aggregate of $33,150,000 and a warrant
to acquire 1,337,148 shares of Common Stock, respectively. The exercise price
for such warrant is $6.9667 per share.
13
<PAGE> 16
On July 30, 1994, the Company and Blockbuster entered into an exchange
agreement (the "Exchange Agreement") and consummated the transactions
contemplated thereby (the "Acquisition"). Pursuant to the Exchange Agreement,
Blockbuster delivered to the Company 8,686,984 ordinary shares (the "Ordinary
Shares") of Virgin Interactive Entertainment Limited ("VIEL") and an option to
acquire 550,000 Ordinary Shares of VIEL (collectively, the "VIE Interests") in
exchange for 22,015,062 shares of the Company's Common Stock. Blockbuster had
acquired a majority of the VIE Interests from third parties on July 29, 1994.
As a result of the Acquisition, the Company acquired approximately 90% of
VIEL's Ordinary Shares.
In connection with the Acquisition, the Company also entered into put-
and call-option agreements with Blockbuster with respect to the Ordinary Shares
of VIEL not owned by the Company. Under these agreements, at certain dates
over the next three years the Company may acquire, or be required to purchase,
these shares at an agreed-upon price. At the option of the Company, such
purchase price may be paid to Blockbuster in cash or shares of the Company's
Common Stock.
In January 1994, the Company entered into a three-year credit agreement
with Blockbuster. As a result of the merger of Blockbuster with and into
Viacom, Viacom succeeded to Blockbuster's position under the credit agreement
(the "Viacom Facility"). This agreement was amended and restated in January
1995 to reflect certain amendments to the facility which were effective as of
December 7, 1994, including a $25,000,000 increase in the amount available
under the facility. The Viacom Facility, as amended, provides for (i) a term
loan of $100,000,000 which funded the Company's merger with Republic and (ii) a
revolving credit facility of $100,000,000 to fund the Company's working capital
and other requirements. All outstanding borrowings mature on March 31, 1997.
Under the Viacom Facility, the Company pays an annual fee (currently 0.375%)
based on the unused portion of the facility, as well as certain facility and
administration fees, all based on the similar fees payable by Viacom under its
separate credit facilities. Interest on all outstanding borrowings is payable,
at the Company's option, at LIBOR plus a spread (currently 1.25%) or at prime
rate; both rates are determined by reference to the corresponding rates payable
by Viacom under its separate credit facilities.
Borrowings under the Viacom Facility are secured by all of the assets
of the Company and its domestic subsidiaries, and the entire amount outstanding
under the Viacom Facility may be accelerated if Viacom's borrowings under its
separate credit facilities were to be accelerated.
On December 23, 1993, a wholly-owned subsidiary of VIEL established a
multi-currency credit agreement with a bank in the U.S. (the "Credit
Agreement"). The Credit Agreement initially provided for maximum borrowings of
$15,000,000, subject to a borrowing base test. Following the Acquisition, the
amount of borrowings allowable under the Credit Agreement was increased to
$75,000,000, and the borrowing base test and other ratio tests were eliminated,
based on the guarantee of all borrowings under the Credit Agreement by BEG.
During the fiscal year ended December 31, 1994, Blockbuster was
charged by the Company approximately $6,723,000 for the purchase of prerecorded
videocassettes and interactive entertainment in connection with Blockbuster's
retailing business. At December 31, 1994, the Company had a net receivable
from BEG of approximately $1,824,000 related to these sales. The Company
believes that the terms of the sale of this product to Blockbuster were as
favorable to the Company as could have been obtained from an unaffiliated
party. The Company expects to continue to sell videocassettes and interactive
entertainment to Blockbuster upon similar terms in the future.
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<PAGE> 17
In 1994, Blockbuster provided the Company with various services such as
accounting, legal and tax services for which the Company was charged an
aggregate of $500,000, which amount includes amounts charged by Blockbuster for
services provided to the Company by Steven R. Berrard, the President and Chief
Executive Officer of the Company and J. Ronald Castell, an officer of the
Company (see "Executive Compensation"). Messrs. Berrard and Castell are also
executive officers of Blockbuster and are compensated by Blockbuster. The amount
of their compensation charged to the Company represents the allocable portion of
their base salary and bonus attributable to their services provided to the
Company. At December 31, 1994, the Company had a net payable to BEG of $354,000
with respect to such expenses. The Company believes that the terms of the
foregoing arrangement are more favorable to the Company than terms that could be
obtained from an unaffiliated party.
Spelling Television Inc. ("Spelling Television") has an agreement with
Tori Spelling, Aaron Spelling's daughter, wherein Spelling Television is granted
the exclusive right and property in and to Ms. Spelling's television series
services in regard to the production of "Beverly Hills, 90210" for a five-year
aggregate term dating from September 26, 1990. Spelling Television has a right
of first negotiation/first refusal to enter into a new contract beyond the
five-year aggregate term, and has an agreement for her services for the sixth
year of the series. Ms. Spelling is compensated: per program; for television
reruns, theatrical re-runs, foreign telecasting and supplemental markets; for
net profits derived from merchandising activities in which Ms. Spelling's name,
likeness, etc. is used and if Ms. Spelling's name and likeness is used with the
name and likeness of one or more other cast members; and if Ms. Spelling
renders services for commercial announcements. Spelling Television guarantees
to employ and compensate or compensate Ms. Spelling for all episodes produced in
a season, but in no event for less than 22 episodes. In fiscal year 1994, Ms.
Spelling was paid approximately $586,505 pursuant to such agreement.
Prior to the merger of Blockbuster into Viacom, the Company licensed
certain entertainment product to Showtime Network Inc., ("Showtime"), a
subsidiary of Viacom, and certain television stations owned by Viacom. Revenues
from sales to Showtime [were not material] for the year ended December 31,
1994. Sales to the television stations consist of both cash and barter
contracts. Revenue from cash contracts was $1,890,000 and the Company has a
receivable due from Viacom of $1,786,000, for fiscal year 1994. The Company
realized [$ ] revenue from third party advertisers with respect to the sale
of advertising time received under the barter contracts. Additionally, prior to
the merger of BEC into Viacom, the Company licensed certain entertainment
product to USA Network and Sci-Fi Channel in which Viacom has equity interests.
Revenue from such sales were $3,878,000 for the year ended December 31, 1994 and
the Company had receivables at December 31, 1994 from USA Network and Sci-Fi
Channel of approximately $4,545,000 related to these sales.
On March 8, 1995, Spelling Television entered into an agreement with
2301 S.E. 17th St., Ltd. (the "Partnership"), the owner of the Hyatt Regency
Pier Sixty Six hotel (the "Hotel") in Ft. Lauderdale, Florida in connection
with the filming of a television pilot and series, if produced, entitled "Pier
66" on location in and around the Hotel (the "Premises"). Messrs. Berrard and
Huezinga own a [10% and 20%] interest, respectively, in the Partnership. In
consideration of the favorable publicity the Hotel will receive for being
depicted in the pilot and series, Spelling Television will not be charged fees
for the use of the Premises and the Hotel agrees to provide rooms during
preproduction and production of the pilot and series, if produced. The
estimated value of (i) the location filming rights and rooms being provided on
the Pilot is [$103,000] and (ii) the rooms being provided on the series
potential is [$297,000].
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<PAGE> 18
REINCORPORATION IN DELAWARE
The Board of Directors has unanimously approved and recommends that
the shareholders consider and approve the reincorporation of the Company in
Delaware by means of a merger of the Company into a wholly-owned subsidiary of
the Company (the "Merger"). Management and the Board of Directors believe the
best interests of the Company and its shareholders will be served by changing
the Company's place of incorporation from Florida to Delaware by merging
Spelling Entertainment Group Inc. (hereinafter referred to in this section as
the "Florida Corporation") into a newly-formed Delaware corporation, Spelling
Merger Corporation (hereinafter referred to in this section as the "Delaware
Corporation"). The Delaware Corporation would be the surviving entity in the
Merger and, as a result of the Merger, would change its name to Spelling
Entertainment Group Inc. In the following discussion of the proposed
reincorporation, the term the "Company" includes either or both the Florida
Corporation and the Delaware Corporation as the context requires.
The Merger will not involve any change in the business, properties or
management of the Florida Corporation. The Company's corporate headquarters
will not change, and there will not be any movement of personnel, including
management, to Delaware. The officers and directors of the Florida Corporation
holding office immediately prior to the Merger being effective will continue to
serve as the officers and directors of the Delaware Corporation. The agreement
and plan of merger (the "Merger Agreement"), which sets forth the terms and
conditions on which the Florida Corporation will be merged into the Delaware
Corporation, provides that the Merger may be abandoned by action of a majority
of the respective Boards of Directors of the Florida Corporation and the
Delaware Corporation at any time prior to the effective time of the Merger.
The Merger will become effective, if approved by the shareholders at
the Annual Meeting, upon the filing of Certificates of Merger and Articles of
Merger, as provided by Delaware and Florida law, respectively, which is
expected to be accomplished on or after 10 days following the Annual Meeting,
assuming that the Merger is approved at the Annual Meeting. At the time the
Merger is effective, each share of the Common Stock then issued (including
shares held in the treasury) will be automatically converted into and exchanged
for one share of Common Stock, par value $.001 per share (the "Delaware Common
Stock"), of the Delaware Corporation.
A copy of the Merger Agreement is attached hereto as Exhibit A, a copy
of the Certificate of Incorporation of the Delaware Corporation (the "Delaware
Certificate") is attached hereto as Exhibit B and a copy of the By-Laws of the
Delaware Corporation (the "Delaware By-Laws") is annexed hereto as Exhibit C.
ANY DESCRIPTION IN THIS PROXY STATEMENT OF THE MERGER AGREEMENT, THE DELAWARE
CERTIFICATE OR THE DELAWARE BY-LAWS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO EXHIBITS A, B AND C, RESPECTIVELY.
