<PAGE>
Draft of 3/16/98
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934*
(Amendment No. 4)
BET Holdings, Inc.
(Name of Issuer)
Class A Common Stock, par value $.02 per share
(Title of Class of Securities)
086585-10-6
(CUSIP Number)
<TABLE>
<S> <C> <C>
Stephen M. Brett, Esq. Frederick H. McGrath, Esq. Howard V. Sinclair, Esq.
Senior Vice President Baker & Botts, L.L.P. Arent, Fox, Kintner,
and General Counsel 599 Lexington Avenue Plotkin & Kahn
Tele-Communications, Inc. New York, New York 10022-6030 1050 Connecticut Avenue, N.W.
5619 DTC Parkway (212) 705-5000 Washington, D.C. 20036-5339
Englewood, CO 80111 (202) 857-6000
(303) 267-5500
</TABLE>
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
March 15, 1998
(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 [_].
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).
*NOTE: THIS STATEMENT CONSTITUTES AMENDMENT NO. 4 OF THE REPORTING GROUP
SCHEDULE 13D AND ALSO CONSTITUTES AMENDMENT NO. 10 OF A REPORT ON
SCHEDULE 13D OF ROBERT L. JOHNSON AND AMENDMENT NO. 4 OF A REPORT ON
SCHEDULE 13D OF TELE-COMMUNICATIONS, INC.
<PAGE>
CUSIP No. 086585-10-6
(1) Names of Reporting Persons S.S. or I.R.S. Identification
Nos. of Above Persons
Robert L. Johnson
(2) Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [_]
(3) SEC Use Only
(4) Source of Funds
BK, OO
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [_]
(6) Citizenship or Place of Organization
United States
Number of (7) Sole Voting Power 0 shares
Shares
Beneficially (8) Shared Voting Power 10,631,103 shares*
Owned by
Each (9) Sole Dispositive Power 0 shares
Reporting
Person (10) Shared Dispositive Power 10,631,103 shares*
With
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
10,631,103 shares*
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
[_]
(13) Percent of Class Represented by Amount in Row (11)
63.6%
Assumes conversion of all shares of Class B Common Stock and Class C
Common Stock beneficially owned by the Reporting Persons into shares
of Class A Common Stock. Because each share of Class B Common Stock
and Class C Common Stock generally is entitled to ten votes per share
while the Class A Common Stock is entitled to one vote per share, the
Reporting Persons may be deemed to beneficially own equity securities
of the Company representing approximately 91.8% of the voting power of
the Company.
(14) Type of Reporting Person (See Instructions)
IN
____________________
* Includes 103,600 shares beneficially owned by Mr. Johnson's spouse, as to
which shares the Reporting Persons disclaim beneficial ownership.
Page 2 of 9 pages
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CUSIP No. 086585-10-6
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above
Persons
Tele-Communications, Inc.
84-1260157
(2) Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [_]
(3) SEC Use Only
(4) Source of Funds
BK, OO
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [_]
(6) Citizenship or Place of Organization
Delaware
Number of (7) Sole Voting Power 0 shares
Shares
Beneficially (8) Shared Voting Power 10,631,103 shares*
Owned by
Each (9) Sole Dispositive Power 0 shares
Reporting
Person (10) Shared Dispositive Power 10,631,103 shares*
With
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
10,631,103 shares*
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [_]
(13) Percent of Class Represented by Amount in Row (11)
63.6%
Assumes conversion of all shares of Class B Common Stock and Class C
Common Stock beneficially owned by the Reporting Persons into shares
of Class A Common Stock. Because each share of Class B Common Stock
and Class C Common Stock generally is entitled to ten votes per share
while the Class A Common Stock is entitled to one vote per share, the
Reporting Persons may be deemed to beneficially own equity securities
of the Company representing approximately 91.8% of the voting power of
the Company.
(14) Type of Reporting Person (See Instructions)
CO
____________________
* Includes 103,600 shares beneficially owned by Mr. Johnson's spouse, as to
which shares the Reporting Persons disclaim beneficial ownership.
Page 3 of 9 pages
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Statement of
ROBERT L. JOHNSON
and
TELE-COMMUNICATIONS, INC.
Pursuant to Section 13(d)
of the Securities Exchange Act of 1934
in respect of
BET HOLDINGS INC.
