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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934*
(Amendment No. 2)
HOME SHOPPING NETWORK, INC.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
437351109
(CUSIP Number)
Stephen M. Brett, Esq.
Senior Vice President and General Counsel
Tele-Communications, Inc.
5619 DTC Parkway
Englewood, CO 80111
(303) 267-5500
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 27, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of less than five percent of such class.
See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page should be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP No. 827740101
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(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos.
of Above Persons
Tele-Communications, Inc.
84-1260157
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(2) Check the Appropriate Box if a Member of a Group
(a) / /
(b) / /
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(3) SEC Use Only
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(4) Source of Funds
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(5) Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e) / /
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(6) Citizenship or Place of Organization
Delaware
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Number of (7) Sole Voting Power 0 shares
Shares Bene- ------------------------------------------------------
ficially (8) Shared Voting Power 37,566,702 shares
Owned by ------------------------------------------------------
Each Report- (9) Sole Dispositive Power 0 shares
ing Person ------------------------------------------------------
With (10) Shared Dispositive Power 37,566,702 shares
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(11) Aggregate Amount Beneficially Owned by Each Reporting Person
37,566,702 shares
See Item 5
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(12) Check if the Aggregate Amount in Row (11) Excludes
Certain Shares /X/
Excludes shares beneficially owned by the executive
officers and directors of TCI. See Item 5.
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(13) Percent of Class Represented by Amount in Row (11)
41.5%
Assumes conversion of Class B Stock into Common Stock.
Because each share of Class B Stock generally is entitled to
ten votes per share while the Common Stock is entitled to one
vote per share, the Reporting Person may be deemed to
beneficially own (prior to any conversion of the Class B
Stock) equity securities of the Company representing
approximately 80% of the voting power of the Company.
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(14) Type of Reporting Person (See Instructions)
CO
2
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Statement Of
TELE-COMMUNICATIONS, INC.
Pursuant to Section 13(d) of the
Securities Exchange Act of 1934
in respect of
HOME SHOPPING NETWORK, INC.
This Report on Schedule 13D (the "Schedule 13D") relates to
the common stock, par value $.01 per share (the "Common Stock"), of Home
Shopping Network, Inc., a Delaware corporation (the "Company"). The Report on
Schedule 13D originally filed by Tele-Communications, Inc., a Delaware
corporation ("TCI" or the "Reporting Person"), on August 12, 1994, as amended
by Amendment No. 1 thereto (collectively, the "TCI Schedule 13D"), is hereby
amended and supplemented to include the information contained herein, and this
Report constitutes Amendment No. 2 to the TCI Schedule 13D.
The summary descriptions contained in this Report of certain
agreements and documents are qualified in their entirety by reference to the
complete texts of such agreements and documents, filed as Exhibits hereto and
incorporated herein by reference.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 of the TCI Schedule 13D is hereby amended and
supplemented by adding the following information thereto:
On November 27, 1995, and prior to there being any agreement,
arrangement or understanding relating to the transactions described below,
Liberty Media Corporation ("Liberty"), a wholly owned subsidiary of TCI, and
Silver King Communications, Inc. ("Silver King"), requested that the Board of
Directors of the Company consider and approve for purposes of Section 203 of
the Delaware General Corporation Law ("Section 203") a transaction pursuant to
which Liberty would indirectly transfer all of the shares of Common Stock and
Class B Stock of the Company owned by it to Silver King in exchange for shares
of Silver King. Such additional shares of Silver King would be held in Silver
Co. (as defined in below) pursuant to the arrangements described herein. The
Reporting Person has been advised by the Company that the Company's Board of
Directors, upon the recommendation of a Special Committee of Independent
Directors, approved the transaction, thereby exempting Silver King and certain
other
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affiliates of Liberty and Barry Diller from the restrictions upon "business
combinations" between an "interested stockholder" (as each such term is defined
in Section 203) and the Company contained in Section 203.
Following such approval, Liberty, Mr. Diller and Silver King
and certain of their affiliates, entered into a series of agreements pursuant
to which, subject to the terms and conditions set forth therein, Liberty will
indirectly transfer the 20,000,000 shares of Class B Stock and 17,566,702
shares of Common Stock held by TCI (collectively the "TCI HSN Shares") to
Silver King (such transactions are referred to collectively as the "Merger and
Exchange"). In addition, on such date Liberty and Mr. Diller entered into an
amendment to the Stockholders Agreement, dated as of August 24, 1995 (as so
amended, the "SK Stockholders Agreement"), with respect to the equity
securities of Silver King. The SK Stockholders Agreement provides that Mr.
Diller will be entitled to exercise voting authority over all equity securities
of Silver King owned by Liberty, Mr. Diller and certain of their respective
affiliates, subject to certain restrictions. Pursuant to the SK Stockholders
Agreement, substantially all of Liberty's equity interest in Silver King will
be held through an entity ("Silver Co.") in which Liberty will hold a
non-voting equity interest (which is expected to constitute in excess of 99% of
the outstanding equity interests in such entity) and Mr. Diller will hold the
entire voting equity interest. Upon the occurrence of certain events described
in the SK Stockholders Agreement, Liberty will be entitled to purchase Mr.
Diller's equity interest in Silver Co. (subject to the receipt of required
regulatory approvals), thus making Silver Co. a wholly owned subsidiary of
Liberty. Thereafter, Liberty would be entitled to elect a majority of the
directors of Silver King (by virtue of the voting power of the Silver King
shares held by Silver Co.) and vote the shares of Silver King, subject to
certain rights of Mr. Diller to require Liberty to grant him a proxy to vote
such shares upon the occurrence of certain events.
Following the Merger and Exchange but without giving effect to
certain other pending transactions involving Silver King, Liberty and/or Mr.
Diller, it is currently expected that Liberty, Mr. Diller and their respective
affiliates (including Silver Co.) will collectively beneficially own 5,359,054
shares of the Common Stock of Silver King and 8,082,000 shares of the Class B
Common Stock of Silver King, which shares constitute approximately 59% of the
outstanding equity securities of Silver King, which securities would, primarily
by virtue of the fact that the shares of Class B Common Stock of Silver King
are entitled to cast 10 votes per share while the Common Stock of Silver King
is entitled to cast one vote per share, represent approximately 89% of the
voting power of the outstanding equity securities of Silver King. In such
event, the equity interest to be held by TCI in Silver Co. upon consummation
of the Merger and Exchange (as well as the Silver King shares held directly by
TCI) would represent an approximately 57% equity interest in Silver King,
subject to certain limitations contained in the SK Stockholders Agreement.
By virtue of its acquisition of the TCI HSN Shares, Silver
King would own shares of Common Stock and Class B Stock representing
approximately 41% of the outstanding equity securities of the Company, which
shares would represent approximately 80% of the voting power of the outstanding
equity securities of the Company. As a result, Silver King would have the power
to elect a majority of the members of the Board of Directors of the Company and
to determine the outcome of the vote with respect to substantially all matters
presented to a vote of the stockholders of the Company or by which such
stockholders act by written consent. So long
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as Mr. Diller is entitled to vote the shares of Silver King held by Silver Co.,
Mr. Diller will have indirect voting control of the Company by virtue of his
voting control of Silver King (based upon the anticipated equity capital
structure of each of Silver King and the Company upon the consummation of the
foregoing transactions).
Pursuant to the SK Stockholders Agreement, Diller has agreed
that, if so requested by TCI, following the Merger and Exchange he will use his
reasonable best efforts to cause one designee of TCI to serve or continue to
serve on the Board of Directors of the Company.
In addition, Mr. Diller has been elected as the Chairman of
the Board of the Company, and Mr. Diller and certain members of his proposed
management team were granted options to purchase an aggregate of 16 million
shares of Common Stock at an exercise price of $8.50 per share (which shares
would represent approximately 15% of the outstanding common stock of the
Company (assuming the exercise of all of such options)).
The consummation of the transactions described herein is
subject to the satisfaction of a number of conditions, including, but not
limited to, approval of the stockholders of Silver King of the issuance of the
shares of Silver King Common Stock and Class B Common Stock in the Merger and
Exchange and certain amendments to its Certificate of Incorporation and the
receipt of certain regulatory consents and approvals.
The foregoing summary description of certain provisions of the
SK Stockholders Agreement and the other agreements described above is qualified
in its entirety by reference to the terms and provisions of such agreements,
each of which is attached hereto as an Exhibit and incorporated by reference
herein.
Other than as described herein, neither TCI nor, to the best
of TCI's knowledge, any of its executive officers, directors or controlling
persons, have any present plans or proposals which relate to or would result
in: (a) the acquisition by any person of securities of the Company, or the
disposition of securities of the Company; (b) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Company or any of its subsidiaries; (c) a sale or transfer of a material
amount of assets of the Company or of any of its subsidiaries; (d) any change
in the present Board of Directors or management of the Company, including any
plans or proposals to change the number or terms of directors or to fill any
existing vacancies on the Board of Directors of the Company; (e) any material
change in the present capitalization or dividend policy of the Company; (f) any
other material change in the Company's business or corporate structure; (g)
changes in the Company's charter, by-laws or instruments corresponding thereto
or other actions which may impede the acquisition of control of the Company by
any person; (h) causing a class of securities of the Company to be deleted from
a national securities exchange or to cease to be authorized to be quoted in any
inter-dealer quotation system of a registered national securities association;
(i) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Exchange Act;
or (j) any action similar to any of those enumerated above.
Notwithstanding anything contained herein, the Reporting
Person reserves the right, depending on other relevant factors, to change its
intention with respect to any and all of the matters referred to in the
preceding paragraph.
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
Item 5 of the TCI Schedule 13D is hereby amended and
supplemented by adding the following information thereto:
As a result of the execution of the SK Stockholders Agreement,
the Merger Agreement and the Exchange Agreement, TCI may be deemed to share
beneficial ownership of the 20,000,000 shares of Class B Stock and 17,566,702
shares of Common Stock beneficially owned by it with Silver Co. and Silver
King.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIP WITH RESPECT
TO THE SECURITIES OF THE ISSUER
Item 6 of the TCI Schedule 13D is hereby amended and
supplemented by adding the following information thereto:
The information set forth in Item 4 above is incorporated
by reference herein.
In connection with the execution of the amendment to the SK
Stockholders Agreement, on November 27, 1995, certain affiliates of Liberty and
Silver Co. entered into a Merger Agreement (the "Merger Agreement") pursuant to
which, subject to the applicable terms and conditions contained therein, an
indirect wholly owned subsidiary of TCI holding all of the TCI HSN Shares will
be merged with and into Silver Co. (the "Merger"), as a result of which Silver
Co. will become the beneficial owner of all of the TCI HSN Shares. In the
Merger, Liberty will receive an additional non-voting equity interest in Silver
Co.
Immediately following the Merger, in accordance with an
Exchange Agreement, also dated as of November 27, 1995, between Silver Co. and
Silver King (the "Exchange Agreement"), Silver Co. will exchange the TCI HSN
Shares for additional shares of Common Stock and Class B Common Stock of Silver
King (the "Exchange").
The foregoing summary description of certain provisions of the
Letter Agreement, the Merger Agreement and the Exchange Agreement is qualified
in its entirety by reference to the terms and provisions of each of the Letter
Agreement, the Merger Agreement and the Exchange Agreement, each of which is
attached hereto as an Exhibit and incorporated by reference herein.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
3. Press Release issued by Liberty Media Corporation, dated
November 27, 1995.
4. Press Release issued by Home Shopping Network, Inc., dated
November 27, 1995.
5. Letter Agreement, dated as of August 24, 1995, by and between
Liberty Media Corporation and Barry Diller.
6. Letter Agreement, dated as of November 27, 1995, by and
between Liberty Media Corporation and Barry Diller.
7. Agreement and Plan of Merger, dated as of November 27, 1995,
by and among Silver Management Company, Liberty Program
Investments, Inc. and Liberty HSN, Inc.
8. Exchange Agreement, dated as of November 27, 1995, by and
between Silver Management Company and Silver King
Communications, Inc.
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SIGNATURE
After reasonable inquiry and to the best of his knowledge and belief,
the undersigned certifies that the information in this statement is true,
complete and correct.
Dated: November 30, 1995
TELE-COMMUNICATIONS, INC.
By: /s/Peter R. Barton
------------------------
Name: Peter R. Barton
Title: Executive Vice President
8
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EXHIBIT INDEX
3. Press Release issued by Liberty Media Corporation, dated
November 27, 1995.
4. Press Release issued by Home Shopping Network, Inc., dated
November 27, 1995.
5. Letter Agreement, dated as of August 24, 1995, by and between
Liberty Media Corporation and Barry Diller.
6. Letter Agreement, dated as of November 27, 1995, by and
between Liberty Media Corporation and Barry Diller.
7. Agreement and Plan of Merger, dated as of November 27, 1995,
by and among Silver Management Company, Liberty Program
Investments, Inc. and Liberty HSN, Inc.
8. Exchange Agreement, dated as of November 27, 1995, by and
between Silver Management Company and Silver King
Communications, Inc.
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EXHIBIT 3
LIBERTY
Media Group
FOR IMMEDIATE RELEASE
November 27, 1995
Contact: Vivian Carr (303) 721-5406
LIBERTY MEDIA GROUP TO EXCHANGE HSN SHARES FOR
INCREASED STAKE IN SILVER KING
Englewood, Colorado .... Tele-Communications, Inc. Liberty Media Group
("Liberty") today announced that it has agreed to exchange its controlling
interest in Home Shopping Network, Inc. ("HSN") for shares of Silver King
Communications, Inc. ("Silver King"). Liberty will receive approximately 11
million newly issued shares of Silver King in exchange for its 37.5 million
shares of HSN. After giving effect to the exchange and to Silver King's
acquisition of Savoy Pictures Entertainment, Inc. (see Silver King press
release of November 27) Liberty will own approximately 45% of Silver King on a
fully diluted basis. In addition, it was announced today by HSN that Barry
Diller, Chairman and CEO of Silver King, has been named Chairman of HSN.
Silver King and HSN will remain publicly traded companies.
Under the terms of the transaction, Liberty will contribute all of its HSN
shares into a company previously formed by Liberty and Mr. Diller ("Silver
Company"). Mr. Diller will hold all of the voting securities of Silver Company
and Liberty will own certain non-voting equity securities of Silver Company.
Following receipt of all necessary regulatory and shareholder approvals and
consummation of the Savoy transaction, Silver Company will exchange its shares
of HSN Common Stock 4.855 million shares of Silver King Common Stock and its
shares of HSN Class B Common Stock for 6.082 million shares of Silver King
Class B Common Stock. As a result of these transactions, and the prior
exercise of an option to purchase 2 million shares of Silver King Class B
Common Stock, Silver Company will hold approximately 84% of the votes of Silver
King. Following completion of the foregoing transactions, HSN will no longer
be a consolidated subsidiary of Liberty for financial reporting purposes.
Peter Barton, Liberty's President and CEO, said "This transaction is another
step in our ongoing objective of aggressively managing our portfolio of assets
in order to maximize the equity return to our shareholders. It gives us the
opportunity to increase our investment in Silver King while retaining a
significant holding in HSN. Barry has tremendous energy and creativity and an
uninterrupted record of entrepreneurial success. We believe that his
simultaneous leadership of HSN and Silver King creates a unique opportunity for
value creation that will benefit the shareholders of both companies."
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Liberty Media Group is a division of Tele-Communications, Inc. In addition to
its interests in Silver King and HSN, Liberty has ownership interests in more
than 50 cable television networks, including The Discovery Channel, QVC, CNN,
the Family Channel, and numerous regional and national sports networks.
Liberty Media Group Series A and B common stock are series of
Tele-Communications, Inc. common stock and are traded on the Nasdaq National
Market under the symbols LBTYA and LBTYB, respectively.
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EXHIBIT 4
HOME SHOPPING NETWORK
Corporate Communications, P.O. Box 9090, Clearwater, FL 34618-9090
FOR IMMEDIATE RELEASE NOVEMBER 27, 1995
HSN/PRO0436 CONTACT: LOUISE I. CLEARY
DILLER APPOINTED CHAIRMAN OF HSN'S BOARD OF DIRECTORS
ST. PETERSBURG, FLORIDA -- Home Shopping Network, Inc. (NYSE:HSN)
announced today that Barry Diller, currently an HSN director, has been
appointed as its new chairman of the board. In addition, Diller and certain
members of his proposed management team have been granted options to purchase
approximately 15 million shares of the company's common stock at a price of
$8.50 per share.
HSN also announced that its board of directors has been advised of a
proposal by Liberty Media Corporation, which owns shares representing 80
percent of the voting stock of HSN, regarding the transfer of these shares to
Silver King Communications, Inc. in exchange for securities of Silver King.
Details of the proposed exchange were not released, but consummation of the
transaction would be subject to certain steps, including the approval of Silver
King shareholders. Diller became chairman of the board and chief executive
officer of Silver King in August 1995. Silver King owns 12 television stations
which broadcast HSN's programming.
The board of directors of HSN will consider this proposed
transaction for any action its considers appropriate at a meeting today.
# # #
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For more information contact: Corporate Communications, Home Shopping Network,
Inc. (813) 572-8585
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EXHIBIT 5
LIBERTY MEDIA CORPORATION
8101 EAST PRENTICE AVENUE, SUITE 500
ENGLEWOOD, COLORADO 80111
August 24, 1995
Mr. Barry Diller
1940 Coldwater Canyon
Beverly Hills, California 90120
Dear Sir:
Reference is made to the Term Sheet attached hereto pursuant
to which, subject to the prior receipt of any required approvals of the Board
of Directors of Silver King Communications, Inc. ("Silver") under Section 203
of the Delaware General Corporation Law, we have entered into certain
agreements with respect to the equity securities of Silver, all as more fully
described in the Term Sheet.
The Term Sheet contemplates that the agreements contained
therein will be superseded by definitive agreements and instruments which will
contain provisions incorporating and expanding upon the agreements set forth
therein, together with other provisions customary in the case of transactions
of this type, and such other provisions as are reasonable and appropriate in
the context of the transactions contemplated hereby. Notwithstanding the
foregoing, the parties expressly acknowledge that the Term Sheet and this
agreement, subject to the prior receipt of any such required approvals of the
Board of Directors of Silver, will constitute a binding agreement between them,
subject to the terms and preconditions set forth herein and in the Term Sheet,
until such definitive agreements are executed and delivered. If such
definitive agreements are not executed and delivered, then, subject to the
receipt of any such required approvals of the Board of Directors of Silver, the
Term Sheet and this agreement shall constitute such definitive agreements.
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If the foregoing is acceptable to you, please execute the copy
of this agreement in the space below, at which time this instrument will
constitute a binding agreement between us.
Very truly yours,
LIBERTY MEDIA CORPORATION
By: /s/ Peter R. Barton
--------------------
Name: Peter R. Barton
Title: President
ACCEPTED AND AGREED
this 24th day of August, 1995
/s/ Barry Diller
------------
Barry Diller
<PAGE> 3
PROJECT NET TERM SHEET
Subject to the prior receipt of any required approvals of the Board of
Directors of Silver King Communications, Inc., a Delaware corporation
("Silver"), for purposes of Section 203 of the Delaware General Corporation
Law ("Section 203"), the following constitute the proposed terms upon which
Liberty Media Corporation, a Delaware corporation ("Rockies"), and Barry Diller
("Lasorda") and/or a corporation, partnership or trust at least 90% owned and
controlled by Lasorda ("Dodgers") will enter into certain agreements with
respect to the equity securities of Silver. It is contemplated that, if the
required Section 203 approvals are obtained from the Board of Directors of
Silver, definitive agreements will be entered into containing the detailed
terms of the matters set forth herein.
TRANSACTION At a meeting of the Silver Board of
OVERVIEW: Directors, Rockies will present to the
Board a proposal whereby:
(x) Dodgers and/or Lasorda will
purchase the Initial Shares and the
Additional Shares from Silver and
will be granted the Options by
Silver (each, as defined in the
Silver Term Sheet);
(y) Lasorda will agree to become
initially the Chairman of the Board
and Chief Executive Officer of
Silver and to become a member of
the Silver Board of Directors; and
(z) Subject to the approval of the
Silver Board of Directors, Rockies,
Dodgers and Lasorda will enter into
the Silver Stockholders Agreement.