REASONS FOR CHANGE IN STATE OF INCORPORATION
The Board of Directors believes that the best interests of the Company
and its shareholders will be served by changing the Company's state of
incorporation from Florida to Delaware because its corporation laws are
comprehensive and flexible and are periodically revised to meet changing
business needs and its judiciary has considerable expertise in dealing with
corporate legal issues. The Board of Directors notes that many corporations
initially have chosen Delaware as their state of incorporation or subsequently
have changed their state of incorporation to Delaware in a manner similar to
that proposed
16
<PAGE> 19
by the Company. It should be noted, however, that shareholders in some
instances have fewer rights and hence less protection under the Delaware
General Corporation Law (the "Delaware Corporation Law") than under the Florida
Business Corporation Act (the "Florida Corporation Act").
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED RE-INCORPORATION IN
DELAWARE BY MEANS OF THE MERGER.
EXPENSES
The estimated expenses previously incurred and expected to be incurred
in connection with the Merger are as follows:
<TABLE>
<CAPTION>
DESCRIPTION AMOUNT
- ---------------------------------------------------------------------------------- ------
<S> <C>
Filing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Legal Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
</TABLE>
Most of these expenses will be incurred whether or not the Merger is
approved by the shareholders. These expenses are being paid from the Company's
general operating funds.
DISSENTERS' RIGHTS
Holders of Common Stock will not have dissenters' rights in connection
with the Merger. Dissenters' rights are not available under Florida law to
shareholders if, on the record date fixed to determine the shareholders
entitled to vote at the meeting of shareholders at which such action is to be
acted upon, the shares were listed on a national securities exchange. The
Common Stock is listed on the New York Stock Exchange (the "NYSE") and the
Pacific Stock Exchange ("PSE").
FINANCIAL STATEMENTS
Accompanying this Proxy Statement is the Company's Annual Report for
the fiscal year ended December 31, 1994 which contains certain consolidated
financial statements of the Company and its subsidiaries and the notes thereto,
as well as Management's Discussion and Analysis of Financial Condition and
Results of Operations.
ACCOUNTING TREATMENT OF THE MERGER
The Company will account for the Merger as an "as if pooling," and
accordingly there will be no effect on the Company's financial statements as a
result of the Merger.
REGULATORY APPROVALS
Upon approval by the shareholders, the Company will have complied with
all federal or state regulatory requirements in order to consummate the Merger.
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<PAGE> 20
REQUIRED VOTE
The proposal to reincorporate the Company in Delaware by means of the
Merger must be approved by the affirmative vote of a majority of the holders of
the total number of shares of Common Stock entitled to vote at the annual
meeting. Viacom, which owns approximately 77% of the outstanding shares of the
Common Stock, has indicated that it will vote FOR the Merger.
TRADING IN THE DELAWARE STOCK
The Delaware Corporation intends to take all necessary steps to
arrange for the Delaware Common Stock to be listed and traded on the NYSE and
PSE. It is also expected that such listing and trading will begin on the
effective date of the Merger, subject to the rules of the NYSE and PSE.
EXCHANGE OF STOCK CERTIFICATES
It will not be necessary for shareholders of the Florida Corporation
to exchange their existing stock certificates for stock certificates of the
Delaware Corporation.
COMPARISON OF SHAREHOLDER RIGHTS UNDER FLORIDA LAW AND UNDER DELAWARE LAW
INTRODUCTION
The rights of a holder of stock in the Delaware Corporation will
differ in some respects from those of a holder of stock in the Florida
Corporation. The following summary does not purport to be a complete statement
of the rights of shareholders under applicable Florida laws, the amended
Articles of Incorporation of the Florida Corporation (the "Florida Articles"),
the By-Laws of the Florida Corporation (the "Florida By-Laws") and the Florida
Corporation Act as compared with the rights of shareholders under Delaware law,
the Delaware Certificate and the Delaware By-Laws. The identification of
specific differences is not meant to indicate that other significant
differences do not exist. This summary is qualified in its entirety by
reference to the Delaware Corporation Law and the Florida Corporation Act and
the governing corporate instruments of the Florida Corporation and the Delaware
Corporation.
CERTAIN VOTING RIGHTS
The Delaware Corporation Law generally requires approval of any
merger, consolidation or sale of substantially all the assets of a corporation
at a meeting of shareholders by vote of the holders of a majority of all
outstanding shares of the corporation entitled to vote thereon, although a
certificate of incorporation of a Delaware corporation may provide for a super
majority vote.
The Florida Corporation Act generally requires approval of any merger
or consolidation of a corporation by vote of each class of shareholders
entitled to vote on the plan by a majority of all the votes entitled to be cast
on the plan by that class. The Florida Corporation Act requires approval of a
sale of substantially all of the assets of a corporation by a vote of a
majority of shareholders entitled to vote on the transaction. In either case,
the articles of incorporation or Board of Directors of a corporation may
require a super majority vote or a vote by classes.
18
<PAGE> 21
Under both the Delaware Corporation Law and the Florida Corporation
Act, if a proposed amendment to the certificate of incorporation or articles of
incorporation, respectively, affects adversely the rights, preferences or
powers of a class of stock without voting rights in certain specified matters,
such amendment must also be approved by a majority of the holders of that class
of stock, unless the articles of incorporation require a greater number of
affirmative votes.
The rules of the NYSE and the PSE, on which the Common Stock is
currently listed and on which, it is currently anticipated, that the Delaware
Common Stock will be listed, also afford shareholders certain voting rights.
For example, NYSE rules require shareholder approval prior to the issuance by
the Company of any common stock, or any securities convertible into common
stock, if such shares are to be issued in connection with any transaction or
series of related transactions, other than a public offering for cash, if (i)
the voting power of such common stock would be equal to at least 20% of the
voting power of the shares outstanding prior to the issuance of such shares, or
(ii) the number of such shares would be equal to at least 20% of the number of
shares of common stock outstanding prior to the issuance of such shares. The
NYSE also requires shareholder approval for any issuance of securities by the
Company that will result in a change of control of the Company.
SPECIAL MEETINGS OF SHAREHOLDERS; SHAREHOLDER ACTION BY WRITTEN CONSENT
Under the Delaware Corporation Law, special shareholder meetings may
be called by the Board of Directors and by any person or persons authorized by
the certificate of incorporation or the by-laws.
Under the Florida Corporation Act, a special meeting of the
shareholders may be called by the Board of Directors or persons authorized to
do so by the articles of incorporation or bylaws, or the holders of at least
10% (unless a greater percentage is required by the articles of incorporation,
not to exceed 50%) of all shares entitled to vote on any issue for which a
special meeting is called. Under the Florida By-Laws, special meetings of
shareholders may be called at any time by the Chairman, President, a majority
of the Board of Directors or by one-tenth of all shares entitled to vote at the
meeting.
Under the Delaware Corporation Law and the Florida Corporation Act,
any action by shareholders must be taken at a meeting of shareholders, unless a
consent in writing setting forth the action so taken is signed by the
shareholders having not less than the minimum number of votes necessary to take
such action at a meeting at which all shares entitled to vote were present and
voted.
AMENDMENT OF CERTIFICATE OF INCORPORATION AND BYLAWS
The Delaware Corporation Law allows amendments of the certificate of
incorporation if the Board of Directors adopts a resolution setting forth the
amendment proposed, declaring its advisability, and the shareholders thereafter
approve such proposed amendment either at a special meeting called by the board
for the purpose of approval of such amendment by the shareholders or, if so
directed by the board, at the next annual shareholders' meeting. At any such
meeting, the proposed amendment generally must be approved by a majority of the
outstanding shares entitled to vote.
The Florida Corporation Act allows amendments of the articles of
incorporation upon the recommendation by the Board of Directors to the
shareholders and, unless required otherwise under the Florida Corporation Act,
the Articles of Incorporation or the Board of Directors, the approval by a
majority of the votes entitled to be cast on the amendment by any voting group
with respect to which the amendment would create dissenters' rights and by
every other voting group entitled to vote on the amendment.
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Under the Delaware Corporation Law, the power to adopt, amend or
repeal by-laws resides with the shareholders entitled to vote thereon, and with
the directors if such power is conferred upon the Board of Directors by the
certificate of incorporation. The Delaware Certificate so provides.
Under the Florida Corporation Act, a corporation's Board of Directors
may amend or repeal the corporation's bylaws unless the Articles of
Incorporation or the Florida Corporation Act reserves the power to amend the
bylaws exclusively to the shareholders, or the shareholders provide expressly
that the Board of Directors may not amend or repeal the bylaws. The Florida
By-Laws provide that a majority of the shareholders entitled to vote at any
meeting, the Board of Directors by unanimous written consent or a majority of
the Board of Directors at a meeting may amend or repeal the Florida By-Laws.
BOARD APPROVED PREFERRED STOCK
Both the Delaware Corporation Law and the Florida Corporation Act
permit a corporation's certificate of incorporation or articles of
incorporation, respectively, to allow the Board of Directors to issue, without
shareholder approval, a series of preferred stock and to designate the
applicable rights, preferences, privileges and restrictions. The Delaware
Certificate and the Florida Articles both grant such power to the Board of
Directors.
LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Delaware Corporation Law and the Florida Corporation Act both have
provisions and limitations regarding directors' liability and indemnification
by a corporation of its officers, directors and employees.
The Delaware Corporation Law permits a Delaware corporation to include
in its certificate of incorporation a provision which eliminates or limits the
personal liability of a director to the corporation or its shareholders for
monetary damages for breach of fiduciary duties as a director provided no such
provision may eliminate or limit the liability of a director (i) for any breach
of the director's duty of loyalty to the corporation or its shareholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) for declaration of unlawful dividends or
illegal redemptions or stock repurchases or (iv) for any transaction from which
the director derived an improper personal benefit. The Delaware Certificate
includes such a provision. See "Description of Indemnification Provisions,"
below.
Under the Delaware Corporation Law, a director or officer may, in
general, be indemnified by the corporation if he or she has acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
No indemnification is permitted if the person is adjudged liable to the
corporation in a derivative suit unless the court determines that
indemnification would be appropriate. For a description of the indemnification
provisions contained in the Delaware Certificate and the Delaware Bylaws, see
"Description of Indemnification Provisions," below.