This Report on Schedule 13D relates to the Class A common stock, par value
$.02 per share (the "Class A Stock"), of BET Holdings, Inc., a Delaware
corporation (the "Company"). The Report on Schedule 13D originally filed by the
Reporting Group (as defined below) on September 16, 1997 as amended and
supplement by the amendments thereto previously filed with the Commission
(collectively, the "Reporting Group Schedule 13D") is hereby amended and
supplemented to include the information contained herein, and this Report
constitutes Amendment No. 4 to the Reporting Group Schedule 13D. The Report on
Schedule 13D originally filed by Robert L. Johnson ("Johnson") on November 12,
1991, as amended and supplemented by the amendments thereto previously filed
with the Commission (collectively, the "Johnson Schedule 13D"), is hereby
amended and supplemented to include the information contained herein, and this
Report constitutes Amendment No. 10 to the Johnson Schedule 13D. In addition,
the Report on Schedule 13D originally filed by Tele-Communications, Inc., a
Delaware corporation ("TCI"), on August 15, 1994, as amended and supplemented by
the amendments thereto previously filed with the Commission (collectively, the
"TCI Schedule 13D"), is hereby amended and supplemented to include the
information contained herein, and this Report constitutes Amendment No. 4 to the
TCI Schedule 13D. Mr. Johnson and TCI (each, a "Reporting Person") constitute a
"group" for purposes of Rule 13d-5 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), with respect to their respective beneficial
ownership of the Class A Stock and are collectively referred to as the
"Reporting Group." The Johnson Schedule 13D, the TCI Schedule 13D, and the
Reporting Group Schedule 13D, are collectively referred to as the "Schedule
13D." Capitalized terms not otherwise defined herein have the respective
meanings ascribed thereto in the Reporting Group 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
Page 4 of 9 pages
<PAGE>
as Exhibits hereto and incorporated herein by reference. Information contained
herein with respect to each Reporting Person and its executive officers,
directors and controlling persons is given solely by such Reporting Person, and
no other Reporting Person has responsibility for the accuracy or completeness of
information supplied by such other Reporting Person.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The information set forth in Item 3 of the Johnson Schedule 13D, the TCI
Schedule 13D and the Reporting Group Schedule 13D is hereby amended and
supplemented by adding the following information thereto:
On March 15, 1998 the Company, Johnson, Liberty and a newly-formed
corporation which is wholly owned by Johnson and Liberty ("Buyer"), entered into
an Agreement and Plan of Merger (the "Merger Agreement") providing for the
merger (the "Merger") of Buyer with and into the Company. In the Merger, each
share of Class A Stock of the Company outstanding immediately prior to the time
the Merger is consummated (other than shares held by Johnson, Liberty, Buyer or
any of their respective subsidiaries, which will be cancelled, or shares held by
stockholders who have exercised their statutory right under the laws of the
state of Delaware to have such shares appraised and be paid the fair value
thereof ("Dissenting Shares")) will be converted into the right to receive
$63.00 payable entirely in cash, without any interest thereon (such cash paid
for the shares of Class A Stock is hereinafter referred to as the "Merger
Consideration"), and each outstanding share of common stock of Buyer will be
converted into one share of the common stock of the Company, as the surviving
corporation in the Merger (the "Surviving Corporation"). Each outstanding option
to purchase Class A Stock (other than those owned by Johnson), whether or not
then exercisable, shall be cancelled at the closing of the Merger and the holder
thereof will be paid an amount in cash equal to the difference between $63.00
and the exercise price of such option.
The Reporting Persons have calculated that, assuming there are no
Dissenting Shares, approximately $471.6 million will be required to pay the
aggregate Merger Consideration due to stockholders and option holders of the
Company at the closing of the Merger. In addition, it is anticipated that an
aggregate of approximately $46 million will be required to pay all other
expenses and costs relating to the transactions, to refinance or finance certain
indebtedness of the Company, Black Entertainment Television, Inc. (a wholly
owned subsidiary of the Company), Buyer and certain principals of Buyer, and for
other general corporate purposes (the "Merger Expenses").
On March 13, 1998, The Bank of New York Company, Inc. ("BNY") and BNY
Capital Markets, Inc. ("BNY Capital Markets") delivered a letter (the "BNY
Letter") to Johnson and Liberty to the effect that BNY and BNY Capital Markets
are highly confident as of the date of such letter, subject to certain
qualifications and conditions set forth therein, that they, directly or through
any of their affiliates, could successfully arrange and fully syndicate a $600
million senior secured credit facility for the purpose of (i) financing the
payment of the Merger Consideration in the Merger, (ii) paying all fees,
expenses and costs in connection with the Acquisition, (iii) refinancing the
existing revolving credit facility of Black Entertainment Television, Inc. and
(iv) general corporate purposes. A copy of the BNY Letter is filed as Exhibit 6
hereto and is incorporated herein by reference in its entirety.
Page 5 of 9 pages
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In addition, Buyer has agreed in the Merger Agreement to use its reasonable
efforts to obtain from an appropriate financial institution by May 15, 1998
(subject to reasonable extension) a firm commitment with respect to the
financing for the Merger Consideration and the Merger Expenses (the
"Financing"), which commitment would be subject to customary conditions for
transactions of this type. In the event Buyer is unable to obtain such a
commitment by such date (as such date may be extended), the Company will have
the option to terminate the Merger Agreement.
ITEM 4. PURPOSE OF TRANSACTION
The information set forth in Item 4 of the Johnson Schedule 13D, the TCI
Schedule 13D and the Reporting Group Schedule 13D is hereby amended and
supplemented by adding the following information thereto:
The information set forth in Item 3 of this Schedule 13D is hereby
incorporated by reference herein.
The Reporting Persons intend to consummate the Merger and acquire all of
the outstanding shares of Class A Stock at the earliest practicable date. The
Merger Agreement specifies certain conditions which must be satisfied prior to
the closing of the Merger, including, among other things, (a) the obtaining of
the affirmative vote of a majority of the voting power of the shares owned by
stockholders of the Company other than Johnson, Liberty or their respective
controlled affiliates, (b) the expiration of all waiting periods under the Hart-
Scott-Rodino Antitrust Improvement Act of 1976 (the "HSR Act") with respect to
the Merger, (c) the receipt of any necessary regulatory approvals, (d) the
obtaining of the Financing on terms reasonably satisfactory to Buyer, (e) that
there be no pending or threatened governmental actions or claims or pending
third party actions or claims relating to the Merger at the Effective Time and
(f) that the total number of Dissenting Shares is no more than 10% of the then
outstanding shares of Class A Stock (other than shares held by Johnson, Liberty
or their respective controlled affiliates). On March 15, 1998, the Company,
Johnson, Liberty, Tele-Communications, Inc. and the Company's directors entered
into a Memorandum of Understanding with the plaintiffs in the consolidated class
action suit pending in Delaware relating to the proposed Acquisition. The
Memorandum of Understanding provides for the full settlement of all claims which
were or could have been brought by the plaintiffs and all stockholders of the
Company from September 9, 1997 to the date of the consummation of the Merger as
well as the release from liability of the defendants therein and their
affiliates. Such proposed settlement will be subject, among other things, to
the execution of a stipulation of settlement and court approval of the terms of
the settlement. The plaintiffs in a similar class action suit filed in the
District of Columbia are not parties to the Memorandum of Understanding.
