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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934*
HSN, INC.
(formerly named Silver King Communications, Inc.)
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
40429R 10 9
(CUSIP Number)
Stephen M. Brett, Esq. Pamela S. Seymon, Esq.
Senior Vice President Wachtell, Lipton, Rosen & Katz
and General Counsel 51 West 52nd Street
Tele-Communications, Inc. New York, New York 10019
5619 DTC Parkway (212) 403-1000
Englewood, CO 80111
(303) 267-5500
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
December 20, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Sched-
ule 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 state-
ment [ ]. (A fee is not required only if the reporting person:
(1) has a previous statement on file reporting beneficial own-
ership 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 per-
cent 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 amend-
ment containing information which would alter disclosures pro-
vided 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. 2 OF A RE-
PORT ON SCHEDULE 13D OF BDTV INC., AMENDMENT NO. 6
OF A REPORT ON SCHEDULE 13D OF EACH OF BARRY DILLER
AND THE REPORTING GROUP (AS DEFINED IN ITEM 2) AND
AMENDMENT NO. 8 OF A REPORT ON SCHEDULE 13D OF TELE-
COMMUNICATIONS, INC.
CUSIP No. 40429R 10 9
(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
OO
(5) Check if Disclosure of Legal Proceedings is Required Pursu-
ant to Items 2(d) or 2(e) [ ]
(6) Citizenship or Place of Organization
Delaware
Number of (7) Sole Voting Power 0 shares
Shares Bene-
ficially (8) Shared Voting Power 23,380,094 shares
Owned by
Each Report- (9) Sole Dispositive Power 0 shares
ing Person
With (10) Shared Dispositive Power 23,380,094 shares
(11) Aggregate Amount Beneficially Owned by Each Reporting Per-
son
23,380,094 shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [X]
Excludes shares beneficially owned by the executive offic-
ers and directors of TCI. See Item 5. Excludes options
to purchase an aggregate of 6,379,385 shares of Common
Stock granted to Mr. Diller, none of which are currently
vested or exercisable and none of which become exercisable
within 60 days.
(13) Percent of Class Represented by Amount in Row (11)
39.5%
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 Persons may be deemed
to beneficially own equity securities of the Company rep-
resenting approximately 77.8% of the voting power of the
Company.
(14) Type of Reporting Person (See Instructions)
CO
Page 2 of 20 Pages
CUSIP No. 40429R 10 9
(1) Names of Reporting Persons S.S. or I.R.S. Identification
Nos. of Above Persons
Barry Diller
(2) Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
(3) SEC Use Only
(4) Source of Funds
OO
(5) Check if Disclosure of Legal Proceedings is Required Pursu-
ant to Items 2(d) or 2(e) [ ]
(6) Citizenship or Place of Organization
United States
Number of (7) Sole Voting Power 0 shares
Shares Bene-
ficially (8) Shared Voting Power 23,380,094 shares
Owned by
Each Report- (9) Sole Dispositive Power 0 shares
ing Person
With (10) Shared Dispositive Power 23,380,094 shares
(11) Aggregate Amount Beneficially Owned by Each Reporting Per-
son
23,380,094 shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [X]
Excludes shares beneficially owned by the executive offic-
ers and directors of TCI. See Item 5. Excludes options
to purchase an aggregate of 6,379,385 shares of Common
Stock granted to Mr. Diller, none of which are currently
vested or exercisable and none of which become exercisable
within 60 days.
(13) Percent of Class Represented by Amount in Row (11)
39.5%
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 Persons may be deemed
to beneficially own equity securities of the Company rep-
resenting approximately 77.8% of the voting power of the
Company.
(14) Type of Reporting Person (See Instructions)
IN
Page 3 of 20 Pages
CUSIP No. 40429R 10 9
(1) Names of Reporting Persons S.S. or I.R.S. Identification
Nos. of Above Persons
BDTV 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
(5) Check if Disclosure of Legal Proceedings is Required Pur-
suant to Items 2(d) or 2(e) [ ]
(6) Citizenship or Place of Organization
Delaware
Number of (7) Sole Voting Power 0 shares
Shares Bene-
ficially (8) Shared Voting Power 23,380,094 shares
Owned by
Each Report- (9) Sole Dispositive Power 0 shares
ing Person
With (10) Shared Dispositive Power 23,380,094 shares
(11) Aggregate Amount Beneficially Owned by Each Reporting Per-
son
23,380,094 shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [X]
Excludes shares beneficially owned by the executive offic-
ers and directors of TCI. See Item 5. Excludes options
to purchase an aggregate of 6,379,385 shares of Common
Stock granted to Mr. Diller, none of which are currently
vested or exercisable and none of which become exercisable
within 60 days.
(13) Percent of Class Represented by Amount in Row (11)
39.5%
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 Persons may be deemed
to beneficially own equity securities of the Company rep-
resenting approximately 77.8% of the voting power of the
Company.
(14) Type of Reporting Person (See Instructions)
CO
Page 4 of 20 Pages
CUSIP No. 40429R 10 9
(1) Names of Reporting Persons S.S. or I.R.S. Identification
Nos. of Above Persons
BDTV II INC.
(2) Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
(3) SEC Use Only
(4) Source of Funds
OO
(5) Check if Disclosure of Legal Proceedings is Required Pur-
suant to Items 2(d) or 2(e) [ ]
(6) Citizenship or Place of Organization
United States
Number of (7) Sole Voting Power 0 shares
Shares Bene-
ficially (8) Shared Voting Power 23,380,094 shares
Owned by
Each Report- (9) Sole Dispositive Power 0 shares
ing Person
With (10) Shared Dispositive Power 23,380,094 shares
(11) Aggregate Amount Beneficially Owned by Each Reporting Per-
son
23,380,094 shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [X]
Excludes shares beneficially owned by the executive offic-
ers and directors of TCI. See Item 5. Excludes options
to purchase an aggregate of 6,379,385 shares of Common
Stock granted to Mr. Diller, none of which are currently
vested or exercisable and none of which become exercisable
within 60 days.
(13) Percent of Class Represented by Amount in Row (11)
39.5%
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 Persons may be deemed
to beneficially own equity securities of the Company rep-
resenting approximately 77.8% of the voting power of the
Company.
(14) Type of Reporting Person (See Instructions)
CO
Page 5 of 20 Pages
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Statement of
TELE-COMMUNICATIONS, INC.,
BARRY DILLER
BDTV INC.
and
BDTV II INC.
Pursuant to Section 13(d)
of the Securities Exchange Act of 1934
in respect of
HSN, INC.
(formerly named Silver King Communications, Inc.)
This Report on Schedule 13D (the "Schedule 13D") re-
lates to the common stock, par value $.01 per share (the "Com-
mon Stock"), of HSN, Inc., a Delaware corporation (the "Com-
pany," which was formerly named Silver King Communications,
Inc.). 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. 8 to the TCI Schedule 13D. In addition, the Re-
port on Schedule 13D originally filed by each of Mr. Barry
Diller (the "Barry Diller Schedule 13D") and the Reporting
Group (the "Reporting Group Schedule 13D") on August 29, 1995,
as amended and supplemented by the amendments thereto previ-
ously filed with the Commission, is hereby amended and supple-
mented to include the information contained herein, and this
Report constitutes Amendment No. 6 to each of the Barry Diller
Schedule 13D and the Reporting Group Schedule 13D. This Report
on Schedule 13D also constitutes Amendment No. 2 to the Report
on Schedule 13D of BDTV INC., a Delaware corporation ("BDTV"),
originally filed with the Commission on August 16, 1996 (the
"BDTV Schedule 13D"). This Report on Schedule 13D also consti-
tutes the Original Report (the "BDTV II Schedule 13D") of BDTV
II INC., a Delaware corporation ("BDTV II"). Barry Diller,
TCI, BDTV and BDTV II (each, a "Reporting Person") constitute a
Page 6 of 20 Pages
"group" for purposes of Rule 13d-5 under the Securities Ex-
change Act of 1934, as amended (the "Exchange Act"), with re-
spect to their respective beneficial ownership of the Common
Stock and are collectively referred to as the "Reporting
Group." The TCI Schedule 13D, the Barry Diller Schedule 13D,
the Reporting Group Schedule 13D, the BDTV Schedule 13D and the
BDTV II Schedule 13D are collectively referred to as the "Sche-
dule 13D." Capitalized terms not defined herein have the mean-
ings provided in the prior Reports on Schedule 13D referred to
in this paragraph.
The summary descriptions contained in this Report of
certain agreements and documents are qualified in their en-
tirety by reference to the complete texts of such agreements
and documents, filed 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 ac-
curacy or completeness of information supplied by such other
Reporting Person.
ITEM 1. SECURITY AND ISSUER.
The information contained in Item 1 of the TCI Sched-
ule 13D, the Barry Diller Schedule 13D, the BDTV Schedule 13D
and the Reporting Group Schedule 13D is hereby amended and
supplemented by adding the following information (and such in-
formation also constitutes the BDTV II Schedule 13D):
In conjunction with their approval of the HSN Merger,
on December 19, 1996, the stockholders of the Company approved
an amendment to the Company's Amended and Restated Certificate
of Incorporation to change the name of the Company to HSN, Inc.
The principal executive offices of the Company are at 11831
30th Court North, St. Petersburg, FL 33716.
ITEM 2. IDENTITY AND BACKGROUND.
The information contained in Item 2 of the TCI Sched-
ule 13D, the Barry Diller Schedule 13D, the BDTV Schedule 13D
and the Reporting Group Schedule 13D is hereby amended and sup-
plemented by adding the following information (and such infor-
mation also constitutes the BDTV II Schedule 13D):
The business address of BDTV II INC. is 1940 Coldwa-
ter Canyon Drive, Beverly Hills, CA 90210. BDTV II is a com-
pany formed by TCI and Mr. Diller to hold Company securities.
The name, business address and present principal oc-
cupation or employment and the name, address and principal bus-
iness of any corporation or other organization in which such
Page 7 of 20 Pages
employment is conducted of each of the executive officers and
directors of BDTV II are set forth in Schedule 1 attached
hereto and incorporated herein by reference.
During the last five years, neither BDTV II, nor, to
the best of BDTV II's knowledge, any of the persons named on
Schedule 1, has (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii)
been a party to a civil proceeding of a judicial or administra-
tive body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandat-
ing activities subject to, federal or state securities laws or
finding any violation with respect to such laws. To the best
knowledge of BDTV II, each of its executive officers and direc-
tors is a citizen of the United States, except as specifically
set forth in Schedule 1 hereto.
The name, business address and principal occupation
or employment and the name, address and principal business of
any corporation or other organization in which such employment
is conducted of each of the executive officers and directors of
TCI are set forth in Schedule 2 attached hereto and incorpo-
rated herein by reference. Such Schedule 2 shall supersede all
prior schedules in this Schedule 13D setting forth such infor-
mation for TCI.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The information contained in Item 5 of this Schedule
13D is hereby incorporated by reference herein.
ITEM 4. PURPOSE OF THE TRANSACTION.
The information set forth in Item 5 of this Schedule
13D is hereby incorporated by reference herein.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in Item 5 of the TCI Sched-
ule 13D, the Barry Diller Schedule 13D, the BDTV Schedule 13D
and the Reporting Group Schedule 13D is hereby amended and sup-
plemented by adding the following information:
The Savoy Merger was approved by Savoy's stockholders
and the Company's stockholders and consummated on December 19,
1996 and the HSN Merger was approved by HSN's stockholders and
the Company's stockholders on December 19, 1996 and was consum-
mated on December 20, 1996. Immediately prior to the HSN
Merger, 739,141 shares of HSN Class B Stock held by Liberty
HSN, Inc., an indirect, wholly owned subsidiary of TCI ("Lib-
erty HSN"), were exchanged for an equal number of shares
Page 8 of 20 Pages
of Class B common stock of House Acquisition Corp. ("House") and
17,566,702 shares of HSN Common Stock held by Liberty HSN were
exchanged for a like number of shares of common stock of House.
Pursuant to the HSN Merger, 19,260,859 shares of HSN Class B
Stock held by Liberty HSN were converted into 7,809,111 shares
of Class B Stock, the contingent right to acquire 2,591,752
shares of Class B Stock and cash in lieu of fractional shares.
All such shares of House Class B common stock and common stock
were converted in the HSN Merger into Class B common stock and
common stock of the surviving corporation. Pursuant to the
Exchange Agreement (as defined below), such shares of the sur-
viving corporation are exchangeable from time to time upon the
occurrence of certain events for shares of Common Stock and
Class B Stock of the Company at the same exchange ratios ap-
plicable to the HSN Common Stock and HSN Class B Stock in the
HSN Merger, subject to certain adjustments as described in the
Exchange Agreement.
Also pursuant to the HSN Merger, 100,000 shares of
HSN Common Stock held by Barry Diller were converted into
45,000 shares of Common Stock and options to acquire 13,300,000
shares of HSN Common Stock owned by Mr. Diller were converted
into options to receive 5,985,000 shares of Common Stock,
1,496,250 of which are currently vested. Barry Diller also re-
ceived options to acquire an additional 625,000 shares of Com-
mon Stock, which options were granted in November 1995, but
were subject to consummation of the Savoy Merger and the HSN
Merger; options to acquire 156,250 of such shares are currently
vested.
In addition, at the annual meeting of Company stock-
holders held on December 19, 1996, the stockholders of the Com-
pany approved an amendment to the Company's Amended and Re-
stated Certificate of Incorporation which deleted the require-
ment that the Common Stock and Class B Common Stock vote as
separate classes on certain fundamental matters presented to
stockholders of the Company at any time at which there are more
than 2,280,000 sahres of Class B Common Stock outstanding.
Based on information provided by the Company, such amendment
became effective on December 20, 1996. As a result, the hold-
ers of Common Stock and Class B Common Stock will vote together
as a single class on substantially all matters presented to
stockholders, except with respect to the election of 25% of the
Company's directors (who shall be voted upon by the holders of
Common Stock only) and as otherwise provided under Delaware
law.
Following consummation of the HSN Merger and the Sa-
voy Merger but without giving effect to the exchange of sur-
viving corporation stock owned by the TCI entities for shares
of Company stock or to the issuance of shares of Class B Stock
pursuant to the contingent right of Liberty HSN, the Reporting
Page 9 of 20 Pages
Group beneficially owns 12,484,191 shares of Company stock
(9,809,111 shares of Class B Stock and 2,675,080 shares of Com-
mon Stock). Based on the number of shares outstanding of Sa-
voy, HSN and the Company as of December 12, 1996 and after giv-
ing effect to the Savoy Merger and the HSN Merger, such shares
represent approximately 25.8% of the outstanding common equity
and 71.8% of the outstanding common voting power of the Company
with respect to matters as to which the holders of Class B
Stock and Common Stock vote together as a single class. Assum-
ing the issuance of all of the Class B Stock issuable pursuant
to the contingent right and the exchange of all shares of the
surviving corporation stock held by Liberty HSN for Company
securities, the Reporting Group estimates that, based on the
number of shares outstanding of Savoy, HSN and the Company as
of December 12, 1996 (and after giving effect to the Savoy
Merger and the HSN Merger), the Reporting Group would benefi-
cially own approximately 39.5% of the outstanding common equity
of the Company and shares of Common Stock and Class B Stock
representing approximately 77.8% of the outstanding common vot-
ing power with respect to matters as to which the holders of
Class B Stock and Common Stock vote together as a single class.