As soon as practicable following receipt
of all required approvals by the Silver
Board of the arrangements contemplated
by clauses (x) and (y) above (and the
execution and delivery of the Silver
Term Sheet by the applicable parties
thereto), Rockies and Dodgers will enter
into the Silver Stockholders Agreement
described below.
I. SILVER COMPANY ARRANGEMENTS.
FORMATION OF Promptly following the date of this Term
SILVER COMPANY: Sheet, Rockies and Dodgers will form an
entity ("Silver Company"), with Rockies
holding a convertible non-voting
participating preferred equity interest
and Dodgers holding a common equity
interest initially constituting all of
the voting equity interest in the Silver
Company.
<PAGE> 4
The capital contributions to the Silver
Company will be as follows:
1. Rockies will contribute the
Silver Option (as defined below) and an
amount in cash equal to the aggregate
exercise price of the Silver Option.
2. Dodgers will contribute [$100]
in cash.
Rockies and Dodgers will use all
reasonable efforts to seek and obtain
FCC approval for the exercise of the
Silver Option by the Silver Company and
the transactions contemplated hereby.
Following the occurrence of a Change in
Law (as defined below), (i) Rockies;
equity interest in the Silver Company
will convert into voting common equity
interest having the same pro rata
rights, powers and preferences as
Dodgers; equity interest in the Silver
Company and (ii) Rockies or its designee
shall be required to purchase (and
Dogers will be required to sell)
Dodgers' entire equity interest in the
Silver Company for an amount equal to
the cash amount invested in the Silver
Company by Dodgers plus interest on such
amount at the Agreed Rate from the date
of such contribution to the date of such
purchase, compounded annually (the
"Dodgers Interest Purchase Price"). The
"Agreed Rate" shall equal the rate of
interest per annum in effect from time
to time and publicly announced by the
Bank of New York as its prime rate of
interest.
Other than as set forth above, there
will be no additional contributions to
the Silver Company without the consent
of each holder of a voting or non-voting
equity interest in the Silver Company.
At all times, the percentage equity
economic interest in the Silver Company
of each of Rockies and Dodgers will be
in proportion to the fair market value
of the relative contributions that have
been made by such Stockholder to the
Silver Company (with the fair market
value of the Silver Option determined by
reference to the "spread" between the
market price per share of the Silver
Common Stock and the applicable exercise
price per share of such option). The
capitalization of the Silver Company
will be structured in a manner
reasonably acceptable to the parties in
light of relevant tax, regulatory and
capital commitment considerations.
MANAGEMENT: The business and affairs of the Silver
Company will be managed by a Board of
Directors elected by the holders of a
majority of the voting equity interests
in the Silver Company. Notwithstanding
the foregoing, the taking of any action
by the
<PAGE> 5
Silver Company with respect to (i) to
the extent permitted by applicable law,
any Fundamental Matter (as defined
below) (as applied to the Silver
Company, mutatis mutandis) or (ii) any
acquisition or disposition (including
pledges) of the Silver Option or any
other Silver Securities held by the
Silver Company, in either case, will
require the unanimous approval of each
holder of a voting or non-voting equity
interest in the Silver Company.
TRANSFERS OF Except as otherwise specifically
INTERESTS: provided in this Term Sheet, no
transfers or other dispositions
(including pledges), directly or
indirectly, of any interest in the
Silver Company will be permitted without
the consent of each Stockholder,
provided, that Rockies shall be entitled
to transfer all or part of its interest
in the Silver Company to members of the
Rockies Stockholder Group.
At such time as (i) Lasorda is no longer
the Chairman of the Board and/or Chief
Executive Officer and/or President of
Silver or (ii) the Dodgers Stockholder
Group ceases to own its Eligible
Stockholder Amount (as defined below) of
Silver Securities, Dodgers shall be
required to sell its entire interest in
the Silver Company to Rockies (or
Rockies' designee) at a price equal to
the Dodgers Interest Purchase Price.
II. SILVER STOCKHOLDERS AGREEMENT.
SCOPE: Simultaneously with the formation of the
Silver Company, Rockies and Lasorda will
enter into the Silver Stockholders
Agreement, which will govern, among
other matters, (i) all equity securities
of Silver, including any securities
exercisable or exchangeable for or
convertible into equity securities of
Silver (collectively, the "Silver
Securities") held by Rockies or Lasorda
(each, a "Stockholder") and their
respective controlled affiliates (such
Stockholder, together with, in the case
of Rockies, the controlled affiliates of
Rockies and Rockies; publicly held
parent corporation ("Rockies Parent"),
and, in the case of Lasorda, his 90%
owned and controlled affiliates, is
referred to as a "Stockholder Group"),
(ii) the formation andcapitalization of
the Silver Company, (iii) the exchange
of certain shares of Silver Common Stock
owned by Dodgers for shares of Silver
Class B Stock owned by Rockies or the
Silver Company and (iv) the right of
Lasorda to vote the Silver Securities
held by the Rockies Stockholder Group
pursuant to the conditional proxy
described below under the caption
"Dodgers Management Rights," subject to
the limitations described herein. Each
Stockholder Group will agree that it
<PAGE> 6
will not enter into any other agreement
with respect to its Silver Securities
other than as contemplated hereby.
Notwithstanding the foregoing, prior to
the time that Rockies acquires Dodgers'
interest in the Silver Company in the
manner described in this Term Sheet, the
Silver Company shall not be deemed to be
a member of either the Rockies
Stockholder Group or the Dodgers
Stockholder Group and, except as
specifically set forth in this Term
Sheet, any Silver Securities held by the
Silver Company (including the option
currently held by Rockies to acquire
shares of Silver Class B Stock (the
"Silver Option") and the shares of
Silver Class B Stock subject to the
Silver Option) shall not be deemed to be
held by either the Rockies Stockholder
Group or the Dodgers Stockholder Group.
DODGERS Lasorda shall be entitled to exercise
MANAGEMENT voting authority and authority to act by
RIGHTS: written consent over all Silver
Securities owned by each member of the
Rockies Stockholder Group, on all
matters submitted to a vote of Silver
stockholders or by which Silver
stockholders may act by written consent
pursuant to a conditional proxy (which
proxy shall be valid for the full term
that this Term Sheet and the Silver
Stockholders Agreement that replaces
this Term Sheet are effective and is
irrevocable and coupled with an interest
for purposes of Section 212 of the
Delaware General Corporation Law);
provided, that each Stockholder agrees,
and agrees to cause each member of its
Stockholder Group, to take or cause to
be taken all reasonable actions required
(including to vote or execute a written
consent with respect to the Silver
Securities held by the Silver Company)
(i) prior to a Change in Law (as defined
below), to the extent permitted by law,
to prevent the taking of any action by
Silver with respect to a Fundamental
Matter without the consent of both
Stockholders and (ii) following a Change
in Law, (A) for the election of a slate
of directors of Silver, two of whom will
be designated by Rockies and the
remainder of whom will be designated by
Dodgers and (B) to prevent the taking of
any action by Silver with respect to a
Fundamental Matter without the consent
of both Stockholders.
Following a Change in Law, subject to
applicable law and fiduciary duties and
except with respect to (x) any
Fundamental Matters, (y) any decision to
terminate Lasorda's employment with
Silver for Cause and (z) any decision
relating to Lasorda's compensation by
Silver (except as provided for by the
Silver Term Sheet), Rockies shall be
required to use its reasonable best
efforts to cause its designees on the
Silver Board of Directors to vote with
respect to any matter presented to a
vote
<PAGE> 7
of the Silver Board of Directors in the
manner instructed by Lasorda.
For purposes of this Term Sheet and the
Silver Stockholders Agreement, a "Change
in Law" shall be deemed to have occurred
at such time as Rockies is entitled to
exercise full ownership and control over
its Silver Securities (including the pro
rata portion of the Silver Securities
held by the Silver Company represented
by Rockies equity interest in the Silver
Company) notwithstanding Silver's
ownership of its broadcast licenses.
FUNDAMENTAL 1. Any transaction not in the
MATTERS: ordinary course of business, launching
new or additional channels or engaging
in any new field of business, in any
case, which will result in, or will have
a reasonable likelihood of resulting in,
Rockies or any member of its Stockholder
Group being required under law to divest
itself of all or any part of its Silver
Securities, or interests therein
(including its interest in the Silver
Company), or any other material assets
of such entity, or which will render
such entity's continued ownership of
such stock or assets illegal or subject
to the imposition of a fine or penalty
or which will impose material additional
restrictions or limitations on such
entity's full rights of ownership
(including, without limitation, voting)
thereof or therein.
2. The acquisition, disposition
(including pledges), grant or issuance,
directly or indirectly, by Silver or any
of its subsidiaries, of any assets
(including debt and/or equity
securities) or business (by merger,
consolidation or otherwise), or the
incurrence of any indebtedness, in any
such case (in one transaction or a
series of related transactions), with a
value of 10% or more of the market value
of Silver's outstanding equity
securities at the time of such
transaction.
3. Any material amendments to the
Certificate of Incorporation or Bylaws
of Silver.
4. Engaging in any line of
business other than media,
communications and entertainment
products, services and programming.
5. The settlement of any
litigation, arbitration or other
proceeding which is other than in the
ordinary course of business and which
involves any material restriction on the
conduct of business by Silver or its
affiliates or the continued ownership of
its assets by Silver or any of its
affiliates (in each case, including
Rockies).
<PAGE> 8
6. Any transaction (other than
those contemplated by this Term Sheet)
between Silver and its affiliates, on
the one hand, and Lasorda and his
affiliates, on the other hand, subject
to exceptions relating to the size of
the proposed transaction and those
transactions which are otherwise on an
arm's length basis.
TERMINATION OF A Stockholder shall cease to be entitled
RIGHTS: to exercise any rights under this Term
Sheet and the Stockholders Agreement as
of the date that its Stockholder Group
collectively ceases to own the
equivalent of 1,100,000 shares of Silver
Common Stock in the case of Dodgers and
1,000,000 shares of Silver Common Stock
in the case of Rockies (including, in
the case of Rockies, the proportionate
number of Silver Securities represented
by Rockies' equity interest in the
Silver Company), in each case determined
on a fully diluted basis (taking into
account, in the case of Rockies, the
shares issuable upon exercise of the
Silver Option and, in the case of
Dodgers, all unexercised Options,
whether or not then exercisable, and all
Silver Additional Shares) (as to each
Stockholder, its "Eligible Stockholder
Amount").
In addition, Lasorda and each member of
his Stockholder Group shall cease to be
entitled to exercise any rights under
this Term Sheet and the Silver
Stockholders Agreement with respect to
the following matters at such time as
Lasorda is no longer Chairman of the
Board and/or Chief Executive Officer
and/or President of Silver:
i) the matters covered under the
caption "Dodgers Management
Rights";
ii) the matters covered under the
caption "Share Exchange"; and
iii) the Dodgers right of first
refusal in connection with
certain transfers of Silver
Securities by the Rockies
Stockholder Group pursuant to
the second paragraph under
the caption "Transfers of
Silver Securities".
In addition, at such time as Lasorda is
no longer Chairman of the Board and/or
Chief Executive Officer and/or President
of Silver, the Rockies Stockholder Group
shall no longer have any obligations
under this Term Sheet or the Silver
Stockholders Agreement with respect to
the matters covered under the caption
"Transfers of Silver Securities", except
with respect to the Silver Put.
<PAGE> 9
Notwithstanding the provisions of the
previous two paragraphs, in the event
that prior to the date of the exercise
of the Silver Option by the Silver
Company, Lasorda's employment with
Silver is terminated (x) by Silver
without Cause (as defined in the Silver
Term Sheet) or (y) Lasorda for Good
Reason (as defined in the Silver Term
Sheet, then to the extent that (i)
during the period from such termination
until the exercise of the Silver Option
by the Silver Company, Lasorda continues
to indicate a good faith intention to
become Chairman of the Board and/or
Chief Executive Officer and/or President
of Silver promptly following the
exercise of the Silver Option by the
Silver Company and (ii) upon such
exercise of the Silver Option Lasorda
does become the Chairman of the Board
and/or Chief Executive Officer and/or
President of Silver, such termination of
Lasorda's employment will not have the
effects specified in the preceding two
paragraphs.
SHARE EXCHANGE: So long as the Dodgers Stockholder Group
holds the Eligible Stockholder Amount of
Silver Securities, then Dodgers shall
have the right, exercisable from time to
time, to require that Rockies or the
Silver Company exchange, on a share for
share basis, shares of Silver Class B
Stock owned by Rockies or the Silver
Company, as the case may be, for vested
shares of Silver Common Stock owned by
Dodgers (in each case not subject to any
liens (other than pursuant to the Silver
Stockholders Agreement)).
Notwithstanding the foregoing, neither
Rockies nor the Silver Company shall be
required to exchange any shares of
Silver Class B Stock for shares of
Silver Common Stock to the extent that,
after giving effect to such exchange,
Rockies will cease to own Silver
Securities constituting at least 50% of
the total voting power of Silver,
determined on a fully diluted basis
(taking into account the pro rata
portion of the Silver Securities held by
the Silver Company represented by
Rockies equity interest in the Silver
Company).
TRANSFERS Subject to the other provisions of this
OF SILVER Term Sheet and the Silver Stockholders
SECURITIES: Agreement, no Stockholder shall transfer
or otherwise dispose of (including
pledges), directly or indirectly, any
Silver Securities other than (w)
transfers of Silver Securities by
Lasorda in order to pay taxes arising
from the granting, vesting and/or
exercise of the Options and/or the
payment of bonuses on repayment of the
Lasorda Note (as defined in the
Silver Term Sheet), (x) transfers of
Silver Securities by Rockies to members
of the Rockies Stockholder Group or by
Lasorda or Dodgers to members of the
Dodgers Stockholder Group, (y) a pledge
or grant of a security interest in
vested Silver Securities (other than the
pledge of the Additional Shares and the
excess shares (each as defined in the
<PAGE> 10
Silver Term Sheet)) in connection with
bona fide indebtedness in connection
with which the pledgee of the applicable
Silver Securities agrees that, upon any
default or exercise of its rights under
such pledge or security arrangement, it
will offer to sell the pledged Silver
Securities to the non-pledging
Stockholder (or its designee) for an
amount equal to the lesser of the
applicable amount of such indebtedness
and the fair market value of such
pledged Silver Securities, and (z)
transfers of Options or Silver
Securities to Silver by Dodgers or its
affiliates in connection with a
"cashless" exercise of the Options
(which shall be permitted pursuant to
the terms thereof).
In addition to the foregoing, but
subject to a right of first refusal of
the other Stockholder (which right shall
be assignable): (i) following the fifth
anniversary of the date of the Silver
Stockholders Agreement either
Stockholder may transfer all but not
less than all of the Silver Securities
held by its Stockholder Group (and, in
the case of Rockies, its entire interest
in the Silver Company) to an
unaffiliated third party, (ii) following
the time that Lasorda is no longer the
Chairman of the Board and/or Chief
Executive Officer and/or President of
Silver, Lasorda may transfer all but not
less than all of the Silver Securities
held by its Stockholder Group to an
unaffiliated third party, and (iii)
either Stockholder may transfer any
portion of the Silver Securities held by
its Stockholder Group to an unaffiliated
third party, provided that, following
such transfer (A) such Stockholder Group
retains its Eligible Stockholder Amount
of Silver Securities and (B) in the case
of Rockies, the outstanding shares of
Silver Class B Stock and Silver Common
Stock held by Rockies and Dodgers (and
the members of their respective
Stockholder Groups) and the Silver
Company collectively represent 50.1% of
the voting power of the outstanding
Silver Securities on a fully diluted
basis. Notwithstanding the previous
sentence (but subject to the conditions
contained in the proviso in clause (iii)
above), either Stockholder may transfer
any of its Silver Securities in one or
more transactions that comply with the
requirements of Rule 144 or 145 (as
applicable) under the Securities Act of
1933 without regard to the right of
first refusal described in the previous
sentence.
Except as otherwise specifically
provided in this Term Sheet, neither
Stockholder shall be entitled to assign
any of its rights under the Silver
Stockholders Agreement; and following
any transfer of Silver Securities in
accordance with the provisions of the
previous paragraph (other than to a
member of the Stockholder Group of such
Stockholder), the assignee of such
Silver Securities shall not have any
rights or obligations under
<PAGE> 11
the Stockholders Agreement with respect
to such Silver Securities.
If Lasorda ceases to be the Chairman of
the Board and/or Chief Executive Officer
and/or President of Silver (except as a
result of a termination by Silver for
Cause) following the third anniversary
of the date of this Term Sheet, then
during the forty-five day period
following the date that Lasorda so
ceases to be the Chairman of the Board
and/or Chief Executive Officer and/or
President of Silver, Dodgers will be
entitled to elect to "put" all, but not
less than all, of the Silver Securities
held by its Stockholder Group to Rockies
at their Appraised Value (the "Silver
Put"). The purchase price for the Silver
Put shall be payable, at Rockies'
election, in cash or in any publicly
traded class or series of common equity
securities of Rockies or its parent
(including any class or series of common
equity securities of Rockies Parent
intended to track the business and
assets of Rockies), as to which
securities Dodgers will receive
customary registration rights. For
purposes of the payment of such purchase
price, the value of such common equity
securities of Rockies or Rockies Parent
shall be the average of the closing
trading prices of such securities for
the 20 trading days ending on the second
complete trading day prior to the
consummation of such purchase. In order
to determine Appraised Value, promptly
following the exercise of the Silver
Put, each of Dodgers and Rockies shall
select an independent investment banking
firm who shall promptly make a
determination of Appraised Value. If the
higher of the two such determinations is
greater than 110% of the lower of such
determinations, then a third independent
investment banking firm shall be
selected by such first two investment
banking firms, which third investment
banking firm shall promptly determine
Appraised Value. The Appraised Value
shall be the average of the first two
appraisals, if only two appraisals are
required, or if three appraisals are
required, the average of the two
appraisals closest in value (or if there
are not two closest appraisals, the
average of all three such appraisals).
In making their determinations, such
investment banking firms shall be
instructed that the Appraised Value
shall be equal to (i) the fair market
value of Silver on a going concern basis
in a transaction in which the applicable
buyer acquires all outstanding Silver
Securities multiplied by (ii) the
fraction corresponding to the percentage
of the fully diluted equity of Silver
represented by the Silver Securities
owned by the Dodgers Stockholder Group.
Such investment banking firms shall also
be instructed to assume in making their
determination that (i) Lasorda is no
longer the Chairman of the Board and/or
Chief Executive Officer and/or President
of Silver and (ii) that there is no
controlling
<PAGE> 12
stockholder of Silver. Following the
determination of the Appraised Value,
Rockies shall be entitled within a 60
day period to elect to either pay the
applicable purchase price in the manner
set forth above for the Silver
Securities held by the Dodgers
Stockholder Group or, in the alternative
(and notwithstanding the exercise of the
Silver Put), to elect to cause Silver to
conduct an "auction" in which all of the
outstanding Silver Securities shall be
sold to a third party (and, in the event
of such an election, each Stockholder
agrees to cooperate in conducting such
"auction" and consummating such sale as
promptly and efficiently as
practicable); provided, that any member
of a Stockholder Group acting alone or
together with a group of bidders may bid
in and/or be the purchaser in such
auction.