As a result of the Merger, (a) all of the outstanding shares of Class A
Stock (other than Dissenting Shares and shares owned by Johnson, Liberty, Buyer
or any of their respective subsidiaries) would be cancelled, and the shares of
Buyer would become the shares of the Surviving Corporation, (b) Johnson and
Liberty would own 100% of the outstanding shares of the Surviving Corporation,
(c) the Class A Stock of the Company would cease to be authorized to be quoted
on any national securities exchange, (d) the capital stock of the Company would
be removed from registration under the Exchange Act, (e) the directors of Buyer
would become the directors of the Surviving Corporation and (f) the officers of
the Company would become the officers of the Surviving Corporation.
The foregoing description of the Merger Agreement and the transactions
contemplated thereby is only a summary thereof and does not purport to be
complete.
Page 6 of 9 pages
<PAGE>
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
The information set forth in Item 6 of the Johnson Schedule 13D, the TCI
Schedule 13D and the Reporting Group Schedule 13D is hereby amended and
supplemented by adding the following information thereto:
The information set forth in Item 4 of this Schedule 13D is hereby
incorporated by reference herein.
On March 15, 1998, Johnson and Liberty entered into a letter agreement (the
"Johnson/Liberty Letter Agreement") relating to the Surviving Corporation. The
Johnson/Liberty Letter Agreement will become operative upon the consummation of
the Merger. Such agreement provides for certain management rights of each party,
restrictions on transfer of securities of the Surviving Corporation and certain
rights of first refusal upon proposed transfers of securities of the Surviving
Corporation, certain liquidity rights of Liberty and other provisions relating
to the relationship of the parties following the Merger. A copy of the
Johnson/Liberty Letter Agreement is filed as Exhibit 8 hereto and is
incorporated herein by reference in its entirety.
The foregoing description of the Johnson/Liberty Letter Agreement does not
purport to be complete and is qualified in its entirety by reference to the
Johnson/Liberty Letter Agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
6. Letter, dated March 13, 1998, from The Bank of New York Company, Inc. and
BNY Capital Markets, Inc. to BTV Acquisition Corporation and Liberty Media
Corporation.
7. Press Release of Robert L. Johnson and Liberty Media Corporation.
8. Letter Agreement, dated March 15, 1998, between Robert L. Johnson and
Liberty Media Corporation.
Page 7 of 9 pages
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of his knowledge and belief, each
of the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: March 18, 1998
/s/ Robert L. Johnson
---------------------
Robert L. Johnson
TELE-COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
--------------------
Name: Stephen M. Brett
Title: Executive Vice President
and General Counsel
Page 8 of 9 pages
<PAGE>
EXHIBIT INDEX
Seq. Pg. No.
1. Joint Filing Agreement between Robert L. Johnson and Tele-
Communications, Inc. regarding joint filing of Schedule 13D.*
2. Letter, dated September 10, 1997, from Robert L. Johnson
and Liberty Media Corporation to the Board of Directors of
the Company.*
3. Letter, dated September 19, 1997, from Robert L. Johnson and
Liberty Media Corporation to Delano E. Lewis, the sole member
of the Special Committee of the Board of Directors of the
Company.*
4. Letter Agreement between Robert L. Johnson and Liberty Media
Corporation.*
5. Press Release of the Company, dated January 23, 1998.*
6. Letter, dated March 13, 1998, from The Bank of New York Company,
Inc. and BNY Capital Markets, Inc. to BTV Acquisition Corporation
and Liberty Media Corporation.
7. Press Release of Robert L. Johnson and Liberty Media Corporation.
8. Letter Agreement, dated March 15, 1998, between Robert L.
Johnson and Liberty Media Corporation.
* Previously filed.
Page 9 of 9 pages
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EXHIBIT 6
BANK OF NEW YORK COMPANY, INC.
ONE WALL STREET
NEW YORK, NEW YORK 10286
BNY CAPITAL MARKETS, INC.
ONE WALL STREET
NEW YORK, NEW YORK 10286
March 13, 1997
BTV Acquisition Corporation
1900 W Place, N.E.
Washington D.C. 20018
Attention: Robert L. Johnson
Liberty Media Corporation
5619 DTC Parkway
Englewood, Colorado 80111
Attention: Robert R. Bennett
Gentlemen:
You have discussed with us your intention to seek a $600 million
senior secured credit facility (the "Facility") to be made available to BTV
--------
Acquisition Corporation, a Delaware corporation (the "Borrower"), for the
--------
purpose of (i) financing the potential acquisition, through a merger (the
"Acquisition"), of the Borrower into BET Holdings, Inc. a Delaware corporation
-----------
("Holdings"), (ii) paying all fees, expenses and costs in connection with the
--------
Acquisition, (iii) refinancing the existing revolving credit facility of Black
Entertainment Television, Inc., a District of Columbia corporation ("BET"), and
---
(iv) general corporate purposes. Holdings is a holding company which owns a
number of subsidiaries, including, without limitation, all of the issued and
outstanding capital stock of BET. Subject to the qualifications and conditions
set forth below, The Bank of New York Company, Inc. and BNY Capital Markets,
Inc. are highly confident as of the date of this letter that they, directly or
through any of their affiliates, could successfully arrange and fully syndicate
the Facility.