Under the Florida Corporation Act, a director is not personally liable
for monetary damages to any person for his actions as a director unless the
director breached his duties by way of: (i) a criminal violation, unless the
director had reasonable cause to believe his conduct was lawful or had no
reasonable cause to believe his conduct was unlawful; (ii) a transaction from
which the director derived an improper personal benefit; (iii) declaration of
unlawful distributions; (iv) in a derivative action, conscious disregard
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by the director for the best interests of the corporation or willful misconduct
by the director; or (v) in a third party action, recklessness or actions or
omissions committed in bad faith or with malicious purpose or in a manner
exhibiting wanton and willful disregard of human rights, safety or property.
Under the Florida Corporation Act, a corporation has the power to
indemnify any director, officer, employee, or agent of the corporation against
liability incurred in connection with any proceeding, including any appeal, if
the director acted in good faith and in a manner he reasonably believed to be
in, or not opposed to, the best interests of the corporation and, with respect
to any criminal action or proceeding, he had no reasonable cause to believe his
conduct was unlawful. No indemnification is permitted if the person is
adjudged liable unless the court determines that in view of all of the
circumstances of the case, indemnification would be proper. In addition, no
indemnification is permitted for criminal violations (unless the director,
officer, employee or agent had reasonable cause to believe his conduct was
lawful or had no reasonable cause to believe his conduct was unlawful),
transactions in which the director or officer derived an improper personal
benefit, declaration of unlawful dividends or, in derivative actions, willful
misconduct or conscious disregard for the best interests of the corporation.
CLASSIFICATION OF BOARD OF DIRECTORS
Both the Delaware Corporation Law and the Florida Corporation Act
permit, but do not require, the adoption of a "classified" board or directors
with staggered terms under which a part of the Board of Directors is elected
each year for a maximum term of three years. Neither the Florida Corporation
nor the Delaware Corporation has a classified Board of Directors, and all
directors stand for election on an annual basis.
CUMULATIVE VOTING OF SHARES
Under both the Delaware Corporation Law and the Florida Corporation
Act, shareholders of a corporation cannot elect directors by cumulative voting
unless its certificate of incorporation or articles of incorporation so
provides. Neither the Delaware Certificate nor the Florida Articles provide
for cumulative voting. As a result, the holder or holders of a majority of the
voting power of the Delaware Corporation are able to elect all directors then
being elected.
NUMBER OF DIRECTORS
Under both the Delaware Corporation Law and the Florida Corporation
Act, unless the certificate of incorporation or articles of incorporation
specifies the number of directors, a Board of Directors may change the
authorized number of directors by an amendment to the corporation's bylaws if
fixed therein, or in such manner as provided therein, unless amendment of the
bylaws or this specific provision is reserved to the shareholders. If the
certificate of incorporation or articles of incorporation specifies the number
of directors, the number of directors can only be changed by amending the
certificate of incorporation or articles of incorporation, or in such manner as
provided therein.
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REMOVAL OF DIRECTORS
In general, under the Delaware Corporation Law, any or all of the
directors of a corporation may be removed, with or without cause, by vote of
the holders of a majority of the shares then entitled to vote at an election of
directors, except that the Delaware Corporation Law authorizes removal by the
shareholders of a member of a classified board only for cause.
Under the Florida Corporation Act, the shareholders may remove
directors with or without cause unless the articles of incorporation provide
that directors may be removed only for cause. The Florida Articles do not
require cause for removal of directors.
DISSENTERS' RIGHTS IN MERGERS
Under both the Delaware Corporation Law and the Florida Corporation
Act, a shareholder of a corporation participating in certain merger
transactions may, under certain circumstances, receive cash in the amount of
the fair market value of his or her shares (as determined by a court) in lieu
of the consideration he or she would otherwise receive in the Merger. Unless a
corporation's certificate of incorporation provides otherwise, the Delaware
Corporation Law does not require that such dissenters' rights of appraisal be
afforded to shareholders with respect to (i) a merger or consolidation by a
corporation the shares of which are either listed on a national securities
exchange or designated as a national market security on an interdealer
quotation system by the National Association of Securities Dealers, Inc. or
widely held (by at least 2,000 shareholders), if the shareholders of such
corporation receive only shares of the surviving corporation or of such a
listed or widely held corporation; or (ii) those shareholders who are the
shareholders of a corporation surviving a merger if no vote of such shareholder
is required because, among other things, the number of shares to be issued in
the merger does not exceed 20% of the shares of the surviving corporation
outstanding immediately prior to the merger (if certain other conditions are
met).
Unless a corporation's articles of incorporation provides otherwise,
the Florida Corporation Act does not require that dissenters' rights be
afforded to holders of shares which, on the record date fixed to determine the
shareholders entitled to vote at the meeting of shareholders at which such
action is to be acted upon, were listed on a national securities exchange.
PAYMENT OF DIVIDENDS
The Delaware Corporation Law permits the payment of dividends and the
redemption of shares out of surplus. Under the Delaware Corporation Law,
dividends may be paid out of net profits for the fiscal year in which declared
or out of net profits for the preceding fiscal year, even if the corporation
has no surplus. Under the Florida Corporation Act, the payment of dividends or
the redemption of shares may not be made if the corporation would not be able
to pays its debts as they become due in the usual course of business or the
corporation's assets would be less than its liabilities plus the amount
necessary to satisfy the preferential rights upon dissolution of those whose
rights are superior to those receiving the distribution (unless the articles of
incorporation provide otherwise).
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LOANS TO OFFICERS AND DIRECTORS
Under the Delaware Corporation Law, a corporation may make loans to,
guarantee the obligations of or otherwise assist its officers or other
employees and those of its subsidiaries when the transaction, in the judgment
of the corporation's Board of Directors, may reasonably be expected to benefit
the corporation.
Under the Florida Corporation Act, a corporation may lend money to,
guarantee any obligation of, or otherwise assist any officer, director, or
employee of the corporation or of a subsidiary, whenever, in the judgment of
the Board of Directors, such loan, guarantee, or assistance may reasonably be
expected to benefit the corporation.
MERGER MORATORIUM STATUTES
Florida and Delaware have "Control-Share Acquisitions" and "Merger
Moratorium" statutes, respectively, which are designed to encourage potential
acquirors of publicly traded corporations to obtain the consent and approval of
the proposed target's Board of Directors prior to commencing a tender offer for
the target company's shares. This encouragement is accomplished by prohibiting
or restricting acquirors from undertaking many post-acquisition financial
restructuring alternatives.
Both the Florida and the Delaware statutes permit a corporation to opt
out of the operation of the merger moratorium provisions. The Florida
Corporation, in its By-laws, has opted out of Florida's Control-Share
Acquisition Statute. The Delaware Corporation, in the Delaware Certificate,
has elected not to be governed by Section 203 of the Delaware Corporation Law.
GENERAL PROVISIONS OF THE DELAWARE CERTIFICATE
The Delaware Certificate has been prepared in accordance with the
Delaware Corporation Law and gives the Company broad corporate power to engage
in any lawful activity in which a corporation incorporated under the Delaware
Corporation Law may engage. THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE DELAWARE CERTIFICATE, WHICH IS ATTACHED HERETO AS EXHIBIT
B.
The authorized capitalization of the Delaware Corporation consists of
320 million shares, of which 300 million are common shares, .001 par value, and
20 million are preferred shares. The Delaware Certificate grants to the Board
of Directors authority to establish one or more series of preferred shares,
determine the number of shares in each such series and fix the rights,
preferences and privileges applicable to each such series. Neither the
Delaware Certificate nor the Delaware By-Laws contain any cumulative voting
provisions or shareholder pre-emptive rights.
DESCRIPTION OF THE INDEMNIFICATION PROVISIONS
Article VII of the Delaware Certificate provides as follows:
Section 1 provides that, to the extent not prohibited by law, the
Delaware Corporation shall indemnify its directors and officers for expenses
(including attorneys' fees and disbursements) and any liability or loss paid or
incurred if such person is or was made, or threatened to be made, a party to
any action by reason of the fact that such person is or was a director or
officer of the Delaware Corporation,
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or is or was serving in any capacity at the request of the Delaware Corporation
for any other corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise (an "Other Entity"). Persons who are not directors or
officers of the Delaware Corporation may be similarly indemnified in respect of
service to the Delaware Corporation or to an Other Entity at the request of the
Delaware Corporation to the extent the Board of Directors at any time specifies
that such persons are entitled to the benefits of Article VII of the Delaware
Certificate.
Section 1 permits indemnification whether the basis of such proceeding
is an alleged action in an official capacity or in any other capacity while
serving as an officer or director. However, Section 1 is limited by reference
to the Delaware Corporation Law, which specifically limits indemnification in
the case of derivative suits (suits brought in the name and on behalf of the
Delaware Corporation) to the payment of expenses if the person acted in good
faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the Delaware Corporation. If a person is adjudged
liable to the Delaware Corporation in a derivative suit (but not in other
suits) no indemnification payments may be made unless a court determines
otherwise.
Section 2 provides that expenses are to be advanced prior to the final
disposition of a proceeding upon the receipt by the Delaware Corporation of a
satisfactory undertaking that the director or officer will repay such advances
if he or she is ultimately found not to be entitled to indemnification.
Section 3 provides that the right to indemnification under the
Delaware Certificate is not an exclusive right and, therefore, the Delaware
Corporation may provide other indemnification, if appropriate.
Section 4 provides that the right to indemnity and to receive advances
continues as to a director or officer after such person has ceased to hold an
office with the Delaware Corporation.
Section 5 permits the Delaware Corporation, as provided in the
Delaware Corporation Law, to purchase directors' and officers' liability
insurance. Section 5 also permits the Delaware Corporation to establish a
trust fund to ensure payments of indemnification claims.
Section 6 provides that the right to indemnification is a contract
right and, therefore, cannot be retroactively eliminated by a later shareholder
vote.
Section 7 permits a person entitled to indemnity to bring an action in
court to obtain such indemnity and requires that in any such suit the court
will not be bound by a decision of the Board of Directors, independent counsel
or shareholders that such person is not entitled to indemnification. The
purpose of Section 7 is to permit court determination of the issue,
notwithstanding a negative decision by the Board of Directors, its chosen
counsel or the shareholders, which decision might be made, for example,
following a change of control in the Delaware Corporation.
Section 8 provides that any director or officer of the Delaware
Corporation serving in any capacity with a majority owned subsidiary or any
employee benefit plan of the Delaware Corporation or any majority owned
subsidiary corporation shall be deemed to be doing so at the request of the
Delaware Corporation.