Notwithstanding any other provision of
the Term Sheet, prior to any transfer or
other disposition (other than a pledge
or grant of a security interest in
compliance with clause (y) of the first
paragraph under the caption "Transfers
of Silver Securities") of Silver Class B
Stock (other than pursuant to the
provisions described under the caption
"Share Exchange" or to a member of such
Stockholder's Stockholder Group, to the
other Stockholder or, if the
non-transferring Stockholder so elects,
to a purchaser designated by the non-
transferring Stockholder in connection
with the exercise by such non-
transferring Stockholder of its right of
first refusal pursuant to the Silver
Stockholders Agreement), all shares of
Silver Class B Stock proposed to be so
transferred or otherwise disposed of
shall be exchanged with the
non-transferring Stockholder or the
Silver Company, as the case may be, for
shares of Silver Common Stock, on a
share for share basis, and to the extent
such non-transferring Stockholder or the
Silver Company, as the case may be, does
not own sufficient shares of Silver
Common Stock to make such an exchange,
such transferring Stockholder shall
convert, or cause to be converted, such
shares of Silver Class B Stock into
shares of Silver Common Stock (or such
other Silver Securities into which such
shares are then convertible) prior to
such transfer.
All transfers and exchanges contemplated
by this Term Sheet and the Silver
Stockholders Agreement shall be subject
to limited periods of suspension in
order to prevent liability under the
federal securities laws.
Subject to the restrictions on the
transfer of its Silver Securities
contained herein and in the Silver
Stockholders Agreement, each Stockholder
shall be entitled to customary demand
and
<PAGE> 13
incidental registration rights with
respect to the Silver Securities held by
its Stockholder Group.
<PAGE> 1
EXHIBIT 6
November 27, 1995
LIBERTY MEDIA CORPORATION
8101 East Prentice Avenue, Suite 500
Englewood, Colorado 80111
Mr. Barry Diller
1940 Coldwater Canyon
Beverly Hills, California 90210
Dear Sir:
Reference is made to the agreement between Liberty Media
Corporation ("Rockies") and Barry Diller ("Lasorda"), dated August 24, 1995
(including the related term sheet included therein, the "Prior Agreement"),
relating to the securities of Silver King Communications, Inc. ("Silver").
Capitalized terms not otherwise defined in this letter agreement (this
"Agreement") shall have the meanings ascribed to such terms in the Prior
Agreement. Subject to the prior receipt of any required approvals of the Board
of Directors of Home Shopping Network, Inc. ("House") under Section 203 of the
Delaware General Corporation Law (the "DGCL"), Rockies and Lasorda hereby agree
to the following amendments to the Prior Agreement and the additional
agreements contained herein, each of which shall be incorporated in the Silver
Stockholders Agreement:
1. Merger and Exchange of Securities.
(a) Subject to the satisfaction of certain conditions
contained herein and contained in the definitive
merger agreement entered into among Liberty Program
Investments, Inc. ("Rockies Sub"), Liberty HSN, Inc.
("Rockies House Sub") and Silver Company in
connection herewith (the "Merger Agreement"), Rockies
House Sub will be merged with and into Silver Company
(the "Merger"), which will be the surviving
corporation in the Merger. In the Merger, Rockies
Sub, the sole stockholder of Rockies House Sub, will
receive 3,363,262 shares (the "Merger Consideration
Shares") of the Class B Common Stock, par value $.01
per share, of Silver Company (the "Silver Company
Non-Voting Stock"). At the time of the Merger,
Rockies House Sub will own 17,566,702 shares of House
Common Stock and 20,000,000 shares of House Class B
Common Stock (collectively, the "House Shares").
Notwithstanding the foregoing, the Merger
Consideration Shares to be received by Rockies in the
Merger shall be such amount as is necessary to cause
the percentage equity economic interest of each of
Rockies and Dodgers in Silver Company to be in
proportion to the relative fair market values of the
contributions of the parties to Silver Company;
provided, that notwithstanding the provisions
<PAGE> 2
of the Prior Agreement the value of the Silver Option
shall be determined by reference to the imputed value
of a share of Silver Common Stock to be received by
Silver Company in the Exchange.
(b) Subject to the satisfaction of certain conditions
contained herein and contained in the definitive
exchange agreement entered into among Silver Company
and Silver in connection herewith (the "Exchange
Agreement"), immediately following the Merger, Silver
Company will exchange (the "Exchange") the 20,000,000
shares of House Class B Common Stock for 6,082,000
shares of Silver Class B Stock and the 17,566,702
shares of House Common Stock for 4,855,436 shares of
Silver Common Stock (collectively, the "Exchange
Shares").
(c) Immediately following Rockies' receipt of the Merger
Consideration Shares in the Merger, Rockies will
transfer up to one-third of the aggregate number of
shares of Silver Company Non-Voting Stock owned by it
(subject to adjustment in the event the SP Merger (as
defined below) is not consummated) to a corporation
("Newco") which will be wholly owned by Lasorda in
exchange for a non-interest bearing secured
promissory note of Newco in the principal amount of
$1,000 (the "Note"). The Note and the related pledge
and security agreement will have such terms and
provisions as may be reasonably acceptable to
Rockies, which terms and provisions shall include,
among other matters, that the Note will (i) be
non-recourse to Newco, (ii) be secured by a pledge of
all of the shares of Silver Company Non-Voting Stock
transferred to Newco (the "Pledged Silver Company
Shares") and by a pledge of all of the authorized and
issued shares of Newco (the "Pledged Newco Shares",
and collectively with the Pledged Silver Company
Shares, the "Pledged Shares"), (iii) mature on the
20th anniversary of the date of issue and (iv) not be
prepayable at the option of the holder. The Pledged
Shares may not be assigned, transferred, sold,
disposed of, pledged or otherwise encumbered in any
manner (including, but not limited to, with respect
to the voting thereof) and any attempted disposition
of the Pledged Shares shall constitute a breach of
the pledge agreement entitling Rockies to exercise
upon such pledge and obtain full ownership of such
Pledged Shares immediately and without any notice to
Lasorda or Newco and, in the event Lasorda or Newco
receive any proceeds from an attempted disposition of
such Pledged Shares, then Lasorda and/or Newco shall
be deemed to hold such proceeds in a constructive
trust for the benefit of Rockies and shall promptly
pay over to Rockies the amount of any such proceeds.
In addition, in the event any dividends are paid or
distributions made on the Pledged Shares, then
notwithstanding the provisions of the pledge
agreement, such dividends or distributions will be
paid or distributed directly to Rockies. Newco will
have no other assets or liabilities and will engage
in no other business except as contemplated by this
paragraph (c).
Rockies will have a right to purchase, and Lasorda
will have a right to require Rockies to purchase, the
Pledged Silver Company Shares at any
<PAGE> 3
time for $1,000 in cash. Rockies will have the right
to purchase all of the outstanding shares of capital
stock of Newco at any time for $1,000 in cash.
To the extent that the Pledged Shares are entitled to
vote upon or consent to any matter to be presented to
the stockholders of Newco or Silver Company, as the
case may be, Lasorda and/or Newco hereby grants to
Rockies (or any person to which the Note is
transferred) an irrevocable proxy (which proxy shall
be deemed coupled with an interest) to vote such
shares or consent to any action.
The Note shall be transferable at any time without
the consent of Newco and any transferee shall succeed
to any and all of Rockies rights with respect to the
Note and the Pledged Shares and the other related
arrangements contemplated by this paragraph (c).
The Note and the other arrangements described in this
paragraph (c) shall have such other terms and
conditions as the parties may reasonably agree in
furtherance of the foregoing.
2. Restructuring Transaction. (a) At any time
following the consummation of the Exchange that
Rockies is no longer a subsidiary of Rockies' Parent
(and provided that a Change in Law has not
theretofore otherwise occurred), but in no event
prior to the earliest to occur of (i) the termination
of the Agreement and Plan of Merger between Savoy
Pictures Entertainment, Inc. ("Savoy"), Silver and a
wholly owned subsidiary of Silver (the "SP Merger
Agreement"), (ii) the eighteen month anniversary of
the consummation of the merger between Savoy, Silver
and a wholly owned subsidiary of Silver (the "SP
Merger"), and (iii) the consummation of the sale,
transfer or other disposition by Silver of that
number of Silver's broadcast licenses (including any
such licenses acquired by Silver in connection with
the SP Merger) (the "Licenses") required in
connection with any divesture of Licenses which is
required pursuant to any Federal Communications
Commission ("FCC") rule or regulation, or in
accordance with any conditions or requirements
specified in any waiver therefrom, as a result of
Silver exceeding, as a result of the consummation of
the SP Merger, the limitation on the number of
Licenses permitted to be owned by any individual or
entity, Rockies may request by written notice to
Lasorda and Silver that Lasorda use all reasonable
efforts to take, and, subject to any applicable
fiduciary duties of Lasorda, as a director or officer
of Silver, to the stockholders of Silver, use all
reasonable efforts to cause Silver to take, such
actions as may be reasonably necessary, including,
but not limited to, to file any required applications
with the FCC and any other governmental or regulatory
agency, to obtain any required FCC or other
governmental or regulatory consents and approvals,
and to undertake any restructuring of Silver's
assets, liabilities and businesses, in order that
Rockies would be permitted to exercise ownership
rights (including voting rights) with respect to the
Silver Securities owned by it
<PAGE> 4
(including its pro rata interest in any Silver
Securities held by the Silver Company) (the
"Restructuring Transaction").
(b) Simultaneously with or immediately following the
consummation of the Restructuring Transaction,
Rockies or its designee shall be required to purchase
(and Dodgers will be required to sell) Dodgers'
entire equity interest in the Silver Company for an
amount equal to the Dodgers Interest Purchase Price.
(c) The terms of the Silver Company Non-Voting Stock
shall provide that (i) such shares are convertible at
the option of the holder thereof into a like number
of shares of voting common stock of Silver Company,
subject only to the receipt of any required
governmental or regulatory consents or approvals and
the termination of any applicable waiting period
under the HSR Act required in connection with such
conversion and (ii) following notice by the holder
thereof to Silver Company of its intention to convert
such shares, Silver Company shall, and shall cause
each of its subsidiaries and affiliates (including
Silver) to, seek any required consents or approvals,
and make any and all required filings and obtain any
and all such consents and approvals with or from any
governmental or regulatory agency, including the FCC,
and the termination of any applicable waiting period
under the HSR Act in connection with such conversion,
in each case as promptly as practicable.
(d) If a Restructuring Transaction has not occurred
within 365 days following the notice referred to in
paragraph 2(a) (or, if earlier, such time as Rockies
reasonably determines, after consultation with
Lasorda, that Lasorda has ceased to use his
reasonable efforts to consummate a Restructuring
Transaction as required by this Section 2), and a
Change in Law has not otherwise occurred by such
date, then notwithstanding the restrictions on
transfer of the Silver Securities described under the
caption "Transfers of Silver Securities" in the Prior
Agreement, the Rockies Stockholder Group will be
entitled to sell any and all of its Silver Securities
(including its entire equity interest in the Silver
Company), subject only to (i) a right of first
refusal of Dodgers (or its designee), (ii) Rockies'
obligation to swap shares of Silver Class B Stock so
proposed to be sold for shares of Silver Common Stock
owned by the Dodgers Stockholder Group pursuant to
the paragraph of the Prior Agreement entitled "Share
Exchange" (but without regard to the limitation in
the last sentence thereof), and (iii) Rockies'
further obligation to convert shares of Silver Class
B Stock into shares of Silver Common Stock prior to
such a sale (other than to a member of the Dodgers
Stockholders Group). Such person or entity (other
than a member of the Dodgers Stockholder Group) shall
acquire such Silver Securities and/or interest in the
Silver Company free and clear of any rights or
obligations under the Prior Agreement, this Agreement
or the Silver Stockholders Agreement; provided, that
such person or entity shall be entitled to such
reasonable demand and incidental registration rights
with respect to its Silver Securities (including
those shares represented by
<PAGE> 5
its interest in the Silver Company) as was Rockies
under the Prior Agreement and/or the Silver
Stockholders Agreement prior to such sale. Except as
specifically provided in this paragraph, the sale by
Rockies permitted herein will not otherwise alter the
rights and obligations of the parties set forth in the
Prior Agreement (as amended by this Agreement).
3. Management Structure. The Silver Stockholders
Agreement shall provide that upon the earlier to
occur of (i) the Restructuring Transaction (which
will result in a Change in Law following the
consummation thereof) and (ii) a Change in Law (which
the parties agree shall include, for purposes of this
Agreement and the Prior Agreement, any change in law,
rule or regulation, or change in the circumstances of
any party or Silver (including, but not limited to,
in the case of Rockies, a change in the ownership of
a majority of the outstanding common stock of
Rockies) or any other event, the effect of which is
or would be to permit Rockies or any holder of
Rockies' interest in the Silver Company to exercise
ownership rights (including voting rights) with
respect to the Silver Securities owned by it
(including its pro rata portion of any Silver
Securities held by the Silver Company)), whether
before or after the Merger and/or the Exchange, the
management rights of the parties with respect to
Silver shall be as follows:
(i) Lasorda thereafter would be entitled to
designate a mutually agreeable number of the
members of the Board of Directors of Silver
and Rockies would be entitled to designate
the remainder of the directors of Silver
(which number designated by Rockies shall, in
any event, constitute a majority of the
number of directors constituting the entire
Silver Board of Directors). In the event
that (A) any of Rockies' designees on the
Silver Board of Directors vote in a manner
inconsistent with the expressed preference of
Lasorda (or, unless required by applicable
law, abstain from voting) with respect to any
matter voted upon by the Silver Board of
Directors, and the outcome of such vote is
inconsistent with such preference or (B) any
member of the Rockies Stockholder Group votes
any of its Silver Securities with respect to
any matter presented for a vote of the
stockholders of Silver in a manner
inconsistent with the expressed preference of
Lasorda (or abstains from voting) and the
outcome of such vote is inconsistent with
such preference (including, except as set
forth below, decisions relating to Lasorda's
employment with Silver), in either case other
than (x) any decision to terminate Lasorda's
employment with Silver for Cause, (y) any
decision relating to Lasorda's compensation
by Silver or any of its subsidiaries (except
as provided for by the Silver Term Sheet), or
(z) any decision relating to a Fundamental
Matter (except as set forth in (x), (y) and
(z) above, a "Qualifying Disagreement"), then
Lasorda shall be entitled to deliver notice
of his election (a "Management Election") to
exercise his management
<PAGE> 6
rights as a result of the occurrence of such
Qualifying Disagreement in the manner and to
the extent set forth below.
(ii) Following a Management Election by Lasorda:
(A) Lasorda shall be entitled to exercise his
voting authority or authority to act by
written consent over all Silver Securities
then owned by each member of the Rockies
Stockholder Group and the Dodgers Stockholder
Group on all matters submitted to a vote of
Silver stockholders, or by which Silver
stockholders may act by written consent,
pursuant to a conditional proxy (which proxy
shall be valid for the full remaining term
that the Prior Agreement and the Silver
Stockholders Agreement that supersedes (to
the extent set forth therein) the Prior
Agreement is effective and shall be
irrevocable and coupled with an interest for
purposes of Section 212 of the DGCL),
provided, that each Stockholder agrees, and
agrees to cause each member of its
Stockholder Group, to take or cause to be
taken all reasonable actions required (x) for
the election of a slate of directors of
Silver, two of whom will be designated by
Rockies and the remainder of whom will be
designated by Lasorda, and (y) to prevent the
taking of any action by Silver or its
subsidiaries with respect to a Fundamental
Matter without the consent of both
Stockholders; and (B) subject to applicable
law and fiduciary duties and except with
respect to any Fundamental Matters and any
matter referred to in clause (x) or (y) under
clause (i) above, Rockies shall be required
to use its reasonable best efforts to cause
its designees on the Silver Board of
Directors to vote with respect to any matter
presented to a vote of the Silver Board of
Directors in the manner instructed by
Lasorda.
(iii) Lasorda shall cease to be entitled to
exercise any rights under this Agreement or
the Stockholders Agreement with respect to
the matters set forth in this Section 3 upon
the occurrence of any of the following: (x)
Lasorda is no longer Chairman of the Board
and/or Chief Executive Officer and/or
President of Silver and (y) the Dodgers
Stockholder Group ceases to own its Eligible
Stockholder Amount of Silver Securities.
(iv) Each of Rockies and Lasorda agrees, and
agrees to cause each member of its
Stockholder Group, to take all reasonable
actions required (including to vote or
execute a written consent with respect to the
Silver Securities held by the Silver Company)
in order to give effect to the provisions of
this Section 3. In this connection, (A)
following the earlier to occur of the events
specified in clauses (i) and (ii) of the
introductory paragraph of this Section 3, if
so requested by Rockies, all representatives
of Lasorda and/or the Dodgers Stockholder
Group on the Silver Board of Directors shall
immediately resign (other than the
representative(s) to be designated by Lasorda
pursuant to clause (i)) and (B)
<PAGE> 7
following a Management Election, if so
requested by Lasorda, all representatives of
Rockies on the Silver Board of Directors shall
resign immediately (other than two persons
designated by Rockies).
4. Contribution to Silver Company.
In the event that (a) a Change in Law occurs prior to
the date upon which Rockies is required to transfer
the Silver Option and cash to the Silver Company and
(b) the change in structure described in this Section
would not result in any material delay or additional
review of Lasorda's application to the FCC regarding
a change in control of Silver (the "CINC Approval"),
or otherwise materially delay the consummation of
such change in control, then Rockies shall not be
required to make such contribution but shall instead
exercise the Silver Option promptly following the
receipt of the CINC Approval. All shares of Silver
Class B Stock received by it upon such exercise shall
be held by Rockies and shall immediately become
subject to the Silver Stockholders Agreement. In
such event, the parties shall use their respective
commercially reasonable efforts to amend the Merger
Agreement and the Exchange Agreement to provide that
Rockies shall exchange the House Shares directly with
Silver in exchange for the Exchange Shares on the
basis set forth in the Exchange Agreement, mutatis
mutandis. Such transaction would be structured in a
manner reasonably acceptable to the parties in light
of relevant tax and regulatory considerations. In
such event, the management structure described in
Section 3 would apply as to the parties respective
management rights as to Silver.
5. Fundamental Matters. Upon the consummation of the
Merger and the Exchange, the indicated paragraphs of
the definition of the term "Fundamental Matters" in
the Prior Agreement shall be amended in their
entirety to read as follows:
"(2) The acquisition, disposition
(including pledges), directly or
indirectly, by Silver or any of its
subsidiaries, of any assets
(including debt and/or equity
securities) or business (by merger,
consolidation or otherwise), the
grant or issuance of any debt or
equity securities of Silver or any
of its subsidiaries, the redemption,
repurchase or reacquisition of any
debt or equity securities of Silver
or any of its subsidiaries by Silver
or any such subsidiary, or the
incurrence of any indebtedness, or
any combination of the foregoing, in
any such case, in one transaction or
any series of transactions in a six
month period, with a value of 10% or
more of the market value of Silver's
outstanding equity securities at the
time of such transaction."
"(4) Engaging in any line of business
other than media, communications and
entertainment products, services and
programming, and electronic
retailing."
<PAGE> 8
6. Covenant of Lasorda. Lasorda hereby covenants and
agrees with Rockies that, if so requested by Rockies,
following the Merger he will use his reasonable best
efforts to cause one designee of Rockies to serve or
continue to serve on the Board of Directors of House.
7. Consent of Rockies and Lasorda Regarding Certain
Transactions. For purposes of the provisions of the
Prior Agreement and this Agreement regarding Dodgers
Management Rights and Fundamental Matters, each of
Rockies and Lasorda hereby consents and agrees to the
taking of any action by any of Lasorda, the Silver
Company or Silver, which action is reasonably
necessary or appropriate to approve and consummate
the transactions (including the related amendments to
the Silver Certificate of Incorporation and other
actions to be taken by the Silver stockholders
(including the approval by Silver stockholders of the
additional options to purchase Silver Common Stock to
be granted to Lasorda (which grant shall be made in
respect of, and subject to, the consummation of each
of the Exchange and the SP Merger), as approved by
the Compensation Committee of the Silver Board of
Directors in connection herewith)) contemplated by
each of the Merger Agreement, the Exchange Agreement
and the SP Merger Agreement, provided, that the
applicable parties shall not enter into, or permit
any material amendment to, or waiver or modification
of material rights or obligations under the SP Merger
Agreement without the prior written consent of
Rockies (which consent shall not be unreasonably
withheld).