Such amounts do not include shares of Common Stock subject to
options with respect to 6,379,385 shares of Common Stock held
by Mr. Diller, none of which is currently vested or currently
exercisable or becomes exercisable in the next 60 days.
On December 20, 1996, following consummation of the
HSN Merger, pursuant to the Stockholders Agreement, Liberty HSN
contributed the 7,809,111 shares of Class B Stock it received
in the HSN Merger to BDTV II and Barry Diller contributed 4
shares of Common Stock to BDTV II, which contributions consti-
tuted the initial capitalization of BDTV II. The certificate
of incorporation of BDTV II is substantially identical to the
amended and restated certificate of incorporation of BDTV,
which was previously filed as an exhibit to this Schedule 13D.
The Reporting Group has not reached any definite con-
clusions concerning its future course of action with respect to
the Company and the shares of Common Stock and Class B Stock
beneficially owned by it and will continue to consider all of
its options. In reaching any conclusion as to its future
course of action, each of the TCI entities, Barry Diller, BDTV
and BDTV II will take into consideration various factors, in-
cluding, but not limited to, the Company's business and pros-
pects, other developments concerning the Company, other busi-
ness opportunities available to each Reporting Person and the
Reporting Group as a whole, developments with respect to the
businesses of each Reporting Person, general economic condi-
tions and money and stock market conditions, including, but not
limited to, the market price of the Common Stock.
Page 10 of 20 Pages
Each of the TCI entities, Barry Diller, BDTV and BDTV
II reserves the right, subject to applicable law, to: (i) ac-
quire additional Common Stock or Class B Stock, in open market
or privately negotiated transactions or otherwise; (ii) dispose
of all or a portion of its holding of Common Stock or Class B
Stock; (iii) continue to hold all or a part of such shares and
exercise voting control over the Company, or to hold such
shares as a passive investment; (iv) take other actions which
could involve one or more of the types of transactions or have
one or more of the results described in the penultimate para-
graph of this Item 5; or (v) change its intention with respect
to any or all of the matters referred to in this Item 5.
Other than as described in this Schedule 13D or
Amendment No. 2 to the Schedule 13E-3 with respect to HSN filed
by HSN, the Company, TCI, House and Barry Diller dated November
20, 1996 (which contains the proxy statement/prospectus of the
Company, HSN, and Savoy with respect to the Savoy Merger and
the HSN Merger and is incorporated herein by reference), none
of the TCI entities, Mr.Diller, BDTV or BDTV II nor, to the
best of their respective knowledge, any of their respective
executive officers, directors or controlling persons, has any
present plans or proposals which relate to or would result in:
(a) the acquisition by any person of additional 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 term 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 cor-
porate 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 delisted
from a national securities exchange or to cease to be autho-
rized to be quoted in any inter-dealer quotation system of a
registered national securities association; (i) a class of eq-
uity securities of the Company becoming eligible for termina-
tion of registration pursuant to Section 12(g)(4) of the Ex-
change Act; or (j) any action similar to any of those enumer-
ated above.
Notwithstanding anything contained herein, each of
the TCI entities, Barry Diller, BDTV and BDTV II and the Re-
porting Group as a whole reserves the right, depending on other
relevant factors, to change their respective intentions with
Page 11 of 20 Pages
respect to any and all of the matters referred to in this Item
5.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATION-
SHIPS WITH RESPECT TO THE SECURITIES OF THE ISSUER
The information set forth in Item 6 of the TCI Sched-
ule 13D, the Barry Diller Schedule 13D, the BDTV Schedule 13D
and the Reporting Group Schedule 13D is hereby amended and sup-
plemented by adding the following information:
On December 20, 1996, the Company and Liberty HSN
entered into an Exchange Agreement (the "Exchange Agreement")
which agreement has substantially the terms and conditions set
forth in Exhibit C to the HSN Merger Agreement which was previ-
ously described in and filed as an exhibit to this Schedule
13D. The description of the Exchange Agreement in this Sched-
ule 13D is qualified in its entirety by reference to the Ex-
change Agreement, which is attached hereto as an Exhibit and
incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1) Second Amended and Restated Joint Filing Agreement,
dated as of December 23, 1996, by and between Tele-Communica-
ions, Inc., Barry Diller, BDTV Inc. and BDTC II Inc.
2) Exchange Agreement, dated as of December 20, 1996, by
and between Liberty HSN, Inc. and the Company.
Page 12 of 20 Pages
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: December 24, 1996
TELE-COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
Name: Stephen M. Brett
Title: Senior Vice President
and General Counsel
/s/ Barry Diller
Barry Diller
BDTV INC.
By: /s/ Barry Diller
Name: Barry Diller
Title: President
BDTV II INC.
By: /s/ Barry Diller
Name: Barry Diller
Title: President
Page 13 of 20 Pages
EXHIBIT INDEX
Seq. Pg. No.
1. Written Agreement between TCI
and Mr. Diller regarding Joint
Filing of Schedule 13D.*
2. Definitive Term Sheet regarding
Stockholders Agreement, dated
as of August 24, 1995, by and
between Liberty Media Corporation
and Mr. Diller.*
3. Definitive Term Sheet regarding
Equity Compensation Agreement,
dated as of August 24, 1995, by
and between the Company and
Mr. Diller.*
4. Press Release issued by the
Company and Mr. Diller, dated
August 25, 1995.*
5. Letter Agreement, dated November 13,
1995, by and between Liberty Media
Corporation and Mr. Diller.*
6. Letter Agreement, dated November 16,
1995, by and between Liberty Media
Corporation and Mr. Diller.*
7. First Amendment to Stockholders
Agreement, dated as of November 27,
1995, by and between Liberty Media
Corporation and Mr. Diller.*
8. 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.*
_____________________
* Previously filed.
Page 14 of 20 Pages
9. Exchange Agreement, dated as of
November 27, 1995, by and between
Silver Management Company and Silver
King Communications, Inc.*
10. Agreement and Plan of Merger, dated
as of November 27, 1995, by and among
Silver King Communications, Inc.,
Thames Acquisition Corp. and Savoy
Pictures Entertainment, Inc.*
11. Voting Agreement, dated as of
November 27, 1995, by and among
Certain Stockholders of the Company
and Savoy Pictures Entertainment, Inc.*
12. Letter Agreement, dated March 22,
1996, by and between Liberty Media
Corporation and Barry Diller.*
13. In re Applications of Roy M. Speer
and Silver Management Company, Federal
Communications Commission Memorandum
and Order, adopted March 6, 1996 and
released March 11, 1996.*
14. In re Applications of Roy M. Speer
and Silver Management Company,
Request for Clarification of Silver
Management Company, dated April 10,
1996.*
15. In re Applications of Roy M. Speer
and Silver Management Company, Federal
Communications Commission Memorandum
Opinion and Order and Notice of Apparent
Liability, adopted June 6, 1996 and
released June 14, 1996.*
16. Amended and Restated Joint Filing
Agreement of TCI, Mr. Diller and BDTV.*
17. Amended and Restated Certificate of
Incorporation of BDTV INC.*
_____________________
* Previously filed.
Page 15 of 20 Pages
18. Press Release issued by the Company
and Home Shopping Network, Inc.,
dated August 26, 1996.*
19. Agreement and Plan of Exchange
and Merger, dated as of August 25,
1996, by and among the Company,
Home Shopping Network, Inc., House
Acquisition Corp., and Liberty
HSN, Inc.*
20. Termination Agreement, dated as of
August 25, 1996, among the Company,
BDTV INC., Liberty Program Investments,
Inc., and Liberty HSN, Inc.*
21. Voting Agreement, dated as of
August 25, 1996, by and among
Certain Stockholders of Home
Shopping Network, Inc. and the
Company.*
22. Voting Agreement, dated as of
August 25, 1996, by and among
Barry Diller, Liberty Media
Corporation, Arrow Holdings,
LLC, BDTV INC., and Home Shopping
Network, Inc.*
23. Letter Agreement, dated as of
August 25, 1996, by and between
Liberty Media Corporation and
Barry Diller.*
24. Second Amended and Restated Joint
Filing Agreement by and between
TCI, Mr. Diller, BDTC Inc. and
BDTV II Inc.
24. Exchange Agreement, dated as of
December 20, 1996, by and between
the Company and Liberty HSN, Inc.
_____________________
* Previously filed.
Page 16 of 20 Pages
SCHEDULE 1
Directors, Executive Officers and Controlling Persons
of BDTV II INC. ("BDTV II")
Principal Business or
Principal Occupation Organization in which
Name and Business Address such Business is Conducted
Barry Diller Chairman of the Board, Ownership and Operation of
Chief Executive Officer Television Stations
and Director of HSN,
Inc., 2425 Olympic Bou-
levard, Santa Monica, CA
90404; Chairman of the
Board, President and
Director of BDTV and
BDTV II
Page 17 of 20 Pages
SCHEDULE 2
Directors, Executive Officers and Controlling Persons
of Tele-Communications, Inc. ("TCI")
Principal Business or
Principal Occupation Organization in which
Name and Business Address such Business is Conducted
John C. Malone Chairman of the Board, Cable television & tele-
President and Chief communications; & program-
Executive Officer & ming services
Director of TCI, 5619
DTC Parkway, Englewood,
CO 80111
Donne F. Fisher Consultant & Director of Cable television & tele-
TCI, 5619 DTC Parkway, communications; & program-
Englewood, CO 80111 ming services
John W. Gallivan Director of TCI; Chair- Newspaper publishing
man of the Board of
Kearns-Tribune Corpora-
tion, 400 Tribune Build-
ing, Salt Lake City, UT
84111
Tony Lee Coelho Director of TCI; Chair- Investment Services
man of the Board & Chief
Executive Officer of ETC
w/TCI, Inc.; Chairman &
Chief Executive Officer
of Coelho Associates,
L.L.P., 1325 Avenue of
the Americas, 26th
Floor, New York, NY
10019
Kim Magness Director of TCI & TCI Management of personal
Communications, Inc., investments
Manages various personal
investments, 4000 E.
Belleview, Englewood, CO
80111
Paul A. Gould Director of TCI; Manag- Securities firm
ing Director and Execu-
tive Vice President of
Allen & Company, Incor-
porated, 711 Fifth Ave-
nue, New York, NY 10022
Page 18 of 20 Pages
Principal Business or
Principal Occupation Organization in which
Name and Business Address such Business is Conducted
Robert A. Naify Director of TCI; Presi- Motion Picture Industry
dent and Chief Executive
Officer of Todd-AO Cor-
poration, 172 Golden
Gate Avenue, San Fran-
cisco, CA 94102
Jerome H. Kern Director of TCI; Busi- Business Consulting: Law
ness Consultant; Senior
Counsel to Baker &
Botts, L.L.P., 5619 DTC
Parkway, Englewood, CO
80111
J. C. Sparkman Director of TCI and Con- Cable television & tele-
sultant, 5619 DTC Park- communications; & program-
way, Englewood, CO 80111 ming services
Gary K. Bracken Senior Vice President & Cable television & tele-
Controller of TCI Com- communications; & program-
munications, Inc., 5619 ming services
DTC Parkway, Englewood,
CO 80111
Stephen M. Brett Executive Vice Presi- Cable television & tele-
dent, Secretary & Gen- communications; & program-
eral Counsel of TCI, ming services
5619 DTC Parkway, Engle-
wood, CO 80111
Brendan R. Clouston Executive Vice President Cable television & tele-
& Chief Operating Officer communications; & program-
of TCI, 5619 DTC Parkway, ming services
Englewood, CO 80111
Barry Marshall Executive Vice President Cable television & tele-
of TCI Communications, communications; & program-
Inc., 5619 DTC Parkway, ming services
Englewood, CO 80111
Larry E. Romrell Executive Vice President Cable television & tele-
of TCI, 5619 DTC Park- communications; & program-
way, Englewood, CO 80111 ming services
Page 19 of 20 Pages
Principal Business or
Principal Occupation Organization in which
Name and Business Address such Business is Conducted
Bernard W.
Schotters, II Senior Vice President - Cable television & tele-
Finance & Treasurer of communications; & program-
TCI Communications, ming services
Inc., 5619 DTC Parkway,
Englewood, CO 80111
Robert N. Thomson Senior Vice President - Cable television & tele-
Government Affairs of communications; & program-
TCI Communications, ming services
Inc., 5619 DTC Parkway,
Englewood, CO 80111
Fred A. Vierra Executive Vice President Cable television & tele-
of TCI; Chief Executive communications; &
Officer of Tele- programming services
Communications Interna
tional, Inc., 5619 DTC
Parkway, Englewood, CO
80111
Peter R. Barton Executive Vice President Cable television &
of TCI, 5619 DTC telecommunications; &
Parkway, Englewood, CO programming services
80111
Page 20 of 20 Pages
EXHIBIT 23
SECOND AMENDED AND RESTATED JOINT FILING AGREEMENT
AMENDED AND RESTATED JOINT FILING AGREEMENT, dated as of
December 23, 1996, by and between Tele-Communications, Inc., a
Delaware corporation, Barry Diller, BDTV INC., a Delaware
corporation and BDTV II INC., a Delaware corporation.
WHEREAS, each of the parties hereto beneficially owns
shares of Common Stock or options to purchase shares of Common
Stock, or shares of Class B Common Stock (collectively, the
"Company Securities") of HSN, Inc., a Delaware corporation
formerly named Silver King Communications, Inc. (the
"Company");
WHEREAS, the parties hereto constitute a "group" with
respect to the beneficial ownership of the Company Securities
for purposes of Rule 13d-1 and Schedule 13D promulgated by the
Securities and Exchange Commission (the "Schedule 13D"); and
WHEREAS, Tele-Communications, Inc., Barry Diller and BDTV
INC. have previously entered into an agreement, dated as of
August 15, 1996, pursuant to which the parties thereto agreed
to prepare a single statement containing the information
required by the Schedule 13D with respect to their respective
interests in the Company;
NOW, THEREFORE, the parties hereto agree as follows:
1. The parties hereto shall prepare a single
statement containing the information required by Schedule 13D
with respect to their respective interests in the Company
Securities (the "Reporting Group Schedule 13D"), and the
Reporting Group Schedule 13D shall be filed on behalf of each
of them.
2. Each party hereto shall be responsible for the
timely filing of the Reporting Group Schedule 13D and any
necessary amendments thereto, and for the completeness and
accuracy of the information concerning him or it contained
therein, but shall not be responsible for the completeness and
accuracy of the information concerning any other party
contained therein, except to the extent that he or it knows or
has reason to believe that such information is inaccurate.
3. This Agreement shall continue unless terminated
by any party hereto.
