<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SPELLING ENTERTAINMENT GROUP INC.
- --------------------------------------------------------------------------------
(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):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
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:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[X] 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:
$125.00
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
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 14, 1995
YOU ARE URGED TO MARK, DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT PROMPTLY.
<PAGE>
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 14, 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 88,295,986 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 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.
<PAGE>
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. Such action by Viacom is sufficient to elect such directors and
approve Proposal 2 without any action on the part of any other holder of Common
Stock.
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 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.
2
<PAGE>
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 in entertainment and investment banking.
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 visiting
professorship from Brandeis University.
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 October 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.
3
<PAGE>
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 "Commission"), the New York Stock
Exchange ("NYSE") and the Pacific Stock Exchange ("PSE"). 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 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 to Messrs. Bachmann and
Carson.
4
<PAGE>
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
NAME OF DIRECTOR, EXECUTIVE OFFICER OF COMMON STOCK PERCENT
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(6) *
Viacom Inc.......................... 69,043,850(5) 77%
All directors and executive officers
as a group (12 persons)............ 69,446,850(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 March 31, 1995 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 1,337,148 shares of Common Stock which may be acquired by Viacom
pursuant to a warrant converted to a right to acquire shares of Common
Stock in connection with the Republic merger (see "Certain Transactions").
(6) Consists of shares of Common Stock which may be acquired within 60 days of
March 31, 1995 by Messrs. Bachmann and Carson and Ms. Coughlan.
(7) Includes shares of Common Stock attributed to Mr. Redstone.
5
<PAGE>
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
bylaws 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 bylaws, 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 two times. In addition, a Special Committee of the Board,
consisting of the independent directors, met seven times during 1994 to
consider the Republic acquisition, the Virgin Interactive acquisition, the
negotiation and the subsequent amendment of 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.
6
<PAGE>
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) certain 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").
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
--------------------- ------------
SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER
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 1993 96,154 10,000 2,875(c) 40,000 --
President,
Office of the President
Thomas P. Carson 1994 289,424 150,000 15,400(b) 100,000 --
Executive Vice 1993 67,308 -- 2,800(c) 100,000 --
President,
Office of the President
Chief Financial Officer
and Treasurer
J. Ronald Castell 1994 125,000(a) -- -- -- --
Executive Vice
President,
Office of the President
Kathleen Coughlan 1994 168,270 52,500 6,000(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.
7
<PAGE>
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.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
------------------------------- ---------------------
NUMBER OF % OF TOTAL
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) 4.73% $ 9.375 9/01/04 $943,342 $2,390,614
Thomas P. Carson........ 100,000(1) 2.95% $ 9.375 9/01/04 $589,589 $1,494,134
J. Ronald Castell....... -- -- -- -- -- --
Kathleen Coughlan....... 50,000(2) 1.48% $10.375 1/10/04 $326,239 $ 826,754
</TABLE>
- --------
(1) Grants vest 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 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>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1994 DECEMBER 31, 1994
SHARES 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 -- $ 18,750
</TABLE>
DIRECTOR COMPENSATION
Each member of the Board (excluding Messrs. Berrard, Biondi, Dauman, Huizenga
and Redstone) is currently paid an annual fee of $15,000 plus $750 for each
meeting attended, including committee meetings.
8
<PAGE>
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.
The Company has an agreement with Kathleen Coughlan, dated as of January 10,
1994, which was amended as of September 1, 1994, and terminates on January 9,
1997. Pursuant to such agreement (as amended), Ms. Coughlan is employed as
Senior Vice President--Corporate Controller of the Company at an annual salary
of $175,000, which is subject to annual review but shall in no event be less
than $175,000. Ms. Coughlan is also entitled to receive a bonus, at the
Company's discretion. She was also granted 50,000 stock options vesting 25%
each year over the term of the agreement (as amended).
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 the
9
<PAGE>
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.
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.
10
<PAGE>
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.