<PAGE>
Our expression of confidence is subject to the following
qualifications and conditions. First, the Facility would have to be on terms and
conditions, including, without limitation, pricing and fees and covenants,
including maximum leverage and coverage ratios, that in our view are appropriate
for a Facility of this size, type and purpose and that are satisfactory to us.
Second, the Acquisition would have to be structured on terms and conditions
satisfactory to us, including, without limitation, the purchase price on both a
per share and aggregate basis. Third, the results of our due diligence with
respect to the Acquisition, the Facility, the Borrower, Holdings and all of its
subsidiaries, including, without limitation, BET, which due diligence has not
yet commenced, would have to be satisfactory to us. Fourth the capital structure
of the Borrower, Holdings and BET would have to be on terms and conditions
satisfactory to us. Fifth, the documentation for the Facility and the
Acquisition would have to be satisfactory to us. Sixth, no material adverse
change shall have occurred in the market for senior-debt financings. Seventh, no
material adverse change (including, without limitation, arising from any
litigation or other proceeding, now existing or hereafter commenced) shall have
occurred in the financial condition, business, operations, property or prospects
of the Borrower, Holdings or any subsidiaries of Holdings, including, without
limitation, BET. Eighth, no competing financing to the Borrower, Holdings or any
subsidiaries or Holdings, including, without limitation, BET, will be offered or
arranged. Ninth, no change or proposed change in law shall have occurred that
could materially and adversely affect the Facility, the Acquisition or the
economic consequences thereof.
Without in any way limiting the foregoing, we should emphasize to you
that this is not, and should not be construed as, a commitment. Any commitment
that we or any of our affiliates might provide in connection with the Facility
or the Acquisition would only be provided after internal credit approval is
obtained in respect thereof and would be provided pursuant to a written
agreement separate from this letter.
We shall have the right to review and approve all public announcements
and filings relating to the transactions contemplated hereby that refer,
directly or indirectly, to us or to this letter before they are made (such
approval not to be unreasonably withheld), provided that you and BET may name us
and make reference to factual matters concerning us in a press release and
filings made by you in connection with the Acquisition.
You should be aware that other companies with interests that may
conflict with yours may be or become customers of us or our affiliates, and we
or our affiliates may be providing, or in the future may provide, financing or
other services to them.
Except as required by law or unless we otherwise consent in writing,
you are not authorized to show or circulate this letter, or disclose any of the
contents hereof, to any other person or entity other than your legal and
financial advisors and the board of directors of Holdings and their legal and
financial advisors, in each case solely in connection with the Facility and the
Acquisition, each of whom shall be similarly restricted.
2
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This letter shall not become effective until it has been accepted by
you, such acceptance to be effected by your countersigning and returning this
letter, accompanied by your payment of the fee referred to in the fee letter of
even date herewith accompanying this letter, to the undersigned no later than
Wednesday, March 18, 1998.
Very truly yours,
THE BANK OF NEW YORK COMPANY, INC.
By: /s/ Kalpana Raina
-------------------------------------
BNY CAPITAL MARKETS, INC.
By: /s/ Torry Berntsen
-------------------------------------
ACCEPTED AND AGREED:
BTV ACQUISITION CORPORATION
By: /s/ Robert L. Johnson
-------------------------------
Name: Robert L. Johnson
Title: President
LIBERTY MEDIA CORPORATION
By: /s/ Robert R. Bennett
-------------------------------
Name: Robert R. Bennett
Title: President
Date: March 15, 1998
3
<PAGE>
EXHIBIT 7
FOR IMMEDIATE RELEASE
March 16, 1998
MERGER OFFER BY ROBERT L. JOHNSON AND LIBERTY MEDIA TO
PURCHASE OUTSTANDING SHARES OF BET HOLDINGS, INC. STOCK
APPROVED BY BOARD OF DIRECTORS
Washington, D.C. (March 16, 1998) -- Robert L. Johnson, Founder, Chairman and
Chief Executive Officer of BET Holdings Inc. and Liberty Media Corporation
received approval from the Board of Directors for BET Holdings, Inc. of their
offer to purchase all of the outstanding shares of BET common stock not already
owned by them for a price of sixty-three dollars ($63.00) per share. The Board
voted to adopt the proposal as being in the best interest of the remaining
shareholders of BET and signed a definitive merger agreement with Johnson,
Liberty and a newly formed acquisition corporation owned by Johnson and Liberty.
"Liberty Media and I are pleased to announce that we have reached a successful
merger agreement with BET Holdings to acquire all of the outstanding common
shares of BET Holdings that are not currently held by myself and Liberty Media,"
said Robert L. Johnson, Founder, Chairman and Chief Executive Officer of BET
Holdings, Inc. "We believe that the purchase price paid for those shares
represents a full and fair value to all BET shareholders. We look forward to
shareholder approval of the merger agreement."
It is expected that the proposed merger will be voted upon by BET shareholders
at Special Meeting of Shareholders planned to be held in the early summer of
1998.
The completion of the merger is subject to approval by the holders of a majority
of the shares not held by Johnson and Liberty. In addition, completion of the
merger is subject to additional conditions, including receipt of sufficient
financing, receipt of all necessary governmental and regulatory approvals and
consents and the absence of litigation, including litigation challenging the
proposed merger.