4. Stephen M. Brett, Esq. and Pamela S. Seymon,
Esq. shall be designated as the persons authorized to receive
notices and communications with respect to the Reporting Group
Schedule 13D and any amendments thereto.
5. This Agreement may be executed in counterparts,
each of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
TELE-COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
Name: Stephen M. Brett
Title: Senior Vice President
and General Counsel
/s/ Barry Diller
Barry Diller
BDTV INC.
By: /s/ Barry Diller
Name: Barry Diller
Title: President
BDTV II INC.
By: /s/ Barry Diller
Name: Barry Diller
Title: President
2
EXHIBIT 24
EXCHANGE AGREEMENT
DATED AS OF DECEMBER 20, 1996
BY AND BETWEEN
SILVER KING COMMUNICATIONS, INC.
AND
LIBERTY HSN, INC.
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS................................... 2
SECTION 1.1 Defined Terms............................ 2
SECTION 1.2 Additional Defined Terms................. 7
ARTICLE 2 EXCHANGE OF SHARES............................ 8
SECTION 2.1 Right to Exchange the Exchange Securities
8
SECTION 2.2 Disputes Concerning Occurrence of an Issuance
Event and Available Silver King Amount... 10
SECTION 2.3 Mechanics of the Exchange................ 11
ARTICLE 3 EXCHANGE RATE ADJUSTMENTS..................... 13
SECTION 3.1 Exchange Rate Adjustments................ 13
SECTION 3.2 Adjustment for Consolidation or Merger
of Silver King........................... 18
SECTION 3.3 Notice of Adjustment..................... 19
SECTION 3.4 Notice of Certain Transactions........... 19
SECTION 3.5 Exchange Rate Adjustments for Actions of the
Surviving Corporation.................... 20
ARTICLE 4 GENERAL REPRESENTATIONS AND WARRANTIES
OF SILVER KING AND LIBERTY HSN................ 20
SECTION 4.1 Representations and Warranties of Silver King
.......................................20
SECTION 4.2 Representations and Warranties of Liberty HSN
.......................................22
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SILVER
KING WITH RESPECT TO EACH EXCHANGE............ 22
SECTION 5.1 Organization and Qualification........... 22
SECTION 5.2 Authorization of the Exchange............ 22
SECTION 5.3 Validity of Silver King Shares, etc. .... 22
SECTION 5.4 No Approvals or Notices Required; No Conflict
with Instruments......................... 23
-i-
Page
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE
ELIGIBLE HOLDER WITH RESPECT TO EACH
EXCHANGE...................................... 24
SECTION 6.1 Ownership and Validity of Surviving Exchange
Shares................................... 24
SECTION 6.2 No Approvals or Notices Required; No Conflict
with Instruments......................... 24
ARTICLE 7 COVENANTS AND OTHER AGREEMENTS................ 25
SECTION 7.1 Notification of Issuance Event........... 25
SECTION 7.2 Transfer of Surviving Corporation's Assets
and
Liabilities to Subsidiary................ 25
SECTION 7.3 Treatment of Silver King Class B Stock and
Silver
King Common Stock upon a Distribution.... 26
SECTION 7.4 Reservation of Silver King Securities.... 26
SECTION 7.5 Certain Obligations Upon Insolvency or
Bankruptcy
of Surviving Corporation................. 26
SECTION 7.6 Reasonable Efforts....................... 27
SECTION 7.7 Notification of Certain Matters.......... 28
SECTION 7.8 Certain Information...................... 28
SECTION 7.9 Additional Covenants..................... 28
ARTICLE 8 MISCELLANEOUS................................. 31
SECTION 8.1 Further Assurances....................... 31
SECTION 8.2 Expenses................................. 31
SECTION 8.3 Notices.................................. 31
SECTION 8.4 Entire Agreement......................... 32
SECTION 8.5 Assignment; Binding Effect; Benefit...... 32
SECTION 8.6 Amendment................................ 33
SECTION 8.7 Extension; Waiver........................ 33
SECTION 8.8 Survival................................. 33
SECTION 8.9 Tax Interpretation....................... 33
SECTION 8.10 General Interpretation................... 33
SECTION 8.11 Severability............................. 34
SECTION 8.12 Counterparts............................. 34
SECTION 8.13 Applicable Law........................... 34
-ii-
EXCHANGE AGREEMENT
EXCHANGE AGREEMENT, dated as of December 20, 1996, by
and between SILVER KING COMMUNICATIONS, INC., a Delaware
corporation ("Silver King"), and LIBERTY HSN, INC., a Colorado
corporation ("Liberty HSN").
RECITALS:
WHEREAS, Silver King, House Acquisition Corp., a
direct subsidiary of Silver King ("Silver Sub"), Home Shopping
Network, Inc., a Delaware corporation ("HSN") and Liberty HSN
have entered into an Agreement and Plan of Exchange and Merger
(the "Merger Agreement"), dated as of August 25, 1996, pursuant
to which, subject to the terms and conditions contained
therein, HSN will be merged with and into Silver Sub (the
"Merger"), with the result that (i) HSN would be the surviving
corporation in the Merger (the "Surviving Corporation"), (ii)
HSN would become a subsidiary of Silver King and (iii) the
stockholders of HSN would be entitled to receive shares of
Silver King stock in exchange for their shares of HSN stock,
subject to certain exceptions with respect to certain shares of
HSN stock held by Liberty HSN (which are being exchanged for
shares of Silver Sub prior to the Merger as described below);
WHEREAS, immediately prior to the Pre-Merger Exchange
(as defined below), Liberty HSN owned 17,566,702 shares of
Class A Common Stock, par value $.01 per share, of HSN ("HSN
Common Stock"), and 20,000,000 shares of Class B Common Stock,
par value $.01 per share, of HSN ("HSN Class B Stock"), but
because of limitations based on certain regulations, orders and
policies of the Federal Communications Commission (the "FCC"),
Liberty HSN is not permitted to receive all of the shares of
Silver King stock it would otherwise be entitled to receive in
exchange for its shares of HSN stock in the Merger;
WHEREAS, pursuant to the Merger Agreement,
simultaneous with the execution of this Agreement and
immediately prior to the Effective Time of the Merger, Liberty
HSN is exchanging (the "Pre-Merger Exchange") its 17,566,702
shares of HSN Common Stock and 739,141 shares of its 20,000,000
shares of HSN Class B Stock for an equal number of shares of
common stock and class B common stock of Silver Sub, which
shares of Silver Sub will be converted in the Merger into an
equal number of shares of the Surviving Corporation's Common
Stock and the Surviving Corporation's Class B Common Stock.
WHEREAS, upon consummation of the Merger, Liberty HSN
will own (subject to certain adjustments as provided in the
Merger Agreement) 17,566,702 shares of Surviving Common Stock
and 739,141 shares of Surviving Class B Stock;
WHEREAS, subject to the terms and conditions of this
Agreement, each share of Surviving Common Stock and Surviving
Class B Stock will be exchanged for a number of shares of
Silver King Common Stock and Silver King Class B Stock, respec-
tively, determined in accordance with this Agreement at such
time and from time to time as Liberty HSN or its permitted
transferee hereunder is entitled or otherwise permitted under
FCC Regulations to own the additional Silver King Securities
issuable upon the exchange of Surviving Corporation stock.
WHEREAS, it is a condition to the parties' obligation
to consummate the Merger that Silver King and Liberty HSN have
entered into this Exchange Agreement;
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 1
DEFINITIONS
SECTION 1.1 Defined Terms. The definitions set
forth in this Article shall apply to the following terms when
used with initial capital letters in this Agreement.
"Agreement to Transfer" shall mean an agreement by a
holder of Exchange Securities to transfer, directly or
indirectly, the Silver King Securities issuable upon an
Exchange of Exchange Securities owned by such holder to one or
more third parties who are entitled or otherwise permitted to
Own (in accordance with FCC Regulations) such Silver King
Securities (including in connection with a public offering of
Silver King Securities effected pursuant to the Liberty Group's
demand and piggyback registration rights under the Stockholders
Agreement).
"Available Silver King Amount" shall mean, as of the
date of determination, the number equal to the difference
between (x) the maximum number of Silver King Securities which
the holder of the Exchange Securities or, in the case of an
Exchange in connection with an Agreement to Transfer, the
Transferee, would, under the FCC Regulations then in effect,
then be permitted to Own (in accordance with FCC Regulations),
and (y) the number of Silver King Securities then Owned (for
purposes of the FCC Regulations) by such holder of Exchange
Securities or such Transferee, as applicable, in each case,
giving effect to the voting power of the stock Owned or to be
Owned by such holder.
"Available Surviving Share Amount" shall mean as of
the date of determination, the aggregate number of shares of
Surviving Common Stock and or Surviving Class B Stock which may
be exchanged at the then applicable Exchange Rate for shares of
Silver King Common Stock and/or Silver King Class B Stock, as
applicable, in each case, rounded down to the nearest whole
number, which number of shares of Surviving Common Stock and/or
Surviving Class B Stock (or such combination thereof as is
chosen by the holder seeking to exchange such Exchange
Securities) will result in the issuance to such holder upon
such exchange of the Available Silver King Amount of Silver
King Securities.
"BDTV" shall have the meaning assigned to such term
in the Stockholders Agreement.
"BDTV II" shall have the meaning assigned to such
term in the Stockholders Agreement.
"BDTV Entity" shall have the meaning assigned to such
term in the Stockholders Agreement.
-2-
"Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in The
City of New York, New York are authorized or obligated by law
or executive order to remain closed.
"Class B Exchange Rate" shall mean the kind and
amount of securities, assets or other property that as of any
date are issuable or deliverable upon exchange of a share of
Surviving Class B Stock. The Class B Exchange Rate shall
initially be .54 of a share of Silver King Class B Stock and
shall be subject to adjustment, from time to time, as set forth
in Article 3 of this Agreement. In the event that pursuant to
Article 3, the Surviving Class B Stock becomes exchangeable for
more than one class or series of capital stock of Silver King
or another Person, the term "Class B Exchange Rate," when used
with respect to any such class or series, shall mean the number
or fraction of shares or other units of such capital stock that
as of any date would be issuable upon exchange of a share of
Surviving Class B Stock.
"Closing Price" shall mean, on any Trading Day, (i)
the last sale price (or, if no sale price is reported on that
Trading Day, the average of the closing bid and asked prices)
of a share of Silver King Common Stock on the Nasdaq National
Market on such Trading Day, or (ii) if the primary trading
market for the Silver King Common Stock is not the Nasdaq
National Market, then the closing sale price regular way on
such Trading Day, or, in case no such sale takes place on such
Trading Day, the reported closing bid price regular way on such
Trading Day, in each case on the principal exchange on which
such stock is traded, or (iii) if the Closing Price on such
Trading Day is not available pursuant to one of the methods
specified above, then the average of the bid and asked prices
for the Silver King Common Stock on such Trading Day as
furnished by any New York Stock Exchange member firm selected
from time to time by the Silver King Board of Directors for
that purpose.
"Common Exchange Rate" shall mean the kind and amount
of securities, assets or other property that as of any date are
issuable or deliverable upon exchange of a share of Surviving
Common Stock. The Common Exchange Rate shall initially be .45
of a share of Silver King Common Stock and shall be subject to
adjustment, from time to time, as set forth in Article 3 of
this Agreement. In the event that pursuant to Article 3 the
Surviving Common Stock becomes exchangeable for more than one
class or series of capital stock of Silver King or another
Person, the term "Common Exchange Rate," when used with respect
to any such class or series, shall mean the number or fraction
of shares or other units of such capital stock that as of any
date would be issuable upon exchange of a share of Surviving
Common Stock.
"Contingent Right" shall mean the right of Liberty
HSN to receive the Contingent Shares pursuant to the Merger
Agreement.
"Contingent Shares" shall mean the shares of Silver
King Class B Stock (or other securities) which Silver King is
obligated to issue to Liberty HSN following the Effective Time
pursuant to Section 2(d) and Exhibit A of the Merger Agreement.
"Convertible Securities" shall mean rights, options,
warrants and other securities which are exercisable or
exchangeable for or convertible into shares of capital stock of
any Person at the option of the holder thereof; provided,
however, that the term Convertible Securities shall not include
the Silver King Class B Stock or Surviving Class B Stock.
-3-
"Current Market Price" on the Determination Date for
any issuance of rights, warrants or options or any distribution
in respect of which the Current Market Price is being
calculated, shall mean the average of the daily Closing Prices
of the Silver King Common Stock for the shortest of:
(a) the period of 20 consecutive Trading Days
commencing 30 Trading Days before such Determination Date,
(b) the period commencing on the date next
succeeding the first public announcement of the issuance of
rights, warrants or options or the distribution in respect of
which the Current Market Price is being calculated and ending
on the last full Trading Day before such Determination Date,
and
(c) the period, if any, commencing on the date next
succeeding the Ex-Dividend Date with respect to the next
preceding issuance of rights, warrants or options or
distribution for which an adjustment is required by the
provisions of Section 3.1(a)(i)(4), 3.1(b) or 3.1(c), and
ending on the last full Trading Day before such Determination
Date.
If the record date for an issuance of rights,
warrants or options or a distribution for which an adjustment
is required by the provisions of Section 3.1(a)(i)(4), or
Section 3.1(b) or (c) (the "preceding adjustment event")
precedes the record date for the issuance or distribution in
respect of which the Current Market Price is being calculated
and the Ex-Dividend Date for such preceding adjustment event is
on or after the Determination Date for the issuance or
distribution in respect of which the Current Market Price is
being calculated, then the Current Market Price shall be
adjusted by deducting therefrom the fair market value (on the
record date for the issuance or distribution in respect of
which the Current Market Price is being calculated), as
determined in good faith by the Silver King Board of Directors,
of the capital stock, rights, warrants or options, assets or
debt securities issued or distributed in respect of each share
of Silver King Common Stock in such preceding adjustment event.
Further, in the event that the Ex-Dividend Date (or in the case
of a subdivision, combination or reclassification, the
effective date with respect thereto) with respect to a
dividend, subdivision, combination or reclassification to which
Section 3.1(a)(i)(1), Section 3.1(a)(i)(2), Section
3.1(a)(i)(3) or Section 3.1(a)(i)(5) applies occurs during the
period applicable for calculating the Current Market Price,
then the Current Market Price shall be calculated for such
period in a manner determined in good faith by the Silver King
Board of Directors to reflect the impact of such dividend,
subdivision, combination or reclassification on the Closing
Prices of the Silver King Common Stock during such period.
"Determination Date" for any issuance of rights,
warrants or options or any dividend or distribution to which
Section 3.1(b) or (c) applies shall mean the earlier of (i) the
record date for the determination of stockholders entitled to
receive the rights, warrants or options or the dividend or
distribution to which such paragraph applies and (ii) the Ex-
Dividend Date for such rights, warrants or options or dividend
or distribution.
"Effective Time" shall mean the effective time of the
Merger.
"Eligible Holder" shall mean, in the case of any
Exchange, the applicable holder of Exchange Securities who is
entitled to effect an Exchange pursuant to the terms of this
Agreement, including an Exchange in connection with an
Agreement to Transfer.
