<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
December 19, 1996
- --------------------------------------------------------------------------------
Date of Report (Date of earliest event reported)
Home Shopping Network, Inc.
- --------------------------------------------------------------------------------
(Exact name of Registrant as Specified in Charter)
Delaware 1-9118 59-2649518
- --------------------------------------------------------------------------------
(State or Other Juris. (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
2501 118th Avenue North
St. Petersburg, Florida 33716
- --------------------------------------------------------------------------------
(Address of Principal (Zip Code)
Executive Offices)
(813) 572-8585
- --------------------------------------------------------------------------------
(Registrant's telephone number,
including area code)
<PAGE> 2
ITEM 1. CHANGE IN CONTROL
On Thursday, December 19, 1996, Home Shopping Network, Inc., Silver
King Communications, Inc. and Savoy Pictures Entertainment, Inc. announced that
the merger of the three companies was approved by their respective
shareholders and that the merger of the three companies is expected to be
completed on Friday, December 20, 1996. Attached hereto as Exhibit 99 is a
copy of the jointly issued press release.
The merger was completed following the close of trading on the New
York Stock Exchange on December 20, 1996.
In connection with the merger, Home Shopping Network, Inc., Silver
King Communications, Inc. and United States Trust Company of New York, as
Trustee (the "Trustee"), entered into a supplement, dated as of December 20,
1996, to the Indenture, dated as of March 1, 1996, between Home Shopping
Network, Inc. and the Trustee.
ITEM 5. OTHER EVENTS.
Attached hereto as Exhibit 10.40 is a copy of the Nonqualified Stock
Option Agreement between Home Shopping Network, Inc. and Barry Diller, Chairman
of the Board of Home Shopping Network, Inc.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits
NUMBER DESCRIPTION
------ -----------
99 Press Release of Home Shopping Network, Inc.,
Silver King Communications, Inc. and
Savoy Pictures Entertainment, Inc. dated
December 19, 1996.
10.40 Nonqualified Stock Option Agreement between
Home Shopping Network, Inc. and
Barry Diller, Chairman of the Board of
Home Shopping Network, Inc.
Page 2 of 18
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HOME SHOPPING NETWORK, INC.
Dated: December 20, 1996 By /s/ Kevin J. McKeon
------------------------------------
Name: Kevin J. McKeon
Title: Executive Vice President and
Chief Financial Officer
Page 3 of 18
<PAGE> 4
EXHIBIT INDEX
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
99 Press Release of Home Shopping 5
Network, Inc., Silver King
Communications, Inc. and Savoy
Pictures Entertainment, Inc.
10.40 Nonqualified Stock Option Agreement 9
between Home Shopping Network, Inc.
and Barry Diller, Chairman of the
Board of Home Shopping Network, Inc.
Page 4 of 18
<PAGE> 1
EXHIBIT 99
FOR IMMEDIATE RELEASE CONTACT: Meredith Dobbs
SKTV/PR38 TEL.: (813) 572-8585 x 7363
December 19, 1996
MERGER OF SILVER KING COMMUNICATIONS, HOME SHOPPING
NETWORK AND SAVOY PICTURES APPROVED BY SHAREHOLDERS
-- Mergers to be Completed by Friday, 12/20 --
-- Combined Company, HSN, Inc., to Trade on NASDAQ --
NEW YORK, NY Shareholders of Silver King Communications, Inc. (NASDAQ: SKTV),
Home Shopping Network, Inc. (NYSE: HSN) and Savoy Pictures Entertainment, Inc.
(NASDAQ: SPEI) each voted today to approve the merger of the three companies.
Additionally, shareholders of Silver King voted to change the name of Silver
King Communications, the surviving entity, to HSN, Inc. Beginning Monday,
December 23, 1996, the combined company will trade on the NASDAQ under the
symbol "HSNI."
Savoy's merger into Silver King will be effective at the close of business
today. The merger of Silver King and Home Shopping Network is expected to be
effective at the close of business tomorrow, Friday, December 20, 1996.