8. Reasonable Efforts. Each of Rockies and Lasorda
agrees to use, and to cause each of its respective
officers, directors, employees, affiliates and
representatives to use, all reasonable efforts and
take all reasonable actions required or necessary to
consummate the transactions contemplated by this
Agreement and the Prior Agreement (including, without
limitation, the Merger and the Exchange) and to cause
the conditions to each of the respective parties'
obligations to consummate the foregoing transactions
to be satisfied.
9. Liabilities under the Federal Securities Laws. The
exercise of any rights hereunder or under the Prior
Agreement or the Silver Stockholders Agreement by
either Rockies or Dodgers and/or Lasorda shall be
subject to such reasonable delay as may be required
to prevent the other Stockholder Group from incurring
any liability under the federal securities laws.
10. Miscellaneous. This agreement shall be governed by
and construed in accordance with the laws of the
State of New York applicable to agreements to be
fully performed therein and without regard to
principles of conflict of laws. This Agreement,
together with the Prior Agreement, incorporates the
entire understanding of the parties with respect to
the subject matter herein and therein and supersedes
all previous understandings, discussions,
negotiations and agreements with respect to
<PAGE> 9
such subject matter. The Prior Agreement, as amended
pursuant to the specific terms of this Agreement, is
hereby ratified and confirmed in all respects;
provided, however, that in the event of any conflict
between the terms of this Agreement and the terms of
the Prior Agreement, the terms of this Agreement shall
be deemed to supersede the conflicting terms of the
Prior Agreement. This Agreement may be executed in
counterparts, (including its rights and obligations
under the Prior Agreement) each of which shall be
deemed an original and all of which shall constitute
one and the same instrument. Except as otherwise
provided herein, neither party may assign this
Agreement without the prior written consent of the
other party.
<PAGE> 10
If the foregoing is acceptable to you, please execute the copy
of this agreement in the space below, at which time this Agreement will
constitute a binding agreement between us.
Very truly yours,
LIBERTY MEDIA CORPORATION
By: /s/ Robert R. Bennett
-------------------------------
Name: Robert R. Bennett
Title: Executive Vice President
ACCEPTED AND AGREED
this 27th day of November, 1995
By: /s/ Barry Diller
----------------------------
Barry Diller
<PAGE> 1
EXHIBIT 7
AGREEMENT AND PLAN OF MERGER
DATED AS OF NOVEMBER 27, 1995
BY AND AMONG
SILVER MANAGEMENT COMPANY,
LIBERTY PROGRAM INVESTMENTS, INC.
AND LIBERTY HSN, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
THE MERGER AND RELATED MATTERS . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Conversion of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.3 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.4 Certificate of Incorporation of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.5 Bylaws of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.6 Directors and Officers of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.7 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SILVER CO. . . . . . . . . . . . . . . . . . 4
SECTION 2.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3 Validity of Merger Consideration Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.4 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.5 No Approvals or Notices Required; No Conflict with Instruments . . . . . . . . . . . . . . . . . 6
SECTION 2.6 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ROCKIES SUB
AND ROCKIES HOUSE SUB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.2 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.3 Capitalization; Validity of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.4 Assets of Rockies House Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.5 Liabilities of Rockies House Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.6 No Approvals or Notices Required; No Conflict with Instruments . . . . . . . . . . . . . . . . . 9
SECTION 3.7 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
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ARTICLE IV
COVENANTS AND OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.1 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.2 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.3 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.4 House Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.5 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.6 No Amendment of Exchange Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.1 Conditions Precedent to the Obligations of Silver Co.,
Rockies Sub and Rockies House Sub . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(a) Absence of Injunctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) No Proceedings or Adverse Enactments . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(c) HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(d) Receipt of Governmental Approvals and Consents . . . . . . . . . . . . . . . . . . . . . 13
(e) Satisfaction of Conditions to the Exchange . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.2 Conditions Precedent to the Obligations of Rockies Sub and
Rockies House Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(c) Silver Co. Capital Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(d) Capitalization of Silver Co. and Validity of Stock Prior to Closing. . . . . . . . . . 14
(e) No Impediments to the Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(f) No Proceedings or Adverse Enactments Affecting Merger Consideration Shares . . . . . . . 14
(g) Lasorda Management Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(h) Officer's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(i) Other Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(j) No Adverse Change or Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(k) Audited Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(l) Consummation of SP Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.3 Conditions Precedent to the Obligations of Silver Co . . . . . . . . . . . . . . . . . . . . . . 16
(a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
-ii-
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(c) Officer's Certificates . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(d) Other Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.1 Termination and Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 7.1 Failure to Consummate the Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 7.2 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 7.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.6 Assignment; Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.7 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.8 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.9 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7.13 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
-iii-
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 27, 1995, by and
among Silver Management Company, a Delaware corporation ("Silver Co."), Liberty
Program Investments, Inc., a Wyoming corporation ("Rockies Sub") and an indirect
wholly-owned subsidiary of Liberty Media Corporation, a Delaware corporation
("Rockies"), and Liberty HSN, Inc., a Colorado corporation and a wholly-owned
subsidiary of Rockies Sub ("Rockies House Sub").
RECITALS:
WHEREAS, Rockies House Sub owns 17,566,702 shares of the Common Stock,
par value $.01 per share (the "House Common Stock"), of Home Shopping Network,
Inc., a Delaware corporation ("House"), and 20,000,000 shares of the Class B
Common Stock, par value $.01 per share (the "House Class B Stock"), of House
(collectively, the "House Shares");
WHEREAS, the House Board of Directors has approved the transactions
contemplated hereby and the Exchange Agreement (as hereinafter defined) being
entered into simultaneously herewith (including for purposes of Section 203 of
the Delaware General Corporation Law (the "DGCL"));
WHEREAS, immediately following the consummation of the merger
contemplated hereby, Silver Co. desires to exchange (the "Exchange") with Silver
King Communications, Inc., a Delaware corporation ("Silver"), all of the shares
of House Common Stock which it will acquire as a result of such merger for newly
issued shares of Common Stock, par value $.01 per share (the "Silver Common
Stock"), of Silver and all of the shares of House Class B Stock which it will
acquire as a result of such merger for newly issued shares of Class B Common
Stock, par value $.01 per share (the "Silver Class B Stock"), of Silver, all
pursuant to that certain Exchange Agreement, dated as of the date hereof, by and
between Silver Co. and Silver (the "Exchange Agreement");
WHEREAS, Rockies Sub, Rockies House Sub and Silver Co. wish to set
forth their agreement as to the terms and conditions upon which Rockies House
Sub will be merged with and into Silver Co., as a result of which merger Silver
Co. will be the surviving corporation.
NOW, THEREFORE, in consideration of the premises and of the respective
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
<PAGE> 6
ARTICLE I
THE MERGER AND RELATED MATTERS
SECTION 1.1 The Merger. (a) Upon the terms and subject to the
conditions of this Agreement, at the Effective Time (as such term is defined in
Section 1.1(b) hereof), Rockies House Sub shall be merged with and into Silver
Co. (the "Merger") in accordance with the provisions of the DGCL and the
Colorado Business Corporation Act (the "Colorado Code"), the separate corporate
existence of Rockies House Sub shall cease, and Silver Co. shall continue as the
surviving corporation under the laws of the State of Delaware (the "Surviving
Corporation").
(b) The Merger shall become effective at the time (the "Effective
Time") of the later to occur of (i) the filing with the Delaware Secretary of
State of a certificate of merger (the "Certificate of Merger") in such form as
is required by, and executed in accordance with, the applicable provisions of
the DGCL and (ii) the filing of appropriate articles of merger (the "Articles of
Merger") with the Colorado Secretary of State in accordance with the provisions
of Section 7-111-105 of the Colorado Code, or at such later time as may be
agreed to by Rockies Sub and Silver Co. and specified in the Certificate of
Merger and the Articles of Merger. Provided that this Agreement has not been
terminated pursuant to Article VI, the parties will cause the Certificate of
Merger to be filed with the Delaware Secretary of State and the Articles of
Merger to be filed with the Colorado Secretary of State as soon as practicable
after the Closing (as defined in Section 1.7).
(c) The Merger shall have the effects set forth in Sections 259, 260
and 261 of the DGCL and in Section 7-111-106 of the Colorado Code. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the properties, rights, privileges, powers and franchises of Rockies
House Sub and Silver Co. shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Rockies House Sub and Silver Co. shall become the
debts, liabilities and duties of the Surviving Corporation. If, at any time
after the Effective Time, the Surviving Corporation considers or is advised that
any deeds, bills of sale, assignments, assurances or any other actions or things
are necessary or desirable to vest, perfect or confirm of record or otherwise in
the Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of either Rockies House Sub or Silver Co., or
otherwise to carry out the intent and purposes of this Agreement, the officers
and directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of each of Rockies House Sub and Silver Co.,
all such deeds, bills of sale, assignments and assurances and to take and do, in
the name and on behalf of each of Rockies House Sub and Silver Co., all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise carry out the
intent and purposes of this Agreement.
-2-
<PAGE> 7
SECTION 1.2 Conversion of Stock. At the Effective Time:
(a) By virtue of the Merger and without any action on the part of the
holder thereof, the outstanding shares of common stock of Rockies House Sub, par
value $1.00 per share, shall be converted into and represent the right to
receive, and shall be exchangeable for, as provided in Section 1.3 hereof, an
aggregate of 3,363,262 newly issued, fully paid and nonassessable shares of the
Class B Common Stock, par value $.01 per share of Silver Co. (the "Silver Co.
Class B Common Stock"). The shares of Silver Co. Class B Common Stock to be
issued as consideration in the Merger are collectively referred to herein as the
"Merger Consideration Shares." At the Effective Time, all such shares of common
stock of Rockies House Sub shall automatically be cancelled and retired and
cease to exist. Following the Effective Time, such shares shall no longer be
deemed to be outstanding, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the right to
receive the shares of Silver Co. Class B Common Stock to be issued in
consideration therefor upon the surrender of such certificate in accordance with
Section 1.3 hereof, without interest.
(b) Each share of Class A Common Stock, par value $.01 per share of
Silver Co. (the "Silver Co. Class A Common Stock") then issued and outstanding
shall remain issued and outstanding and unchanged by the Merger.
(c) Each share of Class B Common Stock, par value $.01 per share, of
Silver Co. (the "Silver Co. Class B Common Stock") then issued and outstanding
shall remain issued and outstanding and unchanged by the Merger.
SECTION 1.3 Exchange of Certificates. At the Closing (as defined
below), upon surrender to Silver Co. of the certificates which immediately prior
to the Effective Time represented the outstanding shares of common stock of
Rockies House Sub, Silver Co. shall deliver to Rockies Sub the Merger
Consideration Shares payable in respect of such shares. The stock certificate or
certificates representing the Merger Consideration Shares delivered to Rockies
Sub pursuant to this Agreement shall be dated the Closing Date (as defined
below) and shall be issued to and registered in the name of Rockies Sub, or a
designee of Rockies Sub, if Rockies Sub so directs.
SECTION 1.4 Certificate of Incorporation of the Surviving Corporation.
The certificate of incorporation of Silver Co. as in effect immediately prior to
the Effective Time shall be the certificate of incorporation of the Surviving
Corporation after the Merger until thereafter amended as provided by law.
SECTION 1.5 Bylaws of the Surviving Corporation. The bylaws of Silver
Co. as in effect immediately prior to the Effective Time, shall be the bylaws of
the Surviving Corporation after the Merger until thereafter amended as provided
by law.
-3-
<PAGE> 8
SECTION 1.6 Directors and Officers of the Surviving Corporation. The
directors and officers of Silver Co. immediately prior to the Effective Time
shall be (until their respective successors are elected and qualified) the
directors and officers of the Surviving Corporation after the Merger.
SECTION 1.7 Closing. The Closing of the transactions contemplated by
this Agreement (the "Closing") shall take place (i) at the offices of Baker &
Botts, L.L.P., 885 Third Avenue, New York, New York 10022, at 10:00 a.m., local
time, on the second business day following the day on which the last of the
conditions set forth in Sections 5.1(c), 5.1(d), 5.1(e), 5.2(b) (other than any
actions to be taken at the Closing), 5.2(c), 5.2(e), 5.2(l) and 5.3(b) (other
than any actions to be taken at the Closing) hereof is fulfilled or waived
(subject to applicable law) or (ii) at such other time and place and on such
other date as Silver Co. and Rockies Sub shall agree (the "Closing Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SILVER CO.
Silver Co. hereby makes the following representations and warranties to
Rockies Sub and Rockies House Sub:
SECTION 2.1 Organization and Qualification. Silver Co. (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation; (ii) has all requisite corporate power
and authority to carry on its business as it is now conducted and to own, lease
and operate the properties it now owns, leases or operates at the places
currently located and in the manner currently used and operated and (iii) is
duly qualified or licensed and in good standing to do business in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or license
necessary. Silver Co. has delivered or made available to Rockies Sub true and
complete copies of its certificate of incorporation and bylaws, each as amended
to date and currently in effect (respectively, the "Silver Co. Charter" and the
"Silver Co. Bylaws").
SECTION 2.2 Authorization and Validity of Agreement. The execution,
delivery and performance of this Agreement by Silver Co. and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the board of directors of Silver Co. and by the requisite vote of the
stockholders of Silver Co. entitled to vote thereon. Silver Co. has full
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the Merger and the other
transactions contemplated hereby. No other corporate proceedings on the part of
Silver Co. or any of its subsidiaries are necessary to authorize the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Silver Co. and, assuming the due authorization, execution and
delivery of this
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Agreement by Rockies Sub and Rockies House Sub, constitutes a legal, valid and
binding obligation of Silver Co. enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting creditors' rights
generally or by principles governing the availability of equitable remedies.
SECTION 2.3 Validity of Merger Consideration Shares. The shares of
Silver Co. Class B Common Stock to be issued to Rockies Sub pursuant to the
Merger, upon issuance and delivery in accordance with the terms and conditions
of this Agreement, will be duly authorized, validly issued, fully paid and
non-assessable, and except as contemplated by this Agreement or the definitive
term sheet attached to the letter to Barry Diller ("Lasorda") from Rockies,
dated August 24, 1995, as amended by the letter to Lasorda, dated as of the date
hereof, pursuant to which Rockies and Lasorda have entered into certain
agreements with respect to the equity securities of Silver, all as described
therein (as amended, the "Term Sheet"), will be free of any liens, claims,
charges, security interests, pledges, voting or stockholder agreements,
encumbrances or equities of any kind whatsoever, will not be issued in violation
of any preemptive rights and will vest in Rockies Sub full rights with respect
thereto, including the right to vote such Merger Consideration Shares on all
matters properly presented to the stockholders of Silver Co. or to consent to
the taking of certain actions, all to the extent set forth in the Silver Co.
Charter. The shares of Silver Co. Class B Common Stock to be issued in the
Merger will have identical rights, powers, privileges and preferences as the
Silver Co. Class B Common Stock outstanding immediately prior to the Closing
Date.
SECTION 2.4 Capitalization. As of the Closing Date, the authorized
capital stock of Silver Co. shall consist of (i) 1 share of Silver Co. Class A
Common Stock, of which 1 share shall be issued and outstanding and held
beneficially and of record by Arrow Holdings, LLC, a California limited
liability company ("Arrow") and (ii) 3,978,262 shares of Silver Co. Class B
Common Stock, of which 615,000 shares shall be issued and outstanding and held
beneficially and of record by Rockies Sub (assuming the contribution of the
Silver Option and cash equal to the exercise price thereof pursuant to (and as
defined in) the Term Sheet); as of the Closing Date, no other shares of capital
stock of Silver Co. shall be issued and outstanding or held by Silver Co. in its
treasury. The respective rights, preferences, privileges, limitations and
restrictions of the Silver Co. Class A Common Stock and the Silver Co. Class B
Common Stock shall be as set forth in the Silver Co. Charter. Except pursuant to
this Agreement and the transactions contemplated by the Term Sheet, as of the
Closing Date, there shall be no outstanding or authorized subscriptions,
options, warrants, calls, rights, commitments or any other agreements of any
character to or by which Silver Co. will be a party or by which it shall be
bound which, directly or indirectly, will obligate Silver Co. to issue, deliver
or sell or cause to be issued, delivered or sold any shares of capital stock or
other equity interests of Silver Co. or any securities convertible into, or
exercisable or exchangeable for, or evidencing the right to subscribe for any
such shares of capital stock or other equity interests of Silver Co. or
obligating Silver Co. to grant, extend or enter into any such subscription,
option, warrant, call or right. All shares of Silver Co. Class A Common Stock
and Silver Co. Class B Common Stock subject to issuance
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<PAGE> 10
as aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully paid and non-assessable and not subject to preemptive
rights. Other than as contemplated by the Term Sheet or the Silver Co. Charter,
as of the Closing Date, there shall be no obligations, contingent or otherwise,
of Silver Co. or any of its subsidiaries to repurchase, redeem or otherwise
acquire any shares of Silver Co. Class A Common Stock or Silver Co. Class B
Common Stock or the capital stock of any subsidiary or to provide funds to make
any material investment (in the form of a loan, capital contribution or
otherwise) in any such subsidiary or any other entity other than guarantees of
obligations of subsidiaries entered into in the ordinary course of business.
SECTION 2.5 No Approvals or Notices Required; No Conflict with
Instruments. The execution and delivery by Silver Co. of this Agreement do not,
and the performance by Silver Co. of its obligations hereunder and the
consummation of the transactions contemplated hereby, including the issuance of
the Merger Consideration Shares, will not:
(i) conflict with or violate the Silver Co. Charter or the
Silver Co. Bylaws or the charter or bylaws of any subsidiary of Silver
Co., in each case as amended to date;
(ii) require any consent, approval, order or authorization of
or other action by any court, administrative agency or commission or
other governmental authority or instrumentality, foreign, United States
federal, state or local (each such entity a "Governmental Entity" and
each such action a "Governmental Consent") or any registration,
qualification, declaration or filing with or notice to any Governmental
Entity (a "Governmental Filing"), in each case on the part of or with
respect to Silver Co., the absence or omission of which would, either
individually or in the aggregate, have a material adverse effect on the
transactions contemplated hereby or on the business, assets, results of
operations or financial condition of Silver Co., except for (A) the
filing of the Certificate of Merger with the Delaware Secretary of
State, (B) the filing of the Articles of Merger with the Colorado
Secretary of State, and (C) the Governmental Filings required pursuant
to the pre-merger notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act") and the expiration or
termination of any applicable waiting period with respect to the Merger
under the HSR Act;
(iii) require, on the part of Silver Co., any consent by or
approval of (a "Contract Consent") or notice to (a "Contract Notice")
any other person or entity (other than a Governmental Entity), the
absence or omission of which would, either individually or in the
aggregate, have a material adverse effect on the transactions
contemplated hereby or on the business, assets, results of operations
or financial condition of Silver Co.;
(iv) conflict with, result in any violation or breach of or
default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or acceleration of
any obligation or the loss of any material benefit under or
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<PAGE> 11
the creation of any lien, security interest, pledge, charge, claim,
option, right to acquire, restriction on transfer, voting restriction
or agreement, or any other restriction or encumbrance of any nature
whatsoever on any assets pursuant to (any such conflict, violation,
breach, default, right of termination, cancellation or acceleration,
loss or creation, a "Violation") any "Contract" (which term shall mean
and include any note, bond, indenture, mortgage, deed of trust, lease,
franchise, permit, authorization, license, contract, instrument,
employee benefit plan or practice, or other agreement, obligation,
commitment or concession of any nature) to which Silver Co. is a party,
by which Silver Co. or any of its assets or properties is bound or
pursuant to which Silver Co. is entitled to any rights or benefits,
except for such Violations which would not, either individually or in
the aggregate, have a material adverse effect on the transactions
contemplated hereby or on the business, assets, results of operations
or financial condition of Silver Co.; or
(v) assuming that the Governmental Consents and Governmental
Filings specified in clause (ii) of this Section 2.5 are obtained, made
and given (and any related waiting period is terminated or otherwise
expires), result in a Violation of, under or pursuant to any law, rule,
regulation, order, judgment or decree applicable to Silver Co. or by
which any of its properties or assets are bound.