-4-
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder.
"Exchange Notice" shall mean the written notice
required to be delivered to notify Silver King or an Eligible
Holder, as the case may be, of the exercise of an Exchange
Right.
"Exchange Securities" shall mean the Surviving Common
Stock and the Surviving Class B Stock received by Liberty HSN
in the Merger in respect of the shares of Silver Sub common
stock and Silver Sub class B common stock received in the Pre-
Merger Exchange.
"Ex-Dividend Date" shall mean the date on which "ex-
dividend" trading commences for a dividend, an issuance of
rights, warrants or options or a distribution to which any of
Section 3.1(a), (b), or (c) applies, in the Nasdaq National
Market or on the principal exchange on which the Silver King
Common Stock is then quoted or traded.
"FCC Regulations" shall mean as of the applicable
date, collectively, all federal communications statutes and all
rules, regulations, orders, decrees and policies (including the
FCC's Memorandum Opinion and Order released March 11, 1996 and
its Memorandum Opinion and Order released June 14, 1996) of the
FCC as then in effect, and any interpretations or waivers
thereof or modifications thereto.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations thereunder.
"Issuance Event" shall mean the occurrence of any
event or the existence of any fact or circumstance which would
permit, under applicable FCC Regulations, a holder of Exchange
Securities to Own a greater number of Silver King Securities
than such holder currently Owns. For purposes of this
Agreement, an Issuance Event which occurs (i) as a result of an
order of the FCC, shall be deemed to occur on the date that any
such order becomes final and non-appealable, or (ii) as a
result of a change in law or regulation of the FCC, shall be
deemed to occur on the date such law or regulation was
promulgated, enacted or adopted or, if later, the date such law
or regulation becomes effective.
"Liberty" shall mean Liberty Media Corporation, a
Delaware corporation.
"Liberty Group" shall mean Liberty, Tele-
Communications, Inc., a Delaware corporation, and their
respective controlled affiliates, including Liberty HSN.
"Other Property" shall mean any security (other than
Silver King Common Stock or Silver King Class B Stock), assets
or other property deliverable upon the surrender of shares of
Surviving Common Stock or Surviving Class B Stock for Exchange
in accordance with this Agreement.
"Own" shall mean record, beneficial or other
ownership, direct or indirect, of securities which are
attributable to a Person or otherwise owned by a Person in
accordance with applicable FCC Regulations. The terms
"Ownership" and "Owner" shall have correlative meanings.
-5-
"Person" shall mean any individual, corporation,
partnership, joint venture, association, joint stock company,
limited liability company, trust, unincorporated organization,
government or agency or political subdivision thereof, or other
entity, whether acting in an individual, fiduciary or other
capacity.
"Proxy Statement" shall mean the Joint Proxy
Statement/Prospectus filed with the SEC on November 20, 1996,
by Silver King, HSN and Savoy with respect to the Merger and
the Savoy Merger.
"Redemption Securities" shall mean securities of an
issuer other than Silver King that are distributed by Silver
King in payment, in whole or in part, of the call, redemption,
exchange or other acquisition price for Redeemable Capital
Stock.
"Restrictive Condition" means any limitation or
restriction imposed on a Person as a result of such Person's
acquisition of Silver King Securities upon an Exchange of any
Exchange Securities, or the imposition of any restriction or
limitation of the type referred to in clause (i) of Section
7.9(a) or any requirement that such Person dispose or divest of
any Silver King Securities or interest therein (including any
interest in BDTV, BDTV II or any BDTV Entity) in connection
with or as a result of such Exchange.
"Savoy" shall mean Savoy Pictures Entertainment,
Inc., a Delaware corporation.
"Savoy Merger" shall mean the merger between a wholly
owned subsidiary of Silver King and Savoy pursuant to the Savoy
Merger Agreement.
"Savoy Merger Agreement" shall mean the Agreement and
Plan of Merger, as amended and restated as of August 13, 1996,
by and among Silver King, Thames Acquisition Corp. and Savoy.
"SEC" shall mean the Securities and Exchange
Commission.
"Securities Act" shall mean the Securities Act of
1933, as amended, and the rules and regulations thereunder.
"Silver King Class B Stock" shall mean the Class B
Common Stock, par value $.01 per share, of Silver King, or any
shares into which such shares shall be converted or exchanged
and shall include, where appropriate, in the case of any
reclassification, recapitalization or other change in the
Silver King Class B Stock following the Merger, or in the case
of a consolidation or merger of Silver King with or into
another Person following the Merger affecting the Silver King
Class B Stock, such capital stock to which a holder of Silver
King Class B Stock shall be entitled upon the occurrence of
such event.
"Silver King Common Stock" shall mean the Common
Stock, par value $.01 per share of Silver King, or any shares
into which such shares shall be converted or exchanged and
shall include, where appropriate, in the case of any
reclassification, recapitalization or other change in the
Silver King Common Stock following the Merger, or in the case
of a consolidation or merger of Silver King with or into
another Person following the
-6-
Merger affecting the Silver King Common Stock, such capital
stock to which a holder of Silver King Common Stock shall be
entitled upon the occurrence of such event.
"Silver King Securities" shall mean the Silver King
Common Stock and the Silver King Class B Stock.
"Stockholders Agreement" shall mean the letter
agreement between Barry Diller and Liberty, dated August 24,
1995, and the attached term sheet, as amended by the letter
agreement, dated as of August 25, 1996, between Liberty and Mr.
Diller, pursuant to which Liberty and Mr. Diller have entered
into certain agreements with respect to the equity securities
of Silver King, BDTV, BDTV II, any BDTV Entities and the
Surviving Corporation and with respect to the Merger, all as
described therein, except that in the event such letter
agreements and term sheet are superseded by a definitive
Stockholders Agreement, "Stockholders Agreement" shall refer to
such definitive Stockholders Agreement.
"Surviving Class B Stock" shall mean the Class B
Common Stock, par value $.01 per share, of the Surviving
Corporation, or any shares into which such shares shall be
converted or exchanged (other than shares of Silver King Class
B Stock) and shall include, where appropriate, in the case of
any reclassification, recapitalization or other change in the
Surviving Class B Stock following the Merger, or in the case of
a consolidation or merger of the Surviving Class B Stock with
or into another Person following the Merger affecting the
Surviving Class B Stock, such capital stock to which a holder
of Surviving Class B Stock shall be entitled upon the
occurrence of such event.
"Surviving Common Stock" shall mean the Common Stock,
par value $.01 per share, of the Surviving Corporation, or any
shares into which such shares shall be converted or exchanged
(other than shares of Silver King Common Stock) and shall
include, where appropriate, in the case of any
reclassification, recapitalization or other change in the
Surviving Common Stock following the Merger, or in the case of
a consolidation or merger of the Surviving Common Stock with or
into another Person following the Merger affecting the
Surviving Common Stock, such capital stock to which a holder of
Surviving Common Stock shall be entitled upon the occurrence of
such event.
"Trading Day" shall mean a day on which the primary
trading market for the Silver King Common Stock is open for the
transaction of business.
"Transferee" shall mean a Person who, pursuant to an
Agreement to Transfer entered into with a holder of Exchange
Securities, is or will become the Owner of Silver King
Securities issuable upon the Exchange of Exchange Securities.
Such holder of the Exchange Securities, prior to the
consummation of any such Agreement to Transfer, is sometimes
referred to herein as the "Transferor."
SECTION 1.2 Additional Defined Terms. The following
additional terms listed below shall have the meanings ascribed
thereto in the Section (or other provisions hereof) indicated
opposite such term:
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Term Section
Additional Contingent Right 7.5(a)
Adjustment Event 3.3
Contract 5.4(d)
Contract Consent 5.4(c)
Contract Notice 5.4(c)
Exchange 2.1(c)
Exchange Date 2.3(d)
Exchange Right 2.1(c)
FCC Introduction
Governmental Consent 5.4(b)
Governmental Entity 5.4(b)
Governmental Filing 5.4(b)
HSN Introduction
HSN Class B Stock Introduction
HSN Common Stock Introduction
Liberty HSN Introduction
Merger Introduction
Merger Agreement Introduction
NASD 5.3
Pre-Merger Exchange Introduction
Redeemable Capital Stock 3.1(a)(ii)
Redemption Event 3.1(d)
Response Notice 2.3(a)
Restructuring Transaction 7.5(b)
Silver King Introduction
Silver King Bylaws 5.1
Silver King Charter 5.1
Silver King Exchange Shares 2.1(c)
Silver King Preferred Stock 4.1(a)
Silver Sub Introduction
Surviving Corporation Introduction
Surviving Exchange Shares 2.1(c)
Surviving Sub 7.2
Transaction 3.2(a)
Violation 5.4(d)
ARTICLE 2
EXCHANGE OF SHARES
SECTION 2.1 Right to Exchange the Exchange
Securities. (a) Any holder of Exchange Securities who is
entitled or otherwise permitted to Own additional Silver King
Securities in accordance with paragraph (c) of this Section 2.1
shall have the right, subject to the terms and conditions of
this Agreement, to exchange (i) a number of shares of Surviving
Common Stock at the then applicable Common Exchange Rate (as of
the Exchange Date (as defined below)) and/or (ii) a number of
shares of Surviving Class B Stock at the then applicable Class
B Exchange Rate (as of the Exchange Date), in each case,
rounded
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down to the nearest whole number, which would result in the
issuance to such holder of a number of shares of Silver King
Securities equal to the then Available Silver King Amount. An
Eligible Holder shall also be entitled to receive upon such
Exchange, the kind and amount of securities, assets or other
property (other than shares of Silver King Securities) for
which such shares of Surviving Common Stock and Surviving Class
B Stock are then exchangeable pursuant to Article 3 hereof. In
the event more than one class of Surviving Corporation stock is
available for Exchange, the Eligible Holder shall be entitled
to elect the number of shares of each class of Surviving
Corporation stock to be so exchanged.
(b) At such time as a holder of Exchange Securities
is entitled or otherwise permitted to Own additional Silver
King Securities in accordance with paragraph (c) of this
Section 2.1, Silver King shall have the right, subject to the
terms and conditions of this Agreement, to require an Eligible
Holder to exchange (i) a number of shares of Surviving Common
Stock at the then applicable Common Exchange Rate (as of the
Exchange Date) for shares of Silver King Common Stock and/or
(ii) a number of shares of Surviving Class B Stock at the then
applicable Class B Exchange Rate (as of the Exchange Date) for
shares of Silver King Class B Stock, in each case, rounded down
to the nearest whole number, which would result in the issuance
to such holder of a number of shares of Silver King Common
Stock and/or Silver King Class B Stock, as applicable, equal to
the then Available Silver King Amount. An Eligible Holder
shall also be entitled to receive upon such Exchange, the kind
and amount of securities, assets or other property (other than
shares of Silver King Securities) for which such shares of
Surviving Common Stock and Surviving Class B Stock are then
exchangeable pursuant to Article 3 hereof. In the event more
than one class of Surviving Corporation stock is available for
Exchange, the Eligible Holder shall be entitled to elect the
number of shares of each class of Surviving Corporation stock
to be so exchanged.
(c) A holder of Exchange Securities shall be deemed
to be entitled or otherwise permitted to own additional Silver
King Securities (i) upon the occurrence of an Issuance Event or
(ii) in connection with an Agreement to Transfer; provided that
in the case of clause (ii), all conditions to such transfer
(other than the issuance of the applicable number of Silver
King Securities and other than any conditions which are capable
of being satisfied only at the closing of such transfer) have
been satisfied. In the case of an Exchange in connection with
an Agreement to Transfer, such holder shall be deemed to be
entitled or otherwise permitted to Own the number of additional
Silver King Securities which are the subject of such agreement
and which the applicable Transferee is entitled or otherwise
permitted to Own. The right of an Eligible Holder or of Silver
King to cause the exchange of shares of Surviving Common Stock
and Surviving Class B Stock for shares of Silver King
Securities pursuant to this Section 2.1 is herein referred to
as the "Exchange Right" and each such exchange is herein
referred to as an "Exchange." The shares of Surviving Common
Stock and Surviving Class B Stock to be exchanged pursuant to
an Exchange are herein referred to as the "Surviving Exchange
Shares" and the shares of Silver King Common Stock and Silver
King Class B Stock to be received in exchange for such
Surviving Exchange Shares in an Exchange are herein referred to
as the "Silver King Exchange Shares."
(d) Except pursuant to an Agreement to Transfer, no
Exchange Securities shall be exchangeable by a member of the
Liberty Group under this Agreement until all Contingent Shares
issuable to Liberty HSN pursuant to the Contingent Right have
been so issued or until the Contingent Right has expired;
provided that the foregoing restriction
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shall not affect the Liberty Group's right to assign its rights
under this Agreement to any permitted transferee of Exchange
Securities (or interests therein) or the rights of any such
permitted transferee to exchange such Exchange Securities.
(e) It shall be a condition to the obligation of a
holder of Exchange Securities to consummate an Exchange
pursuant to this Agreement that:
(i) such Exchange not be taxable to such
holder; provided, however, that to the extent that (x) the
taxability of such Exchange was caused by or resulted from
(1) any action or inaction by Liberty HSN or another
member of the Liberty Group (other than any action or
inaction specifically contemplated or required by the
Merger Agreement, this Agreement, or the Stockholders
Agreement), (2) the laws and regulations in effect at the
Effective Time or (3) any difference in the tax position
of an Eligible Holder relative to the tax position of
Liberty HSN, such that, had such Exchange been effected by
Liberty HSN, this condition would have been satisfied, or
(y) the taxes applicable to such Exchange would have
accrued or been payable by Liberty HSN had all of the
Exchange Securities been issued to Liberty HSN in the
Merger at the Effective Time pursuant to the laws and
regulations in effect at the Effective Time, such Eligible
Holder shall not be entitled to assert the failure of this
condition; and
(ii) such Exchange not result in the creation or
imposition of any Restrictive Condition with respect to
such Eligible Holder or with respect to any shares
received in the Exchange.
(f) Silver King's right and obligation to effect an
Exchange shall be deferred to the extent that the number of
Silver King Securities which would then otherwise be required
to be issued to all Eligible Holders upon the Exchange of their
Exchange Securities is less than 25,000 (which number shall be
adjusted to give effect to any stock splits, reverse splits,
recapitalizations or the like); provided, however, that any
such Exchange Securities not then required to be exchanged as a
result of the provisions of this paragraph shall be exchanged
at such time as such number of Silver King Securities issuable
upon the Exchange of all Exchange Securities then required to
be exchanged equals or exceeds such number, at which time,
subject to the other conditions herein, the parties shall
execute each such Exchange. The deferral set forth in this
paragraph (f) shall not be applicable in the event that upon
the Exchange of all of outstanding Exchange Securities by an
Eligible Holder, such holder would be entitled to receive in
the aggregate less than 25,000 Silver King Securities.