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Section 9 provides that any person entitled to be indemnified may
elect to have the right to indemnification interpreted on the basis of the
applicable law in effect at the time of the occurrence of the events giving
rise to the action, to the extent permitted by law, or on the basis of the
applicable law in effect at the time such indemnification is sought.
The indemnification provisions contained in the Delaware Certificate
may be amended or repealed only by the shareholders of the Delaware Corporation
following approval thereof by the Board of Directors. The Delaware Corporation
has been informed that in the opinion of the Commission, indemnification for
liabilities arising under the Securities Act of 1933, as amended, is against
public policy as expressed in such Act and is therefore unenforceable.
Article VIII of the Delaware Certificate, in general, eliminates the
personal liability of each of the directors of the Delaware Corporation (but
not a director acting in another capacity, such as an officer or employee) to
the Delaware Corporation or its shareholders for monetary damages for breach of
a director's fiduciary duty of care. Except as described below, the effect of
such Article is to protect directors for all their business decisions,
including those later found by a court to have been negligent or grossly
negligent. However, it does not eliminate or limit the liability of a director
for: (i) a breach of the director's duty of loyalty to the Delaware Corporation
or its shareholders; (ii) acts or omissions not in good faith; (iii) acts or
omissions which involve intentional misconduct or a knowing violation of law;
(iv) willful or negligent conduct in connection with the payment of illegal
dividends, or unlawful stock repurchases or redemptions, or (v) any transaction
from which the director derives an improper personal benefit. In general, the
"duty of loyalty" requires directors to refrain from self-dealing; it requires
directors to place the interests of shareholders above their own when the two
may be in conflict. Although monetary damage awards occasioned by a breach of
the duty of care are eliminated, the Delaware Certificate does not eliminate
the duty of care and, therefore, does not prevent a shareholder from seeking
equitable remedies for an alleged breach of such duty, including an injunction
prohibiting a proposed action or transaction. The Delaware Certificate permits
only a limitation on liability of a director to the Delaware Corporation
(including derivative actions) and its shareholders. Directors are potentially
liable for damages in suits brought by third parties (including governmental
and regulatory agencies).
The indemnification provided by the Delaware Certificate and the
limitation on the personal liability of a director to its shareholders for
monetary damages for violations of a director's fiduciary duty of care provided
by the Delaware Certificate extend only so far as is legally permitted. If the
Delaware Corporation Law is amended to permit broader indemnification rights,
the protection afforded to directors and officers of the Delaware Corporation
by the Delaware Certificate will be expanded to the fullest extent authorized
by the Delaware Corporation Law, as so amended, without further shareholder
action. Similarly, if the Delaware Corporation Law is amended to permit the
further elimination or limitation of the personal liability of directors for
breaches of fiduciary duties, then the liability of directors shall be
eliminated or limited to the fullest extent authorized by the Delaware
Corporation Law.
The Company believes that the indemnification provisions described
above, together with the limitation of Directors' liability provided for by the
Delaware Certificate, will ensure that the shareholders will continue to
benefit from the services of qualified directors and officers. Notwithstanding
the foregoing, under certain circumstances, because of the indemnification
provisions, the Company may in the future be obligated to incur more expense in
indemnifying its officers and directors, which may affect the Company's future
profitability. In addition, shareholders should note that limitation on
directors' liability may have the effect of reducing the likelihood of
derivative litigation against directors and may also discourage or deter
shareholders or management from bringing a lawsuit against directors for breach
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of their fiduciary duty of care, even though such an action, if successful,
might otherwise have benefitted the Company and its shareholders. Furthermore,
because of the limitation of a director's liability, the Company's shareholders
will lose the right to maintain certain causes of action in the future that
exist under common law, including a shareholder's right on behalf of himself or
the Company to recover monetary damages against directors for negligence or
gross negligence.
PROVISIONS OF THE DELAWARE BY-LAWS
The By-Laws of the Delaware Corporation have been prepared in
accordance with the Delaware Certificate and the Delaware Corporation Law.
They are substantially similar to the Florida By-laws. They set forth
important rules relating to the governing of the Delaware Corporation,
including provisions which dictate how the Board of Directors and Committees
thereof are to operate, how meetings of shareholders of the Delaware
Corporation may be called and the procedures to be followed by any shareholder
of the Delaware Corporation that wishes to nominate any person to be a director
of the Delaware Corporation or otherwise bring any other proposal before a
meeting of shareholders. Shareholders are urged to carefully review the full
text of the Delaware By-laws which is attached to this Proxy Statement as
Exhibit C hereto.
CERTAIN TAX CONSEQUENCES
In the opinion of counsel to the Company, Graham & James, under
present federal income tax laws, no gain or loss will be recognized to the
Florida Corporation or the Delaware Corporation as a result of the Merger, and
no gain or loss will be recognized under such laws to the holders of
outstanding shares of capital stock of the Company. No opinion is given with
respect to the tax consequences to the holders of outstanding shares of capital
stock of the Company arising under the law of any state, locality or foreign
jurisdiction, nor is any opinion given with respect to the Federal tax
consequences of the Merger upon foreign holders of outstanding shares of
capital stock of the Company.
In the opinion of Florida counsel to the Company, Smith Hulsey &
Busey, under present Florida law, the Merger will not result in any Florida
corporate income tax to the Florida Corporation, Delaware Corporation, or any
holder of the outstanding capital stock of either corporation, nor any Florida
sales and use tax, Florida intangible personal property tax or Florida
documentary stamp tax liability to the Florida Corporation or Delaware
Corporation. In the opinion of Florida counsel, the State of Florida does not
impose personal income taxes that would be applicable to any individual holder
of the outstanding capital stock of the Florida Corporation or Delaware
Corporation.
INDEPENDENT PUBLIC ACCOUNTANTS
On November 1, 1994, the Company engaged the accounting firm of Price
Waterhouse LLP as its independent accountants for the fiscal year ending
December 31, 1994. This engagement was authorized by the Company's Board of
Directors upon the recommendation of the Board's Audit Committee. The
determination of the Company to select Price Waterhouse was made in order to
enable the Company to better coordinate financial reporting matters with
Viacom, its majority shareholder; Price Waterhouse LLP serves as independent
accountants to Viacom.
On November 1, 1994, the Company informed Arthur Andersen LLP, its
independent accountants for the fiscal year ended December 31, 1993, of its
action. The accountants' reports on the
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Company's financial statements for the past two fiscal years preceding the
determination not to reappoint Arthur Andersen LLP did not contain an adverse
opinion or disclaimer of opinion, or a qualification regarding audit scope or
accounting principles. Moreover, during the two most recent fiscal years and
the subsequent period prior to the change in accountants, there were no
disagreements with Arthur Andersen LLP or Ernst & Young LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure. Furthermore, no "reportable events," as defined in Item
304(a)(1)(v) of Regulation S-K of the Securities and Exchange Commission,
occurred during such period.
Representatives of Price Waterhouse LLP are expected to be present at
the 1995 Annual Meeting of Shareholders. They will have the opportunity to make
a statement if they desire to do so, and will be available to respond to
appropriate questions.
FINANCIAL STATEMENTS
The Company has either previously sent or is enclosing its Annual
Report to Shareholders for the year ended December 31, 1994. Shareholders are
referred to the report for financial and other information about the Company,
but such report is not incorporated into this Proxy Statement and is not a part
of the proxy soliciting material.
PROPOSALS BY SHAREHOLDERS
Any proposals by shareholders intended to be presented at the 1996
Annual Meeting must be received by the Company no later than December 1, 1995.
OTHER MATTERS
You are again urged to attend the Annual Meeting at which time
management of the Company will present a review of the Company's operations.
Proxies will be solicited by the Board of Directors through use of the mails.
Proxies may also be solicited by directors, officers and a small number of
other employees of the Company personally or by mail, telephone, telegraph, or
otherwise, but such persons will not be compensated for such services.
Brokerage firms, banks, fiduciaries, voting trustees or other nominees will be
requested to forward the soliciting material to each beneficial owner of stock
held of record by them.
The Board of Directors does not intend to present, and does not have
any reason to believe that others will present, any item of business at the
Annual Meeting other than those specifically set forth in the notice of the
meeting. However, if other matters are presented for a vote, the proxies will
be voted for such matters in accordance with the judgment of the persons acting
under the proxies.
By Order of the Board of Directors
SALLY SUCHIL
Secretary
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AGREEMENT AND PLAN OF MERGER
AGREEMENT dated as of _______, 1995 (the "Merger Agreement"), by and
between SPELLING ENTERTAINMENT GROUP INC., a Florida corporation (the "Merging
Corporation"), and SPELLING MERGER CORPORATION, a Delaware corporation (the
"Surviving Corporation"). The Surviving Corporation is a wholly-owned
subsidiary of the Merging Corporation. The Merging Corporation and the
Surviving Corporation are hereinafter sometimes collectively referred to as the
"Constituent Corporations."
The Merging Corporation and the Surviving Corporation desire to effect
a merger (the "Merger") of the Merging Corporation with and into the Surviving
Corporation as provided in this Merger Agreement. The Boards of Directors of
the Constituent Corporations have approved the Merger and directed that this
Merger Agreement be submitted to their respective shareholders for adoption.
This Merger Agreement sets forth an Agreement of Merger pursuant to the
provisions of the Florida Business Corporation Act (the "Florida Corporation
Act") and the Delaware General Corporation Law.
The authorized shares of capital stock of the Merging Corporation
consist of 300 million shares of Common Stock, par value $.10 per share (the
"Florida Common Stock"). The authorized shares of capital stock of the
Surviving Corporation consist of 300 million shares of Common Stock, par value
$0.001 per share (the "Delaware Stock").