SECTION 2.6 Brokers or Finders. No agent, broker, investment banker,
financial advisor or other person or entity is or will be entitled, by reason of
any agreement, act or statement by Silver Co. or any of its directors, officers,
employees or affiliates, to any financial advisory, broker's, finder's or
similar fee or commission, to reimbursement of expenses or to indemnification or
contribution in connection with any of the transactions contemplated by this
Agreement, except as set forth in Schedule 2.6 hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ROCKIES SUB
AND ROCKIES HOUSE SUB
Each of Rockies Sub and Rockies House Sub hereby makes the following
representations and warranties to Silver Co.:
SECTION 3.1 Organization and Qualification. Each of Rockies Sub and
Rockies House Sub (i) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation; (ii) has
all requisite corporate power and authority to carry on its business as it is
now conducted and to own, lease and operate the properties it now owns, leases
or operates at the places currently located and in the manner currently used and
operated and (iii) is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such qualification or
license necessary. Each of Rockies Sub and Rockies
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House Sub has delivered or made available to Silver Co. true and complete copies
of its certificate of incorporation and bylaws, each as amended to date and
currently in effect (respectively, the "Rockies Sub Charter," the "Rockies House
Sub Charter," the "Rockies Sub Bylaws" and the "Rockies House Sub Bylaws."
SECTION 3.2 Authorization and Validity of Agreement. The execution,
delivery and performance of this Agreement by each of Rockies Sub and Rockies
House Sub and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the board of directors of each of Rockies Sub and
Rockies House Sub and by the stockholder(s) of Rockies House Sub. Each of
Rockies Sub and Rockies House Sub has full corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder and
to consummate the Merger and the other transactions contemplated hereby. No
other corporate proceedings on the part of either Rockies Sub or Rockies House
Sub or any of their respective subsidiaries are necessary to authorize the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each of Rockies Sub and Rockies House Sub and, assuming the due
authorization, execution and delivery of this Agreement by Silver Co.,
constitutes a legal, valid and binding obligation of each of Rockies Sub and
Rockies House Sub, enforceable against it in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally or by
principles governing the availability of equitable remedies.
SECTION 3.3 Capitalization; Validity of Stock. The authorized capital
stock of Rockies House Sub consists solely of 5000 shares of common stock, par
value $1.00 per share (the "Rockies House Sub Common Stock"), of which 1000
shares of Rockies House Sub Common Stock are issued and outstanding, all of
which are held of record and owned beneficially by Rockies Sub. No shares are
reserved for issuance upon exercise of outstanding stock options, no shares are
held by Rockies House Sub in its treasury, and no shares are held by any
subsidiary of Rockies House Sub. The shares of Rockies House Sub Common Stock
held by Rockies Sub are duly authorized, validly issued, fully paid and
non-assessable, and are held by Rockies Sub free of any liens, claims, charges,
security interests, pledges, voting or stockholder agreements, encumbrances or
equities of any kind whatsoever. Such shares were not issued in violation of any
preemptive rights.
SECTION 3.4 Assets of Rockies House Sub. Rockies House Sub's assets
consist solely of the House Shares. Rockies House Sub is the record and
beneficial owner of the House Shares, and such shares are held by Rockies House
Sub free of any liens, claims, charges, security interests, pledges, voting or
stockholder agreements, encumbrances or equities, other than pursuant to this
Agreement, the Term Sheet and certain voting restrictions contained in the
Stipulation and Agreement of Compromise, Settlement and Release entered into in
the action entitled 7547 Corp. v. Liberty Media Corp., et al. in the Delaware
Chancery Court and approved by such court on January 27, 1995 (the "Section 203
Settlement Agreement"). Except for this Agreement, the Term Sheet, certain
voting restrictions contained in the Section 203 Settlement
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<PAGE> 13
Agreement and the transactions contemplated hereby and thereby, there are no
agreements, arrangements, warrants, options, puts, calls, rights or other
commitments or understandings of any character to which Rockies House Sub,
Rockies Sub or Rockies is a party or by which any of them is bound and relating
to the sale, purchase, redemption, conversion, exchange, registration, voting or
transfer of any of the House Shares. Following the Effective Time, the Surviving
Corporation will hold the House Shares, free and clear of any liens, claims,
charges, security interests, pledges, voting or stockholder agreements,
encumbrances or options (other than any of the foregoing created by Silver Co.
or the Surviving Corporation), and will have full rights of ownership with
respect to the House Shares, including the right to vote the House Shares on all
matters properly presented to the stockholders of House to the extent and in the
manner set forth in the certificate of incorporation of House as in effect on
the date hereof.
SECTION 3.5 Liabilities of Rockies House Sub. At the Closing, Rockies
House Sub will have no liabilities, whether contingent or fixed or otherwise
(other than as may arise pursuant to this Agreement or the transactions
contemplated hereby). Since its formation, Rockies House Sub has conducted no
business other than the holding of the House Shares.
SECTION 3.6 No Approvals or Notices Required; No Conflict with
Instruments. The execution and delivery by each of Rockies Sub and Rockies House
Sub of this Agreement do not, and the performance by each of Rockies Sub and
Rockies House Sub of their respective obligations hereunder and the consummation
of the transactions contemplated hereby will not:
(i) conflict with or violate the Rockies Sub Charter, the
Rockies House Sub Charter, the Rockies Sub Bylaws or the Rockies House
Sub Bylaws;
(ii) require any Governmental Consent or Governmental Filing,
in each case on the part of or with respect to each of Rockies Sub and
any subsidiary of Rockies Sub, the absence or omission of which would,
either individually or in the aggregate, have a material adverse effect
on the transactions contemplated hereby, except for (A) the filing of
the Articles of Merger with the Colorado Secretary of State and (B) the
Governmental Filings required pursuant to the pre- merger notification
requirements of the HSR Act and the expiration or termination of any
applicable waiting period with respect to the Merger under the HSR Act;
(iii) require, on the part of Rockies Sub, Rockies House Sub or
House any stockholder approval that has not been obtained;
(iv) except for any required consent or waiver under the Second
Amended and Restated Credit Agreement, dated as of August 30, 1994 (as
amended by the First Amendment thereto, dated as of March 29, 1995, and
as further amended by the Second Amendment thereto, dated as of June
28, 1995 and by the Third Amendment thereto, dated as of September 28,
1995) among House and certain of its subsidiaries, LTCB Trust Company
as Agent, and the banks that are signatories thereto (the "House Credit
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<PAGE> 14
Agreement"), require, on the part of Rockies Sub or any subsidiary of
Rockies Sub any Contract Consent or Contract Notice, the absence or
omission of which would, either individually or in the aggregate, have
a material adverse effect on the transactions contemplated hereby;
(v) except for any required consent or waiver under the House
Credit Agreement, conflict with or result in any Violation of any
Contract to which Rockies Sub or any subsidiary of Rockies Sub is a
party, or by which Rockies Sub or any subsidiary of Rockies Sub, or any
of their respective assets or properties is bound, except for such
Violations which would not, either individually or in the aggregate,
have a material adverse effect on the transactions contemplated hereby;
or
(vi) assuming that the Governmental Filings specified in clause
(ii) of this Section 3.6 are obtained, made and given, result in a
Violation of, under or pursuant to any law, rule, regulation, order,
judgment or decree applicable to Rockies Sub or any subsidiary of
Rockies Sub or by which any of their respective properties or assets
are bound, except for such Violations which would not, either
individually or in the aggregate, have a material adverse effect on the
transactions contemplated hereby.
SECTION 3.7 Brokers or Finders. No agent, broker, investment banker,
financial advisor or other person or entity is or will be entitled, by reason of
any agreement, act or statement by Rockies Sub or Rockies House Sub, any of
their respective subsidiaries, directors, officers, employees or affiliates, to
any financial advisory, broker's, finder's or similar fee or commission, to
reimbursement of expenses or to indemnification or contribution in connection
with any of the transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS AND OTHER AGREEMENTS
SECTION 4.1 Reasonable Efforts. Subject to the terms and conditions of
this Agreement and applicable law, each of the parties shall use its reasonable
efforts to take, or cause to be taken, all actions, and do, or cause to be done,
all things reasonably necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement as soon as reasonably
practicable, including such actions or things as either party hereto may
reasonably request in order to cause any of the conditions to such other party's
obligation to consummate such transactions specified in Article V to be fully
satisfied. Without limiting the generality of the foregoing, the parties shall
(and shall cause their respective subsidiaries, and use their reasonable efforts
to cause their respective affiliates, directors, officers, employees, agents,
attorneys, accountants and representatives, to) consult and fully cooperate with
and provide reasonable assistance to each other in (i) obtaining all necessary
Contract Consents and Governmental Consents, and giving all necessary Contract
Notices to and making all necessary
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<PAGE> 15
Governmental Filings and all other necessary filings with and applications and
submissions to any Governmental Entity or other person or entity; (ii) filing
all applicable Pre-Merger Notification and Report Forms required under the HSR
Act as a result of the transactions contemplated by this Agreement and promptly
complying with any requests for additional information and documentary material
that may be requested pursuant to the HSR Act; (iii) lifting any permanent or
preliminary injunction or restraining order or other similar order issued or
entered by any court or Governmental Entity (an "Injunction") of any type
referred to in Section 5.1; (iv) providing all such information about such
party, its subsidiaries and its officers, directors, partners and affiliates and
making all applications and filings as may be necessary or reasonably requested
in connection with any of the foregoing; and (v) in general, consummating and
making effective the transactions contemplated hereby; provided, however, that
in order to obtain any consent, approval, waiver, license, permit,
authorization, registration, qualification or other permission or action or the
lifting of any Injunction referred to in clauses (i) and (iii) of this sentence,
no party shall be required to (x) pay any consideration, to divest itself of any
of, or otherwise rearrange the composition of, its assets or to agree to any
conditions or requirements which are materially adverse or burdensome or (y)
amend, or agree to amend, in any material respect any Contract. Prior to making
any application to or filing with any Governmental Entity or other person or
entity in connection with this Agreement, each of Silver Co. and Rockies Sub
shall provide the other party with drafts thereof and afford the other party a
reasonable opportunity to comment on such drafts.
SECTION 4.2 Public Announcements. Each party agrees that it shall not,
and shall use its reasonable efforts to cause its affiliates, directors,
officers, employees and authorized representatives not to, issue any press
release, make any public announcement or furnish any written statement to its
employees or stockholders generally concerning the transactions contemplated by
this Agreement without the consent of the other party (which consent shall not
be unreasonably withheld), except to the extent required by applicable law or
any listing agreement with or other applicable requirements of a national
securities exchange or the applicable requirements of the NASD (and in such case
such party shall, to the extent consistent with timely compliance with such
requirement, consult with the other party prior to making the required release,
announcement or statement).
SECTION 4.3 Confidentiality. Each party shall, and shall use its
reasonable efforts to cause its officers, employees and authorized
representatives to, (i) hold in confidence all confidential information obtained
by it from the other party or such other party's officers, employees or
authorized representatives pursuant to this Agreement (unless such information
is or becomes publicly available or readily ascertainable from public or
published information or trade sources through no wrongful act of such first
party) and (ii) use all such data and information solely for the purpose of
consummating the transactions contemplated hereby, except, in either case, as
may be otherwise required by law or legal process or as may be necessary or
appropriate in connection with the enforcement of, or any litigation concerning,
this Agreement. In the event a party is required by applicable law or legal
process to disclose any confidential information of the other party, such first
party will provide the other party with prompt notice
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<PAGE> 16
thereof to enable such other party to seek an appropriate protective order. In
the event this Agreement is terminated, each party shall promptly return, if so
requested by the other party, all nonpublic documents obtained from such other
party in connection with the transactions contemplated hereby and any copies
thereof which may have been made by such first party and shall use its
reasonable efforts to cause its officers, employees and authorized
representatives to whom such documents were furnished promptly to return such
documents and any copies thereof any of them may have made.
SECTION 4.4 House Shares. Silver Co. shall not, directly or indirectly,
transfer, assign, sell, pledge or otherwise encumber or authorize or propose the
transfer, assignment, sale, pledge or encumbrance of any of the House Shares
acquired or to be acquired by it pursuant to the Merger except in connection
with the consummation of the Exchange.
SECTION 4.5 Notification of Certain Matters. Rockies Sub and/or Rockies
House Sub shall give prompt notice to Silver Co., and Silver Co. shall give
prompt notice to Rockies Sub, of the occurrence, or failure to occur, of any
event, which occurrence or failure to occur would be likely to cause (a) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect, (b) any material failure of Silver Co. or
Rockies Sub and Rockies House Sub, as the case may be, or of any officer,
director, employee or agent thereof, to comply with or satisfy any covenant or
agreement to be complied with or satisfied by it under this Agreement or (c) the
failure to be satisfied of any condition to the parties' respective obligations
to consummate the transactions contemplated hereby and by the Exchange
Agreement. Notwithstanding the foregoing, the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 4.6 No Amendment of Exchange Agreement. Silver Co. shall not
amend or otherwise alter or waive any of its rights or obligations (including
any conditions on its obligations to consummate the transactions contemplated
thereby or any amendment to Silver's obligations to consummate the transactions
contemplated thereby) under the Exchange Agreement in any material respect
without the prior written consent of Rockies Sub.
ARTICLE V
CONDITIONS
SECTION 5.1 Conditions Precedent to the Obligations of Silver Co.,
Rockies Sub and Rockies House Sub. The obligations of each of Silver Co.,
Rockies Sub and Rockies House Sub to consummate the transactions contemplated by
this Agreement are subject to the satisfaction at or prior to the Closing Date
of each of the following conditions, any or all of which may be waived in whole
or in part by the parties, to the extent permitted by applicable law:
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<PAGE> 17
(a) Absence of Injunctions. No Injunction or other legal restraint or
prohibition preventing consummation of the transactions contemplated hereby as
provided herein shall be in effect.
(b) No Proceedings or Adverse Enactments. There shall not have been any
action taken, or any statute, rule, regulation, order, judgment or decree
enacted, promulgated, entered, issued or enforced by any Governmental Entity,
and there shall be no action, suit, proceeding or investigation pending or
threatened which makes the transactions contemplated by this Agreement illegal
or imposes, or is reasonably likely to result in the imposition of, material
damages or penalties in connection therewith.
(c) HSR Act. All applicable waiting periods under the HSR Act shall
have expired or been terminated without commencement of litigation by the
appropriate governmental enforcement agency to restrain the transactions
contemplated hereby.
(d) Receipt of Governmental Approvals and Consents. All Governmental
Consents as are required in connection with the consummation of the transactions
contemplated hereby shall have been obtained and shall be in full force and
effect and all Governmental Filings as are required in connection with the
consummation of such transactions shall have been made, and all waiting periods,
if any, applicable to the consummation of such transactions imposed by any
Governmental Entity shall have expired, other than those which, if not obtained,
in force or effect, made or expired (as the case may be) would not, either
individually or in the aggregate, have a material adverse effect on the
transactions contemplated hereby.
(e) Satisfaction of Conditions to the Exchange. All of the conditions
to the respective parties' obligations to consummate the Exchange as set forth
in Article V of the Exchange Agreement shall have been satisfied without regard
to any waiver thereof, except for those conditions which by their nature may
only be satisfied as of the closing of the Exchange and any waivers permitted by
Section 4.6 hereof.
SECTION 5.2 Conditions Precedent to the Obligations of Rockies Sub and
Rockies House Sub. The obligation of each of Rockies Sub and Rockies House Sub
to consummate the transactions contemplated by this Agreement is also subject to
the satisfaction, at or prior to the Closing Date, of each of the following
conditions, any or all of which may be waived in whole or in part by Rockies Sub
or Rockies House Sub, to the extent permitted by applicable law:
(a) Accuracy of Representations and Warranties. All representations and
warranties of Silver Co. contained in this Agreement shall, if specifically
qualified by materiality, be true and correct and, if not so qualified, be true
and correct in all material respects in each case as of the Closing Date (except
to the extent such representations and warranties speak as of a specified
earlier date), except for changes expressly permitted or contemplated by this
Agreement.
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(b) Performance of Agreements. Silver Co. shall have performed in all
material respects all obligations and agreements, and complied in all material
respects with all covenants and conditions, contained in this Agreement to be
performed or complied with by it at or prior to the Closing Date.
(c) Silver Co. Capital Contribution. The capital contributions to
Silver Co. contemplated by the first two paragraphs of the section entitled
"Formation of Silver Company" of the Term Sheet shall have been consummated.
(d) Capitalization of Silver Co. and Validity of Stock Prior to
Closing. Immediately prior to the Closing, (i) one share of Silver Co. Class A
Common Stock shall be issued and outstanding and held beneficially and of record
by Arrow and 615,000 shares shall be reserved for issuance upon conversion of
outstanding shares of Silver Co. Class B Common Stock and (ii) 615,000 shares of
Silver Co. Class B Common Stock shall be issued and outstanding and held
beneficially and of record by Rockies Sub; no other shares of capital stock of
Silver Co. shall be authorized for issuance and no other shares of capital stock
of Silver Co. shall be outstanding or reserved for issuance, and no shares shall
be held by Silver Co. in its treasury, except as specifically contemplated by
this Agreement.
(e) No Impediments to the Exchange. There shall be no circumstance or
condition as of the Closing, in the good faith judgment of Rockies Sub, that
will prevent or impede the consummation of the Exchange immediately following
the Closing.
(f) No Proceedings or Adverse Enactments Affecting Merger Consideration
Shares. There shall not have been any action taken, or any statute, rule,
regulation, order, judgment or decree enacted, promulgated, entered, issued or
enforced by any Governmental Entity, and there shall be no action, suit or
proceeding pending or threatened which would, as of or after the Closing, impose
material limitations on the ability of Rockies Sub effectively to exercise full
rights of ownership of the Merger Consideration Shares (including, to the extent
such Merger Consideration Shares have voting rights, the right to vote such
shares on all matters properly presented to the stockholders of Silver Co.).
(g) Lasorda Management Role. Lasorda shall be the Chief Executive
Officer and/or Chairman of the Board and/or President of Silver and shall be the
Chairman of the Board of House.
(h) Officer's Certificates. Rockies Sub shall have received a
certificate of Silver Co. dated the Closing Date, signed by an executive officer
of Silver Co. certifying that the conditions set forth in Sections 5.1(e), 5.2
(a) and 5.2(b) have been satisfied, which certification shall have been given by
such officers after due inquiry.
(i) Other Deliveries. All other documents and instruments required
under this Agreement to have been delivered by Silver Co. to Rockies Sub or
Rockies House Sub at or prior
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to the Closing or as Rockies Sub or Rockies House Sub shall have reasonably
requested, shall have been delivered by Silver Co.
(j) No Adverse Change or Development. Except with respect to the
Reserved Matters (as defined below), subsequent to August 31, 1995, there shall
not have occurred any change or development in or affecting the assets,
liabilities, business, operations, or financial condition of Silver which in any
case or in the aggregate would, in the reasonable judgment of the Board of
Directors of Rockies, represent a material adverse effect upon Silver and its
subsidiaries, taken as a whole. For purposes of this paragraph (j), the term
"Reserved Matters" shall mean any information relating to the assets,
liabilities, business operations or financial condition of Silver which is
contained in, is reasonably discernable from, results from, or which is or has
become known to, as applicable, any of the following:
(i) any reports or statements filed by Silver with the SEC with
respect to periods subsequent to August 31, 1995 and prior to
the date of this Agreement;
(ii) any information delivered to Rockies or its
representatives prior to the date of this Agreement, in
connection with any investigation, discussions, reviews or
analyses of the business and affairs of Silver conducted by
Rockies or its representatives, or otherwise; and
(iii) with respect to any current or recurring negative
financial or operating trend, information with respect to
Silver, any continuance (including any continued or accelerated
deterioration) thereof, beyond the date hereof, which
information is contained in the Reserved Matters referred to in
clauses (i) and (ii) above.