SECTION 2.2 Disputes Concerning Occurrence of an
Issuance Event and Available Silver King Amount. The
determination of whether or not a holder is entitled or
otherwise permitted to Own additional Silver King Securities
and the determination of the Available Silver King Amount
issuable to the applicable Eligible Holder, shall be made in
the good faith reasonable determination of the Person
exercising the Exchange Right based upon FCC Regulations. In
the event of any dispute between Silver King and a holder of
Exchange Securities with respect to whether a holder is
entitled or otherwise permitted to Own additional Silver King
Securities or the determination of the Available Silver King
Amount issuable to such Eligible Holder, such dispute shall be
resolved by delivery to Silver King and such holder of a
written opinion addressed to each of Silver King and such
holder (which opinion shall be in form and substance reasonably
satisfactory to Silver King
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and such holder and shall not be subject to material
qualifications or limitations) of counsel to Silver King
specializing in FCC matters as to the matters that are the
subject of any such dispute. Such opinion shall be delivered
within 10 Business Days after notice by either Silver King or
such holder to the other party that the matter is outstanding
and has not been resolved between them. In the event that no
such opinion is delivered within ten (10) Business Days after
such notice, the matter shall be resolved in favor of such
holder.
SECTION 2.3 Mechanics of the Exchange. (a) An
Eligible Holder may exercise the Exchange Right set forth in
Section 2.1(a) above by delivering an Exchange Notice to Silver
King. Silver King may exercise the Exchange Right set forth in
Section 2.1(b) above by delivering an Exchange Notice to the
applicable Eligible Holder. If Silver King delivers the
Exchange Notice, such notice shall set forth in reasonable
detail the facts and circumstances which have entitled or
otherwise permitted such holder to Own additional Silver King
Securities, the Available Silver King Amount, a brief
description of the method used to calculate such amount and the
Common Exchange Rate and the Class B Exchange Rate in effect at
such time. If an Eligible Holder delivers the Exchange Notice,
such notice shall include the same information, to the extent
known by such holder, and shall also set forth the number and
type of Surviving Corporation stock such holder desires to
exchange; if Silver King delivers the Exchange Notice, the
applicable Eligible Holder shall notify Silver King in writing
(the "Response Notice") of the number and type of Surviving
Corporation stock such holder desires to exchange within ten
(10) Business Days following receipt of the Exchange Notice,
and in the event such holder fails to notify Silver King within
such ten-day period, Silver King may, subject to the other
terms and conditions herein, determine the number and type of
shares to be exchanged. Notwithstanding any other provision of
this Agreement to the contrary, in the event that an Eligible
Holder desires to exchange a number of shares of Surviving
Class B Stock which would require the issuance of a number of
shares of Silver King Class B Stock which would cause such
Eligible Holder, because of the voting power thereof, to
violate FCC Regulations, such Eligible Holder shall only be
required to exchange the number of Exchange Securities set
forth in such notice which such Eligible Holder can exchange
(if any) without violating any FCC Regulations, notwithstanding
that such Eligible Holder could have exchanged a greater number
of Exchange Securities had such Eligible Holder elected to
exchange fewer shares of Surviving Class B Stock and more
shares of Surviving Common Stock. Each Exchange Notice shall
be irrevocable, and upon receipt of an Exchange Notice and
satisfaction of the conditions to such Exchange, Silver King
and such Eligible Holder, shall be obligated to effect such
Exchange.
(b) Subject to the resolution of any disputes
pursuant to Section 2.2 and subject to Section 2.1(d), (e) and
(f), as promptly as practicable following receipt or delivery
by Silver King of an Exchange Notice, each of Silver King and
the applicable Eligible Holder shall, and shall cause each of
its respective subsidiaries and the officers, directors and
employees of such Person and such Person's subsidiaries to, (i)
make any and all required applications or filings with, and
seek any required consents, approvals or waivers from, any
governmental or regulatory agencies (including, but not limited
to, with the FCC and under the HSR Act), (ii) use all
reasonable efforts to obtain any and all such consents,
approvals or waivers and the termination of any applicable
waiting period under the HSR Act, in each case, which are
reasonably necessary in connection with the applicable
Exchange, and (iii) use reasonable efforts to cooperate with,
and express its support for, such other party's efforts to
obtain any such consents, approvals and waivers. Upon receipt
of such consents, approvals or waivers or the expiration or
termination of such
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waiting period, as the case may be, Silver King or the Eligible
Holder, as the case may be, shall notify the other of such
receipt, expiration or termination. Upon the receipt of all
such required consents, approvals or waivers and the
termination of any applicable waiting period under the HSR Act,
such Eligible Holder of the shares of Surviving Common Stock
and Surviving Class B Stock specified in the applicable
Exchange Notice or Response Notice shall surrender for exchange
the appropriate stock certificate(s) pursuant to Section 2.3(c)
hereof.
(c) At such time as all required consents,
approvals, waivers and terminations described in Section 2.3(b)
have been obtained or waived and provided that the conditions
set forth in Section 2.2(e) have been satisfied, the Eligible
Holder shall surrender such holder's certificate or
certificates for the Exchange Securities to be exchanged, with
appropriate stock powers attached, duly endorsed, at the office
of Silver King or any transfer agent for Silver King's stock,
together with a written notice to Silver King that such holder
is exchanging all or a specified number of shares of Surviving
Common Stock and/or Surviving Class B Stock, as applicable,
represented by such certificate or certificates and stating
the name or names in which such holder desires the certificate
or certificates for Silver King Common Stock and/or Silver King
Class B Stock, as applicable, to be issued. Promptly
thereafter, Silver King shall issue and deliver to such holder
or such holder's nominee or nominees, a certificate or
certificates representing the Silver King Common Stock and/or
Silver King Class B Stock to be issued, conveyed and delivered
to such Eligible Holder pursuant to Section 2.1, with any
necessary documentary or transfer tax stamps duly affixed and
canceled, dated the applicable Exchange Date (as defined
below), and such certificates shall be issued to and registered
in the name of the applicable Eligible Holder or in such other
name as such Eligible Holder shall request. Certificates
representing Silver King stock to be issued hereunder may
include appropriate legends based on federal and state
securities laws.
(d) Each Exchange shall be deemed to have been
effected at the close of business on the date (the "Exchange
Date") of receipt by Silver King or any such transfer agent of
the certificate or certificates and notice referred to in
paragraph (c) above and, in any case, no later than five (5)
Business Days after all applicable conditions to such Exchange
have been satisfied. Each Exchange shall be at the Common
Exchange Rate or the Class B Exchange Rate, as applicable, in
effect immediately prior to the close of business on the
Exchange Date. If any transfer is involved in the issuance or
delivery of any certificate or certificates for shares of
Silver King Common Stock or Silver King Class B Stock in a name
other than that of the registered holder of the shares of
Surviving Common Stock or Surviving Class B Stock, as
applicable, surrendered for exchange, such holder shall also
deliver to Silver King a sum sufficient to pay all stock
transfer taxes, if any, payable in respect of such transfer or
evidence satisfactory to Silver King that such stock transfer
taxes have been paid. Except as provided above, Silver King
shall pay any issue, stamp or other similar tax in respect of
such issuance or delivery.
(e) The Person or Persons entitled to receive the
shares of Silver King Common Stock and/or Silver King Class B
Stock, as applicable, issuable on such Exchange shall be
treated for all purposes as the record holder or holders of
such shares of Silver King Common Stock and/or Silver King
Class B Stock, as applicable, as of the close of business on
the Exchange Date; provided, however, that no surrender of
Exchange Securities on any date when the stock transfer books
of Silver King are closed for any purpose shall be effective to
constitute the Person or Persons entitled to receive the shares
of Silver
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King Common Stock and/or Silver King Class B Stock, as
applicable, deliverable upon such Exchange as the record
holder(s) of such shares of Silver King Common Stock and/or
Silver King Class B Stock, as applicable, on such date, but
such surrender shall be effective (assuming all other
requirements for the valid Exchange of such shares have been
satisfied) to constitute such Person or Persons as the record
holder(s) of such shares of Silver King Common Stock and/or
Silver King Class B Stock, as applicable, for all purposes as
of the opening of business on the next succeeding day on which
such stock transfer books are open, and such Exchange shall be
at the Common Exchange Rate or the Class B Exchange Rate, as
applicable, in effect on the Exchange Date as if the stock
transfer books of Silver King had not been closed on such date.
Without limiting the first sentence of this paragraph (e), as
of the close of business on an Exchange Date, the rights and
obligations of the holder of the applicable Surviving Exchange
Shares, as a holder thereof, shall cease (other than with
respect to such holder's right to receive the applicable number
of shares of Silver King Common Stock and/or Silver King Class
B Stock and its obligation to deliver the applicable
certificate(s) for shares of Silver King stock as provided
herein).
(f) Holders of shares of Surviving Common Stock and/
or Surviving Class B Stock at the close of business on a record
date for any payment of declared dividends on such shares shall
be entitled to receive the dividend payable on such shares on
the corresponding dividend payment date notwithstanding the
effective Exchange of such shares following such record date
and prior to the corresponding dividend payment date.
(g) If the shares of Surviving Common Stock or
Surviving Class B Stock represented by a certificate
surrendered for exchange are exchanged in part only, then
simultaneously with any such Exchange, Silver King shall cause
the Surviving Corporation to issue and deliver to the
registered holder, without charge therefor, a new certificate
or certificates representing in the aggregate the number of
unexchanged shares.
ARTICLE 3
EXCHANGE RATE ADJUSTMENTS
SECTION 3.1 Exchange Rate Adjustments. The Common
Exchange Rate and the Class B Exchange Rate each shall be
subject to adjustment from time to time as provided below in
this Section 3.1.
(a) (i) If Silver King shall, after the Effective
Time:
1. pay a stock dividend or make a distribution on
the outstanding shares of Silver King Common
Stock and/or Silver King Class B Stock in shares
of Silver King Common Stock or Silver King Class
B Stock,
2. subdivide or split the outstanding shares of
Silver King Common Stock and/or Silver King
Class B Stock into a greater number of shares,
3. combine the outstanding shares of Silver King
Common Stock and/or Silver King Class B Stock
into a smaller number of shares,
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4. pay a dividend or make a distribution on the
outstanding shares of Silver King Common Stock
and/or Silver King Class B Stock in shares of
its capital stock (other than Silver King Common
Stock, Silver King Class B Stock or rights,
warrants or options for its capital stock), or
5. issue by reclassification of its outstanding
shares of Silver King Common Stock and/or Silver
King Class B Stock (other than a reclas-
sification by way of merger or binding share
exchange that is subject to Section 3.2) any
shares of its capital stock (other than rights,
warrants or options for its capital stock),
then, in any such event, the Common Exchange Rate (in the
case of such an event affecting the Silver King Common
Stock) and/or the Class B Exchange Rate (in the case of an
event affecting the Silver King Class B Stock), in effect
immediately prior to the opening of business on the record
date for determination of stockholders entitled to receive
such dividend or distribution or the effective date of
such subdivision, split, combination or reclassification,
as the case may be, shall be adjusted so that the holder
of any shares of Surviving Common Stock (in the case of
such an event affecting the Silver King Common Stock) and/
or Surviving Class B Stock (in the case of such an event
affecting the Silver King Class B Stock) shall thereafter
be entitled to receive, upon exchange of shares of
Surviving Common Stock and/or Surviving Class B Stock, the
number of shares of Silver King Common Stock and/or Silver
King Class B Stock, or other capital stock (or a
combination of the foregoing) of Silver King which such
holder would have owned or been entitled or otherwise
permitted to receive immediately following such event if
such holder had exchanged his shares of Surviving Common
Stock and/or Surviving Class B Stock, as the case may be,
immediately prior to the record date for, or effective
date of, as applicable, such event.
(ii) Notwithstanding the foregoing, if an event
listed in clause (4) or (5) above would result in the
shares of Surviving Common Stock and/or Surviving Class B
Stock being exchangeable for shares or units (or a
fraction thereof) of more than one class or series of
capital stock of Silver King and any such class or series
of capital stock provides by its terms a right in favor of
Silver King to call, redeem, exchange or otherwise acquire
all of the outstanding shares or units of such class or
series (such class or series of capital stock being herein
referred to as "Redeemable Capital Stock") for
consideration that may include Redemption Securities, then
the Common Exchange Rate and/or the Class B Exchange Rate,
as the case may be, shall not be adjusted pursuant to this
subparagraph (a) and in lieu thereof, the holders of such
shares of Surviving Common Stock and/or Surviving Class B
Stock shall be entitled to the rights contemplated by
paragraph (c) with the same effect as if the dividend or
distribution of such Redeemable Capital Stock or the
issuance of the additional class or series of such
Redeemable Capital Stock by reclassification had been a
distribution of assets of Silver King to which such para-
graph (c) is applicable.
(iii) The adjustment contemplated by this
paragraph (a) shall be made successively whenever any
event listed above shall occur. For a dividend or
distribution, the adjustment shall become effective at the
opening of business on the
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Business Day next following the record date for such
dividend or distribution. For a subdivision, split,
combination or reclassification, the adjustment shall
become effective immediately after the effectiveness of
such subdivision, split, combination or reclassification.
(iv) If after an adjustment pursuant to this
paragraph (a) a holder of Surviving Common Stock (in the
case of an adjustment to the Common Exchange Rate) and/or
Surviving Class B Stock (in the case of an adjustment to
the Class B Exchange Rate) would be entitled to receive
upon exchange thereof shares of two or more classes or
series of capital stock of Silver King, the Common
Exchange Rate or the Class B Exchange Rate, as applicable,
shall thereafter be subject to adjustment upon the
occurrence of an action contemplated by this Section 3.1
taken with respect to any such class or series of capital
stock other than Silver King Common Stock or Silver King
Class B Stock, on terms comparable to those applicable to
the Silver King Common Stock and the Silver King Class B
Stock pursuant to this Section 3.1.
(b) (i) If Silver King shall, after the Effective
Time, distribute rights, warrants or options to all or
substantially all holders of its outstanding shares of
Silver King Common Stock and/or Silver King Class B Stock
entitling them (for a period not exceeding forty-five days
from the record date referred to below) to subscribe for
or purchase shares of Silver King Common Stock (or
Convertible Securities for shares of Silver King Common
Stock) at a price per share (or having an exercise,
exchange or conversion price per share, after adding
thereto an allocable portion of the exercise price of the
right, warrant or option to purchase such Convertible
Securities, computed on the basis of the maximum number of
shares of Silver King Common Stock issuable upon exercise,
exchange or conversion of such Convertible Securities)
less than the Current Market Price on the applicable
Determination Date, then, in any such event, the Common
Exchange Rate and the Class B Exchange Rate shall each be
adjusted by multiplying each such exchange rate in effect
immediately prior to the opening of business on the record
date for the determination of stockholders entitled to
receive such distribution by a fraction, of which the
numerator shall be the number of shares of Silver King
Common Stock outstanding on such record date plus the
number of additional shares of Silver King Common Stock so
offered pursuant to such rights, warrants or options to
the holders of Silver King Common Stock (and to holders of
Convertible Securities for shares of Silver King Common
Stock) for subscription or purchase (or into which the
Convertible Securities for shares of Silver King Common
Stock so offered are exercisable, exchangeable or
convertible), and of which the denominator shall be the
number of shares of Silver King Common Stock outstanding
on such record date plus the number of additional shares
of Silver King Common Stock which the aggregate offering
price of the total number of shares of Silver King Common
Stock so offered (or the aggregate exercise, exchange or
conversion price of the Convertible Securities for shares
of Silver King Common Stock so offered, after adding
thereto the aggregate exercise price of the rights,
warrants or options to purchase such Convertible Securi-
ties) to the holders of Silver King Common Stock (and to
such holders of Convertible Securities for shares of
Silver King Common Stock) would purchase at such Current
Market Price.