"It has taken us more than a year to bring the consolidation of these three
companies to their respective shareholders for a vote," stated HSN, Inc.
Chairman Barry Diller. "FCC delays, negotiations, independent committees,
lawyers' drafts, redrafts, Board approvals, FCC approvals and the normal
rigamarole attendant to transactions takes a toll on more than time. But,
finally, and undimmed, we have one company with a strong balance sheet in
interesting businesses and with a great appetite for growth, both in our
current business lines and opportunistically through acquisition."
Page 5 of 18
<PAGE> 2
SHAREHOLDERS APPROVE SILVER KING, HOME
SHOPPING NETWORK AND SAVOY MERGER
page 2 of 4
James Held, Vice Chairman of HSN, Inc. and President and CEO of Home Shopping
Network, stated, "Home Shopping Network will succeed in achieving our set goal
of a $100 million EBITDA run rate for 1996, and anticipates strong continued
growth in 1997, domestically and internationally, including the launch of a new
program venture, America's Jewelry Store. And Silver King, the largest
broadcast group in the country not affiliated with a network, represents a true
opportunity. Over the next several years we will maximize the group's value, on
a market-by-market basis, through partnerships, sale, acquisition and a
managed implementation of our programming plans. These plans include a
tightly-marketed original local production format designed to thrive in a
fractionalized broadcast world, attracting long under-appreciated local
advertisers as well as encouraging a growth in direct sales programming in
conjunction with Home Shopping Network."
Home Shopping Network's pioneering electronic retailing business reaches
approximately 70 million cable, broadcast and satellite households with its
24-hour programming. On January 1, 1997, Home Shopping Network will launch
America's Jewelry Store (AJS), a 24-hour television channel devoted exclusively
to the sale of quality jewelry. Jewelry already represents Home Shopping
Network's largest and most profitable category, and the Company is regarded for
its competitive prices, expert knowledge and exceptional selection. In 1996,
Home Shopping Network announced strategic investments in H.O.T., the leading
home shopping service in Germany, and SHOP Channel, a new home shopping service
in Japan. The Company is also initiating a $35 million infrastructure build-up
designed to position HSN as a leading player in electronic commerce fulfillment
as it develops into an industry over the next five years.
Page 6 of 18
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SHAREHOLDERS APPROVE SILVER KING, HOME
SHOPPING NETWORK AND SAVOY MERGER
page 3 of 4
Silver King's television broadcast group, the sixth-largest in the nation, owns
and operates 12 independent full-power UHF broadcast stations in 11 major
markets, reaching approximately 29 million television households. The stations
serve 10 of the 16 largest markets in the United States, including New York,
Los Angeles, Chicago and Philadelphia. Silver King also has minority interests,
ranging from 33-49 percent, in stations in seven major markets, including San
Francisco and Washington, D.C., which reach an additional 10 million U.S.
television households.
SF Broadcasting owns, in partnership with Fox, and operates VHF Fox affiliates
in Honolulu, New Orleans, Mobile and Green Bay. These stations are already
demonstrating growth from their initial conversion to Fox, as evidenced by the
latest Nielson ratings which ranked KHON-Honolulu first in its market and
the number one Fox affiliate nationally. SF Broadcasting is currently exploring
additional station opportunities in adjoining markets as a basis for regional
group marketing and operations efforts.
The Internet Shopping Network (ISN) was the first large-scale enterprise to
embrace the Internet as a medium for conducting commerce. Today it is one of
the largest on-line computer retailers, offering over 40,000 computer hardware
and software products, many downloadable directly into customers computers. ISN
is currently expanding its product selection to target the needs of small and
home businesses.
Vela Research develops and markets high technology digital audio-video MPEG
compression/decompression products to the cable, broadcast, computer and
telecommunications industries.
