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EXHIBIT 10.25
EXCHANGE AGREEMENT
DATED AS OF DECEMBER 20, 1996
BY AND BETWEEN
SILVER KING COMMUNICATIONS, INC.
AND
LIBERTY HSN, INC.
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TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Additional Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 2 EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.1 Right to Exchange the Exchange Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.2 Disputes Concerning Occurrence of an Issuance Event
and Available Silver King Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.3 Mechanics of the Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 3 EXCHANGE RATE ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.1 Exchange Rate Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.2 Adjustment for Consolidation or Merger of Silver King . . . . . . . . . . . . . . . . . . . 19
SECTION 3.3 Notice of Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.4 Notice of Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.5 Exchange Rate Adjustments for Actions of the
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 4 GENERAL REPRESENTATIONS AND WARRANTIES OF SILVER KING AND LIBERTY HSN . . . . . . . . . . . . . . . 22
SECTION 4.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SILVER KING WITH RESPECT TO EACH EXCHANGE . . . . . . . . . . . . 23
SECTION 5.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.2 Authorization of the Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.3 Validity of Silver King Shares, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.4 No Approvals or Notices Required; No Conflict with Instruments . . . . . . . . . . . . . . 24
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE ELIGIBLE HOLDER WITH RESPECT TO EACH EXCHANGE . . . . . . . . 25
SECTION 6.1 Ownership and Validity of Surviving Exchange Shares . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.2 No Approvals or Notices Required; No Conflict with Instruments . . . . . . . . . . . . . . 26
ARTICLE 7 COVENANTS AND OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 7.1 Notification of Issuance Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 7.2 Transfer of Surviving Corporation s Assets and
Liabilities to Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 7.3 Treatment of Silver King Class B Stock and Silver King
Common Stock upon a Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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SECTION 7.4 Reservation of Silver King Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 7.5 Certain Obligations Upon Insolvency or Bankruptcy
of Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 7.6 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 7.7 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 7.8 Certain Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 7.9 Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 8 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.5 Assignment; Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.6 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.7 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.8 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.9 Tax Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.10 General Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.13 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
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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, respectively, determined in accordance with
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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.
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"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.
"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.
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"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.
"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
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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.
"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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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)
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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.
"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.
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"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 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 ▇▇▇▇▇ ▇▇▇▇▇▇ 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 ▇▇. ▇▇▇▇▇▇, pursuant to which Liberty and ▇▇. ▇▇▇▇▇▇ 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
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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:
Term Section
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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
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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 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,
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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 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
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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 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,
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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 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
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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 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
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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,
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
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5. issue by reclassification of its outstanding shares
of Silver King Common Stock and/or Silver King Class
B Stock (other than a reclassification 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 paragraph (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 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.
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(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 Securities)
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, 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
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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
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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 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.
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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 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 paragraph shall apply similarly to
successive transactions or other events to which this paragraph would otherwise
be applicable.
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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 $.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, moratorium 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:
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(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.
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
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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, 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
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(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, cancellation or acceleration of any obligation
or the loss of any material benefit under or the creation of any lien, security
interest, pledge, charge, claim, option, right to acquire, restriction on
transfer, voting restriction or agreement, or any other restriction or
encumbrance of any nature whatsoever on any assets pursuant to (any such
conflict, violation, breach, default, right of termination, cancellation or
acceleration, loss or creation, a "Violation") any "Contract" (which term shall
mean and include any note, bond, indenture, mortgage, deed of trust, lease,
franchise, permit, 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 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):
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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;
(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
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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
liabilities. 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 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
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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 reasonably 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 Transaction 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 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
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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 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
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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 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
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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 HSNs 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 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.
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(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
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.
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(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.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to a member of the Liberty Group, to:
Liberty Media Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(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
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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.
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
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Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The use of any gender herein shall be deemed to be or include the
other genders and the use of the singular herein shall be deemed to be or
include the plural (and vice versa), wherever appropriate. The use of the
words "hereof", "herein", "hereunder" and words of similar import shall refer
to this entire Agreement, and not to any particular article, section,
subsection, clause, paragraph or other subdivision of this Agreement, unless
the context clearly indicates otherwise. Notwithstanding anything herein to
the contrary, for purposes of this Agreement, Silver 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/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President, General
Counsel and Corporate Secretary
LIBERTY HSN, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
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