(ii) The adjustment contemplated by this
paragraph (b) shall be made successively whenever any such
rights, warrants or options are distributed,
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and shall become effective immediately after the record
date for the determination of stockholders entitled to
receive such distribution. If all of the shares of Silver
King Common Stock (or all of the Convertible Securities
for shares of Silver King Common Stock) subject to such
rights, warrants or options have not been issued when such
rights, warrants or options expire (or, in the case of
rights, warrants or options to purchase Convertible
Securities for shares of Silver King Common Stock which
have been exercised, if all of the shares of Silver King
Common Stock issuable upon exercise, exchange or
conversion of such Convertible Securities have not been
issued prior to the expiration of the exercise, exchange
or conversion right thereof), then the Common Exchange
Rate and the Class B Exchange Rate shall promptly be
readjusted to the Common Exchange Rate and the Class B
Exchange Rate which would then be in effect had the
adjustment upon the issuance of such rights, warrants or
options been made on the basis of the actual number of
shares of Silver King Common Stock (or such Convertible
Securities) issued upon the exercise of such rights,
warrants or options (or the exercise, exchange or
conversion of such Convertible Securities).
(iii) No adjustment shall be made under this
paragraph (b) if the adjusted Common Exchange Rate or the
Class B Exchange Rate would be lower than the Common
Exchange Rate or the Class B Exchange Rate, as applicable,
in effect immediately prior to such adjustment, other than
in the case of an adjustment pursuant to the last sentence
of paragraph (b)(ii).
(c) (i) If Silver King shall, after the Effective
Time, (x) pay a dividend or make a distribution to all or
substantially all holders of its outstanding shares of
Silver King Common Stock and/or Silver King Class B Stock
of any assets (including cash) or debt securities or any
rights, warrants or options to purchase securities
(excluding dividends or distributions referred to in
paragraph (a) (except as otherwise provided in clause (y)
of this sentence) and distributions of rights, warrants or
options referred to in paragraph (b)), or (y) pay a
dividend or make a distribution to all or substantially
all holders of its outstanding shares of Silver King
Common Stock and/or Silver King Class B Stock of
Redeemable Capital Stock, or issue Redeemable Capital
Stock by reclassification of the Silver King Common Stock
and/or Silver King Class B Stock, and pursuant to
paragraph (a) such Redeemable Capital Stock is to be
treated the same as a distribution of assets of Silver
King subject to this paragraph (c), then, in any such
event, from and after the record date for determining the
holders of Silver King Common Stock and Silver King Class
B Stock entitled to receive such dividend or distribution,
a holder of Surviving Common Stock and/or Surviving Class
B Stock that exchanges such shares in accordance with the
provisions of this Agreement will upon such Exchange be
entitled to receive, in addition to the shares of Silver
King Common Stock or Silver King Class B Stock for which
such shares of Surviving Common Stock or Surviving Class B
Stock, as applicable, are then exchangeable, the kind and
amount of assets or debt securities or rights, warrants or
options to purchase securities comprising such dividend or
distribution that such holder would have received if such
holder had exchanged such shares of Surviving Common Stock
or Surviving Class B Stock immediately prior to the record
date for determining the holders of Silver King Common
Stock or Silver King Class B Stock entitled to receive
such distribution.
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(ii) The adjustment pursuant to the foregoing
provisions of this paragraph (c) shall be made
successively whenever any dividend or distribution or
reclassification to which this paragraph (c) applies is
made, and shall become effective immediately after (x) in
the case of a dividend or distribution, the record date
for the determination of stockholders entitled to receive
such dividend or distribution or (y) in the case of a
reclassification, the effective date of such
reclassification.
(d) In the event that a holder of Surviving Common
Stock and Surviving Class B Stock would be entitled to receive
upon exercise of the Exchange Right pursuant to this Agreement
any Redeemable Capital Stock and Silver King redeems, exchanges
or otherwise acquires all of the outstanding shares or other
units of such Redeemable Capital Stock (such event being a
"Redemption Event"), then, from and after the effective date of
such Redemption Event, the holders of shares of Surviving
Common Stock and Surviving Class B Stock then outstanding shall
be entitled to receive upon the Exchange of such shares (in
addition to the consideration such holders are otherwise
entitled to receive pursuant to their Exchange Rights), in lieu
of shares or any units of such Redeemable Capital Stock, the
kind and amount of securities, cash or other assets receivable
upon the Redemption Event (less any consideration paid to
Silver King by a holder of Silver King stock in connection with
such holders' receipt of Redemption Securities upon such
Redemption Event (other than the surrender of shares of
Redeemable Capital Stock)) by a holder of the number of shares
or units of such Redeemable Capital Stock for which such shares
of Surviving Common Stock or Surviving Class B Stock could have
been exchanged immediately prior to the effective date of such
Redemption Event (assuming, to the extent applicable, that such
holder failed to exercise any rights of election with respect
thereto and received per share or unit of such Redeemable
Capital Stock the kind and amount of securities, cash or other
assets received per share or unit by a plurality of the non-
electing shares or units of such Redeemable Capital Stock) (as
such type and amount of securities may be adjusted in
accordance with this Agreement to reflect events or actions
subsequent to the Redemption Event), and from and after the
effective date of such Redemption Event the holders of the
Surviving Common Stock and Surviving Class B Stock shall have
no other exchange rights under these provisions with respect to
such Redeemable Capital Stock.
(e) If this Section 3.1 shall require that an
adjustment be made to the Common Exchange Rate and/or the Class
B Exchange Rate, such adjustment shall apply to any Exchange
effected after the record date for the event which requires
such adjustment notwithstanding that such Exchange is effected
prior to the occurrence of the event which requires such
adjustment.
(f) All adjustments to the Common Exchange Rate or
the Class B Exchange Rate shall be calculated to the nearest
1/1000th of a share. No adjustment in either such exchange
rate shall be required unless such adjustment would require an
increase or decrease of at least one percent therein; provided,
however, that any adjustment which by reason of this paragraph
is not required to be made shall be carried forward and taken
into account in any subsequent adjustment. No adjustment need
be made for a change in the par value of the Silver King Common
Stock and/or Silver King Class B Stock. To the extent the
shares of Surviving Common Stock or Surviving Class B Stock
become exchangeable for cash, no adjustment need be made
thereafter as to the cash and no interest shall accrue on such
cash.
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(g) Silver King shall be entitled, to the extent
permitted by law, to make such increases in the Common Exchange
Rate or the Class B Exchange Rate, in addition to those
referred to above in this Section 3.1, as Silver King
determines to be advisable in order that any stock dividends,
subdivisions of shares, reclassification or combination of
shares, distribution of rights, options or warrants to purchase
stock or securities, or a distribution of other assets
hereafter made by Silver King to its stockholders shall not be
taxable.
(h) There shall be no adjustment to the Common
Exchange Rate or the Class B Exchange Rate in the event of the
issuance of any stock or other securities or assets of Silver
King in a reorganization, acquisition or other similar
transaction except as specifically provided in this Section 3.1
or, if applicable, Section 3.2. In the event this Section 3.1
requires adjustments to the Common Exchange Rate or the Class B
Exchange Rate under more than one of paragraph (a)(iv), (b) or
(c), and the record dates for the dividends or distributions
giving rise to such adjustments shall occur on the same date,
then such adjustments shall be made by applying first, the
provisions of paragraph (a), second, the provisions of
paragraph (c) and third, the provisions of paragraph (b). The
holders of shares of Surviving Class B Stock shall not be
entitled to any additional or further adjustment to the Class B
Exchange Rate in connection with the convertibility of Silver
King Class B Stock to Silver King Common Stock.
SECTION 3.2 Adjustment for Consolidation or Merger
of Silver King. (a) In case of any consolidation or merger to
which Silver King is a party, or in the case of any sale or
transfer to another corporation of the property and assets of
Silver King as an entirety or substantially as an entirety, or
in case of any statutory exchange of securities with another
corporation (each of the foregoing being referred to herein as
a "Transaction"), in each case as a result of which shares of
Silver King Common Stock and/or Silver King Class B Stock shall
be reclassified or converted into the right to receive stock,
securities or other property (including cash) or any
combination thereof, proper provision shall be made so that
each share of Surviving Common Stock and/or Surviving Class B
Stock which is not converted into the right to receive stock,
securities or other property in connection with such
Transaction pursuant to paragraph (b) below shall, after
consummation of such Transaction, be subject to exchange at the
option of the holder into the kind and amount of stock,
securities or other property receivable upon consummation of
such Transaction by a holder of the number of shares of Silver
King Common Stock or Silver King Class B Stock, as applicable
(and/or any Other Property into which the Surviving Common
Stock or Surviving Class B Stock may be exchangeable in
accordance with this Agreement) into which such share of
Surviving Common Stock or Surviving Class B Stock, as the case
may be, might have been exchanged immediately prior to
consummation of such Transaction (assuming in each case that
such holder of Silver King Common Stock or Silver King Class B
Stock (or such Other Property) failed to exercise rights of
election, if any, as to the kind or amount of stock, securities
or other property receivable upon consummation of such
Transaction (provided that if the kind or amount of stock,
securities or other property receivable upon consummation of
such Transaction is not the same for each non-electing share,
then the kind and amount of stock, securities or other property
receivable upon consummation of such Transaction for each non-
electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing
shares)). In connection with the foregoing, (i) effective
provision shall be made, in the Articles or Certificate of
Incorporation of the resulting or surviving corporation or
otherwise or in any contracts of sale or transfer with respect
to the Transaction, so that the provisions set forth herein for
the protection of the Exchange Rights of Surviving Common Stock
and Surviving Class B
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Stock shall thereafter be made applicable, as nearly as
reasonably may be, to any such other securities and assets
deliverable upon Exchange of Surviving Common Stock and
Surviving Class B Stock; and (ii) any such resulting or
surviving corporation or transferee shall expressly assume the
obligation to deliver, upon the exercise of Exchange Rights,
such securities, cash or other assets as the holders of the
Surviving Common Stock and Surviving Class B Stock shall be
entitled to receive pursuant to the provisions hereof, and to
make provision for the protection of the Exchange Rights of the
Surviving Common Stock and Surviving Class B Stock, as provided
in clause (i) of this sentence. The kind and amount of stock
or securities into which the shares of Surviving Common Stock
and Surviving Class B Stock shall be exchangeable after
consummation of such Transaction shall be subject to
adjustment, as nearly as may be practicable, as described in
Section 3.1 following the date of consummation of such
Transaction.
(b) Silver King shall not become a party and shall
not permit any of its subsidiaries to become a party to any
Transaction with respect to the foregoing unless the terms of
the agreements relating to such transaction include obligations
of the applicable parties consistent with this Section 3.2.
SECTION 3.3 Notice of Adjustment. Whenever the
Common Exchange Rate and/or the Class B Exchange Rate is
adjusted as provided in Section 3.1, 3.2 or 3.5 (an "Adjustment
Event"), Silver King shall:
(a) compute the adjusted Common Exchange Rate or
Class B Exchange Rate, as applicable, in accordance herewith
and prepare a certificate signed by an officer of Silver King
setting forth the adjusted Common Exchange Rate and/or Class B
Exchange Rate, as the case may be, the method of calculation
thereof and the facts requiring such adjustment and upon which
such adjustment is based, all in reasonable detail; and
(b) promptly mail a copy of such certificate and a
notice to the holders of the outstanding shares of Surviving
Common Stock (in the case of an adjustment to the Common
Exchange Rate) or Surviving Class B Stock (in the case of an
adjustment to the Class B Exchange Rate).
The notice of adjustment and such certificate shall be mailed
at or prior to the time Silver King mails an interim statement,
if any, to its stockholders covering the fiscal quarter during
which the facts requiring such adjustment occurred, but in any
event within 45 days following the end of such fiscal quarter;
provided, that if an Adjustment Event occurs following delivery
of an Exchange Notice but prior to the Exchange Date, Silver
King shall mail the notice of adjustment as soon as practicable
following the Adjustment Event but in no event later than five
days prior to the applicable Exchange Date.
SECTION 3.4 Notice of Certain Transactions. In
case, at any time while any of the Exchange Securities are
outstanding,
(a) Silver King takes any action which would require
an adjustment to the Common Exchange Rate and/or the Class B
Exchange Rate;
(b) Silver King shall authorize (x) any
consolidation, merger or binding share exchange to which Silver
King is a party, for which approval of the stockholders of
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Silver King is required or (y) the sale or transfer of all or
substantially all of the assets of Silver King; or
(c) Silver King shall authorize the voluntary
dissolution, liquidation or winding up of Silver King or Silver
King is the subject of an involuntary dissolution, liquidation
or winding up;
then Silver King shall cause to be filed at each office or
agency maintained for the purpose of exchange of the shares of
Surviving Common Stock and Surviving Class B Stock, and shall
cause to be mailed to each holder of Exchange Securities at its
last address as it shall appear on the stock register, at least
10 days before the record date (or other date set for
definitive action if there shall be no record date), a notice
stating the action or event for which such notice is being
given and the record date for (or such other date) and the
anticipated effective date of such action or event; provided,
however, that any notice required hereunder shall in any event
be given no later than the time that notice is given to the
holders of the Silver King Common Stock or Silver King Class B
Stock.
SECTION 3.5 Exchange Rate Adjustments for Actions of
the Surviving Corporation. In the event of the occurrence of
any of the transactions or other events described in paragraphs
(a)-(d) of Section 3.1 or in Section 3.2 with respect to the
Surviving Common Stock or the Surviving Class B Stock, or
otherwise affecting the Surviving Corporation, the Common
Exchange Rate and/or the Class B Exchange Rate shall be
appropriately adjusted in the manner contemplated by Sections
3.1 and 3.2, mutatis mutandis, so that each Eligible Holder's
Exchange Securities thereafter shall become exchangeable for
the kind and amount of Silver King Securities, upon the
Exchange of such holder's Exchange Securities, that such holder
would have received had such holder exchanged all of its
Exchange Securities pursuant to this Agreement immediately
prior to the applicable Determination Date (or other
comparable date) for such transaction or other event. In
addition to its obligation to adjust the Exchange Rates, Silver
King's other rights and obligations set forth in Sections 3.1,
3.2, 3.3, 3.4 shall also apply to the extent applicable in the
event of an adjustment pursuant to this Section 3.5. Silver
King agrees that it will not cause or permit to occur any such
transaction or other event which would result in any adjustment
to the Common Exchange Rate or the Class B Exchange Rate unless
the terms of the agreement relating to such transaction or
other event include obligations of the applicable parties
consistent with the foregoing. The provisions of this para-
graph shall apply similarly to successive transactions or other
events to which this paragraph would otherwise be applicable.