Page 7 of 18
<PAGE> 4
SHAREHOLDERS APPROVE SILVER KING, HOME
SHOPPING NETWORK AND SAVOY MERGER
page 4 of 4
In addition to approving the mergers, shareholders of Silver King today
elected a new Board of Directors and voted in favor of the other proposals
submitted to shareholders as part of the Company's Annual Meeting. The new Board
of Directors consists of Chairman Barry Diller and Messrs. Victor Kaufman, who
will serve in the Office of the Chairman, John Oxendine, Chairman of Blackstar
Communications, Bruce Ramer, attorney and principal of the law firm of Gang,
Tyre, Ramer & Brown, Sidney Sheinberg, a partner of The Bubble Factory, and
Richard Snyder, Chairman, CEO and President of Golden Books Family
Entertainment. Following completion of the merger with Home Shopping Network,
the Board is expected to elect Messrs. Held, Eli Segal, former Assistant to the
President of the United States, and General H. Norman Schwarzkopf as directors,
completing the new HSN, Inc. Board of Directors.
Under the terms of the merger, holders of Home Shopping Network Common Stock
will receive 0.45 of a share of HSNI (formerly Silver King) Common Stock for
each share of Home Shopping Network Common Stock. Holders of Savoy Common Stock
will receive 0.14 of a share of HSNI Common Stock for each share of Savoy
Common Stock. Options and convertible securities of Home Shopping Network and
Savoy will be exercisable or convertible, pursuant to their terms, into shares
of HSN, Inc. Common Stock at the applicable ratios.
# # #
Page 8 of 18
<PAGE> 1
EXHIBIT 10.40
NONQUALIFIED STOCK OPTION AGREEMENT
BETWEEN
HOME SHOPPING NETWORK, INC.
AND
BARRY DILLER
CHAIRMAN OF THE BOARD OF
HOME SHOPPING NETWORK, INC.
Granting a Nonqualified
Stock Option Under The
1996 Stock Option Plan for Employees
DATE OF GRANT: November 24, 1995
NUMBER OF SHARES: 13,300,000
PURCHASE PRICE: $8.50
Page 9 of 18
<PAGE> 2
NONQUALIFIED STOCK OPTION AGREEMENT
AGREEMENT between HOME SHOPPING NETWORK, INC., a Delaware
corporation (the "Company"), and BARRY DILLER, the Chairman of the Board of the
Company (the "Optionee").
This Agreement evidences the grant of a nonqualified option
(the "Option") to purchase Common Stock, $.01 par value, of the Company. The
Option is subject to the terms and conditions of the Home Shopping Network,
Inc. 1996 Stock Option Plan for Employees (the "Plan") adopted by the Board of
Directors (the "Board") of the Company on February 12, 1996 and approved by the
Company's stockholders on May 9, 1996, and the policies and procedures for
administration of the Plan that may hereafter be adopted by the
Compensation/Benefits Committee of the Board (the "Committee"), to the extent
such policies and procedures are consistent with the terms of this Agreement
and the Plan. A copy of the Plan is attached to this Agreement.
1. Definitions and Construction.
1.1 Definitions. Whenever used herein, the
following terms shall have their respective meanings set forth below:
(a) "Date of Option Grant" means November 24,
1995.
(b) "Number of Option Shares" means 13,300,000
shares of Stock, as adjusted from time to time pursuant to Section 9.
(c) "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
(d) "Exercise Price" means $8.50 per share of
Stock, as adjusted from time to time pursuant to Section 8.
(e) "Fair Market Value" means, as of any date,
the closing price of the Stock on the New York Stock Exchange, Inc. (as
published by the Wall Street Journal, if published) on the day prior to such
date, or if the Stock was not traded on such day, on the next preceding day on
which the Stock was traded, or, if the stock is not then listed or traded, such
price as may be determined in good faith by the Board.