# # #
Contact: Michelle Curtis, 202/608-2003
<PAGE>
EXHIBIT 8
LIBERTY MEDIA CORPORATION
8101 EAST PRENTICE AVENUE, SUITE 500
ENGLEWOOD, COLORADO 80111
March 15, 1998
Mr. Robert L. Johnson
2915 Audubon Terrace, NW
Washington, D.C. 20018
Dear Sir:
This Letter and the attached Term Sheet relate to the prospective
management and ownership of the business of BET Holdings, Inc. (BET) following
our joint acquisition of BET pursuant to the Agreement and Plan of Merger, dated
as of March 15, 1998, among BET, BTV Acquisition Corporation, Robert L. Johnson
(JOHNSON) and Liberty Media Corporation (LIBERTY). Subject to the following
paragraph, the agreements contained in this letter and in the attached Term
Sheet (collectively, this LETTER AGREEMENT) shall become effective upon the
effective date of the Merger (as defined in the Agreement and Plan of Merger).
Except as otherwise expressly provided in this Letter Agreement, this Letter
Agreement shall not affect the obligations of the parties under the letter
agreement dated September 11, 1997, which letter agreement is hereby ratified
and confirmed.
The parties intend that the covenants and agreements set forth in this
Letter Agreement will be superseded by a definitive stockholders' agreement and
other agreements and instruments (collectively, the DEFINITIVE AGREEMENTS) that
will contain provisions incorporating and expanding upon the terms, conditions
and agreements set forth in this Letter Agreement, together with other
provisions which may be customary in the case of transactions of the type
described in this Letter Agreement, and such other provisions as are reasonable
or appropriate in the context of the transactions contemplated by this Letter
Agreement. Notwithstanding the foregoing, the parties expressly acknowledge and
agree that this Letter Agreement constitutes a binding agreement among them,
until the Definitive Agreements are executed and delivered. If the Definitive
Agreements are not executed and delivered prior to the effective time of the
Merger, then this Letter Agreement shall be deemed to constitute the Definitive
Agreements.
Each party represents to the other party that this Letter Agreement has
been duly authorized, executed and delivered by such party and constitutes the
legal, valid and binding obligation of such party, and is enforceable against
such party in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the rights of creditors generally and by general principles of equity.
This Letter Agreement may be executed in counterparts, each of which shall
be deemed
1
<PAGE>
an original and all of which shall constitute one and the same instrument. This
Letter Agreement will be governed by, and construed in accordance with, the laws
of the State of Delaware, without regard to its conflicts of law rules. The
parties agree that irreparable damage will occur if any provision of this Letter
Agreement is not performed in accordance with its terms, and that the parties
shall be entitled to specific performance of the terms of this Letter Agreement
in addition to any other remedy at law or in equity.
If this Letter Agreement is in accordance with your understanding please
indicate your agreement by signing below, at which time this letter will
constitute a binding agreement among us.
Very truly yours,
Liberty Media Corporation
By: /s/ Robert R. Bennett
---------------------------
Name: Robert R. Bennett
Title: President
Accepted And Agreed
March 15, 1998
/s/ Robert L Johnson
- ------------------------------
Robert L. Johnson
2
<PAGE>
STOCKHOLDERS' AGREEMENT TERM SHEET
The following constitute the terms of the stockholders' agreement to be
entered into by Liberty Media Corporation, a Delaware corporation (LIBERTY), and
Robert L. Johnson and/or a corporation, partnership, limited liability company,
trust, or other business entity at least 90% of which is owned and controlled by
him, with respect to the equity securities of the surviving corporation
following the merger of BTV Acquisition Corp. (or an affiliate thereof) with and
into BET Holdings, Inc. (the MERGER) pursuant to the Agreement and Plan of
Merger among Johnson, Liberty, BTV Acquisition Corp. and BET Holdings, Inc. (the
MERGER AGREEMENT). As used in this Letter Agreement, the term COMPANY shall mean
the surviving corporation in the Merger, and the term JOHNSON shall mean Robert
L. Johnson or, if the context requires, shall mean such corporation,
partnership, limited liability company, trust, or other business entity at least
90% of which is owned and controlled by him.
1. SCOPE. The purpose of this Letter Agreement or any Definitive
Agreements that supersede this Letter Agreement (collectively, this AGREEMENT)
is to set forth the relationship of the parties with respect to, among other
matters, (i) all equity securities of the Company, including any securities
exchangeable for or convertible into equity securities of the Company and any
securities which upon exercise entitle the holder to acquire any other equity
securities (collectively, the COMPANY SECURITIES) held by Liberty and Johnson
(each, a STOCKHOLDER) and their respective Affiliates (as defined below), and
(ii) the management of the Company. For purposes of this Agreement:
(a) In the case of Johnson, his Affiliates comprise all entities at least
90% of whose voting securities he owns directly or indirectly. Johnson and his
Affiliates together will be referred to as the JOHNSON STOCKHOLDER GROUP.
(b) In the case of Liberty, its Affiliates comprise all entities at least
90% of whose voting securities its owns directly or indirectly and all entities
at least 90% of whose voting securities are owned directly or indirectly by
Tele-Communications, Inc. (TCI). Liberty and its Affiliates together will be
referred to as the LIBERTY STOCKHOLDER GROUP.
2. MANAGEMENT RIGHTS. Each Stockholder shall be entitled to vote its
Company Securities as it determines in its sole discretion except as follows:
(a) Each Stockholder agrees to take or cause to be taken all reasonable
actions required for the election of a slate of directors of the Company
containing a minimum of two directors designated by Liberty and a minimum of two
directors designated by Johnson.