ARTICLE 4
GENERAL REPRESENTATIONS AND WARRANTIES OF
SILVER KING AND LIBERTY HSN
SECTION 4.1 Representations and Warranties of Silver
King. Silver King hereby represents and warrants:
(a) As of the date hereof, the authorized capital
stock of Silver King consists of (a) 30,000,000 shares of
Silver King Common Stock and 2,415,945 shares of Silver King
Class B Common Stock, and (b) 50,000 shares of preferred stock,
par value
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$.01 per share, of Silver King (the "Silver King Preferred
Stock"), none of which have been designated as to class or
series. At the close of business on December 12, 1996, (i)
7,093,132 shares of Silver King Common Stock were issued and
outstanding and 2,415,945 shares of Silver King Class B Common
Stock were issued and outstanding, all of which Silver King
Common Stock and Silver King Class B Common Stock are validly
issued, fully paid and nonassessable and not subject to any
preemptive rights and (ii) no shares of Silver King Common
Stock were held in treasury by Silver King or by subsidiaries
of Silver King. The statement in the Proxy Statement with
respect to the number of outstanding options to purchase Silver
King Common Stock is true and complete in all material respects
as of the date such Proxy Statement was cleared for mailing by
the SEC. No change in such capitalization has occurred between
December 12, 1996 and the date hereof except issuances of
Silver King Common Stock upon exercise of outstanding options.
As of the date hereof, no shares of Silver King Preferred Stock
were issued or outstanding.
(b) Silver King has all necessary corporate power
and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement by Silver King and the consummation by Silver King of
the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of
Silver King, and no other corporate proceedings on the part of
Silver King are necessary to authorize this Agreement or
consummate the transactions contemplated hereby.
(c) This Agreement has been duly and validly
executed and delivered by Silver King and, assuming the due
authorization, execution and delivery by Liberty HSN,
constitutes the legal and binding obligation of Silver King,
enforceable against Silver King in accordance with its terms,
subject to (a) bankruptcy, insolvency, reorganization, morato-
rium or other similar laws affecting or relating to creditors
rights generally and (b) the availability of injunctive relief
and other equitable remedies.
SECTION 4.2 Representations and Warranties of
Liberty HSN. Liberty HSN hereby represents and warrants:
(a) Liberty HSN has all necessary corporate power
and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement by Liberty HSN, and the consummation by Liberty HSN
of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the
part of Liberty HSN, and no other corporate proceedings on the
part of Liberty HSN are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby.
(b) This Agreement has been duly and validly
executed and delivered by Liberty HSN and, assuming the due
authorization, execution and delivery by Silver King,
constitutes the legal and binding obligation of Liberty HSN,
enforceable against Liberty HSN in accordance with its terms,
subject to (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to
creditors rights generally and (b) the availability of
injunctive relief and other equitable remedies.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
SILVER KING WITH RESPECT TO EACH EXCHANGE
With respect to each Exchange, Silver King shall be
deemed to have made, as of the applicable Exchange Date, the
following representations and warranties to each Eligible
Holder effecting such Exchange and, if applicable, to any
Transferee who shall receive the shares issuable upon such
Exchange pursuant to an Agreement to Transfer:
SECTION 5.1 Organization and Qualification. Silver
King (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 King and its subsidiaries, taken as a whole. Silver
King has delivered or made available to such Eligible Holder
true and complete copies of its certificate of incorporation
and by-laws, each as amended to date and currently in effect
(respectively, the "Silver King Charter" and the "Silver King
Bylaws"). The Silver King Charter and the Silver King Bylaws
are in full force and effect and neither Silver King nor the
Surviving Corporation is in violation of its respective
certificate of incorporation or bylaws.
SECTION 5.2 Authorization of the Exchange. The
consummation of such Exchange by Silver King has been duly and
validly authorized by the board of directors of Silver King and
by any necessary action of the Silver King stockholders.
Silver King has full corporate power and authority to perform
its obligations under this Agreement with respect to such
Exchange and to consummate such Exchange. No other corporate
proceedings on the part of Silver King or any of its
subsidiaries are necessary to authorize the consummation of
such Exchange.
SECTION 5.3 Validity of Silver King Shares, etc.
The shares of Silver King Common Stock and/or Silver King Class
B Stock to be issued by Silver King to such Eligible Holder
(and, if applicable, a Transferee) pursuant to such 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 will be free of any
liens, claims, charges, security interests, preemptive rights,
pledges, voting or stockholder agreements, options or
encumbrances of any kind whatsoever (other than any of the
foregoing arising under the Stockholders Agreement or any
Federal or state securities laws), will not be issued in
violation of any preemptive rights and will vest in such
Eligible Holder (and, if applicable, such Transferee) full
rights with respect thereto, including the right to vote such
Silver King Exchange Shares on all matters properly presented
to the stockholders of Silver King to the extent set forth in
the Silver King Charter. The issuance of the Silver King
Exchange Shares will not violate the rules, regulations and
requirements of the National Association of Securities Dealers,
Inc. ("NASD") or of the principal exchange or trading market on
which the Silver King Common Stock is then quoted or traded
(including,
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without limitation the NASD policies set forth in Section 6(i)
and (j) of Part III of Schedule D of the NASD By-Laws and the
Policy of the Board of Governors with respect to Voting Rights
set forth in Part III of Schedule D of the NASD By-Laws or any
similar policies of such other exchange or trading market).
The issuance of the Silver King Common Stock pursuant to such
Exchange has been registered under the Securities Act.
SECTION 5.4 No Approvals or Notices Required; No
Conflict with Instruments. The performance by Silver King of
its obligations under this Agreement in connection with such
Exchange and the consummation of the transactions contemplated
by such Exchange, including the issuance of the Silver King
Exchange Shares in such Exchange, will not:
(a) conflict with or violate the Silver King Charter
or the Silver King Bylaws or the charter or bylaws of the
Surviving Corporation or any other subsidiary of Silver King,
in each case as amended to date;
(b) 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 King or the Surviving Corporation or any
other subsidiary of Silver King, 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 King and its subsidiaries, taken as a
whole;
(c) require, on the part of Silver King or the
Surviving Corporation or any other subsidiary of Silver King,
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 King and its subsidiaries, taken as a
whole;
(d) 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, can-
cellation 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,
authorization, license, contract, instrument, employee benefit
plan or practice, or other agreement, obligation, commitment or
concession of any nature) to which Silver King or the Surviving
Corporation or any other subsidiary of Silver King is a party,
by which Silver King, the Surviving Corporation or any other
subsidiary of Silver King or any of their respective assets or
properties is bound or pursuant to which Silver King or the
Surviving Corporation or any other subsidiary of Silver King is
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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 King and its subsidiaries, taken
as a whole; or
(e) result in a Violation of, under or pursuant to
any law, rule, regulation, order, judgment or decree applicable
to Silver King or the Surviving Corporation or any other
subsidiary of Silver King 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.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE ELIGIBLE HOLDER
WITH RESPECT TO EACH EXCHANGE
As of each Exchange Date, the Eligible Holder who is
seeking or required to exchange its Surviving Exchange Shares
shall be deemed to have made the following representations and
warranties to Silver King; provided, that it shall be a
condition to Silver King's obligation to effect any such
Exchange in connection with an Agreement to Transfer that the
applicable Transferee and Transferor pursuant to such Agreement
to Transfer shall be deemed to have made to Silver King the
representations set forth in paragraphs (a)-(e) of Section 6.2
(as such matters relate to, and taking into account, such
Transferee's ownership of the Silver King Securities it will
receive upon the consummation of such Exchange and the
transfers contemplated by such Agreement to Transfer):
SECTION 6.1 Ownership and Validity of Surviving
Exchange Shares. Such Eligible Holder owns beneficially and of
record the Surviving Exchange Shares, free of any liens,
claims, charges, security interests, pledges, voting or
stockholder agreements, encumbrances or equities (other than
any of the foregoing arising under this Agreement, the Merger
Agreement, or the Stockholders Agreement or any Federal or
state securities laws).
SECTION 6.2 No Approvals or Notices Required; No
Conflict with Instruments. The consummation of such Exchange
will not:
(a) if applicable, conflict with or violate such
Eligible Holder's organizational documents;
(b) require any Governmental Consent or Governmental
Filing, in each case on the part of or with respect to each of
such Eligible Holder, the absence or omission of which would,
either individually or in the aggregate, have a material
adverse effect on such Exchange;
(c) require, on the part of such Eligible Holder 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 such Exchange;
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(d) conflict with or result in any Violation of any
Contract to which such Eligible Holder is a party, or by which
such Eligible Holder, 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 such Exchange; or
(e) result in a Violation of, under or pursuant to
any law, rule, regulation, order, judgment or decree applicable
to such Eligible Holder 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 such Exchange.
provided, that any such representation pursuant to this Section
6.2 by an Eligible Holder in connection with an Agreement to
Transfer shall take into account the transactions contemplated
to occur immediately following the Exchange pursuant to the
Agreement to Transfer.
ARTICLE 7
COVENANTS AND OTHER AGREEMENTS
For so long as there remain outstanding any Exchange
Securities, the parties covenant and agree as follows:
SECTION 7.1 Notification of Issuance Event. At any
time Silver King or any of its subsidiaries or an Eligible
Holder (i) plans or proposes to take any action which has
resulted, or is reasonably likely to result, in an Issuance
Event or (ii) becomes aware of any event, fact or circumstance
which results in an Issuance Event, Silver King or the Eligible
Holder, respectively, shall (x) in the case of clause (i),
prior to taking such action and (y) in the case of clause (ii),
promptly upon becoming so aware, give notice of such Issuance
Event to each holder of Exchange Securities or Silver King, as
the case may be, which notice shall set forth in reasonable
detail the facts, circumstances or events which will result or
have resulted, as the case may be, in the occurrence of such
Issuance Event. No notice shall be required pursuant to this
Section 7.1 unless the number of shares issuable pursuant to
such Issuance Event, together with any other shares which are
then issuable in accordance with this Agreement, meet the
threshold set forth in Section 2.1(f).
SECTION 7.2 Transfer of Surviving Corporation's
Assets and Liabilities to Subsidiary. Silver King agrees that
as soon as reasonably practicable following the Merger, it will
use its reasonable best efforts to take and cause any of its
subsidiaries to take any actions necessary (including making
all required Government Filings and seeking and obtaining all
necessary Government Consents and Contract Consents) in order
to assign to a wholly owned subsidiary of the Surviving
Corporation ("Surviving Sub") all of the material assets (other
than the capital stock of Surviving Sub) and material
liabilities of the Surviving Corporation and to cause Surviving
Sub to assume or guarantee all such material liabilities and to
obtain the release from the applicable parties of the Surviving
Corporation from all such material liabilities. Following such
transfer, Silver King shall not permit the Surviving
Corporation to own any assets other than the capital stock of
the Surviving Sub, and shall not permit the Surviving
Corporation to be or become subject to any material liabili-
ties. Silver King and Liberty HSN agree that Silver King's
reasonable best efforts for purposes of this Section 7.2 shall
not require Silver King to seek or obtain the consent or waiver
of the holders of the convertible debentures issued under the
Indenture (as defined in
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the Merger Agreement and as in effect immediately prior to the
Effective Time) to such assignment and transfer.
SECTION 7.3 Treatment of Silver King Class B Stock
and Silver King Common Stock upon a Distribution. So long as
there are any shares of Surviving Class B Stock outstanding
that are Exchange Securities, Silver King agrees that it will
not (i) reclassify, subdivide or combine the Silver King Common
Stock without reclassifying, subdividing or combining the
Silver King Class B Stock, on an equal per share basis, or (ii)
reclassify, subdivide or combine the Silver King Class B Stock
without reclassifying, subdividing or combining the Silver King
Common Stock, on an equal per share basis.
SECTION 7.4 Reservation of Silver King Securities.
Silver King agrees to at all times reserve and keep available,
free from preemptive rights, out of the aggregate of its
authorized but unissued Silver King Common Stock and Silver
King Class B Stock, for the purpose of effecting any Exchange
of shares of Surviving Common Stock or Surviving Class B Stock
pursuant to this Agreement, the full number of shares of Silver
King Common Stock and Silver King Class B Stock, then
deliverable upon the Exchange of all then outstanding Exchange
Securities (assuming for this purpose that all of the
outstanding Exchange Securities are held by a single holder),
and shall reserve an additional number of shares of Silver King
Common Stock equal to the number of shares issuable upon the
conversion of shares of Silver King Class B Stock issuable
pursuant to this Agreement
SECTION 7.5 Certain Obligations Upon Insolvency or
Bankruptcy of Surviving Corporation. (a) In the event that
the Surviving Corporation should become insolvent or, within
the meaning of any federal or state bankruptcy law, commence a
voluntary case or consent to the entry of any order of relief
or for the appointment of any custodian for its property or a
court of competent jurisdiction enters an order or decree for
relief against the Surviving Corporation appointing a custodian
or ordering its liquidation, and Liberty HSN determines in good
faith that the equity of the Surviving Corporation is rea-
sonably likely to be impaired or extinguished in connection
therewith, then upon the request of Liberty HSN, its rights
under this Agreement shall be converted into the deferred right
to receive from Silver King the number of shares of Silver King
Common Stock and Silver King Class B Stock which Liberty HSN
would then have had the right to acquire upon the Exchange of
all Exchange Securities then outstanding (such deferred right,
the "Additional Contingent Right"). The terms and conditions
of the Additional Contingent Right shall be identical to those
of the Contingent Right mutatis mutandis; provided, that the
Remaining Shares Issuable (as defined in Exhibit A to the
Merger Agreement) pursuant to the Additional Contingent Right
shall automatically become issuable, subject to regulatory
approval, on the fifth anniversary of the date the Additional
Contingent Right is deemed to have been granted.
(b) In connection with the grant of the Additional
Contingent Right, Silver King shall thereafter be obligated to
use all reasonable efforts to consummate a Restructuring
Transaction (as defined below) on or before the third
anniversary of the date of the grant of the Additional
Contingent Right. In the event that such Restructuring Trans-
action has not been consummated by such fifth anniversary and
the Additional Contingent Right has not been satisfied in full
by such date, Silver King shall thereafter be required to use
its best efforts to cause all Silver King Securities issuable
in respect of the Additional Contingent Right to be issued
prior to the seventh anniversary thereof. Such efforts shall
include, without limitation (but subject to applicable
fiduciary obligations) engaging in a
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Restructuring Transaction, completing an equity offering, or
other corporate restructuring or causing all of the equity
interests in Silver King to be acquired by a third party in a
transaction which is tax free to the stockholders of Silver
King, in any case which would result in all Contingent Shares
issuable to Liberty HSN pursuant to the Additional Contingent
Right being issued to it and Liberty HSN being entitled or
otherwise permitted to hold such Silver King Securities or
other properties receivable by it in such transaction free of
any governmental or regulatory restrictions and to exercise
full rights of ownership with respect thereto. "Restructuring
Transaction" shall mean a transaction, the effect of which
would be to permit Liberty or Liberty HSN, as the case may be
(subject to Liberty's obligations under the Stockholders
Agreement), to exercise full ownership rights (including voting
rights) with respect to the Silver King Securities owned by it
(including its pro rata interest in any Silver King Securities
held by BDTV, BDTV II or a BDTV Entity) or issuable to it in
connection with the Contingent Right and the Additional
Contingent Right (which transaction could include, without
limitation, filing 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/or any restructuring of Silver King's assets,
liabilities and businesses).