(f) "Good Reason" means the assignment to the
Optionee at any time (x) prior to the consummation of the merger (the "Merger")
of the Company with a subsidiary of Silver King Communications, Inc. ("SKC") or
(y) following a Transfer of Control of any duties inconsistent in any respect
with his position as Chairman of the Board of the Company, any purported
termination of the Optionee's service with the Company other than for Cause or
any other action by the Company that results in a diminution in his position,
authority, duties or responsibilities.
<PAGE> 3
(g) "Initial Exercise Date" means the Initial
Vesting Date.
(h) "Initial Vesting Date" means the first
anniversary of the Date of Option Grant.
(i) "LSAR" has the meaning provided in Section
4.9 of this Agreement.
(j) "Option Expiration Date" means the tenth
anniversary of the Date of Option Grant.
(k) "Securities Act" means the Securities Act of
1933, as amended.
(l) "Transfer of Control" means (A) prior to the
consummation of the Merger, (i) the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act),
other than Optionee, Liberty Media Corporation and their respective affiliates
(within the meaning of Rule 12b-2 promulgated under the Exchange Act) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of equity securities of the Company representing a
majority of the voting power of the then outstanding equity securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for purposes
of this subsection (i), the following acquisitions shall not constitute a
Transfer of Control: (x) any acquisition by the Company, (y) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (z) any acquisition by
any corporation pursuant to a transaction which complies with clauses (y) and
(z) of subsection (ii); (ii) consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (y) all or substantially all of the
individuals and entities who were the beneficial owners of the Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the then outstanding
combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors of the corporation resulting from
such Business Combination (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Company Voting Securities and (z)
no Person (excluding any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 30% or more of the combined voting
power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination; or
(iii) approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company; or (B) upon the consummation of the Merger, as set
forth in Paragraph 7(g) of the Equity and Bonus Compensation Agreement by and
between the Optionee and SKC dated as of August 24, 1995. In the event of a
transaction (including, without limitation, a merger,
2
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consolidation, reorganization or recapitalization) between the Company or its
stockholders and another corporation, entity or person, pursuant to which the
holders of Company Common Stock exchange such Common Stock for shares of stock
or assets of such corporation, person or entity, the provisions of this
definition shall apply thereafter to events relating to such corporation,
person or entity, treating such entity as the Company for purposes of this
definition
1.2 Construction. Captions and titles contained
herein are for convenience only and shall not affect the meaning or
interpretation of any provision of this Option Agreement. Except when
otherwise indicated by the context, the singular shall include the plural, the
plural shall include the singular, and the term "or" shall include the
conjunctive as well as the disjunctive.
2. Option Grant and Time of Exercise.
The Options granted hereunder shall be nonqualified stock
options and shall be exercisable as follows (subject to acceleration or earlier
termination as provided in this Agreement):
<TABLE>
<CAPTION>
Date on and Date on or Before
Number After Which Which Must be
of Shares Exercisable Exercised
- --------- ----------- ---------
<S> <C> <C>
3,325,000 November 24, 1996 November 24, 2005
3,325,000 November 24, 1997 November 24, 2005
3,325,000 November 24, 1998 November 24, 2005
3,325,000 November 24, 1999 November 24, 2005
</TABLE>
Without otherwise limiting the provisions of this Agreement, in the event of
termination of the Optionee's service pursuant to Section 7.1(d) of this
Agreement, all unexercised Options shall vest immediately prior to such
termination and shall become exercisable as of the date of such termination.
3. Administration. All questions of interpretation
concerning this Option Agreement shall be determined by the Board or the
Committee, as applicable. All determinations by the Board and Committee shall
be final and binding upon all persons having an interest in the Option. Any
officer of the Company shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation or election which is the
responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation
or election.
3
<PAGE> 5
4. Exercise of the Option.
4.1 Method of Exercise.
Subject to the conditions and restrictions contained
in this Section 4, the Option shall be exercised by delivering written notice
of exercise to the Secretary of the Company. Such notice is irrevocable and
must be accompanied by payment in cash, as provided in this Agreement, or such
other form permitted by this Agreement or as the Committee may reasonably
approve, including shares of Common Stock of the Company in accordance with
this Section 4 below, and a signed stock option exercise form.