(k) Audited Financial Statements. Except to the extent contained in the
matters referred to in clauses (i) and (ii) of the Reserved Matters, the audited
financial statements of Silver, as of and for the fiscal year ended August 31,
1995, contained in the Annual Report on Form 10-K of Silver for the fiscal year
ended August 31, 1995, as amended, shall have been prepared in accordance with
generally accepted accounting principles, applied on a consistent basis
throughout the fiscal year ended August 31, 1995, (except as may be indicated in
the notes thereto) and shall have fairly presented the consolidated financial
position of Silver and its consolidated subsidiaries as of August 31, 1995 and
the consolidated results of its operations and cash flows for the fiscal year
ended August 31, 1995, except for such failures to have been prepared and/or to
have fairly presented the foregoing as do not, individually or in the aggregate,
represent a material adverse effect on the assets, liabilities, business,
operations or financial condition of Silver and its subsidiaries, taken as a
whole.
(l) Consummation of SP Merger. The merger between Savoy Pictures
Entertainment, Inc. ("Savoy") and a wholly- owned subsidiary of Silver (the "SP
Merger") shall have been consummated in accordance with that certain Agreement
and Plan of Merger, dated as of the date hereof, between Silver and Savoy (the
"SP Merger Agreement") or, in the event
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<PAGE> 20
the SP Merger Agreement has previously been terminated, the failure to obtain a
Governmental Consent of the FCC required in connection with the consummation of
the SP Merger shall not have been a material factor in the failure of the SP
Merger to have been consummated.
SECTION 5.3 Conditions Precedent to the Obligations of Silver Co. The
obligation of Silver Co. to consummate the transactions contemplated by this
Agreement is also subject to the satisfaction, at or prior to the Closing Date,
of each of the following conditions, any or all of which may be waived in whole
or in part by Silver Co., to the extent permitted by applicable law:
(a) Accuracy of Representations and Warranties. All representations and
warranties of Rockies Sub and Rockies House Sub contained in this Agreement
shall, if specifically qualified by materiality, be true and correct and, if not
so qualified, be true and correct in all material respects in each case as of
the date of this Agreement and (except to the extent such representations and
warranties speak as of a specified earlier date) on and as of the Closing Date,
with the same force and effect as though made on and as of the Closing Date,
except for changes expressly permitted or contemplated by this Agreement.
(b) Performance of Agreements. Each of Rockies Sub and Rockies House
Sub shall have performed in all material respects all obligations and
agreements, and complied in all material respects with all covenants and
conditions, contained in this Agreement to be performed or complied with by them
at or prior to the Closing Date.
(c) Officer's Certificates. Silver Co. shall have received a
certificate of each of Rockies Sub and Rockies House Sub dated the Closing Date,
signed by an executive officer of Rockies Sub or Rockies House Sub, as the case
may be, certifying that the conditions set forth in Sections 5.3 (a) or (b) have
been satisfied, which certification shall have been given by such officers after
due inquiry.
(d) Other Deliveries. All other documents and instruments required
under this Agreement to have been delivered by Rockies Sub or Rockies House Sub
to Silver Co. at or prior to the Closing, or as Silver Co. shall reasonably
request, shall have been delivered by Rockies Sub or Rockies House Sub.
ARTICLE VI
TERMINATION
SECTION 6.1 Termination and Abandonment. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any time
prior to the Closing, (i) by mutual written consent of Rockies Sub and Silver
Co.; or (ii) by either Rockies Sub or Silver Co.: (A) if the Closing shall not
have occurred before May 30, 1996 (provided, that if the
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Merger shall not have been consummated as of such date as a result of the
failure to have been satisfied of the condition contained in Section 5.2(l) and
such condition, in the reasonable opinion of the parties, is likely to have been
satisfied on or prior to August 30, 1996, then such date shall be extended to
August 30, 1996); provided that the right to terminate this Agreement pursuant
to this clause (ii)(A) shall not be available to any party whose failure to
perform any of its obligations under this Agreement required to be performed by
it at or prior to the Closing has resulted in the failure of the Closing to
occur before such date, (B) if there has been a material breach by the other
party of any of its representations, warranties, covenants or agreements
contained in this Agreement and such breach shall not have been cured within
five business days after written notice thereof shall have been received by the
party alleged to be in breach or (C) if any court of competent jurisdiction or
other competent Governmental Entity shall have issued an order, decree or ruling
or taken any other action permanently restraining, enjoining or otherwise
prohibiting any of the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and nonappealable.
SECTION 6.2 Effect of Termination. In the event of any termination of
this Agreement by Rockies Sub, Rockies House Sub or Silver Co. pursuant to
Section 6.1, this Agreement forthwith shall become void, and there shall be no
liability or obligation on the part of any party hereto, except that Sections
4.3 and 7.3 shall survive the termination of this Agreement and except that
nothing herein will relieve a party from liability for any breach of this
Agreement occurring prior to such termination.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Failure to Consummate the Exchange. In the event that the
Merger is consummated, but, for any reason whatsoever, the Exchange is not
consummated immediately thereafter and on the same date in a manner reasonably
satisfactory (and in accordance with the Exchange Agreement) to Rockies Sub and
its counsel, then, notwithstanding any provision of this Agreement apparently to
the contrary, (i) Rockies Sub and Rockies House Sub shall have no further
obligations under this Agreement (except as provided in Section 6.2) and (ii) in
addition to any other rights or remedies which Rockies Sub and Rockies House Sub
may have pursuant hereto or at law or in equity, Rockies Sub, for itself and on
behalf of Rockies House Sub, shall have the unconditional right to rescind the
transactions consummated pursuant to this Agreement, in which event Silver Co.
shall take all such actions as may be necessary to make such rescission fully
effective, including, but not limited to, upon the request of Rockies Sub,
transferring the House Shares held by the Surviving Corporation to Rockies Sub
upon delivery by Rockies Sub of the Merger Consideration Shares.
SECTION 7.2 Further Assurances. From and after the Closing Date, each
of Silver Co., Rockies Sub and Rockies House Sub shall, at any time and from
time to time, make, execute
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and deliver, or cause to be made, executed and delivered, such instruments,
agreements, consents and assurances and take or cause to be taken all such
actions as may reasonably be requested by any other party hereto to effect the
purposes and intent of this Agreement.
SECTION 7.3 Expenses. Except as otherwise provided herein, all costs
and expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, whether or not the Closing shall occur.
SECTION 7.4 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given on (i) the day on which
delivered personally or by telecopy (with prompt confirmation by mail) during a
business day to the appropriate location listed as the address below, (ii) three
business days after the posting thereof by United States registered or certified
first class mail, return receipt requested, with postage and fees prepaid or
(iii) one business day after deposit thereof for overnight delivery. Such
notices, requests, demands, waivers or other communications shall be addressed
as follows:
(a) if to Silver Co. to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Pamela S. Seymon, Esq.
Telecopier No.: 212-403-2000
(b) if to Rockies Sub or Rockies House Sub, to such party, care of:
Liberty Media Corporation
8101 East Prentice Avenue, Suite 500
Englewood, Colorado 80111
Attention: Peter M. Barton, President
Telecopier No.: (303) 721-5415
with a copy to:
Baker & Botts, L.L.P.
885 Third Ave.
New York, NY 10022-4834
Attention: Frederick McGrath, Esq.
Telecopier: (212) 705-5125
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<PAGE> 23
or to such other person or address as any party shall specify by notice in
writing to the other party.
SECTION 7.5 Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement with respect to the subject
matter hereof between the parties and supersedes all prior agreements and
understandings, oral and written, between the parties with respect to the
subject matter hereof.
SECTION 7.6 Assignment; Binding Effect; Benefit. Neither this Agreement
nor any of the rights, benefits or obligations hereunder may be assigned by any
party without the prior written consent of the other parties hereto. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties or their respective successors and assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
SECTION 7.7 Amendment. This Agreement may be amended prior to the
Effective Time by Silver Co. and Rockies Sub, by action taken by their
respective Boards of Directors at any time before or after approval of the
Merger by the stockholders of Silver Co. and Rockies House Sub, but after any
such approval, no amendment shall be made which by law requires further approval
by such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of Silver
Co. and Rockies Sub.
SECTION 7.8 Extension; Waiver. Rockies Sub or Silver Co. may, to the
extent legally allowed, (i) extend the time specified herein for the performance
of any of the obligations of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto, (iii) waive compliance by the other party
with any of the agreements or covenants of such other party contained herein or
(iv) waive any condition to such waiving party's obligation to consummate the
transactions contemplated hereby or to any of such waiving party's other
obligations hereunder. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party. Any such extension or waiver by any party shall
be binding on such party but not on the other party entitled to the benefits of
the provision of this Agreement affected unless such other party also has agreed
to such extension or waiver. No such waiver shall constitute a waiver of, or
estoppel with respect to, any subsequent or other breach or failure to comply
strictly with the provisions of this Agreement. The failure of any party to
insist on strict compliance with this Agreement or to assert any of its rights
or remedies hereunder or with respect hereto shall not constitute a waiver of
such rights or remedies. Whenever this Agreement requires or permits consent or
approval by any party, such consent or approval shall be effective if given in
writing in a manner consistent with the requirements for a waiver of compliance
as set forth in this Section 7.8.
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SECTION 7.9 Survival. The representations and warranties made by Silver
Co. in Sections 2.1, 2.2, 2.4, 2.5 and 2.6 shall survive the Closing until the
expiration of the statute of limitations period applicable to claims that may be
asserted against Silver Co. in respect of the matters covered thereby; the
representations and warranties made by each of Rockies Sub and Rockies House Sub
in Sections 3.1, 3.2, 3.4, 3.5, 3.6 and 3.7 shall survive the Closing until the
expiration of the statute of limitations period applicable to claims that may be
asserted against each of Rockies Sub and Rockies House Sub in respect of the
matters covered thereby; the representations and warranties of Silver Co. in
Section 2.3 and of each of Rockies Sub and Rockies House Sub in Section 3.3
shall survive indefinitely. No other representations or warranties of the
parties contained in this Agreement shall survive the Closing. In addition, the
covenants and agreements in Sections 4.3, 4.4, and 4.6 and Article VII shall
also survive the Closing until the expiration of the statute of limitations
period applicable to claims that may be asserted in respect of the matters
covered thereby.
SECTION 7.10 Interpretation. When a reference is made in this Agreement
to Sections, Articles or Schedules, such reference shall be to a Section,
Article or Schedule (as the case may be) of this Agreement unless otherwise
indicated. When a reference is made in this Agreement to a "party" or "parties",
such reference shall be to a party or parties to this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The use of any gender herein shall be deemed to
be or include the other genders and the use of the singular herein shall be
deemed to be or include the plural (and vice versa), wherever appropriate. The
use of the words "hereof", "herein", "hereunder" and words of similar import
shall refer to this entire Agreement, and not to any particular article,
section, subsection, clause, paragraph or other subdivision of this Agreement,
unless the context clearly indicates otherwise.
SECTION 7.11 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, provided that, if any provision
hereof or the application thereof shall be so held to be invalid, void or
unenforceable by a court of competent jurisdiction, then such court may
substitute therefor a suitable and equitable provision in order to carry out, so
far as may be valid and enforceable, the intent and purpose of the invalid, void
or unenforceable provision. To the extent that any provision shall be judicially
unenforceable in any one or more states, such provision shall not be affected
with respect to any other state, each provision with respect to each state being
construed as several and independent.
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SECTION 7.12 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
SECTION 7.13 Applicable Law. This Agreement and the legal relations
between the parties shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to the conflict of laws rules
thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
Plan of Merger as of the date first above written.
SILVER MANAGEMENT COMPANY
/s/ Barry Diller
-----------------------------------
By: Barry Diller
Title: President
LIBERTY PROGRAM INVESTMENTS, INC.
/s/ Robert R. Bennett
-----------------------------------
By: Robert R. Bennett
Title: Executive Vice President
LIBERTY HSN, INC.
/s/ Robert R. Bennett
-----------------------------------
By: Robert R. Bennett
Title: Executive Vice President
<PAGE> 1
EXHIBIT 8
EXCHANGE AGREEMENT
DATED AS OF NOVEMBER 27, 1995
BY AND BETWEEN
SILVER KING COMMUNICATIONS, INC.
AND
SILVER MANAGEMENT COMPANY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
SALE AND EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Exchange of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SILVER . . . . . . . . . . . . . . . . . . . 2
SECTION 2.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.2 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.3 Validity of Silver Shares, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.4 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.5 No Approvals or Notices Required; No Conflict with Instruments . . . . . . . . . . . . . . . . . . 4
SECTION 2.6 DGCL Section 203 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.7 Opinion of Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.8 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SILVER CO. . . . . . . . . . . . . . . . . . . 6
SECTION 3.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.2 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.3 Ownership and Validity of House Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.4 No Approvals or Notices Required; No Conflict with Instruments . . . . . . . . . . . . . . . . . . 8
SECTION 3.5 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV
COVENANTS AND OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.1 Silver Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.2 Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.3 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.4 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.6 Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.7 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
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<TABLE>
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ARTICLE V
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.1 Conditions Precedent to the Obligations of Silver and Silver Co. . . . . . . . . . . . . . . . . . 12
(a) Absence of Injunctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(b) No Proceedings or Adverse Enactments . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(c) Stockholder Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(d) Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(e) HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(f) Receipt of Governmental Approvals and Consents . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.2 Conditions Precedent to the Obligations of Silver Co. . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(c) No Proceedings or Adverse Enactments Affecting Silver Shares . . . . . . . . . . . . . . . 13
(d) Control of Silver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(e) Officer's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(f) Other Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(g) Lasorda Management Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.3 Conditions Precedent to the Obligations of Silver . . . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(c) Officer's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(d) Other Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(e) Lasorda Management Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(f) No Adverse Change or Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(g) Audited Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VI
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.1 Termination and Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
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<TABLE>
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SECTION 7.5 Assignment; Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.6 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.7 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.8 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.9 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.12 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
<PAGE> 5
EXCHANGE AGREEMENT
EXCHANGE AGREEMENT, dated as of November 27, 1995, by and between
SILVER KING COMMUNICATIONS, INC., a Delaware corporation ("Silver"), and SILVER
MANAGEMENT COMPANY, a Delaware corporation ("Silver Co.").
RECITALS:
WHEREAS, upon consummation of the transactions contemplated by the
Agreement and Plan of Merger (the "Merger Agreement"), dated the date hereof by
and among Silver Co., Liberty Program Investments, Inc., a Wyoming corporation
and Liberty HSN, Inc., a Colorado corporation ("Rockies House Sub") pursuant to
which Rockies House Sub will be merged with and into Silver Co. (the "Merger"),
Silver Co. will own 17,566,702 shares of the Common Stock, par value $.01 per
share (the "House Common Stock"), of Home Shopping Network, Inc., a Delaware
corporation ("House") and 20,000,000 shares of the Class B Common Stock, par
value $.01 per share (the "House Class B Stock"), of House (such shares of House
Common Stock and House Class B Stock held by Silver Co. are collectively
referred to herein as the "House Shares");
WHEREAS, the House Board of Directors has approved the transactions
contemplated hereby and the Merger Agreement being entered into simultaneously
herewith (including for purposes of Section 203 of the Delaware General
Corporation Law (the "DGCL"));
WHEREAS, Silver desires to acquire, and Silver Co. desires to transfer
to Silver, the House Shares;
WHEREAS, in exchange for the House Shares, Silver Co. desires to
acquire, and Silver desires to issue to Silver Co., the number of shares of
Silver's Common Stock, par value $.01 per share (the "Silver Common Stock"), and
the number of shares of Silver's Class B Common Stock, par value $.01 per share
(the "Silver Class B Stock") described in Section 1.1 below;
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
SALE AND EXCHANGE OF SHARES
SECTION 1.1 Exchange of Shares. In reliance on the representations and
warranties and other agreements of the other party contained herein and upon the
terms and subject to the conditions set forth herein, on the Closing Date (as
defined in Section 1.2) the parties will make the following exchange (the
"Exchange"):
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(i) Silver Co. will transfer, assign and convey to Silver, and
Silver will acquire and accept from Silver Co., all shares of House
Common Stock and all shares of House Class B Stock held by Silver Co.
immediately following the Merger, and
(ii) Silver will issue, convey and deliver to Silver Co., and
Silver Co. will acquire and accept from Silver, 4,855,436 shares of
Silver Common Stock in exchange for the 17,566,702 shares of House
Common Stock and 6,082,000 shares of Silver Class B Stock in exchange
for the 20,000,000 shares of House Class B Stock (such shares of Silver
Common Stock and Silver Class B Stock are collectively referred to
herein as the "Silver Shares").
SECTION 1.2 Closing. The Exchange shall take place at a Closing (the
"Closing") which shall be (i) at the offices of Baker & Botts, L.L.P., 885 Third
Avenue, New York, New York 10022, at 10:00 a.m., local time, on the second
business day following the day on which the last of the conditions set forth in
Sections 5.1(c), 5.1(d), 5.1(e), 5.1(f), 5.2(b) (other than any actions to be
taken at the Closing), 5.2(c) and 5.3(b) (other than any actions to be taken at
the Closing) hereof is fulfilled or, if legally permissible, waived or (ii) at
such other time and place and on such other date as Silver and Silver Co. shall
agree (the "Closing Date"). At the Closing, simultaneously with the delivery by
Silver Co. of certificates representing the House Shares, with appropriate stock
powers attached, duly endorsed, and with any necessary documentary or transfer
tax stamps duly affixed and cancelled, Silver will deliver to Silver Co. a
certificate or certificates representing the Silver Common Stock and Silver
Class B Stock to be issued, conveyed and delivered to Silver Co. pursuant to
Section 1.1, with any necessary documentary or transfer tax stamps duly affixed
and cancelled, dated the Closing Date, and such certificates shall be issued to
and registered in the name of Silver Co. The House Shares and the Silver Shares
shall be so delivered, in each case, free and clear of all liens, claims,
charges, preemptive rights and other encumbrances other than pursuant to the
Merger Agreement and this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SILVER
Silver hereby makes the following representations and warranties to
Silver Co.:
SECTION 2.1 Organization and Qualification. Silver (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (ii) has all requisite corporate power and
authority to carry on its business as it is now conducted and to own, lease and
operate the properties it now owns, leases or operates at the places currently
located and in the manner currently used and operated and (iii) is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or license necessary, except,
in the case of clause (iii) where the failure to be so qualified or licensed, or
in good standing would not have a material adverse effect on the business,
assets or condition (financial or otherwise) of Silver and its subsidiaries,
taken as a
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whole. Silver has delivered or made available to Silver Co. true and complete
copies of its Amended and Restated Certificate of Incorporation and Amended and
Restated By-Laws, each as amended to date and currently in effect (respectively,
the "Silver Charter" and the "Silver Bylaws").
SECTION 2.2 Authorization and Validity of Agreement. (a)The execution,
delivery and performance of this Agreement by Silver and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
board of directors of Silver.
(b) Except for the approval of (x) this Agreement, (y) the issuance of
the Silver Shares and (z) the Silver Charter Amendment (as defined below) by the
stockholders of Silver:
(i) Silver has full corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder and
to consummate the Exchange and the other transactions contemplated
hereby,
(ii) no other corporate proceedings on the part of Silver or
any of its subsidiaries are necessary to authorize the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby,
(iii) this Agreement has been duly and validly executed and
delivered by Silver and, assuming the due authorization, execution and
delivery of this Agreement by Silver Co., constitutes a legal, valid
and binding obligation of Silver, enforceable against it in accordance
with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally or by principles governing the
availability of equitable remedies.