(b) If the Company's board of directors includes more than four directors,
the Stockholders shall be free to exercise their voting rights with respect to
the additional directors as
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they see fit. As of the consummation of the Merger, the Company's board of
directors will comprise seven directors.
3. FUNDAMENTAL MATTERS. If Robert L. Johnson ceases to act as Chairman of
the Board and Chief Executive Officer of the Company on a full time basis
(including as a result of Johnson's death or disability (where disability shall
mean his inability to perform the duties of Chairman and CEO on a full time
basis for any period of 180 consecutive days due to mental or physical illness
or injury) the Company will not approve, disapprove or effectuate any of the
following matters (the FUNDAMENTAL MATTERS) without the consent of Liberty:
(a) any material amendments to the Company's Certificate of Incorporation
or Bylaws;
(b) any merger or other business combination involving the Company which
results in the creation or issuance of any new class of securities or any change
in the characteristics of its already-outstanding capital stock;
(c) any sale, transfer or other disposition, in one transaction or a
series of related transactions, of all or substantially all of the Company's
consolidated assets or business;
(d) any transaction (other than those contemplated by this Letter
Agreement) between the Company and its affiliates, on the one hand, and the
members of the Johnson Stockholder Group and their respective Affiliates, on the
other hand;
(e) any transaction not in the 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,
Liberty or any member of its Stockholder Group being required under law to
divest itself of all or any part of its Company Securities, or interests
therein, 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;
(f) the commencement or settlement of any litigation or arbitration other
than in the ordinary course of the Company's business or that is likely to have
a material adverse effect upon the Company;
(g) the acquisition or disposition, directly or indirectly (by merger,
consolidation or otherwise), by the Company or any of its subsidiaries, of a
material portion of the Company's consolidated assets or business, in one
transaction or a series of related transactions (where material shall mean
assets or businesses having a value of 10% or more of the Company's consolidated
assets before such acquisition or disposition);
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(i) the incurrence, assumption or guarantee by the Company or any of its
subsidiaries of any indebtedness or other liability (including suretyship and
contingent liabilities) or obligation for borrowed money (or any refinancings of
outstanding indebtedness), in one transaction or a series of related
transactions, if the amount of such borrowed money exceeds 10% of the Company's
consolidated assets determined prior to such incurrence, assumption or
guarantee;
(j) any liquidation or dissolution of the Company;
(k) the issuance, grant, offer, sale, acquisition or disposition of any
Company Securities or the equity securities of any of the Company's subsidiaries
(other than pursuant to Company stock option and similar plans, either pre-
existing or as approved by Liberty);
(l) the declaration or payment of any dividend or the making of any
distribution on the capital stock of the Company; or the declaration or payment
of any dividend or the making of any distribution on the capital stock of any of
the Company's subsidiaries that are not wholly owned by the Company;
(m) the approval of the annual budget for the Company and any material
changes thereto; or
(n) the entering into by the Company or any of its subsidiaries of
material contracts, licenses or leases, except in the ordinary course of their
respective businesses .
4. TRANSFERS OF COMPANY SECURITIES.
(a) No Stockholder (the TRANSFEROR) shall sell, transfer, assign, give,
pledge, hypothecate or otherwise dispose of, directly or indirectly (a
TRANSFER), any Company Securities other than in a Permitted Transfer. As a
condition to the completion of each Permitted Transfer, with the exception of
the Permitted Transfers pursuant to Sections 4 (b)(6), and 4(b)(8), or to a
designee under 4 (b)(2)(A), the person or entity to whom the Company Securities
are Transferred (the TRANSFEREE) shall be required to execute a written
instrument, reasonably satisfactory to the other Stockholder (the NON-
TRANSFERRING STOCKHOLDER), agreeing to become subject to the terms and
conditions of this Agreement. Upon the execution of such written instrument the
Transferee shall become a Stockholder for purposes of this Agreement, and shall
become a member of the same Stockholder Group as his or its Transferor with
respect to the Transferred Company Securities.
(b) A PERMITTED TRANSFER shall mean any of the following Transfers:
(1) A Transfer of Company Securities by Liberty to members of the
Liberty Stockholder Group or a Transfer of Company Securities by Johnson to
members of the Johnson Stockholder Group.
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(2) A pledge or other grant of a security interest in vested Company
Securities in connection with the incurrence of bona fide indebtedness by the
Transferor, but only if the pledgee or other secured party of the applicable
Company Securities agrees as follows:
(A) Upon any default or exercise of its rights under such pledge
or security arrangement, before taking any other action to foreclose upon the
pledged Company Securities, it will offer to sell to the Stockholders in the
other (that is, other than the Transferor's) Stockholder Group (or their
designees) a portion of the pledged Company Securities, valued at the appraised
fair market value thereof, equal to the applicable amount required to cure such
default.
(B) If such portion of the pledged Company Securities is
purchased by the other Stockholder Group (or their designees), so that the
secured debt has been completely discharged, the pledgee or other secured party
will thereupon return to the Transferor the remainder of the pledged Company
Securities, free and clear of the pledge or other security interest.
(3) A Transfer by Johnson (or his estate) of Company Securities,
without consideration, in any of the following situations:
(A) A Transfer to, or in trust for the benefit of, members of
his immediate family (consisting of his parents, spouse, siblings, children, and
grandchildren) or an entity wholly-owned by Johnson and/or members of Johnson's
immediate family.
(B) A Transfer to a legal representative in the event Johnson is
adjudicated mentally incompetent.