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 Commission or subject to Regulations 14A or 14C of the
Commission or the liabilities of Section 18 of the Exchange Act and shall not
be deemed incorporated by reference into any filing under the Securities Act of
1933 or the Exchange Act, 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
11
<PAGE>
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 OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG SPELLING ENTERTAINMENT GROUP, BROAD MARKET AND PEER GROUP
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Period SPELLING BROAD
(Fiscal Year Covered) ENTERTAINMENT GROUP PEER GROUP MARKET
- --------------------- ------------------- ---------- ------
<S> <C> <C> <C>
Measurement Pt- 1989 $100 $100 $100
FYE 1990 $ 90.00 $ 91.08 $ 96.88
FYE 1991 $189.78 $128.56 $126.42
FYE 1992 $143.29 $199.60 $136.08
FYE 1993 $231.93 $291.19 $149.80
FYE 1994 $250.78 $274.01 $151.78
</TABLE>
12
<PAGE>
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 Corporation ("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.
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.
13
<PAGE>
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.
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
14
<PAGE>
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 re-runs,
theatrical re-runs, foreign telecasting and supplemental markets; for net
profits derived from merchandising activities in which Ms. Spelling's name and
likeness 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 Networks Inc. ("Showtime"), a subsidiary of
Viacom, and certain television stations owned by Viacom. Revenue from sales to
Showtime was $115,000 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 approximately
$804,000 in 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 8.33% and 16.66% interest, respectively, in a general
partnership which holds a 79.5% interest 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 potential series is $297,000.
Spelling Satellite Networks, Inc. ("SSN"), a subsidiary of the Company, has
engaged Showtime for a period of nine months (which may be extended at SSN's
option for a mutually agreed upon time) to furnish consulting services to SSN
with respect to various cable/satellite programming services. Pursuant to such
arrangement, Showtime will receive a consulting fee of $25,000 per month.
In the ordinary course of business, the Company has and expects to continue
to do business with Viacom and its affiliates, including Blockbuster, Showtime
and Paramount.
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.
15
<PAGE>
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 within 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 Bylaws of the
Delaware Corporation (the "Delaware Bylaws") is annexed hereto as Exhibit C.
ANY DESCRIPTION IN THIS PROXY STATEMENT OF THE MERGER AGREEMENT, THE DELAWARE
CERTIFICATE OR THE DELAWARE BYLAWS 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 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 REINCORPORATION 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....................................................... $ 7,800
Legal Fees........................................................ 50,000
Miscellaneous..................................................... 2,000
-------
Total........................................................... $59,800
=======
</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.
16
<PAGE>
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 NYSE and the 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.
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 Bylaws
of the Florida Corporation (the "Florida Bylaws") and the Florida Corporation
Act as compared with the rights of shareholders under Delaware law, the
Delaware Certificate and the Delaware Bylaws. 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.
17
<PAGE>
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.
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 bylaws.
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 Bylaws, 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 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.
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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.
Under the Delaware Corporation Law, the power to adopt, amend or repeal
bylaws 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 Bylaws
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 Bylaws.
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 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.
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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.
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
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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 provide 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 pay 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).
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 Bylaws, has opted out of Florida's Control-Share Acquisition Statute. The
Delaware Corporation, in the Delaware Certificate, has elected not to be
governed by the merger moratorium provisions 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.
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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 Bylaws 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, 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.
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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.
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
of their fiduciary duty of care, even though such an action, if successful,
might otherwise have benefitted the Company and its
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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 BYLAWS
The Bylaws 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 Bylaws. 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 Bylaws
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 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.
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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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APPENDIX A
AGREEMENT AND PLAN OF MERGER
AGREEMENT dated as of April 12, 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") and 20 million shares of Preferred Stock, par value $.10 per
share. The authorized shares of capital stock of the Surviving Corporation
consist of 300 million shares of Common Stock, par value $.001 per share (the
"Delaware Common Stock") and 20 million shares of Preferred Stock, par value
$.001 per share.
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, 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
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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.
f. The Certificate of Incorporation and Bylaws of the Surviving
Corporation in effect immediately prior to the Effective Date shall
continue to be the Certificate of Incorporation and Bylaws, respectively,
of the Surviving Corporation upon and after the Effective Date until
altered, amended or repealed, except that such Certificate of Incorporation
and Bylaws 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 Bylaws 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 Bylaws 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 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
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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.
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 Bylaws
of the Merging Corporation and the Certificate of Incorporation and Bylaws
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.
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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 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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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.
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.