4.2 Payment of Exercise Price.
(a) Forms of Consideration Authorized.
Except as otherwise provided below, payment of the aggregate Exercise Price for
the number of shares of Stock for which the Option is being exercised shall be
made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company
of whole shares of Stock owned by the Optionee having a Fair Market Value
(without regard to any restrictions on transferability applicable to such stock
by reason of federal or state securities laws or agreements with an underwriter
for the Company), not less than the aggregate Exercise Price, (iii) by means of
a Cashless Exercise, as defined in Section 4.2(c), or (iv) by any combination
of the foregoing.
(b) Tender of Stock. Notwithstanding
the foregoing, the Option may not be exercised by tender to the Company of
shares of Stock to the extent such tender of Stock would constitute a violation
of the provisions of any law, regulation or agreement restricting the
redemption of the Company's stock.
(c) Cashless Exercise. A "Cashless
Exercise" means the assignment in a form reasonably acceptable to the Company
of the net proceeds of a sale or loan with respect to some or all of the shares
of Stock to be acquired upon the exercise of the Option pursuant to a program
or procedure subject to the reasonable approval of the Company (including,
without limitation, through an exercise complying with the provisions of
Regulation T as promulgated from time to time by the Board of Governors of the
Federal Reserve System), in an amount equal to the aggregate exercise price of
the Options being exercised.
4.3 Tax Withholding. No later than the date as of
which an amount first becomes includable in the gross income of the Optionee
for federal income tax purposes in connection with the Option, including,
withholding limitation, obligations arising upon (i) the exercise, in whole or
in part, of the Option, (ii) the transfer , in whole or in part, of any shares
acquired upon exercise of the Option, (iii) the operation of any law or
regulation providing for the imputation of interest, or (iv) the lapsing of any
restriction with respect to any shares acquired upon exercise of the Option,
the Optionee shall pay to the Company, or make arrangements satisfactory to the
Company regarding the payment of, any federal, state, local or foreign tax
withholding obligations required by
4
<PAGE> 6
law to be withheld by the Company with respect to such amount. Such payment may
be made by the withholding or delivery of shares of Common Stock.
4.4 Certificate Registration. The certificate (or
certificates, in accordance with Optionee's instructions) for the shares as to
which the Option is exercised shall be registered in the name of the Optionee
(or, at Optionee's request, a corporation or other entity controlled by
Optionee), or, if applicable, in the names of the heirs of the Optionee.
4.5 Restrictions on Grant of the Option and Issuance of
Shares. The grant of the Option and the issuance of shares of Stock upon
exercise of the Option shall be subject to compliance with all applicable
requirements of federal, state or foreign law with respect to such securities.
The Option may not be exercised if the issuance of shares of Stock upon
exercise would constitute a violation of any applicable federal, state or
foreign securities laws or other law or regulations or the requirements of any
stock exchange or market system upon which the Stock may then be listed.
Certificates with respect to shares of Stock issued upon exercise of the Option
may contain an appropriate legend regarding registration under applicable
federal and state securities laws and limitations on sale under such laws.
4.6 Fractional Shares. The Company shall not be
required to issue fractional shares upon the exercise of the Option and shall
deliver cash in lieu of fractional shares.
4.7 Registration of Shares. Upon request by the
Optionee, the Company shall use all commercially reasonable efforts promptly to
effect a registration under the Securities Act of the shares of Stock issued
upon exercise of the Option and owned by the Optionee without cost to the
Optionee, other than underwriting discounts and commissions, any broker or
dealer fees or commissions and the fees and expenses of any special accounting
required in connection with the registration, which shall be paid by the
Optionee; provided, however, that the Company shall not be obligated to effect
any registration pursuant to this paragraph if counsel designated by the
Company (which counsel shall be reasonably acceptable to the Optionee) delivers
an opinion to the Optionee to the effect that the number of shares of Stock
specified in such request for registration could then be sold by the Optionee
within a three-month period under Rule 144 (or any successor provision then in
effect) under the Securities Act, and the Optionee is then entitled to sell
Stock pursuant to said Rule 144. Such registration shall be effected pursuant
to registration rights customary under the circumstances.