In consideration of the premises and of the mutual covenants,
agreements and conditions set forth herein, the parties hereto do hereby agree
as follows:
SECTION 1. Terms and Conditions of Merger and Mode of Carrying Merger
into Effect.
a. Upon the Effective Date (as defined in Section 4 hereof) of
the Merger, the Merging Corporation shall merge with and into the Surviving
Corporation.
b. The Surviving Corporation shall be the only corporation
surviving the Merger, and its name shall, effective upon the Effective Date, be
changed to "Spelling Entertainment Group Inc." The established headquarters,
offices, and facilities of the Merging Corporation immediately prior to the
Effective Date shall continue as the established headquarters, offices and
facilities of the Surviving Corporation after the Effective Date. The location
of the principal office of the Surviving Corporation in the State of Delaware,
such State being the State under the laws of which the Surviving Corporation
exists, shall be c/o CT System, 1209 Orange Street, Corporate Trust Center,
Wilmington,
<PAGE> 31
Delaware 19801. Upon and after the Effective Date, the separate corporate
existence of the Merging Corporation shall cease.
c. All assets and properties (including, without limitation,
real, personal and mixed, tangible and intangible, choses in action, rights and
credits) then owned by each of the Constituent Corporations, or which would
inure to the benefit of either of such Constituent Corporations, shall
immediately by operation of law and without any conveyance, transfer or further
action of any kind, become the assets and property of the Surviving
Corporation. The Surviving Corporation shall be deemed to be a continuation of
the entity of each of the Constituent Corporations, and shall succeed to the
rights and obligations of each respective Constituent Corporation, and to the
duties and liabilities connected therewith, including, without limitation, any
obligation of the Merging Corporation to indemnify any of its directors,
officers or other persons.
d. All rights of creditors and all liens upon the property of
either of the Constituent Corporations shall be preserved unimpaired by the
Merger, and all debts, liabilities, obligations and duties, including but not
limited to the obligations of the Merging Corporation pursuant to stock
options, warrants and convertible debt instruments, of either of the
Constituent Corporations shall, on the Effective Date, become the
responsibility and liability of the Surviving Corporation, and may be enforced
against it to the same extent as if said debts, liabilities, obligations and
duties had been incurred or contracted by it. All corporate acts, plans
(including but not limited to stock option and equity participation plans),
policies, arrangements, approvals and authorizations of the Merging
Corporation, its shareholders, board of directors, officers and agents, which
were valid and effective immediately prior to the Effective Date, shall be
taken for all purposes as the acts, plans, policies, arrangements, approvals
and authorizations of the Surviving Corporation and shall be as effective and
binding thereon as the same were with respect to the Merging Corporation.
e. After the Effective Date, the Surviving Corporation intends to
qualify to transact business as a foreign corporation in Florida, and upon and
after the Effective Date, the Surviving Corporation consents to be sued in and
may be served with process in the State of Florida in any proceeding for the
enforcement of any obligation of the Merging Corporation. The Surviving
Corporation irrevocably appoints the Florida Secretary of State as its agent to
accept service of process in any such proceeding which process should be mailed
by the Florida Secretary of State to the Surviving Corporation at 5700 Wilshire
Boulevard, Los Angeles, California 90036, ATT: Sally Suchil, Senior Vice
President and General Counsel.
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f. The Certificate of Incorporation and By-laws of the Surviving
Corporation in effect immediately prior to the Effective Date shall continue to
be the Certificate of Incorporation and By-laws, respectively, of the Surviving
Corporation upon and after the Effective Date until altered, amended or
repealed, except that such Certificate of Incorporation and By-laws shall be
amended at the Effective Date to change the name of the Surviving Corporation
to "Spelling Entertainment Group Inc."
g. The directors of the Merging Corporation at the Effective Date
shall be the directors of the Surviving Corporation and will hold office from
the Effective Date until their respective successors are duly elected or
appointed and qualify in the manner provided in the Certificate of
Incorporation and By-laws of the Surviving Corporation, or as otherwise
provided by law.
h. The officers of the Merging Corporation at the Effective Date
shall hold the same respective offices with the Surviving Corporation that such
officers held with the Merging Corporation, until their respective successors
are duly elected or appointed and qualify in the manner provided in the
Certificate of Incorporation and By-laws of the Surviving Corporation, or as
otherwise provided by law.
SECTION 2. Manner and Basis of Converting Shares or Other Securities
of the Merging Corporation into Shares or other Securities of the Surviving
Corporation; Dividends.
a. Upon the Effective Date, each share of Florida Common Stock,
which shall be issued immediately prior to the Merger, including shares held in
the treasury, shall be automatically converted into one share of Delaware
Common Stock, and each issued certificate which immediately prior to the Merger
represented shares of Florida Common Stock shall thereafter be deemed to
represent the same number of shares of Delaware Common Stock.
b. Upon the Effective Date, each option, warrant or other right
to purchase or otherwise acquire from the Merging Corporation shares of Florida
Common Stock which shall be in existence immediately prior to the Merger shall
be automatically converted into an option, warrant or right to purchase or
otherwise acquire from the Surviving Corporation the same number of shares of
Delaware Common Stock at the same price per share as in effect immediately
prior to the Merger and upon the same terms and conditions as set forth in such
option, warrant or right and the plan, agreement or other document pursuant to
which it was granted. The Merging Corporation's 401(k) Savings Plan, 1994 Stock
Option Plan and all other employee benefit Plans in existence immediately prior
to the Merger shall be assumed by, and continue
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<PAGE> 33
in effect upon the same terms and conditions as plans of the Surviving
Corporation, except that they shall thereafter relate, to the extent
applicable, to the capital stock of the Surviving Corporation. Upon the
Effective Date, the number, series and classes of shares of stock of the
Surviving Corporation shall be automatically reserved for issuance upon the
exercise of options granted or to be granted under such plan, or upon the
exercise of any other right to acquire shares of any class of the Surviving
Corporation, which shall equal the number, series and classes of shares of
capital stock of the Merging Corporation that were so reserved immediately
prior to the Merger. Upon the Effective Date, the Surviving Corporation shall,
except as expressly provided herein, automatically assume all of the
obligations of the Merging Corporation under the Merging Corporation's 401(k)
Savings Plan, 1994 Stock Option Plan and all other employee benefit Plans and
the outstanding options and restricted shares and stock appreciation rights
granted under such plans.
c. Upon the Effective Date, each share of capital stock of the
Surviving Corporation which shall be issued immediately prior to the Merger
shall be automatically cancelled and retired and shall have the status of
authorized and unissued shares of the Surviving Corporation; and no shares of
capital stock of the Surviving Corporation shall be issued in respect thereof.
d. Issued certificates representing shares of capital stock of
the Merging Corporation, from and after the Effective Date, shall represent the
same number of shares of the class and series of the Surviving Corporation into
which they shall be converted and the holders of such certificates shall have
precisely the same rights as if such certificates had been issued by the
Surviving Corporation, except that the Surviving Corporation shall be entitled
to rely upon the stock records of the Merging Corporation as to the ownership
of such shares.
e. After the Effective Date, each holder of a certificate
representing issued shares of capital stock of the Merging Corporation may, but
shall not be required to, surrender the same to the Surviving Corporation, and
subject to the provisions of subsection (d) of this Section, each holder shall
be entitled, upon such surrender, to receive a certificate or certificates
representing the number of shares of the Surviving Corporation provided in this
Section for the conversion thereof.
f. If any shareholder cannot produce the certificate or
certificates theretofore evidencing the ownership of shares of the Merging
Corporation, such shareholder shall be required to proceed in regard thereto as
such shareholder would have had to do were such shareholder under like
circumstances applying for the issuance of a new certificate of the Surviving
Corporation.
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<PAGE> 34
g. The holders of shares of the Merging Corporation shall be
entitled to receive from the Surviving Corporation (i) those dividends which
were declared by the Board of Directors of the Merging Corporation prior to,
but not yet paid at, the Effective Date, and (ii) those dividends which may be
declared by the Board of Directors of the Surviving Corporation subsequent to
the Effective Date, pursuant to the Certificate of Incorporation, as amended,
of the Surviving Corporation if such holders are record holders of shares of
capital stock of the Surviving Corporation as of the record date for payment of
such dividends.
SECTION 3. Conditions.
Effectuation of the Merger and the other transactions herein provided
are conditioned on the following:
a. The Merger shall have received approval of the
holders of the capital stock of the Merging Corporation and the
Surviving Corporation in the manner required by the Florida
Corporation Act and the Delaware General Corporation Law,
respectively, and the Articles of Incorporation and By-Laws of the
Merging Corporation and the Certificate of Incorporation and By-laws
of the Surviving Corporation, respectively.
b. Receipt of all consents, orders and approvals and
satisfaction of all other requirements prescribed by law which are
necessary for the consummation of the Merger.
The Board of Directors of the Merging Corporation may in its sole
discretion impose such other conditions upon consummation of the acts
contemplated herein as said Board of Directors may deem necessary or desirable.
SECTION 4. Filing; Effective Date.
After this Merger Agreement shall have been executed by each of the
Constituent Corporations and the conditions set forth in Section 3 hereof have
been satisfied, Articles of Merger (the "Florida Certificate") shall be filed
with the Secretary of State of Florida in the manner prescribed by the Florida
Corporation Act, and this Merger Agreement and a Certificate of Merger or a
Certificate of Ownership and Merger (either such certificate being the
"Delaware Certificate") in lieu thereof) shall be filed with the Secretary of
State of Delaware in the manner prescribed by the Delaware General Corporation
Law. The Merger shall be consummated and shall become effective (the
"Effective Date") on the later of (i) the time and date on which the Florida
Certificate has been filed with the Secretary of State of Florida, or (ii) the
time and date on which this Merger Agreement (or the Delaware Certificate in
lieu thereof) has been filed with the Secretary of State of Delaware; provided,
however, that in no
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<PAGE> 35
event shall the Effective Date be a date later than that permitted by the
Florida Corporation Act or the Delaware General Corporation Law.
SECTION 5. Further Assurances.
Prior to the Effective Date, each of the Constituent Corporations
shall take all such actions as shall be necessary or appropriate in order to
effectuate the Merger. In case at any time after the Effective Date the
Surviving Corporation shall determine that any further conveyance, assignment
or other documents or any further action is necessary or desirable to vest in
or confirm to the Surviving Corporation full title to all the properties,
assets, rights, privileges and franchises of the Merging Corporation, the
officers and directors of the Surviving Corporation, in the name and on behalf
of each of the Constituent Corporations, shall be authorized to execute and
deliver all such instruments and take all such actions in the name and on
behalf of each of the Constituent Corporations, as may be necessary or
desirable in order to vest in and confirm to the Surviving Corporation title to
and possession of all such properties, assets, rights, privileges and
franchises, and otherwise to carry out the purposes of this Merger Agreement.