SECTION 7.6 Reasonable Efforts. (a) Subject to the
terms and conditions of this Agreement and applicable law, in
connection with an Exchange, each of the Eligible Holder
exercising its Exchange Right and Silver King 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 such
Exchange as soon as reasonably practicable following the
receipt or delivery by Silver King of an Exchange Notice,
including such actions or things as Silver King or such
Eligible Holder may reasonably request in order to cause the
consummation of an Exchange following the receipt or delivery
by Silver King of an Exchange Notice. Without limiting the
generality of the foregoing, such Eligible Holder and Silver
King 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 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; (ii) lifting any
permanent or preliminary injunction or restraining order or
other similar order issued or entered by any court or
Governmental Entity in connection with an Exchange; (iii)
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 (iv) in general, consummating and making
effective the transactions contemplated hereby; provided,
however, that, other than in connection with the performance of
its obligations with respect to the consummation of a
Restructuring Transaction as provided in Section 7.5(b), in
order to obtain any such Consent, or the lifting of any
injunction or order referred to in clauses (i) and (ii) of this
sentence, neither such Eligible Holder nor Silver King 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 could reasonably
be expected to be materially adverse or burdensome to its
respective businesses, assets, financial condition or results
of operations, 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 an Exchange, each of Silver King and the
applicable
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Eligible Holder shall provide the other party with drafts
thereof and afford the other party a reasonable opportunity to
comment on such drafts.
(b) In addition to the foregoing paragraph (a),
Silver King shall take such reasonable action which may be
necessary in order that (i) it may validly and legally deliver
fully paid and nonassessable shares of Silver King Common Stock
or Silver King Class B Stock upon any surrender of shares of
Surviving Common Stock or Surviving Class B Stock, as
applicable, for exchange pursuant to this Agreement, (ii) the
delivery of shares of Silver King Common Stock and Silver King
Class B Stock in accordance with this Agreement is exempt from
the registration or qualification requirements of the
Securities Act and applicable state securities laws or, if no
such exemption is available, that the offer and Exchange of
such shares of Silver King Common Stock and Silver King Class B
Stock have been duly registered or qualified under the
Securities Act and applicable state securities laws, (iii) the
shares of Silver King Common Stock (including the shares of
Silver King Common Stock issuable upon conversion of any shares
of Silver King Class B Stock), delivered upon such Exchange are
listed for trading on the Nasdaq National Market or on a
national securities exchange (upon official notice of issuance)
and (iv) the shares of Silver King Common Stock or Silver King
Class B Stock, as applicable, delivered upon such Exchange are
free of preemptive rights and any liens or adverse claims
(other than any of the foregoing created or caused by the
Person receiving such shares in such Exchange).
SECTION 7.7 Notification of Certain Matters. Silver
King shall give prompt notice to each holder of Exchange
Securities, and each holder of Exchange Securities shall give
prompt notice to Silver King, 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 to be
made as of an applicable Exchange Date to be untrue or
inaccurate in any material respect, (b) any material failure of
Silver King or such holder of Exchange Securities, 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 Silver King's
or such holder's respective obligations to consummate an
Exchange. 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 7.8 Certain Information. So long as any Exchange
Securities remain outstanding, Silver King shall provide
promptly upon availability to each holder of Exchange
Securities (a) quarterly and annual consolidated financial
statements and reports (including a balance sheet and related
income statement and the notes related thereto) prepared with
respect to the Surviving Corporation and (b) such additional
financial and other information with respect to the Surviving
Corporation and its subsidiaries as the holders of a majority
of the Exchange Securities may from time to time reasonably
request.
SECTION 7.9 Additional Covenants. (a)
Notwithstanding any other provision of this Agreement or the
Merger Agreement to the contrary (but excluding actions
specifically contemplated by this Agreement and the Merger
Agreement), and in addition to the rights granted to the
holders of Exchange Securities pursuant to this Agreement and
any other voting rights granted by law to the holders of the
Exchange Securities, without the consent of the holders of a
majority of the Exchange Securities (which consent, in the case
of clauses (ii) through (v) below, will not be unreasonably
withheld), Silver King will not (and will not cause or permit
any of its subsidiaries to) cause or permit the Surviving
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Corporation or any of its subsidiaries to take any action that
would, or could reasonably be expected to, or fail to take any
action which failure would or could reasonably be expected to:
(i) make the ownership by any holder of the
Exchange Securities or any other material assets of such
holder unlawful or result in a violation of any law, rule,
regulation, order or decree (including the FCC
Regulations) or impose material additional restrictions or
limitations on such holder's full rights of ownership of
the Exchange Securities or the ownership of its other
material assets or the operation of its businesses
(provided, that for purposes of the foregoing, to the
extent that a condition, restriction or limitation upon
Silver King or the Surviving Corporation or their
respective subsidiaries relates to or is based upon or
would arise as a result of, any action or the consummation
of a transaction by the Liberty Group, such condition,
restriction or limitation shall be deemed to be such a
condition, restriction or limitation on the Liberty Group
(regardless of whether it is a party to or otherwise would
be legally obligated thereby) to the extent that the
taking of an action or the consummation of a transaction
by the Liberty Group would result in BDTV, Silver King, or
any of their respective subsidiaries being in breach or
violation of any law, rule, regulation, order or decree or
otherwise causing such rule, regulation, order or decree
to terminate or expire or would otherwise result in
Liberty HSN's ownership of the Exchange Securities or any
other material assets being illegal or in violation of any
law, rule, regulation, order or decree);
(ii) cause the acquisition or ownership by any
holder of any Exchange Securities (upon the exchange of
Liberty HSN's shares of HSN Common Stock and HSN Class B
Stock for Silver Sub shares pursuant to Section 1.1 of the
Merger Agreement immediately prior to the Effective Time
or upon any subsequent exchange or conversion of Surviving
Common Stock or Surviving Class B Stock (other than in
connection with an Exchange)) to be taxable to such
holder;
(iii) cause the Exchange of Exchange Securities
for Silver King Securities and/or Redeemable Capital Stock
or Redemption Securities to be a taxable transaction to
the holder thereof;
(iv) result in the Surviving Corporation being
unable to pay its debts as they become due or becoming
insolvent; or
(v) otherwise restrict, impair, limit or
otherwise adversely affect the right or ability of a
holder of Exchange Securities at any time to exercise the
Exchange Right under this Agreement (including, but not
limited to, any repurchase of shares of Silver King
Securities by Silver King);
provided, however, that with respect to clauses (ii) and
(iii) hereof, if (x) such acquisition, ownership or
Exchange is taxable to a holder of the Exchange Securities
as a result of (1) any action or failure to act by such
holder (other than due to an action or inaction by the
Liberty Group or such holder specifically contemplated or
required by this Agreement, the Merger Agreement, or the
Stockholders Agreement), (2) the laws and regulations in
effect at the Effective Time or (3) any difference in the
tax position of an Eligible Holder relative to the tax
position of Liberty HSN or (y) the taxes applicable to
such acquisition, ownership or exchange would
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have accrued or been payable by Liberty HSN had all of the
Exchange Securities been issued to Liberty HSN in the
Merger at the Effective Time, then compliance with the
covenants set forth in such clauses (ii) and (iii) shall
be deemed waived by such holder of Exchange Securities and
provided, further, that with respect to the covenants set
forth in clauses (i) and (v) hereof, such covenants shall
not apply to any such consequence that would be suffered
or otherwise incurred by a holder of Exchange Securities,
solely as a result of such holder being subject to
additional or different regulatory restrictions and
limitations than those applicable to Liberty HSN.
(b) If the Exchange of Exchange Securities is
taxable to an Eligible Holder as a result of a change in law or
regulation or as a result of any action taken by Silver King
(but not due to an action or unreasonable inaction by such
holder (other than due to an action or inaction specifically
contemplated or required by this Agreement, the Merger
Agreement, or the Stockholders Agreement)) after the Effective
Time Silver King acknowledges and agrees that it shall be
obligated to provide to such holder upon such Exchange of
Exchange Securities, a number of additional shares of Silver
King Securities sufficient on an after-tax basis to pay any
such resulting tax; provided, however, that Silver King shall
have no obligation under this paragraph (b) to the extent such
Exchange is taxable to an Eligible Holder solely as a result of
any difference in the tax position of such Eligible Holder
relative to the tax position of Liberty HSN.
(c) So long as any Exchange Securities are
outstanding, Silver King shall not declare or pay any cash
dividends, or make any distribution of its properties or assets
to the holders of Silver King Securities (other than a
distribution of Silver King Securities which is tax free to the
holders of Silver King Securities) or cause, or permit to
occur, a Redemption Event, unless prior thereto Silver King
shall have made arrangements reasonably acceptable to the
holders of the Exchange Securities to protect such holders with
respect to any adverse tax consequence incurred by such holder
(other than the obligation of such holder to pay tax solely in
respect of (i) the amount of such dividend or distribution or
(ii) the amounts received pursuant to such Redemption Event, in
each case as if such holder had been a holder of Silver King
Securities on and after the Effective Date), resulting from the
declaration and payment of such dividend or the making of such
distribution or such Redemption Event; provided, however, that
Silver King shall have no obligation under this paragraph (c)
to the extent such adverse tax consequence is incurred by an
Eligible Holder solely as a result of any difference in the tax
position of such Eligible Holder relative to the tax position
of Liberty HSN.
(d) So long as any Exchange Securities are
outstanding, Silver King will not (i) merge with or into any
person, or consolidate with any person, (ii) sell or transfer
to another corporation or other person the property of Silver
King as an entirety or substantially as an entirety, or (iii)
otherwise engage in any statutory exchange of Silver King
Securities with another corporation or other person, in each
case as a result of which shares of Silver King Securities
would be reclassified or converted into the right to receive
stock, securities or other property (including cash) or any
combination thereof, unless in connection with any such
transaction (and immediately prior to the consummation thereof)
each holder of the Exchange Securities would be entitled to
exchange all Exchange Securities for Silver King Securities
(and own and exercise full rights of ownership of such Silver
King Securities following such transaction) or each holder of
such Exchange Securities would be
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entitled to own and exercise full rights of ownership of the
stock, securities or other property receivable by a holder of
the number and kind of Silver King Securities receivable by
such holder upon such Exchange of Exchange Securities;
provided, however, that Silver King shall have no obligation
under this paragraph (d) to the extent that Liberty HSN would
be entitled to own and exercise such rights had Liberty HSN
held all outstanding Exchange Securities at the time of such
transaction.
(e) Silver King shall not become a party and shall
not permit any of its subsidiaries to become a party to any
transaction with respect to the foregoing unless the terms of
the agreements relating to such transaction include obligations
of the applicable parties consistent with this Section 7.9.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 Further Assurances. From and after the
Effective Time, each of Silver King, Liberty HSN and any
Eligible Holder 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 8.2 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 any Exchange
shall occur.
SECTION 8.3 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 (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 King to:
Silver King Communications, Inc.
12425 28th Street North
St. Petersburg, Florida 33716
Attention: General Counsel
Telecopier No.: (813) 572-1349
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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 a member of the Liberty Group, to:
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.
599 Lexington Avenue
New York, New York 10022
Attention: Frederick H. McGrath Esq.
Telecopier No.: (212) 705-5125
(c) If to a holder of Exchange Securities other than
a member of the Liberty Group, at the address
stated for such holder on the stock transfer
books of the Surviving Corporation;
or to such other person or address as any party shall specify
by notice in writing to the other party.
SECTION 8.4 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 8.5 Assignment; Binding Effect; Benefit.
Neither this Agreement nor any of the rights, benefits or
obligations hereunder may be assigned by Silver King without
the prior written consent of the other party hereto. The
rights of the Liberty Group under this Agreement shall be
assignable to any person acquiring Exchange Securities (or any
interest therein (including an interest in any BDTV Entity));
provided, that this provision shall not affect the rights and
obligations of the parties to the Stockholders Agreement.
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. No
assignment permitted hereunder shall be effective until the
assignee shall have agreed in writing to be bound by the terms
of this Agreement.
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SECTION 8.6 Amendment. This Agreement may be
amended, superseded or canceled, only by a written instrument
specifically stating that it amends, supersedes or cancels this
Agreement, executed by each of Silver King and a member of the
Liberty Group.
SECTION 8.7 Extension; Waiver. In connection with
an Exchange, an Eligible Holder exercising its Exchange Right,
or Silver King may, to the extent legally allowed, (i) extend
the time specified herein for the performance of any of the
obligations of the other Person, (ii) waive any inaccuracies in
the representations and warranties of the other Person
contained herein or in any document delivered pursuant hereto,
(iii) waive compliance by the other Person with any of the
agreements or covenants of such other Person contained herein
or (iv) waive any condition to such waiving Person's obligation
to consummate such Exchange to any of such waiving Person's
other obligations under this Agreement. Any agreement on the
part of Silver King or such Eligible Holder to any such
extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such Person. Any such
extension or waiver by any Person shall be binding on such
Person but not on any other Person entitled to the benefits of
the provision of this Agreement affected unless such other
Person 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 Person 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 in the future. Whenever this Agreement requires or
permits consent or approval by any Person, 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 8.7.
SECTION 8.8 Survival. The covenants and agreements
in Articles 2, 3, and 7 and elsewhere in this Agreement shall
survive until all of the Exchange Securities have been
exchanged for Silver King Securities.
SECTION 8.9 Tax Interpretation. Whenever it is
necessary for purposes of this Agreement to determine whether
an Exchange is taxable or tax-free, such determination shall be
made without regard to any interest imputed pursuant to Section
483 of the Internal Revenue Code of 1986, as amended. For
purposes of this Agreement, a Person's "tax position" shall not
include or take into account any offsets against any tax which
are peculiar to such Person (such as tax credits, loss
carry-overs, and current losses).
SECTION 8.10 General 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
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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 King shall not
be deemed to be a subsidiary or an affiliate of Liberty HSN,
and the subsidiaries, directors, officers, employees and
affiliates of Silver King shall not be deemed to be
subsidiaries, directors, officers, employees or affiliates of
Liberty HSN.
SECTION 8.11 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.
SECTION 8.12 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 8.13 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 Exchange Agreement as of the date first above written.
SILVER KING COMMUNICATIONS, INC.
/s/ Michael Drayer
By: Michael Drayer
Title: Executive Vice President,
General Counsel and Corporate
Secretary
LIBERTY HSN, INC.
/s/ Robert R. Bennett
By: Robert R. Bennett
Title: Executive Vice President
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