4.8 Payment of Transfer Taxes, Fees and Other Expenses.
The Company agrees to pay any and all original issuance taxes and stock
transfer taxes that may be imposed on the issuance of shares acquired pursuant
to the exercise of the Options together with any and all other fees and
expenses necessarily incurred by the Company in connection therewith.
5
<PAGE> 7
4.9 Effect of a Transfer of Control. (a) Upon a Transfer
of Control, this Option, to the extent not previously exercisable or
terminated, shall become exercisable.
(b) With respect to each share of Stock
then subject to the Option, to the extent not exercised or terminated as of the
date a Transfer of Control occurs, from and after the date of the Transfer of
Control until the termination of the Option in accordance with this Agreement,
the Optionee shall have the right (an "LSAR"), in lieu of exercising such Option
in whole or in part, upon notice to the Company of his election to exercise an
LSAR, to surrender such Option (or portion thereof) to the Company for
cancellation in exchange for cash in an amount equal to the excess of the Fair
Market Value of the share of Stock to which the Option relates on the date of
exercise of the LSAR over the Exercise Price for such Option. Upon exercise of
an LSAR, the Option with respect to such shares of Stock shall be terminated.
The LSARs granted herein shall not be transferable except to the extent
permitted with respect to the related Option pursuant to this Agreement and
shall be subject to the other terms of this Agreement in the same manner as the
related Option, including, without limitation, with respect to termination and
adjustment.
5. Nontransferability of the Option. The Option
may be exercised during the lifetime of the Optionee only by the Optionee or
the Optionee's guardian or legal representative and may not be assigned or
transferred in any manner except by will or by the laws of descent and
distribution. Following the death of the Optionee, the Option, to the extent
provided in Section 7, may be exercised by the Optionee's legal representative
or by any person empowered to do so under the deceased Optionee's will or under
the then applicable laws of descent and distribution.
6. Termination of the Option.
The Option, whether then exercisable or not, shall terminate
and cease to be exercisable as follows:
(a) if the Company terminates the Optionee's
service for Cause, immediately upon the effective date of such
termination;
(b) if the Optionee's service with the Company is
terminated other than (i) by the Optionee for Good Reason or
(ii) by the Company except as provided in Section 7 below, at
the close of business on the date that is three (3) months
(or, if such day is not a business day, at the close of
business on the first business day after such day) after the
effective date of such termination; or
(c) in all other cases, at the close of business
November 24, 2005.
6
<PAGE> 8
7. Effect of Termination of Service.
7.1 Option Exercisability.
(a) Disability. If the Optionee's
service with the Company is terminated by the Company because of the disability
of the Optionee, the Option, to the extent unexercised and exercisable on the
date on which the Optionee's service terminated, may be exercised by the
Optionee (or the Optionee's guardian or legal representative) at any time prior
to the date that is three (3) months (or, if such day is not a business day, at
the close of business on the first business day after such day) after the date
on which the Optionee's service terminated, but in any event no later than the
Option Expiration Date.
(b) Death. If the Optionee's service
with the Company is terminated because of the death of the Optionee, the
Option, to the extent unexercised and exercisable on the date on which the
Optionee's service terminated, may be exercised by the Optionee's legal
representative or other person who acquired the right to exercise the Option by
reason of the Optionee's death at anytime prior to the date that is six (6)
months (or, if such day is not a business day, at the close of business on the
first business day after such day) after the date on which the Optionee's
service terminated, but in any event no later than the Option Expiration Date.
The Optionee's service shall be deemed to have terminated on account of death if
the Optionee dies within three (3) months after the Optionee's termination of
service, other than for Cause (as defined below).