SECTION 6. Termination and Amendment.
a. At any time prior to the Effective Date, this Merger Agreement
may be terminated by the mutual consent of the Boards of Directors of each of
the Constituent Corporations, whether before or after the approval of this
Merger Agreement by the shareholders of either or both of the Constituent
Corporations. In the event this Merger Agreement is so terminated, it shall be
of no further force or effect and there shall be no liability by reason of this
Merger Agreement or its termination on the part of either of the Constituent
Corporations or of their respective directors, officers, employees, agents,
shareholders or incorporators.
b. The Constituent Corporations may, by written agreement between
them, amend, modify or supplement this Merger Agreement at any time prior to
the Effective Date, provided that no amendment shall be made after the approval
of this Merger Agreement by the shareholders of the Merging Corporation which
changes the terms of this Merger Agreement in a way which is materially adverse
to the shareholders of the Merging Corporation or which otherwise effects an
amendment hereto which is not permitted (i) pursuant to Section 252(c) of the
Delaware General Corporation Law, or (ii) pursuant to Section 607.1103 of the
Florida Corporation Act (inasmuch as such purported amendment affects
shareholders of the Merging Corporation).
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<PAGE> 36
SECTION 7. Governing Law.
This Merger Agreement shall be governed by the laws of the State of
Delaware, except that the laws of the State of Florida shall govern all matters
pertaining to the validity and legality of actions taken by the Merging
Corporation.
SECTION 8. Counterparts.
This Merger Agreement may be executed in any number of counterparts,
each of which shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 9. Severability.
Should any part of this Merger Agreement for any reason be declared
invalid, such declaration shall not affect the validity of any remaining
portion thereof which remaining portion shall remain in full force and effect
as if this Merger Agreement had been executed with the invalid portion thereof
eliminated.
SECTION 10. Entire Agreement.
This Merger Agreement embodies the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings between the parties hereto
relating to such subject matter.
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<PAGE> 37
IN WITNESS WHEREOF, each of the Constituent Corporations has caused
this Merger Agreement to be duly executed on its behalf by their respective
officers thereunto duly authorized, as of the date first above written.
SPELLING ENTERTAINMENT GROUP INC.
By: _______________________________
Name:
Title:
ATTEST:
By: ________________________________
Name:
Title:
SPELLING MERGER CORPORATION
By: ______________________________
Name:
Title:
ATTEST:
By __________________________________
Name:
Title:
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<PAGE> 38
CERTIFICATE OF INCORPORATION
OF
SPELLING MERGER CORPORATION
* * * * *
I. The name of this corporation is Spelling Merger Corporation
(hereinafter referred to as the "Corporation").
II. The address of the Corporation's registered office in the
State of Delaware is 1209 Orange Street, Corporate Trust Center, Wilmington,
Delaware 19801, County of New Castle. The name of the Corporation's registered
agent at such address is CT System.
III. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
IV. The aggregate number of shares of capital stock (referred to
herein as "Shares") which the Corporation shall have authority to issue is
three hundred and twenty million (320,000,000) Shares, of which 300,000,000
will be common stock having a par value of one hundredth of one cent ($.001)
per share (the "Common Stock"), and 20,000,000 will be series preferred stock
having a par value of one hundredth of one cent ($.001) per share (the "Series
Preferred Stock"). The Series Preferred Stock may be issued, from time to
time, in one or more series as authorized by the Board of Directors. Prior to
issuance of a series, the board of directors by resolution shall designate it
from other series and classes of stock of the Corporation, shall specify the
number of shares to be included in the series, and shall fix the terms, rights,
restrictions and qualifications of the shares of a series, including any
preferences, voting powers, dividend rights and redemptions, sinking funds and
conversion rights. Subject to the express terms of the Series Preferred Stock
outstanding at the time, the Board of Directors may increase (but not above the
total number of authorized shares of the class) or decrease (but not below the
total number of shares thereof then outstanding) the number of shares.
V. The name and mailing address of the incorporator are as
follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
---- ---------------
<S> <C>
Greer C. Bosworth c/o Spelling Entertainment Group Inc.
5700 Wilshire Blvd. Suite 575
Los Angeles, CA 90036
</TABLE>
<PAGE> 39
VI. The Corporation is to have perpetual existence.
VII. Indemnification of Directors and Officers
Section 1. The Corporation shall, to the fullest extent not
prohibited by the Delaware General Corporation Law, as the same may be amended
and supplemented (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment), indemnify any director or officer who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
("Proceeding") from and against any and all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such Proceeding if he or she acted in
good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
Section 2. Expenses incurred by an officer or director in defending
any Proceeding shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of a satisfactory
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the Corporation.
Section 3. Indemnification and advancement of expenses shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Indemnification and advancement of expenses, unless
otherwise provided when authorized or ratified, shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
Section 5. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director or officer of the Corporation,
against any liability asserted against him or her and incurred by him or her in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him or her against such
liability. The Corporation may create a trust fund or use other means to ensure
the payment of such amounts as may be necessary to effect indemnification.
Section 6. The right to indemnification is a contract right and,
therefore, cannot be retroactively eliminated by a later
<PAGE> 40
shareholder vote.
Section 7. A director or officer may apply to the Court of Chancery
to hear and determine a claim for advancement of expenses or indemnification.
Any prior determination by the Board of Directors, independent counsel or the
shareholder that such person is not entitled to indemnification shall not
create a presumption that the claimant is not so entitled.
Section 8. Any director or officer of the Corporation serving in any
capacity with a majority-owned subsidiary or any employee benefit plan of the
Corporation or any majority-owned subsidiary corporation shall be deemed to be
doing so at the request of the Corporation.
Section 9. Any person entitled to be indemnified may elect to have
the right to indemnification interpreted on the basis of the applicable law in
effect at the time of the occurrence of the events giving rise to the action,
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification is sought.
VIII. No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for any breach of
fiduciary duty by such director as a director. Notwithstanding the foregoing,
a director shall be liable to the extent provided by applicable law for: (i)
any breach of the director's duty of loyalty to the Corporation or its
stockholders; (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law; (iii) any willful or
negligent conduct in connection with the payment of illegal dividends or
unlawful stock repurchases or redemptions, pursuant to Section 174 of the
General Corporation Law of Delaware; or (iv) any transaction from which such
director derived an improper personal benefit.
IX. In furtherance and not in limitation of the powers conferred
by statute, board of directors is expressly authorized to make, alter or
repeal the bylaws of the Corporation.
X. Elections of directors need not be by written ballot unless
the bylaws of the Corporation shall so provide.
XI. Meetings of stockholders may be held within or without the
State of Delaware, as the bylaws may provide. The books of the Corporation may
be kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the bylaws of the Corporation.
XII. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
<PAGE> 41
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of
Delaware, does make this certificate, hereby declaring and certifying that this
is my act and deed and the facts herein stated are true, and accordingly have
hereunto set my hand this ___ day of April, 1995.
____________________________________
Greer C. Bosworth, Incorporator
<PAGE> 42
BYLAWS
OF
SPELLING MERGER CORPORATION
ARTICLE I
Offices
Section 1. The registered office of the corporation shall be in the
City of Wilmington, County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places
as the Board of Directors may from time to time designate, or as the business
of the corporation may require.
ARTICLE II
Stockholders' Meetings
Section 1. The place of all meetings of the stockholders shall be the
principal office of the corporation, or such other place as shall be
determined, from time to time, by the Board of Directors, and the place at
which such meeting shall be held shall be stated in the notice and call of the
meeting.
Section 2(a). The annual meeting of the stockholders of the
corporation for the election of directors to succeed those whose terms expire
and for the transaction of such other business as may properly come before the
meeting shall
<PAGE> 43
be held on such date as shall be established by the Board of Directors.
Section 2.(b) Only persons who are nominated in accordance with the
procedures set forth in this Section shall be eligible for election by
stockholders as directors. Nominations of persons for election to the Board of
Directors of the corporation may be made at a meeting of stockholders by or at
the direction of the Board of Directors or by any stockholder of the
corporation entitled to vote for the election of directors at the meeting who
complies with the notice procedures set forth in this Section. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the corporation. To be timely, a stockholder's notice shall be delivered to
or mailed and received at the principal executive offices of the corporation
not less than sixty (60) days nor more than ninety (90) days prior to the
meeting; provided, however, that, in the event that less than seventy (70)
days' notice or prior public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must be so
received not later than the close of business on the tenth (10th) day following
the day on which such notice of the date of the meeting was mailed or such
public disclosure was made. Such stockholder's notice shall
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<PAGE> 44
set forth (a) as to each person whom the stockholder proposes to nominate for
election or re-election as a director, (i) the name, age and business address
and residence address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares of the
corporation which are beneficially owned by such person and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (including without limitation such person's written consent to
being named in the proxy statement as a nominee and to serving as a director if
elected); and (b) as to the stockholder giving the notice (i) the name and
address, as they appear on the corporation's books, of such stockholder and
(ii) the class and number of shares of the corporation which are beneficially
owned by such stockholder. At the request of the Board of Directors any person
nominated by the Board of Directors for election as a director shall furnish to
the Secretary of the corporation that information required to be set forth in a
stockholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a director of the corporation unless
nominated in accordance with the procedures set forth in this Section. The
Chairman
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<PAGE> 45
of the meeting shall, if the facts warrant, determine and declare to the
meeting that a nomination was not made in accordance with the procedures
prescribed by the Bylaws, and, if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
Section 3. The voting at all meetings of stockholders may be viva
voce, but any qualified voter may demand a stock vote, whereupon such stock
vote shall be taken by ballot, each of which shall state the name of the
stockholder voting and the number of shares voted by him, and, if such ballot
be cast by proxy, it shall also state the name of such proxy.
At any meeting of the stockholders, every stockholder having the right
to vote shall be entitled to vote in person, or by proxy appointed by an
instrument in writing subscribed by such stockholder and bearing a date not
more than one year prior to said meeting. Each stockholder shall have one vote
for each share of common stock ($.001 par value) of the corporation, registered
in his name on the books of the corporation, and, except where the transfer
books of the corporation shall have been closed or a date shall have been fixed
as a record date for the determination of its stockholders entitled to vote, no
share of stock shall be voted on which shall have been transferred on the books
of the corporation within twenty (20) days next preceding such vote.