SECTION 2.3 Validity of Silver Shares, etc. Subject to the filing and
effectiveness of the Silver Charter Amendment as contemplated in Section 4.1,
the shares of Silver Common Stock and Silver Class B Stock to be issued by
Silver to Silver Co. pursuant to the Exchange, upon issuance and delivery in
accordance with the terms and conditions of this Agreement, will be duly
authorized, validly issued, fully paid and non-assessable, and, except as set
forth on Schedule 2.3, will be free of any liens, claims, charges, security
interests, preemptive rights, pledges, voting or stockholder agreements,
encumbrances or equities of any kind whatsoever, will not be issued in violation
of any preemptive rights and will vest in Silver Co. full rights with respect
thereto, including the right to vote the Silver Shares on all matters properly
presented to the stockholders of Silver to the extent set forth in the Silver
Charter. The Silver Charter, upon amendment as contemplated by Section 4.1, will
provide that the Silver Class B Stock to be authorized for issuance pursuant to
this agreement will have identical rights, powers, privileges and preferences as
the outstanding Silver Class B Stock. In addition, the issuance of the Silver
Shares will not violate the stockholder voting rights, policies and requirements
of the National Association of Securities Dealers, Inc. ("NASD"), assuming such
issuance is approved by the stockholders of Silver pursuant to the DGCL and in
accordance with Section 6(i) of Part III of Schedule D of the NASD By-Laws (the
"NASD Shareholder Approval Policy").
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SECTION 2.4 Capitalization. (a) The authorized capital stock of Silver
consists of (i) 30,000,000 shares of Silver Common Stock, (ii) 2,415,945 shares
of Silver Class B Stock, and (iii) 50,000 shares of Preferred Stock, par value
$.01 per share (the "Silver Preferred Stock"), of which, as of November 20,
1995, (x) 6,975,882 shares of Silver Common Stock are issued and outstanding,
2,295,347 shares are reserved for issuance upon exercise of outstanding stock
options and 2,415,945 shares are reserved for issuance upon conversion of
existing Silver Class B Stock, no shares are held by Silver in its treasury and
no shares are held by any subsidiary of Silver; (y) 2,415,945 shares of Silver
Class B Stock are issued and outstanding, no shares are reserved for issuance
upon exercise of outstanding stock options, no shares are held by Silver in its
treasury and no shares are held by any subsidiary of Silver; and (z) no shares
of Silver Preferred Stock are issued or outstanding, reserved for issuance upon
exercise of outstanding stock options, or held by Silver in its treasury or by
any subsidiary of Silver, and no series of Silver Preferred Stock has been
designated or authorized.
(b) All issued and outstanding shares of Silver Common Stock and Silver
Class B Stock have been validly issued and are fully paid and nonassessable, are
not subject to and have not been issued in violation of any preemptive rights
and have not been issued in violation of any federal or state securities laws.
The respective rights, preferences, privileges, limitations and restrictions of
the Silver Common Stock, the Silver Class B Stock and Silver Preferred Stock are
as set forth in the Silver Charter. Except as set forth on Schedule 2.4 or as
disclosed on the reports, forms, schedules, registration statements and proxy
statements originally filed with the SEC (as defined below) by Silver with
respect to periods or events after January 1, 1994 and prior to the date hereof
(the "Silver SEC Reports") pursuant to the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (respectively the "Securities Act" and the "Exchange Act"), there are
no outstanding or authorized subscriptions, options, warrants, calls, rights,
commitments or any other agreements of any character to or by which Silver or
any of its subsidiaries is a party or is bound which, directly or indirectly,
obligate Silver or any of its subsidiaries to issue, deliver or sell or cause to
be issued, delivered or sold any shares of capital stock or other equity
interests of Silver or any securities convertible into, or exercisable or
exchangeable for, or evidencing the right to subscribe for any such shares of
capital stock or other equity interests or obligating Silver or any of its
subsidiaries to grant, extend or enter into any such subscription, option,
warrant, call or right. All shares of Silver Common Stock, Silver Class B Stock
and/or Silver Preferred Stock subject to issuance as aforesaid, upon issuance on
the terms and conditions specified in the instruments pursuant to which they are
issuable, shall be duly authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights. Except as is disclosed in
the Silver SEC Reports or as set forth in Schedule 2.4, there are no
obligations, contingent or otherwise, of Silver or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of Silver Common Stock,
Silver Class B Stock or Silver Preferred Stock or the capital stock of any
subsidiary or to provide funds to make any material investment (in the form of a
loan, capital contribution or otherwise) in any such subsidiary or any other
entity other than guarantees of obligations of subsidiaries entered into in the
ordinary course of business.
SECTION 2.5 No Approvals or Notices Required; No Conflict with
Instruments. The execution and delivery by Silver of this Agreement do not, and
the performance by Silver of its
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obligations hereunder and the consummation of the transactions contemplated
hereby including the issuance of the Silver Shares will not:
(i) assuming the Silver Charter Amendment is approved and is
filed and becomes effective as contemplated in Section 4.1, conflict
with or violate the Silver Charter, as so amended, or the Silver Bylaws
or the charter or bylaws of any subsidiary of Silver, in each case as
amended to date;
(ii) require any consent, approval, order or authorization of
or other action by any court, administrative agency or commission or
other governmental authority or instrumentality, foreign, United States
federal, state or local (each such entity a "Governmental Entity" and
each such action a "Governmental Consent") or any registration,
qualification, declaration or filing with or notice to any Governmental
Entity (a "Governmental Filing"), in each case on the part of or with
respect to Silver or any subsidiary of Silver, the absence or omission
of which would, either individually or in the aggregate, have a
material adverse effect on the transactions contemplated hereby or on
the business, assets, results of operations or financial condition of
Silver and its subsidiaries, taken as a whole, except for (A) the
filing of the Silver Charter Amendment with the Delaware Secretary of
State (as contemplated by Section 4.1), (B) the filing with the
Securities and Exchange Commission (the "SEC") of the Proxy Statement
(as defined in Section 4.2) required in connection with this Agreement
and the transactions contemplated hereby and (C) the Governmental
Filings required pursuant to the pre-merger notification requirements
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act") and
the expiration or termination of any applicable waiting period with
respect to the Exchange under the HSR Act;
(iii) require, on the part of Silver or any subsidiary of
Silver, any consent by or approval of (a "Contract Consent") or notice
to (a "Contract Notice") any other person or entity (other than a
Governmental Entity), the absence or omission of which would, either
individually or in the aggregate, have a material adverse effect on the
transactions contemplated hereby or on the business, assets, results of
operations or financial condition of Silver and its subsidiaries, taken
as a whole, other than the approval by the Silver stockholders of the
Silver Charter Amendment pursuant to the DGCL and the issuance of the
Silver Shares in accordance with the NASD Shareholder Approval Policy;
(iv) except as set forth on Schedule 2.5, conflict with, result
in any violation or breach of or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or the loss of any
material benefit under or the creation of any lien, security interest,
pledge, charge, claim, option, right to acquire, restriction on
transfer, voting restriction or agreement, or any other restriction or
encumbrance of any nature whatsoever on any assets pursuant to (any
such conflict, violation, breach, default, right of termination,
cancellation or acceleration, loss or creation, a "Violation") any
"Contract" (which term shall mean and include any note, bond,
indenture, mortgage, deed of trust, lease, franchise, permit,
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authorization, license, contract, instrument, employee benefit plan or
practice, or other agreement, obligation, commitment or concession of
any nature) to which Silver or any subsidiary of Silver is a party, by
which Silver, any subsidiary of Silver or any of their respective
assets or properties is bound or pursuant to which Silver or any
subsidiary of Silver is entitled to any rights or benefits, except for
such Violations which would not, either individually or in the
aggregate, have a material adverse effect on the transactions
contemplated hereby or on the business, assets, results of operations
or financial condition of Silver and its subsidiaries, taken as a
whole; or
(v) assuming that the Silver Charter Amendment has been
approved and filed and become effective pursuant to the DGCL as
contemplated in Section 4.1, that the Silver stockholders have approved
the issuance of the Silver Shares in accordance with the NASD
Shareholder Approval Policy, and that the Governmental Consents and
Governmental Filings specified in clause (ii) of this Section 2.5 are
obtained, made and given, result in a Violation of, under or pursuant
to any law, rule, regulation, order, judgment or decree applicable to
Silver or any subsidiary of Silver or by which any of their respective
properties or assets are bound.
SECTION 2.6 DGCL Section 203. The Exchange and the related transactions
contemplated hereby have been approved in all respects by the Board of Directors
of House, including for purposes of Section 203 of the DGCL, and following the
Exchange, Silver shall not be subject to the restrictions on "business
combinations" with "interested stockholders" contained therein.
SECTION 2.7 Opinion of Advisor. Silver's Board of Directors has
received the written opinion of CS First Boston (the "CS First Boston Opinion")
(a copy of which opinion has been delivered to Silver Co.) that, as of the date
of this Agreement, the terms of the Exchange are fair to Silver's stockholders
from a financial point of view.
SECTION 2.8 Brokers or Finders. Other than pursuant to a written
agreement with CS First Boston (a copy of which has been previously furnished to
Silver Co.) and as disclosed in Schedule 2.8, no agent, broker, investment
banker, financial advisor or other person or entity is or will be entitled, by
reason of any agreement, act or statement by Silver or any of its subsidiaries,
directors, officers, employees or affiliates, to any financial advisory,
broker's, finder's or similar fee or commission, to reimbursement of expenses or
to indemnification or contribution in connection with any of the transactions
contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SILVER CO.
Silver Co. hereby makes the following representations and warranties to
Silver:
SECTION 3.1 Organization and Qualification. Silver Co. (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation; (ii) has all requisite corporate power
and authority to carry on its business as it is
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now conducted and to own, lease and operate the properties it now owns, leases
or operates at the places currently located and in the manner currently used and
operated and (iii) is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such qualification or
license necessary. As of the date hereof, Silver Co. has no subsidiaries. As of
the Closing, Silver Co. will have no subsidiaries other than Silver, and by its
execution and delivery of this Agreement, Silver Co. shall not be deemed to have
made any representations, warranties, covenants or other agreements with respect
to or on behalf of Silver (it being understood that any breach by Silver of any
of its representations, warranties, covenants or other agreements made herein
shall not be considered in determining the truth, accuracy, completeness or
performance of, or compliance with, any representation, warranty, covenant or
agreement made by Silver Co. herein). Silver Co. has delivered or made available
to Silver true and complete copies of its certificate of incorporation and
bylaws, each as amended to date and currently in effect (respectively, the
"Silver Co. Charter" and the "Silver Co. Bylaws").
SECTION 3.2 Authorization and Validity of Agreement. The execution,
delivery and performance of this Agreement by Silver Co. and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the board of directors and by the requisite vote of the stockholders of Silver
Co. entitled to vote thereon. Silver Co. has full corporate power and authority
to execute and deliver this Agreement and to perform its obligations hereunder
and to consummate the Exchange and the other transactions contemplated hereby.
No other corporate proceedings on the part of Silver Co. are necessary to
authorize the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Silver Co. and, assuming the due authorization,
execution and delivery of this Agreement by Silver, constitutes a legal, valid
and binding obligation of Silver Co., enforceable against it in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally or by principles governing the availability of
equitable remedies.
SECTION 3.3 Ownership and Validity of House Shares. Upon consummation
of the Merger and immediately prior to the Exchange, Silver Co. will own
beneficially and of record the House Shares, free of any liens, claims, charges,
security interests, pledges, voting or stockholder agreements, encumbrances or
equities. Except for this Agreement, the Merger Agreement, the definitive term
sheet, attached to the letter to Barry Diller ("Lasorda") from Rockies, dated
August 24, 1995, as amended by the letter to Lasorda, dated as of the date
hereof, pursuant to which Rockies and Lasorda have entered into certain
agreements with respect to the equity securities of Silver, all as described
therein (the "Term Sheet"), and the transactions contemplated hereby and thereby
and except for certain voting restrictions contained in the Stipulation and
Agreement of Compromise, Settlement and Release entered into in the action
entitled 7547 Corp. v. Liberty Media Corp., et al. in the Delaware Chancery
Court and approved by such court on January 27, 1995 (the "Section 203
Settlement Agreement"), there are no agreements, arrangements, warrants,
options, puts, calls, rights or other commitments or understandings of any
character to which Silver Co. is a party or by which it is bound and relating to
the issuance, sale, purchase, redemption, conversion, exchange, registration,
voting or transfer of any of the House
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Shares. Upon consummation of the Exchange, Silver will hold the House Shares
free and clear of any liens, claims, charges, security interests, pledges,
voting or stockholder agreements, encumbrances or options (other than any of the
foregoing created by Silver), and will have full rights of ownership with
respect to the House Shares, including the right to vote the House Shares on all
matters properly presented to the stockholders of House to the extent set forth
in the certificate of incorporation of House as in effect on the date hereof.
SECTION 3.4 No Approvals or Notices Required; No Conflict with
Instruments. The execution and delivery by Silver Co. of this Agreement do not,
and the performance by Silver Co. of its obligations hereunder and the
consummation of the transactions contemplated hereby will not:
(i) conflict with or violate the Silver Co. Charter or the
Silver Co. Bylaws;
(ii) require any Governmental Consent or Governmental Filing,
in each case on the part of or with respect to each of Silver Co., the
absence or omission of which would, either individually or in the
aggregate, have a material adverse effect on the transactions
contemplated hereby, except for the Governmental Filings required
pursuant to the pre-merger notification requirements of the HSR Act,
and the expiration or termination of any applicable waiting period with
respect to the Exchange under the HSR Act;
(iii) require, on the part of Silver Co. any Contract Consent
or Contract Notice, the absence or omission of which would, either
individually or in the aggregate, have a material adverse effect on the
transactions contemplated hereby;
(iv) conflict with or result in any Violation of any Contract
to which Silver Co. is a party, or by which Silver Co., or any of its
assets or properties is bound, except for such Violations which would
not, either individually or in the aggregate, have a material adverse
effect on the transactions contemplated hereby; or
(v) assuming that the Governmental Consents and Governmental
Filings specified in clause (ii) of this Section 3.4 are obtained, made
and given, result in a Violation of, under or pursuant to any law,
rule, regulation, order, judgment or decree applicable to Silver Co. or
by which any of its properties or assets are bound, except for such
Violations which would not, either individually or in the aggregate,
have a material adverse effect on the transactions contemplated hereby.
SECTION 3.5 Brokers or Finders. No agent, broker, investment banker,
financial advisor or other person or entity is or will be entitled, by reason of
any agreement, act or statement by Silver Co., any of its directors, officers,
employees or affiliates (other than Silver), to any financial advisory,
broker's, finder's or similar fee or commission, to reimbursement of expenses or
to indemnification or contribution in connection with any of the transactions
contemplated by this Agreement.
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ARTICLE IV
COVENANTS AND OTHER AGREEMENTS
SECTION 4.1 Silver Stockholders Meeting. Silver will take all action
necessary in accordance with Delaware law, the Silver Charter, the Silver Bylaws
and the requirements of the NASD and the SEC to convene a meeting of its
stockholders (the "Silver Stockholders Meeting") as promptly as practicable to
consider and vote upon (a) an amendment to the Silver Charter (the "Silver
Charter Amendment") (i) increasing the authorized number of shares of Silver
Class B Stock by the amount necessary to permit the issuance and delivery of the
Silver Shares to Silver Co. in accordance with Section 1.1 and the transactions
contemplated hereby (together with amendments to such other provisions as may be
reasonably necessary to reflect such increase in the authorized capital stock of
Silver) and (ii) deleting all provisions in the Silver Charter which require
that the holders of the Silver Common Stock and the Silver Class B Stock vote as
separate classes on certain specified matters so long as at least 2,280,000
shares of Silver Class B Stock are outstanding and (b) approval of the issuance
of the Silver Shares in accordance with the NASD Shareholder Approval Policy
(the "NASD Vote"). The Board of Directors of Silver shall recommend that the
stockholders of Silver vote in favor of the Silver Charter Amendment and the
transactions contemplated hereby (including the NASD Vote). Silver shall use its
best efforts to solicit from its stockholders proxies in favor of such
approvals.
SECTION 4.2 Proxy Statement. (a) Silver shall prepare and file with the
SEC, as soon as reasonably practicable, a preliminary proxy statement and a form
of proxy for use at the Silver Stockholders Meeting relating to the vote of
Silver's stockholders with respect to the Silver Charter Amendment, the NASD
Vote and the transactions contemplated hereby (together with any amendments or
supplements thereto, in each case in the form or forms mailed to Silver's
stockholders, the "Proxy Statement"). Silver will use all reasonable efforts to
have, or cause, the Proxy Statement to be cleared by the SEC as promptly as
practicable and to cause the Proxy Statement to be mailed to stockholders of
Silver at the earliest possible date. Silver Co. shall promptly furnish to
Silver such information regarding Silver Co. and its officers and directors as
may be reasonably requested by Silver for inclusion in the Proxy Statement.
(b) Silver covenants that none of the information concerning Silver,
its subsidiaries, or any of its affiliates, directors, officers, employees,
agents or representatives which is included or incorporated by reference in the
Proxy Statement will, at the time the Proxy Statement or any amendment or
supplement thereto is filed with the SEC, at the time of mailing of the Proxy
Statement or any amendment or supplement thereto to Silver's stockholders or at
the time of the Silver Stockholders Meeting, be false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Silver covenants that the Proxy Statement shall comply as
to form in all material respects with the applicable provisions of the Exchange
Act and the rules and regulations thereunder.
(c) Silver Co. covenants that none of the information supplied or to be
supplied by Silver Co. or any of its affiliates (other than Silver), directors,
officers, employees, agents or
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representatives in writing specifically for inclusion in the Proxy Statement
will, at the time the Proxy Statement or any amendment or supplement thereto is
filed with the SEC, at the time of mailing of the Proxy Statement or any
amendment or supplement thereto to Silver's stockholders or at the time of the
Silver Stockholders Meeting, be false or misleading with respect to any material
fact, or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 4.3 Reasonable Efforts. Subject to the terms and conditions of
this Agreement and applicable law, each of the parties shall use its reasonable
efforts to take, or cause to be taken, all actions, and do, or cause to be done,
all things reasonably necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement as soon as reasonably
practicable, including such actions or things as either party hereto may
reasonably request in order to cause any of the conditions to such other party's
obligation to consummate such transactions specified in Article V to be fully
satisfied. Without limiting the generality of the foregoing, the parties shall
(and shall cause their respective subsidiaries, and use their reasonable efforts
to cause their respective affiliates, directors, officers, employees, agents,
attorneys, accountants and representatives, to) consult and fully cooperate with
and provide reasonable assistance to each other in (i) the preparation and
filing with the SEC of the Proxy Statement and any necessary amendments of or
supplements thereto; (ii) seeking to have the Proxy Statement cleared by the SEC
as soon as reasonably practicable after filing with the SEC; (iii) obtaining all
necessary Governmental Consents and Contract Consents, and giving all necessary
Contract Notices to and making all necessary Governmental Filings and other
necessary filings with and applications and submissions to, any Governmental
Entity or other person or entity; (iv) filing all applicable Pre-Merger
Notification and Report Forms required under the HSR Act as a result of the
transactions contemplated by this Agreement and promptly complying with any
requests for additional information and documentary material that may be
requested pursuant to the HSR Act; (v) lifting any permanent or preliminary
injunction or restraining order or other similar order issued or entered by any
court or Governmental Entity (an "Injunction") of any type referred to in
Section 5.1; (vi) providing all such information about such party, its
subsidiaries and its officers, directors, partners and affiliates and making all
applications and filings as may be necessary or reasonably requested in
connection with any of the foregoing; and (vii) in general, consummating and
making effective the transactions contemplated hereby; provided, however, that
in order to obtain any consent, approval, waiver, license, permit,
authorization, registration, qualification or other permission or action or the
lifting of any Injunction referred to in clauses (iii) and (v) of this sentence,
no party shall be required to (x) pay any consideration, to divest itself of any
of, or otherwise rearrange the composition of, its assets or to agree to any
conditions or requirements which are materially adverse or burdensome or (y)
amend, or agree to amend, in any material respect any Contract. Prior to making
any application to or filing with any Governmental Entity or other person or
entity in connection with this Agreement, each of Silver and Silver Co. shall
provide the other party with drafts thereof and afford the other party a
reasonable opportunity to comment on such drafts.