/s/
By: _________________________________
Thomas P. Carson
Name: _______________________________
Executive Vice President
Title: ______________________________
ATTEST:
/s/
By: ____________________________________
Sally Suchil
Name: __________________________________
Senior Vice President
Title: _________________________________
SPELLING MERGER CORPORATION
/s/
By: _________________________________
Peter H. Bachmann
Name: _______________________________
Executive Vice President
Title: ______________________________
ATTEST:
/s/
By: ____________________________________
Sally Suchil
Name: __________________________________
Senior Vice President
Title: _________________________________
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APPENDIX B
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 The Corporation Trust Company.
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 tenth of one cent ($.001) per share (the
"Common Stock"), and 20,000,000 will be series preferred stock having a par
value of one tenth 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>
VI. The Corporation is to have perpetual existence. The Corporation elects to
not be governed by Section 203 of the Delaware General Corporation Law.
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.
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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 or her 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 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
shareholders 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. 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.
IX. In furtherance and not in limitation of the powers conferred by statute,
the 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.
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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.
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 6, 1995.
/s/
_____________________________________
Greer C. Bosworth, Incorporator
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<PAGE>
APPENDIX C
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 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 in
accordance with Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended ("Regulation 14A"). Such stockholder's notice shall 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 (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
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corporation unless nominated in accordance with the procedures set forth in
this Section. The Chairman 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.
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, unless waived.
(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 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
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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
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation in accordance with Regulation
14A. 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 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 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 not 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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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
specifically limited by the Board. All committees so appointed shall keep
regular minutes of the transactions of their meetings, and shall cause them to
be recorded in books kept for that purpose in the office of the corporation,
and shall report the 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 can hear all other persons participating.
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,
and 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 to act 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.
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Section 2(a). The Chairman of the Board shall be the Chairman of the
Executive Committee (if any) and shall preside at all 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 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 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 or her office, or are properly required of him or her by the Board of
Directors.
Section 5. The Treasurer shall have the custody of all monies 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 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 Board of 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.
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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 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 may fix in advance a date, not exceeding
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 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.
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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 as
the Chief Financial Officer, or such other officer as the Board of Directors or
Chief Financial Officer may designate, shall authorize, and shall be drawn out
only by check signed by the Chief Financial Officer or persons designated by
the Chief Financial Officer or by persons designated 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 applicable 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 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 or via facsimile.
Section 2. A waiver of any notice in writing, signed by a stockholder,
director or officer, whether before or after the time stated in said waiver for
holding a meeting, shall be deemed equivalent to a notice required to a
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
otherwise reproduced.
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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.
ARTICLE XII
INDEMNIFICATION
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 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. 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 stockholder vote.
Section 7. 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 8. 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.
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SPELLING ENTERTAINMENT GROUP INC.
5700 WILSHIRE BOULEVARD, LOS ANGELES, CALIFORNIA 90036
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Peter H. Bachmann, Thomas P. Carson and 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, 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 and FOR Proposal 2, in accordance with the Board of Directors'
recommendations, and at their discretion on any other matter that may properly
come before the meeting.
Your vote of 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 P. 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.
(Continued and to be signed on the other side)
<PAGE>
[X] Please mark
your votes
as this
-----------------
COMMON STOCK
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF ALL NOMINEES AND FOR PROPOSAL 2.
FOR all nominees
listed (except as marked
to the contrary)
[_]
WITHHOLD AUTHORITY
to vote for all nominees
listed
[_]
1. ELECTION OF DIRECTORS
Instructions: To withhold authority for
an individual nominee draw a line
through his name.
Nominees: H. Wayne Huizenga, Aaron Spelling,
Steven R. Berrard, Frank J. Biondi, Jr.,
Philippe P. Dauman, J. Brian McGrath, John
L. Muething and Sumner M. Redstone.
A vote FOR all nominees is recommended
by the Board of Directors
2. Change State of Incorporation to Delaware. FOR AGAINST ABSTAIN
A vote FOR is recommended by the Board [_] [_] [_]
of Directors.
3. In their discretion, on such other business
as may properly come before the meeting.
I WILL ATTEND [_]
THE MEETING
Please sign this proxy exactly as your name appears below. When
shares are held jointly, each holder should sign. When signing
as attorney, executor, administrator, trustee or in another
representative capacity, please give full title as such. If a
corporation, please sign in full corporate name by the president
or other authorized officer. If a partnership, please sign in
partnership name by an authorized person.
Date , 1995
----------------------------
--------------------------------------
(Signature)
--------------------------------------
(Signature, if held jointly)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