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<PAGE> 46
Section 4. The order of business at the annual meeting of stockholders
shall be as follows:
(a) Calling the meeting to order.
(b) Proof of notice of meeting.
(c) Reading of minutes of last previous meeting.
(d) Reports of officers.
(e) Reports of committees.
(f) Election of directors.
(g) Miscellaneous business.
Section 5. Special meetings of the stockholders may be called at any
time by the Chairman of the Board, the President, a majority of the Board of
Directors, the holders of not less than one-tenth of all the shares entitled to
vote at the meeting, or otherwise as provided by law.
Section 6. Notice of the time and place of the annual meeting of
stockholders shall be given by mailing written or printed notice of the same at
least ten (10) days, and not more than sixty (60) days, prior to the meeting,
and notice of the time and place and purpose of a special meeting shall be
given by written or printed notice of the same at least ten (10) days, and not
more than sixty (60) days, prior to the meeting, with postage prepaid, to each
stockholder of record of the corporation entitled to vote at such meeting, and
addressed to the stockholder's last known post office address, or to the
address appearing on the corporate books of the corporation; but notice of
meeting may be waived. The Board of Directors may fix in advance a date, not
exceeding sixty (60) days preceding the date of any meeting of
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<PAGE> 47
stockholders, as a record date for the determination of the stockholders
entitled to notice of and to vote at any such meeting.
Section 7. A quorum at any annual or special meeting of stockholders
shall consist of stockholders representing, either in person or by proxy, a
majority of the shares entitled to vote at the meeting, except as otherwise
specifically provided by law or the Certificate of Incorporation. When a
specified item of business is required to be voted on by a class or series of
stock, a majority of the shares of such class or series shall constitute a
quorum for the transaction of such item of business by that class or series.
Section 8. At an annual meeting of stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To
be properly brought before an annual meeting, business must be (a) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (b) otherwise properly brought before the meeting by
or at the direction of the Board of Directors, or (c) otherwise properly
brought before the meeting by a stockholder. For business to be properly
brought before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary of the corporation. To
be timely, a
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<PAGE> 48
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation, not less than sixty (60) days
nor more than ninety (90) days prior to the meeting; provided, however, that,
in the event that less than seventy (70) days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be so received not later than the close of
business on the tenth (10th) day following the day on which such notice of the
date of the annual meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall set forth, as to each matter the
stockholder proposes to bring before the annual meeting, (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name
and address, as they appear on the corporation's books, of the stockholder
proposing such business, (c) the class and number of shares of the corporation
which are beneficially owned by the stockholder, and (d) any material interest
of the stockholder in such business. Notwithstanding anything in these Bylaws
to the contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section. The Chairman of an
annual meeting shall, if the facts warrant, determine and declare to the
meeting that
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<PAGE> 49
business was not properly brought before the meeting in accordance with the
provisions of this Section, and, if he should so determine, he shall so declare
to the meeting, and any such business not properly brought before the meeting
shall not be transacted.
Section 9. Attendance of a stockholder, in person or by proxy, at any
meeting, shall constitute a waiver of notice of such meeting, except where the
stockholder, in person or by proxy, attends a meeting for the express purposes
of objecting to the transaction of any business because the meeting is not
lawfully called or convened.
Section 10. At all meetings of stockholders, the Chairman of the
meeting shall have absolute authority over matters of procedure, and there
shall be no appeal from the ruling of the Chairman.
ARTICLE III
Board of Directors
Section 1. The management of all of the affairs, property and
business of the corporation shall be vested in a Board of Directors, consisting
of not less than three (3) nor more than twenty (20) persons. In addition to
the powers and authorities by these Bylaws and the Certificate of Incorporation
expressly conferred upon it, the Board of Directors may exercise all such
powers of the corporation and do all such lawful acts and things as are not by
statute or
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<PAGE> 50
by the Certificate of Incorporation or by these Bylaws directed or required to
be exercised or done by the stockholders. No director need be a stockholder.
Section 2. The number of directors shall be no less than three (3)
nor more than twenty (20) persons in number. The number of directors to be
elected at each annual meeting of stockholders shall be fixed by the Board of
Directors. The Board of Directors shall have the right at any time during the
ensuing year to increase the number of directors by not more than three (3)
additional directors. A director elected at the annual meeting shall hold
office until his successor is elected and qualified unless he earlier resigns
or is removed.
Section 3. All vacancies in the Board of Directors, whether caused by
resignation, death, or otherwise, may be filled by the remaining directors or a
majority of the remaining directors attending a stated or special meeting
called for that purpose, even though less than a quorum be present. A director
thus elected to fill any vacancy shall hold office for the unexpired term of
his predecessor, and until his successor is elected and qualified.
Section 4. Regular meetings of the Board of Directors may be held at
the principal office of the corporation or at such other place or places as the
Board of Directors may designate from time to time.
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<PAGE> 51
Section 5. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board, the President or a majority of the
directors, to be held at the principal office of the corporation, or at such
other place or places as the notice calling the meeting may designate.
Section 6. Notice of all special meetings of the Board of Directors,
specifying the business to be transacted at and the purpose or purposes of the
meeting, shall be given to each member of the Board at least twenty-four (24)
hours before the time appointed. Notice of meetings may be waived.
Section 7. A quorum at all meetings of the Board of Directors shall
consist of a majority of the directors, but less than a quorum may adjourn any
meeting, which may be held on subsequent dates without further notice, provided
a quorum be present at such deferred meeting.
Section 8. Standing or temporary committees may be appointed from its
own members by the Board of Directors from time to time, and the Board of
Directors may from time to time invest such committees with such powers as it
may see fit, subject to such conditions as may be prescribed by such Board. An
executive committee may be appointed by resolution passed by a majority of the
directors, and it shall have all the powers provided by statute except as
specially limited by the Board. All committees so appointed shall keep regular
minutes of the transactions of their meetings, and shall
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<PAGE> 52
cause them to be recorded in books kept for that purpose in the office of the
corporation, and shall report same to the Board of Directors at its next
meeting.
Section 9. Any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee thereof may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing, setting forth the action so taken, and the writing
or writings are filed with the minutes of proceedings of the board or
committee.
Section 10. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, members of the Board of Directors, or any
committee thereof, may participate in a meeting of the Board of Directors, or
any committee, by means of conference telephone or similar communications
equipment whereby all persons participating in a meeting shall constitute
presence in person at the meeting.
ARTICLE IV
Compensation of Directors
Section 1. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, the Board of Directors shall have the authority
to fix the compensation of directors. All directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors, and
directors
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<PAGE> 53
may be paid a fixed sum for attendance at each meeting of the Board of
Directors and/or a stated salary as director. No such payment shall preclude
any director from serving the corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be
allowed like compensation and expenses for attending committee meetings.
ARTICLE V
Officers
Section 1. The officers of the corporation shall consist of a
Chairman of the Board, a President, a Chief Financial Officer, one or more Vice
Presidents (which may include senior and executive vice presidents), a
Secretary and a Treasurer, who shall be elected for one year by the directors
at their first meeting after the annual meeting of the stockholders, and who
shall hold office until their successors are elected and qualify. The Board of
Directors may also designate one or more officers as Chief Executive Officer or
Chief Operating Officer of the corporation. The Board of Directors may also
choose Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers. No officer, except the Chairman of the Board, need be a member
of the Board of Directors. The same person may hold two or more offices.
Section 2.(a) The Chairman of the Board shall be the Chairman of the
Executive Committee and shall preside at all
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meetings of the Board of Directors or the Executive Committee when present. He
shall provide leadership to the Board of Directors and shall oversee the
deliberations and activities of the Board. He shall advise and counsel with
the President of the corporation on all matters of corporate interest. The
Chairman of the Board shall also perform such other duties as may be assigned
to him by the Board of Directors.
Section 2.(b) The President shall be charged with the actual
operation of all of the corporation's affairs, directly or through delegation
of authority to other officers, within the framework of directives and policies
prescribed from time to time by the Board of Directors. He shall also perform
such other duties as may be specifically directed by the Board of Directors or
are incidental to his office and not prescribed in these Bylaws.
Section 2.(c) The Chief Financial Officer shall be charged with the
duties of obtaining necessary financing for the corporation and coordinating,
directing and administering the corporation's financial operations within the
framework of directives and policies, prescribed from time to time by the
President or the Board of Directors. The Chief Financial Officer shall be
responsible to the President and the Board of Directors for the efficient and
satisfactory discharge of all of his duties. He shall perform other duties
incidental
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to his office and not prescribed in these Bylaws, as may be directed by the
President or the Board of Directors. He shall report to the President and the
Board of Directors as to the financial condition of the corporation at such
time and in such manner as directed by the President or the Board of Directors.
Section 3. The Vice President or Vice Presidents shall perform such
duties as are assigned by the President or the Board of Directors, and such
other duties that are incidental to the office of Vice President. The Board of
Directors may designate one or more executive Vice Presidents to hold the title
Executive Vice President, Office of the President.
Section 4. The Secretary shall issue notice for all meetings, shall
keep minutes of all meetings, shall have charge of the seal and the corporate
books, and shall make such reports and perform such other duties as are
incidental to his office, or are properly required of him by the Board of
Directors.
Section 5. The Treasurer shall have the custody of all moneys and
securities of the corporation and shall keep regular books of account. He
shall disburse the funds of the corporation in payment of the just demands
against the corporation, or as may be ordered by the President or the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the President and the Board of Directors from time to time as may be required
of him an account of all his transactions as Treasurer and of
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the financial condition of the corporation. He shall perform all duties
incidental to this office or which are properly required of him by the Board of
Directors.
Section 6. In the case of absence or inability to act of any officer
of the corporation, the Board of Directors may from time to time delegate the
powers or duties of such officer to any other officer, or any director or other
person whom it may select.
Section 7. Vacancies in any office arising from any cause may be
filled by the directors at any regular or special meeting.