SECTION 4.4 Public Announcements. Each party agrees that it shall not,
and shall use its reasonable efforts to cause its affiliates, directors,
officers, employees and authorized representatives not to, issue any press
release, make any public announcement or furnish any
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written statement to its employees or stockholders generally concerning the
transactions contemplated by this Agreement without the consent of the other
party (which consent shall not be unreasonably withheld), except to the extent
required by applicable law or any listing agreement with or other applicable
requirements of a national securities exchange or the applicable requirements of
the NASD (and in such case such party shall, to the extent consistent with
timely compliance with such requirement, consult with the other party prior to
making the required release, announcement or statement).
SECTION 4.5 Confidentiality. Each party shall, and shall use its
reasonable efforts to cause its officers, employees and authorized
representatives to (i) hold in confidence all confidential information obtained
by it from the other party or such other party's officers, employees or
authorized representatives pursuant to this Agreement (unless such information
is or becomes publicly available or readily ascertainable from public or
published information or trade sources through no wrongful act of such first
party) and (ii) use all such data and information solely for the purpose of
consummating the transactions contemplated hereby, except, in either case, as
may be otherwise required by law or legal process or as may be necessary or
appropriate in connection with the enforcement of, or any litigation concerning,
this Agreement. In the event a party is required by applicable law or legal
process to disclose any confidential information of the other party, such first
party will provide the other party with prompt notice thereof to enable such
other party to seek an appropriate protective order. In the event this Agreement
is terminated, each party shall promptly return, if so requested by the other
party, all nonpublic documents obtained from such other party in connection with
the transactions contemplated hereby and any copies thereof which may have been
made by such first party and shall use its reasonable efforts to cause its
officers, employees and authorized representatives to whom such documents were
furnished promptly to return such documents and any copies thereof any of them
may have made.
SECTION 4.6 Merger Agreement. Silver Co. shall not amend or otherwise
alter or waive any of its rights or obligations (including any conditions on its
obligations to consummate the transactions contemplated thereby) under the
Merger Agreement in any material respect without the prior written consent of
Silver.
SECTION 4.7 Notification of Certain Matters. Silver shall give prompt
notice to Silver Co., and Silver Co. shall give prompt notice to Silver, of the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur would be likely to cause (a) any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect, (b) any
material failure of Silver or Silver Co., as the case may be, or of any officer,
director, employee or agent thereof, to comply with or satisfy any covenant or
agreement to be complied with or satisfied by it under this Agreement or (c) the
failure to be satisfied of any condition to the parties' respective obligations
to consummate the transactions contemplated hereby and by the Merger Agreement.
Notwithstanding the foregoing, the delivery of any notice pursuant to this
Section shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
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ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.1 Conditions Precedent to the Obligations of Silver and
Silver Co. The obligations of each of Silver and Silver Co. to consummate the
transactions contemplated by this Agreement are subject to the satisfaction at
or prior to the Closing Date of each of the following conditions, any or all of
which may be waived in whole or in part by the parties, to the extent permitted
by applicable law:
(a) Absence of Injunctions. No Injunction or other legal restraint or
prohibition preventing consummation of the transactions contemplated hereby as
provided herein shall be in effect.
(b) No Proceedings or Adverse Enactments. There shall not have been any
action taken, or any statute, rule, regulation, order, judgment or decree
enacted, promulgated, entered, issued or enforced by any Governmental Entity,
and there shall be no action, suit, proceeding or investigation pending or
threatened which makes the transactions contemplated by this Agreement illegal
or imposes, or is reasonably likely to result in the imposition of, material
damages or penalties in connection therewith.
(c) Stockholder Approvals. The Silver Charter Amendment and the
transactions contemplated hereby shall have been approved by the requisite vote
of the stockholders of Silver under Delaware law, the Silver Charter, the Silver
Bylaws, and the Silver Charter Amendment shall have been filed with the Delaware
Secretary of State in accordance with the DGCL and become effective under the
DGCL. The issuance of the Silver Shares shall have been approved by the
requisite vote of the stockholders of Silver in accordance with the NASD
Shareholder Approval Policy.
(d) Consummation of the Merger. Immediately prior in time to the
Closing, the Merger and the transactions contemplated thereby shall have been
consummated in accordance with the Merger Agreement.
(e) HSR Act. All applicable waiting periods under the HSR Act shall
have expired or been terminated without commencement of litigation by the
appropriate governmental enforcement agency to restrain the transactions
contemplated hereby.
(f) Receipt of Governmental Approvals and Consents. All Governmental
Consents as are required in connection with the consummation of the transactions
contemplated hereby shall have been obtained and shall be in full force and
effect and all Governmental Filings as are required in connection with the
consummation of such transactions shall have been made, and all waiting periods,
if any, applicable to the consummation of such transactions imposed by any
Governmental Entity shall have expired, other than those which, if not obtained,
in force or effect, made or expired (as the case may be) would not, either
individually or in the aggregate, have a material adverse effect on the
transactions contemplated hereby.
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<PAGE> 17
SECTION 5.2 Conditions Precedent to the Obligations of Silver Co. The
obligation of Silver Co. to consummate the transactions contemplated by this
Agreement is also subject to the satisfaction, at or prior to the Closing Date,
of each of the following conditions, any or all of which may be waived in whole
or in part by Silver Co., to the extent permitted by applicable law:
(a) Accuracy of Representations and Warranties. All representations and
warranties of Silver contained in this Agreement shall, if specifically
qualified by materiality, be true and correct and, if not so qualified, be true
and correct in all material respects in each case as of the date of this
Agreement and (except to the extent such representations or warranties speak as
of a specified earlier date) on and as of the Closing Date, with the same force
and effect as though made on and as of the Closing Date, except for changes
expressly permitted or contemplated by this Agreement.
(b) Performance of Agreements. Silver shall have performed in all
material respects all obligations and agreements, and complied in all material
respects with all covenants and conditions, contained in this Agreement to be
performed or complied with by it at or prior to the Closing Date.
(c) No Proceedings or Adverse Enactments Affecting Silver Shares. There
shall not have been any action taken, or any statute, rule, regulation, order,
judgment or decree enacted, promulgated, entered, issued or enforced by any
Governmental Entity, and there shall be no action, suit or proceeding pending or
threatened which would, as of or after the Closing, impose material limitations
on the ability of Silver Co. effectively to exercise full rights of ownership of
the Silver Shares (including, to the extent such Silver Shares have voting
rights, the right to vote such shares on all matters properly presented to the
stockholders of Silver).
(d) Control of Silver. Immediately after the Exchange, Silver Co. shall
have "control" (as defined in Section 368(c) of the Internal Revenue Code of
1986, as amended) of Silver, and Silver Co. shall own a majority of the voting
power of the outstanding equity securities of Silver.
(e) Officer's Certificates. Silver Co. shall have received a
certificate of Silver, dated the Closing Date, signed by an executive officer of
Silver Co. certifying that the conditions set forth in Sections 5.2 (a) and (b)
have been satisfied, which certification shall have been given by such officer
after due inquiry.
(f) Other Deliveries. All other documents and instruments required
under this Agreement to have been delivered by Silver to Silver Co. at or prior
to the Closing or as Silver Co. shall have reasonably requested, shall have been
delivered by Silver.
(g) Lasorda Management Role. Lasorda shall be Chairman of the Board
and/or Chief Executive Officer and/or President of Silver and shall be Chairman
of the Board of House.
SECTION 5.3 Conditions Precedent to the Obligations of Silver. The
obligation of Silver to consummate the transactions contemplated by this
Agreement is also subject to the
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satisfaction, at or prior to the Closing Date, of each of the following
conditions, any or all of which may be waived in whole or in part by Silver, to
the extent permitted by applicable law:
(a) Accuracy of Representations and Warranties. All representations and
warranties of Silver Co. contained in this Agreement shall, if specifically
qualified by materiality, be true and correct and, if not so qualified, be true
and correct in all material respects, in each case as of the Closing Date
(except to the extent such representations and warranties speak as of a
specified earlier date), except for changes expressly permitted or contemplated
by this Agreement.
(b) Performance of Agreements. Silver Co. shall have performed in all
material respects all obligations and agreements, and complied in all material
respects with all covenants and conditions, contained in this Agreement to be
performed or complied with by them at or prior to the Closing Date.
(c) Officer's Certificates. Silver shall have received a certificate of
Silver Co. dated the Closing Date, signed by an executive officer of Silver Co.
certifying that the conditions set forth in Sections 5.3 (a) and (b) have been
satisfied, which certification shall have been given by such officer after due
inquiry.
(d) Other Deliveries. All other documents and instruments required
under this Agreement to have been delivered by Silver Co. to Silver at or prior
to the Closing, or as Silver shall reasonably request, shall have been delivered
by Silver Co.
(e) Lasorda Management Role. Lasorda shall be Chairman of the Board
and/or Chief Executive Officer and/or President of Silver and the Chairman of
the Board of House; provided, however, that to the extent the failure of the
foregoing condition to be satisfied is primarily the result of any action by
Lasorda (including his resignation, his termination or removal for Cause (as
defined in the Silver Term Sheet), or his failure to cause himself to be elected
or appointed to such positions at Silver at any time following the Control Date
(as defined in the Term Sheet)), then the condition set forth in this Section
5.3(e) shall nevertheless be deemed satisfied.
(f) No Adverse Change or Development. Except with respect to the
Reserved Matters (as defined below), subsequent to December 31, 1994, there
shall not have occurred any change or development in or affecting the assets,
liabilities, business, operations, or financial condition of House which in any
case or in the aggregate would, in the reasonable judgment of the Board of
Directors of Silver, represent a material adverse effect upon House and its
subsidiaries, taken as a whole. For purposes of this paragraph (f), the term
"Reserved Matters" shall mean any information relating to the assets,
liabilities, business, operations or financial condition of House which is
contained in, is reasonably discernable from, results from, or which is or has
become known to, as applicable, any of the following:
(i) any reports or statements filed by House with the SEC with
respect to periods subsequent to December 31, 1994 and prior to
the date of this Agreement;
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(ii) any information obtained or reviewed by, or otherwise
delivered to, Silver or to Barry Diller or his representatives
("Diller") as a result of or in connection with Diller's
service on the Board of Directors of House or the Executive
Committee thereof prior to the date of this Agreement, in
connection with any investigation, discussions, reviews or
analyses of the business and affairs of House conducted by
Diller, or otherwise;
(iii) with respect to any current or recurring negative
financial or operating trend, information with respect to House
(which trends may include, but are not limited to, sales, cost
of goods sold, inventories, liquidity, commission payments to
cable operators and the rate of returned goods), any
continuance (including any continued or accelerated
deterioration) thereof, beyond the date hereof, which
information is contained in the Reserved Matters referred to in
clauses (i) and (ii) above; and
(iv) any adverse changes or developments which are directly or
indirectly caused by Diller and/or senior management of House
(including, but not limited to, its Chairman of the Board)
hired or appointed subsequent to November 22, 1995, including
but not limited to, the adoption, implementation, expansion or
change in any Board of Directors or managerial directives or
accounting and financial reporting policies and/or any other
changes in the nature or manner of operation of House's
business.
(g) Audited Financial Statements. Except to the extent contained in the
matters referred to in clauses (i) and (ii) of the Reserved Matters, the audited
financial statements of House, as of and for the fiscal year ended December 31,
1994, contained in the Annual Report on Form 10-K of House for the fiscal year
ended December 31, 1994, as amended, shall have been prepared in accordance with
generally accepted accounting principles, applied on a consistent basis
throughout the fiscal year ended December 31, 1994, (except as may be indicated
in the notes thereto) and shall have fairly presented the consolidated financial
position of House and its consolidated subsidiaries as of December 31, 1994 and
the consolidated results of its operations and cash flows for the fiscal year
ended December 31, 1994, except for such failures to have been prepared and/or
to have fairly presented the foregoing as do not, individually or in the
aggregate, represent a material adverse effect on the assets, liabilities,
business, operations or financial condition of House and its subsidiaries, taken
as a whole.
ARTICLE VI
TERMINATION
SECTION 6.1 Termination and Abandonment. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any time
prior to the Closing, (i) by mutual written consent of Silver Co. and Silver;
(ii) by either Silver Co. or Silver: (A) if the Closing shall not have occurred
before August 30, 1996 (or, if earlier, the termination of the
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Merger Agreement pursuant to Section 6.1(ii)(A)), provided, that the right to
terminate this Agreement pursuant to this clause (ii)(A) shall not be available
to any party whose failure to perform any of its obligations under this
Agreement required to be performed by it at or prior to the Closing has resulted
in the failure of the Closing to occur before such date, (B) if there has been a
material breach by the other party of any of its representations, warranties,
covenants or agreements contained in this Agreement and such breach shall not
have been cured within five business days after written notice thereof shall
have been received by the party alleged to be in breach or (C) if any court of
competent jurisdiction or other competent Governmental Entity shall have issued
an order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting any of the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become final
and nonappealable or (iii) by Silver or Silver Co., if the required approvals of
the stockholders of Silver contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote upon a vote taken
at a meeting of stockholders duly convened therefor or at any adjournment
thereof.
SECTION 6.2 Effect of Termination. In the event of any termination of
this Agreement by Silver Co. or Silver pursuant to Section 6.1, this Agreement
forthwith shall become void, and there shall be no liability or obligation on
the part of any party hereto, except that Sections 4.5 and 7.2 shall survive the
termination of this Agreement and except that nothing herein will relieve a
party from liability for any breach of this Agreement occurring prior to such
termination.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Further Assurances. From and after the Closing Date, each
of Silver and Silver Co. shall, at any time and from time to time, make, execute
and deliver, or cause to be made, executed and delivered, such instruments,
agreements, consents and assurances and take or cause to be taken all such
actions as may reasonably be requested by any other party hereto to effect the
purposes and intent of this Agreement.
SECTION 7.2 Expenses. Except as otherwise provided herein, all costs
and expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, whether or not the Closing shall occur.
SECTION 7.3 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given on (i) the day on which
delivered personally or by telecopy (with prompt confirmation by mail) during a
business day to the appropriate location listed as the address below, (ii) three
business days after the posting thereof by United States registered or certified
first class mail, return receipt requested, with postage and fees prepaid or
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(iii) one business day after deposit thereof for overnight delivery. Such
notices, requests, demands, waivers or other communications shall be addressed
as follows:
(a) if to Silver to:
Silver King Communications, Inc.
12425 28th Street North
St. Petersburg, Florida 33716
Attention: Steven H. Grant
Telecopier: (813) 572-1349
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019-5150
Attention: Pamela S. Seymon, Esq.
Telecopier No.: (212) 403-2000
(b) if to Silver Co., to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019-5150
Attention: Pamela S. Seymon, Esq.
Telecopier No.: (212) 403-2000
with a copy to the following:
Liberty Media Corporation
8101 East Prentice Avenue, Suite 500
Englewood, Colorado 80111
Attention: Peter M. Barton, President
Telecopier No.: (303) 721-5415
Baker & Botts, L.L.P.
885 Third Avenue
New York, New York 10022-4834
Attention: Frederick McGrath, Esq.
Telecopier No.: (212) 705-5125
or to such other person or address as any party shall specify by notice in
writing to the other party.
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SECTION 7.4 Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the parties and
supersedes all prior agreements and understandings, oral and written, between
the parties with respect to the subject matter hereof.
SECTION 7.5 Assignment; Binding Effect; Benefit. Neither this Agreement
nor any of the rights, benefits or obligations hereunder may be assigned by any
party without the prior written consent of the other parties hereto. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties or their respective successors and assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
SECTION 7.6 Amendment. This Agreement may be amended, superseded or
cancelled, only by a written instrument specifically stating that it amends,
supersedes or cancels this Agreement, executed by all parties hereto.
SECTION 7.7 Extension; Waiver. Silver Co. or Silver may, to the extent
legally allowed, (i) extend the time specified herein for the performance of any
of the obligations of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto, (iii) waive compliance by the other party
with any of the agreements or covenants of such other party contained herein or
(iv) waive any condition to such waiving party's obligation to consummate the
transactions contemplated hereby or to any of such waiving party's other
obligations hereunder. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party. Any such extension or waiver by any party shall
be binding on such party but not on the other party entitled to the benefits of
the provision of this Agreement affected unless such other party also has agreed
to such extension or waiver. No such waiver shall constitute a waiver of, or
estoppel with respect to, any subsequent or other breach or failure to comply
strictly with the provisions of this Agreement. The failure of any party to
insist on strict compliance with this Agreement or to assert any of its rights
or remedies hereunder or with respect hereto shall not constitute a waiver of
such rights or remedies. Whenever this Agreement requires or permits consent or
approval by any party, such consent or approval shall be effective if given in
writing in a manner consistent with the requirements for a waiver of compliance
as set forth in this Section 7.7.
SECTION 7.8 Survival. The representations and warranties made by Silver
in Sections 2.1, 2.2, 2.4, 2.5, 2.6, 2.7 and 2.8 shall survive the Closing until
the expiration of the statute of limitations period applicable to claims that
may be asserted against Silver in respect of the matters covered thereby; the
representations and warranties made by Silver Co. in Sections 3.1, 3.2 and 3.5
shall survive the Closing until the expiration of the statute of limitations
period applicable to claims that may be asserted against Silver Co. in respect
of the matters covered thereby; the representations and warranties of Silver in
Section 2.3, and of Silver Co. in Section 3.3, shall survive indefinitely; no
other representations and warranties of the parties contained in this Agreement
shall survive the Closing. In addition, the covenants and agreements in Section
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4.5 and Article VII shall also survive the Closing until the expiration of the
statute of limitations period applicable to claims that may be asserted in
respect of the matters covered thereby.
SECTION 7.9 Interpretation. When a reference is made in this Agreement
to Sections, Articles or Schedules, such reference shall be to a Section,
Article or Schedule (as the case may be) of this Agreement unless otherwise
indicated. When a reference is made in this Agreement to a "party" or "parties",
such reference shall be to a party or parties to this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The use of any gender herein shall be deemed to
be or include the other genders and the use of the singular herein shall be
deemed to be or include the plural (and vice versa), wherever appropriate. The
use of the words "hereof", "herein", "hereunder" and words of similar import
shall refer to this entire Agreement, and not to any particular article,
section, subsection, clause, paragraph or other subdivision of this Agreement,
unless the context clearly indicates otherwise. Notwithstanding anything herein
to the contrary, for purposes of this Agreement Silver shall not be deemed to be
a subsidiary or an affiliate of Silver Co., and the subsidiaries, directors,
officers, employees and affiliates of Silver shall not be deemed to be
subsidiaries, directors, officers, employees or affiliates of Silver Co.
SECTION 7.10 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, provided that, if any provision
hereof or the application thereof shall be so held to be invalid, void or
unenforceable by a court of competent jurisdiction, then such court may
substitute therefor a suitable and equitable provision in order to carry out, so
far as may be valid and enforceable, the intent and purpose of the invalid, void
or unenforceable provision. To the extent that any provision shall be judicially
unenforceable in any one or more states, such provision shall not be affected
with respect to any other state, each provision with respect to each state being
construed as several and independent.
SECTION 7.11 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
SECTION 7.12 Applicable Law. This Agreement and the legal relations
between the parties shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to the conflict of laws rules
thereof.
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<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have executed this Exchange
Agreement as of the date first above written.
SILVER KING COMMUNICATIONS, INC.
/s/ Steven H. Grant
--------------------------------
By: Steven H. Grant
Title: Executive Vice President
SILVER MANAGEMENT COMPANY
/s/ Barry Diller
--------------------------------
By: Barry Diller
Title: President