(c) Termination Not for Good Reason.
If the Optionee terminates his service with the Company other than for Good
Reason, the Option, to the extent unexercised and exercisable by the Optionee
on the date on which the Optionee's service is terminated, may be exercised in
whole or in part by the Optionee at any time prior to the close of business on
the date that is three (3) months (or if such day is not a business day, at the
close of business on the first business day after such day) after the date on
which the Optionee's service is terminated, but in any event no later than the
Option Expiration Date, and the Option, to the extent unexercisable by the
Optionee on the date on which the Optionee's service is terminated, shall be
terminated.
(d) Other Termination of Service. If
the Optionee's service with the Company is terminated (i) by the Company for
any reason other than Cause, or because of the disability or death of Optionee
as provided in paragraphs (a) or (b), above, or (ii) by the Optionee for Good
Reason, the Option to the extent unexercised and exercisable by the Optionee on
the date on which the Optionee's service is terminated, may be exercised in
whole or in part by the Optionee at any time prior to the close of business on
the date that is six (6) months (or if such day is not a business day, at the
close of business on the first business day after such day) after the date on
which the Optionee's service is terminated, but in any event no later than the
Option Expiration Date. "Cause" shall mean the willful and continued failure of
the Optionee substantially to perform his duties to the Company (other than as
a result of physical or mental illness or injury), after the Board delivers to
the Optionee a written demand for substantial performance that specifically
identifies the manner in which the Board of Directors believes that he has not
substantially performed his duties.
7.2 Extension if Exercise Prevented by Law.
Notwithstanding the foregoing, if the exercise of the Option within the
applicable time periods set forth in Section 7.1 is prevented by the provisions
of Section 4.5, the Option shall remain exercisable until three (3) months
after the date the Optionee is notified by the Company that the Option is
exercisable.
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<PAGE> 9
8. Adjustments for Changes in Capital Structure. In the
event of any stock dividend, stock split, reverse stock split,
recapitalization, combination, consolidation, merger, reclassification, or
similar change in the capital structure of the Company, the number and kind of
shares subject to the Option and the Exercise Price will be appropriately
adjusted consistent with such change. The provisions of this paragraph shall
similarly apply to successive such events, and following any adjustment
pursuant to this Section 8, all references herein to the number and kind of
shares subject to, and the Exercise Price of, the Option shall be deemed to
refer to such adjusted number, kind and Exercise Price.
9. Successors. (a) This Agreement shall inure to the
benefit of and be binding upon the Company and its successors and assigns.
(b) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place, except as otherwise provided in this Agreement.
Upon consummation of the Merger, all references herein to the Company shall be
deemed to refer to SKC, and the Company shall cause SKC to assume expressly and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place, except as otherwise provided in this Agreement.
10. Termination or Amendment. The Board may terminate or
amend the Plan at any time, provided, however, that no such termination or
amendment may adversely affect the Option or any unexercised portion hereof
without the consent of the Optionee. No amendment or addition to this Option
Agreement shall be effective unless in writing and signed by both parties.
11. Integrated Agreement. This Option Agreement and the
Plan constitute the entire understanding and agreement of the Optionee and the
Company with respect to the subject matter contained herein or therein, and
there are no agreements, understandings, restrictions, representations, or
warranties among the Optionee and the Company with respect to such subject
matter other than those as set forth or provided for herein or therein. To the
extent contemplated herein or therein, the provisions of this Option Agreement
shall survive any exercise of the Option and shall remain in full force and
effect. To the extent the terms of this Agreement are not consistent with the
provisions of the Plan, the terms contained in this Agreement shall govern the
Option.
8
<PAGE> 10
IN WITNESS WHEREOF, the Company and the Optionee have executed
this Agreement as of the 24th day of November, 1995.
HOME SHOPPING NETWORK, INC.
By:__________________________________
________________________________________
Barry Diller, OPTIONEE
9