Section 8. The Board of Directors may appoint such other officers and
agents as it shall deem necessary or expedient, who shall hold their offices
for such terms and shall exercise such powers and perform such duties as shall
be determined from time to time by the Board of Directors.
Section 9. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by
the Board of Directors may be removed at any time with or without cause, by the
affirmative vote of a majority of the whole Board of Directors.
Section 10. The Board of Directors may, by resolution, require any
and all of the officers to give bonds to the corporation, with sufficient
surety or sureties, conditioned for the faithful performance of the duties of
their
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respective offices, and to comply with such other duties as may from time to
time be required by the Board of Directors.
ARTICLE VI
Stock
Section 1. Certificates of stock shall be issued in numerical order,
and each stockholder shall be entitled to a certificate signed by the President
or a Vice President and the Secretary or an Assistant Secretary, certifying to
the number of shares owned by him. Where, however, such certificate is signed
by a transfer agent or an assistant transfer agent, or by a transfer clerk
acting on behalf of the corporation, and a registrar, the signatures of any of
the above-named officers may be facsimile.
In case any officer who has signed, or whose facsimile signature has
been used on a certificate, has ceased to be an officer before the certificate
has been delivered, such certificates may, nevertheless, be adopted and issued
and delivered by the corporation as though the officer who signed such
certificate or certificates, or whose facsimile signature or signatures shall
have been used thereon, had not ceased to be such officer of the corporation.
Section 2. Registered stockholders only shall be entitled to be
treated by the corporation as the holders in fact of the stock standing in
their respective names, and the corporation shall not be bound to recognize any
equitable or
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other claim to or interest in any share on the part of any other person,
whether or not it shall have express or other notice thereof, except as
expressly provided by the laws of the State of Delaware.
Section 3. In case of loss or destruction of any certificate of
stock, another may be issued in its place upon proof of such loss or
destruction, and upon the giving of a satisfactory bond of indemnity to the
corporation and/or to the transfer agent and registrar of such stock in such
sum as the officers of the corporation may provide. An officer of the
corporation, within the discretion provided for in the determination of whether
or not a bond is "satisfactory" and whether the sum thereof is adequate, may
waive the requirement of a bond.
Section 4. The Board of Directors shall have the power to close the
stock transfer books of the corporation for a period not exceeding forty (40)
days preceding the date of any meeting of stockholders, or the date for payment
of any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or for
a period of not exceeding forty (40) days in connection with obtaining the
consent of the stockholders for any purpose; provided, however, that, in lieu
of closing the stock transfer books as aforesaid, the Board of Directors may
fix in advance a date, not exceeding
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sixty (60) days preceding the date of any meeting of stockholders, or the date
for the payment of any dividend, or the date for the allotment of rights, or
the date when any change or conversion or exchange of capital stock shall go
into effect, or a date in connection with obtaining such consent, as a record
date for the determination of the stockholders entitled to notice of and to
vote at any such meeting, and any adjournment thereof, or entitled to receive
payment of any such dividend, or to any such allotment of rights, or to
exercise the rights in respect of any change, conversion, or exchange of
capital stock, or to give such consent without actually closing such transfer
books, and in such case such stockholders, and only such stockholders as shall
be stockholders of record on the date so fixed, shall be entitled to such
notice of and to vote at such meeting, and any adjournment thereof, or to
receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the corporation after
any such record date fixed as aforesaid.
ARTICLE VII
Dividends and Finances
Section 1. Before making any distribution of profits, there may be
set aside out of the net profits of the
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corporation, such sum or sums as the directors may from time to time, in their
absolute discretion, deem expedient, as a reserve fund to meet contingencies,
or for equalizing dividends, or for maintaining any property of the
corporation, or for any other purpose, and any profits of any year not
distributed as dividends shall be deemed to have been thus set apart until
otherwise disposed of by the Board of Directors.
Section 2. The monies of the corporation shall be deposited in the
name of the corporation in such bank or banks or trust company or trust
companies designated by the Chief Financial Officer or such other officer as
the Board of Directors may designate, and shall be drawn out only by check
signed by persons designated by the Chief Financial Officer or by resolution by
the Board of Directors.
Section 3. Dividends may be paid in cash, in property or in shares of
the capital stock, subject to the provisions of any statute and these Bylaws.
ARTICLE VIII
Books and Records
The books, accounts and records of the corporation, except as may be
otherwise required by the laws of the State of Delaware, may be kept outside of
the State of Delaware at such place or places as the Board of Directors may
from time to time designate. The Board of Directors shall determine
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whether and to what extent the accounts and books of the corporation, or any of
them other than the stock ledger, shall be open to the inspection of the
stockholders, and no stockholder shall have any right to inspect any account or
book or document of the corporation, except as conferred by law or by
resolution of the stockholders or directors, provided that the provisions of
this paragraph shall not be construed as changing in any way the duty of the
Treasurer to make proper reports to the stockholders at the annual meeting.
ARTICLE IX
Notice
Section 1. Whenever the provisions of a statute or these Bylaws
require notice to be given to any director, officer or stockholder, they shall
not be construed to mean personal notice; such notice may be given in writing
by depositing the same in a post office or letter box, in a postage paid,
sealed wrapper, addressed to such director, officer or stockholder at his or
her address as the same appears on the books of the corporation, and the time
when the same shall be mailed shall be deemed to be the time of the giving of
such notice. Notice to directors may also be given by telephone.
Section 2. A waiver of any notice in writing, signed by a
stockholder, director or officer, whether before or after
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the time stated in said waiver for holding a meeting, shall be deemed
equivalent to a notice required to director, officer or stockholder.
Section 3. Attendance at a meeting shall constitute a waiver of
notice except where a director or stockholder attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
ARTICLE X
Seal
The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE XI
Amendment of Bylaws
Alteration, amendment or repeal of the Bylaws may be made by a
majority of the stockholders entitled to vote at any meeting, or by the Board
of Directors by unanimous written consent or by a majority vote of the
directors at any regular or special meeting, provided notice of such
alteration, amendment or repeal has been given to each director in writing at
least two (2) days prior to said meeting.
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ARTICLE XII
Indemnification and Limitation of Liability
Section 1. The corporation shall, to the fullest extent not
prohibited by Section 145 of the Delaware General Corporation Law, as the same
may be amended and supplemented (but, in the case of any such amendment, only
to the extent that such amendment permits the corporation to provide broader
indemnification rights than said law permitted the corporation to provide prior
to such amendment), indemnify any director or officer who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative ("Proceeding") from and against any and all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such Proceeding if he or
she acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
or her conduct was unlawful.
Section 2. Expenses incurred by an officer or director in defending
any Proceeding shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of a satisfactory
undertaking by or
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on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by
the corporation.
Section 3. Indemnification and advancement of expenses shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any Bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Indemnification and advancement of expenses, unless
otherwise provided when authorized or ratified, shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
Section 5. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director or officer of the corporation,
against any liability asserted against him or her and incurred by him or her in
any such capacity, or arising out of his or her status as such, whether or not
the corporation would have the power to indemnify him or her against such
liability.
Section 6. The right to indemnification is a contract right and,
therefore, cannot be retroactively eliminated by a later stockholder vote.
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Section 7. The Court of Chancery has exclusive jurisdiction to hear
and determine all actions for advancement of expenses or indemnification.
Section 8. Any director or officer of the corporation serving in any
capacity with a majority-owned subsidiary or any employee benefit plan of the
corporation or any majority-owned subsidiary corporation shall be deemed to be
doing so at the request of the corporation.
Section 9. Any person entitled to be indemnified may elect to have
the right to indemnification interpreted on the basis of the applicable law in
effect at the time of the occurrence of the events giving rise to the action,
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification is sought.
Section 10. No director of the corporation shall be personally liable
to the corporation or its stockholders for monetary damages for any breach of
fiduciary duty by such a director as a director. Notwithstanding the
foregoing, a director shall be liable to the extent provided by applicable law
for: (i) any breach of the director's duty of loyalty to the corporation or its
stockholders; (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law; (iii) any willful or
negligent conduct in connection with the payment of illegal dividends or
unlawful stock repurchases or redemptions,
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pursuant to Section 174 of the General Corporation Law of Delaware; or (iv) any
transaction from which such director derived an improper personal benefit. No
amendment or repeal of this paragraph shall apply to or have any effect on the
liability or alleged liability of any director of the corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
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PROXY/VOTING INSTRUCTION CARD
SPELLING ENTERTAINMENT GROUP INC.
5700 Wilshire Boulevard, Los Angeles, California 90036
- -------------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints Peter H. Bachmann, and Thomas P. Carson, J.
Ronald Castell and each of them, proxies with the powers the undersigned would
possess if personally present, and with full power of substitution, to vote all
common shares of the undersigned in Spelling Entertainment Group Inc. at the
Annual Meeting of Shareholders to be held at The Regent Beverly Wilshire, 9500
Wilshire Boulevard, Champagne Room, Beverly Hills, California, on May 23, 1995
at 10:00 a.m., and at any adjournment thereof, upon all subjects that may
properly come before the meeting, including the matters described in the proxy
statement furnished herewith, subject to any directions indicated on the
reverse side of this card. If no directions are given, the proxies will vote
for the election of all listed nominees, in accordance with the Board of
Directors' recommendations on the other subjects listed on the reverse of this
card and at their discretion on any other matter that may properly come before
the meeting.
Your vote for the election of Directors may be indicated on the reverse side of
this card. Nominees are H. Wayne Huizenga, Aaron Spelling, Steven R. Berrard,
Frank J. Biondi, Jr., Philippe F. Dauman, J. Brian McGrath, John L. Muething,
and Sumner M. Redstone.
If you do not sign and return a proxy, or attend the meeting and vote by
ballot, your shares cannot be voted.
[FRONT SIDE]
/X/ Please mark your
vote with an X.
The Board of Directors Recommends a Vote "FOR all nominees" and "FOR" Item 2.
If no direction is made, this proxy will be voted FOR all of the Board of
Directors nominees and FOR Item 2.
For Withhold For Against Abstain
1. Election of / / / / 2. Change / / / / / /
Directors State of
(see reverse) Incorporation
Vote for all nominees except: to Delaware
SIGNATURE(S) Date
---------------------------------------- ---------------------
NOTE: Please mark, sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
[REVERSE SIDE]