(4) A Transfer by members of Johnson's immediate family (or the
estate of such member of Johnson's family) of Company Securities, without
consideration, in any of the following situations:
(A) A Transfer to, or in trust for the benefit of, other members
of Johnson's immediate family.
(B) A Transfer to a legal representative of such member of
Johnson's immediate family in the event that such member of Johnson's immediate
family is adjudicated mentally incompetent.
(5) A Transfer by a trustee of Company Securities owned by a trust to
the grantor or settlor of the trust or any beneficiary of the trust pursuant to
the terms of the trust.
(6) An indirect Transfer of Company Securities, provided that any
such
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indirect Transfer which results in the person or entity which receives the
Company Securities ceasing to be a member of the transferor's Stockholder Group
shall be a Permitted Transfer only if such Transfer is made in compliance with
the right of first refusal procedures set forth below. For purposes of this
Agreement, an INDIRECT TRANSFER includes a transfer of a controlling interest in
any entity that owns Company Securities, and the right of first refusal shall
instead apply to such controlling interest rather than to the Company Securities
held by such entity.
(7) A Transfer of Company Securities to an employee stock option plan
(ESOP), if any, established by the Company.
(8) A Transfer as to which the Non-Transferring Stockholder has
failed to exercise its right of first refusal as set forth in Section 5.
(9) A Transfer of Company Securities consented to in writing by the
Non-Transferring Stockholder.
5. RIGHT OF FIRST REFUSAL.
(a) If a Stockholder has received a bona fide offer from an unaffiliated
third party (a THIRD PARTY OFFER) to purchase all or any portion of its Company
Securities, which offer the Stockholder desires to accept, such Stockholder (the
OFFERING STOCKHOLDER) shall notify the other Stockholder (the OFFEREE
STOCKHOLDER) of such Third Party Offer and the material terms thereof. Such
notice (the OFFER NOTICE) shall constitute an offer (the OFFER) by the Offering
Stockholder to the Offeree Stockholder to purchase all, but not less than all,
Company Securities which the Offering Stockholder desires to sell upon the same
terms (including net economic terms) and conditions as such Third Party Offer.
If all or part of the consideration in such Third Party Offer consists of non-
cash consideration, such non-cash consideration shall be valued at the fair
market value thereof, as mutually agreed by the parties, or if the parties
cannot agree, by a customary appraisal procedure to be performed by unaffiliated
investment banking firms having experience in the valuation of cable television
networks; provided, however, that to the extent the consideration to be paid by
the Offeree Stockholder differs from that to be paid in the Third Party Offer,
such Offeree Stockholder shall not be entitled to accept such Offer unless the
terms and conditions upon which it is to purchase such Company Securities, in
the aggregate, are no less favorable to the Offering Stockholder than those
receivable by it in the Third Party Offer.
(b) If the Offeree Stockholder desires to accept such Offer, it shall
notify the Offering Stockholder within 30 days of the date of delivery of the
Offer Notice. Such notice shall constitute the Offeree Stockholder's acceptance
of the Offer and agreement to purchase such Company Securities upon the terms
and conditions contained in the Offer Notice and in this Agreement. The Offeree
Stockholder shall be entitled to assign its right to purchase the offered
Company Securities to a third party. The purchase and sale of such Company
Securities shall be pursuant to an agreement containing representations and
warranties, conditions to closing and other terms and conditions customary in
transactions of such type, including, but not limited to,
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receipt of any required governmental consents and approvals.
(c) If the Offeree Stockholder fails to accept such Offer, the Offering
Stockholder shall be entitled to sell such offered Company Securities pursuant
to such Third Party Offer, provided that (i) the closing of such transaction
occurs within 120 days of the date of delivery of the Offer Notice and (ii) the
terms and conditions of such sale (including price) are no less favorable to the
Offering Stockholder than the terms and conditions set forth in the Offer
Notice. An unaffiliated third party purchaser acquiring Company Securities in
accordance with the foregoing procedures shall acquire such securities free and
clear of any obligations, and shall have no rights under, this Letter Agreement
or the Stockholders Agreement.
(d) After an initial public offering of the Company's equity securities,
each Stockholder shall also have a right of first refusal upon a proposed
Transfer by a Stockholder pursuant to registered offerings and open market
sales, provided, however, that (i) the price at which the Offering Stockholder
shall offer shares to the Offeree Stockholder shall not exceed the average
market price of such shares over the three trading days preceding such Offer
Notice, in the case of open market sales, or the three trading days preceding
the effectiveness of any such registered offering, in the case of a registered
sale, and (ii) the Offeree Stockholder shall be required to accept such offer
within one day of such notice in the case of open market sales and registered
offerings.
(e) The right of first refusal provided for in this Section shall apply to
any proposed Transfers to a Company ESOP.
6. TERMINATION OF RIGHTS. A Stockholder shall cease to be entitled to
exercise the rights under Sections 2,3, 4, 5 and 9 of this Agreement (but shall
continue to be obligated to perform its obligations hereunder) as of the date
that its Stockholder Group collectively ceases to own at least 1,601,145 shares
of Company common stock (or the equivalent, adjusted, as appropriate, after the
Merger to account for any stock splits or recapitalization). In addition, as of
the date referred to in the preceding sentence, in the case of Liberty, if
applicable, it shall cease to have the rights provided for in Section 7, except
that Libery shall continue to have the rights provided for in the last sentence
in Section 7(a).
7. EXIT RIGHTS.
(a) If the Company's Common Stock is not registered under the Securities
Exchange Act of 1934, as amended (the EXCHANGE ACT), and listed on a national
securities exchange not later than the fifth anniversary of the Effective Time
of the Merger, then Liberty will have the right, for ten years, exercisable each
year only during the 90 day period starting with the anniversary of the
effective date of the Merger, to require that the Company take such actions as
may be necessary to cause the Company to (i) register its Common Stock under the
Exchange Act and (ii) list its Common Stock on a national securities exchange.
Johnson agrees to use his reasonable best efforts to cause the Company to take
such actions. Alternatively, upon notice
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from Liberty of its election to require the Company to take the actions provided
for in the first sentence of this subsection, Johnson may elect to purchase, or
cause the Company to purchase, all of Liberty's Company Securities at fair
market value, to be determined by appraisal. The parties agree that in
connection with an initial public offering of the Company's Common Stock, they
shall each have piggy-back registration rights, subject to requirements imposed
by the underwriters. After such initial public offering, the parties shall have
registration rights providing each party with not less than three demand
registrations; provided, however, that each party shall bear all costs and
expenses of their respective demand registrations after the first such demand
registration.
(b) Upon the death of (i) Johnson, if his spouse has predeceased him (or
if he and his spouse are deemed to have died simultaneously); or (ii) Johnson's
spouse, if Johnson has predeceased his spouse and she is the owner of Company
Securities formerly owned by him, the estate of Johnson or his spouse, as
appropriate, may, at its election, require the purchase of Company Securities
from the estate, in one or more transactions, in an amount sufficient to enable
the legal representative of such Stockholder to pay estate and other taxes,
funeral, and expenses incident to the transfer of the estate. The Company
Securities shall be purchased at their fair market value, to be determined by
appraisal, as provided under this Agreement. Liberty shall be given the first
opportunity by the Estate or spouse to purchase such Company Securities, using
the procedures set forth in Section 5. If Liberty declines, then the Company
must: (i) arrange for the sale of such Company Securities to a third party; or
(ii) purchase such Company Securities; or (3) arrange for the sale of all or a
part of the Company sufficient, through appropriate corporate means, to provide
to the Estate such amounts as are required by the Estate for the purposes stated
in this subsection.
8. COMPENSATION TO THE PARTIES. The parties acknowledge that so long as
Robert L. Johnson is serving as the Chairman of the Board and Chief Executive
Officer of the Company on a full time basis, it is their mutual goal to provide
for aggregate annual compensation to Johnson of $6 million per year and to
Liberty of $2 million per year, adjusted upward annually at the greater of (i) 5
percent; or (ii) increase in the consumer price or similar index, and subject
to annual review and reasonable bonus consideration and award, in respect of
services to be provided by such persons to the Company, in each case subject to
compliance with the Company's credit facilities (and, to the extent such credit
facilities will not permit the full payment of such amounts, the parties agree
that such compensation payable to each of them shall be deferred pro rata and
the amount of such reduction carried over and added to the compensation to be
paid in the following year (or years, as appropriate)). Such compensation shall
be structured in a manner which provides the greatest tax benefits to the
Company.
9. STOCK REPURCHASES. The parties agree that, except as otherwise
provided in Section 7 above, without the consent of both Stockholders the
Company (and any Company ESOP) will not be permitted to repurchase Company
Securities from one Stockholder without offering to repurchase a pro rata amount
of Company Securities from the other Stockholder on the same terms and
conditions.
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10. COMPANY LOAN TO JOHNSON. The parties acknowledge and agree that
Johnson and BTV Acquisition Corporation, or the Company, or both as appropriate
will enter into a loan agreement providing for a loan to Johnson up to an
aggregate of $35 million (the JOHNSON LOAN), to be used for matters previously
discussed between the parties. This obligation will be fully binding on the
Company after the consummation of the Merger. The Johnson Loan shall be for a
term of not less than five, but no more than ten, years and shall bear interest
at a rate equal to the applicable rate (which may vary over time depending on
the final structure of the financing obtained) at which the Company has borrowed
the funds to finance the Merger. Johnson shall have the option to pay interest
currently or to allow interest to accrue and be paid at maturity. Johnson may
sell shares of Company Securities to a Company ESOP, if applicable, from time to
time, and use the proceeds to pay interest.
11. PCS LICENSE. At the appropriate time to be reasonably determined,
Johnson and any entities controlled by him intend to take actions as will result
in the Company owning such rights to certain PCS licenses which may be now held
by R & S PCS, Inc., and which results in the release of the pledge of shares of
BET Holdings, Inc., currently owned by Johnson. Such actions may include, but
not be limited to the sale, transfer or assignment of all of Johnson's (or R & S
PCS Inc.'s) right, title and interest in and to such licenses, or a merger of R
& S PCS, Inc., on a tax free basis, with or into BTV or the Company, or another
entity, as reasonably determined. The final form of this transaction will be
subject to Liberty's approval, not to be unreasonably withheld or delayed.
12. OTHER PROVISIONS.
(a) Notwithstanding anything in the September 11, 1997, letter agreement,
all options held by Johnson in the Company shall vest and automatically become
options to acquire an equal number of shares of common stock of the surviving
Company (adjusted, if necessary, depending on the final capital structure of BTV
and the Company) at the same aggregate price as if all of his options vested and
were exercised prior to the Merger.
(b) Notwithstanding anything in this Agreement to the contrary, for a
period of 5 years following the effective time of the Merger, provided that the
Liberty Stockholder Group owns at least 533,715 shares of Company common stock
(or the equivalent, adjusted, as
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appropriate, after the Merger to account for any stock splits or
recapitalization).
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