EXHIBIT 1
Execution Copy
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STOCK EXCHANGE AGREEMENT
between
▇▇▇▇ ▇. ▇▇▇▇▇
- and -
HSN, INC.
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MAY 20, 1997
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STOCK EXCHANGE AGREEMENT
TABLE OF CONTENTS
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Page No.
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ARTICLE I CERTAIN DEFINITIONS............... 1
ARTICLE II EXCHANGE.......................... 5
Section 2.01. Exchange of Shares for shares
of HSNi Common Stock............ 5
Section 2.02. Delivery of HSNi Shares........... 5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
THE STOCKHOLDER................... 6
Section 3.01. Organization and Good Standing.... 6
Section 3.02. Capitalization.................... 7
Section 3.03. Due Authorization; Execution and
Delivery........................ 8
Section 3.04. Absence of Breach; No Conflict.... 8
Section 3.05. The Shares........................ 9
Section 3.06. Investment Purpose................ 9
Section 3.07. Brokers........................... 10
Section 3.08. Commission Documents; Financial
Information..................... 10
Section 3.09. Approvals; Compliance with Laws... 11
Section 3.10. Litigation........................ 12
Section 3.11. Related Party Transactions........ 12
Section 3.12. Absence of Certain Events; No
Material Adverse Change......... 13
Section 3.13. Full Disclosure................... 14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF HSNi...... 15
Section 4.01. Organization and Good Standing.... 15
Section 4.02. Capitalization.................... 15
Section 4.03. Due Authorization; Execution
and Delivery.................... 16
Section 4.04. Absence of Breach; No Conflict.... 17
Section 4.05. The HSNi Shares................... 17
Section 4.06. Investment Purpose................ 17
Section 4.07. Brokers........................... 18
Section 4.08. Commission Documents; Financial
Information..................... 18
Section 4.09. Approvals; Compliance with Laws... 19
Section 4.10. Litigation........................ 20
Section 4.11. Related Party Transactions........ 20
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Page No.
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Section 4.12. Absence of Certain Events;
No Material Adverse Change...... 20
Section 4.13. Full Disclosure................... 21
ARTICLE V COVENANTS OF THE PARTIES.................... 22
Section 5.01. Additional HSNi Shares............ 22
Section 5.02. Registration Rights............... 22
Section 5.03. HSR Filings....................... 23
Section 5.04. Access to Information............. 23
Section 5.05. Further Action.................... 24
Section 5.06. Conduct of Business............... 24
Section 5.07. Tag-Along Rights.................. 25
Section 5.08. Stockholders Agreement............ 25
ARTICLE VI DIRECTORS................................... 26
Section 6.01. Director Election................. 26
Section 6.02. HSNi Director Appointment......... 26
ARTICLE VII CLOSING; SECOND CLOSING..................... 27
Section 7.01. Closing........................... 27
Section 7.02. Deliveries........................ 27
Section 7.03. Second Closing.................... 27
Section 7.04. Deliveries at Second Closing...... 27
ARTICLE VIII CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE STOCKHOLDER TO EXCHANGE, SELL AND
DELIVER THE SHARES.......................... 27
Section 8.01. Accuracy of HSNi's
Representations and Warranties.. 28
Section 8.02. Performance by HSNi............... 28
Section 8.03. HSR Act........................... 28
Section 8.04. No Injunction..................... 28
Section 8.05. Information Statements............ 28
Section 8.06. Stockholders Agreement............ 28
Section 8.07. No Adverse Decision or Action..... 28
Section 8.08. No Material Adverse Effect........ 29
Section 8.09. Approvals and Consents............ 29
Section 8.10. Proceedings....................... 29
ARTICLE IX CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF HSNi TO EXCHANGE, ISSUE AND DELIVER
THE SHARES.................................. 30
Section 9.01. Accuracy of the Stockholder's
Representations and Warranties.. 30
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Page No.
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Section 9.02. Performance by the Stockholder.... 30
Section 9.03. No Adverse Action or Decision..... 30
Section 9.04. No Material Adverse Effect........ 30
Section 9.05. No Injunction..................... 31
Section 9.06. Approvals and Consents............ 31
Section 9.07. HSR Act........................... 31
Section 9.08. Information Statements............ 31
Section 9.09. Proceedings....................... 31
ARTICLE X TERMINATION; EXPENSES....................... 31
Section 10.01. Termination by Mutual Written
Consent......................... 31
Section 10.02. Termination by the Stockholder
or HSNi......................... 32
Section 10.03. Termination by HSNi............... 32
Section 10.04. Termination by the Stockholder.... 32
Section 10.05. Expenses.......................... 33
ARTICLE XI SURVIVAL OF REPRESENTATIONS AND
WARRANTIES.................................. 33
ARTICLE XII CONFIDENTIALITY............................. 33
ARTICLE XIII MISCELLANEOUS............................... 34
Section 13.01. Notices........................... 34
Section 13.02. Entire Agreement.................. 36
Section 13.03. Successors and Assigns............ 36
Section 13.04. Paragraph Headings................ 36
Section 13.05. Reasonable Efforts................ 36
Section 13.06. Applicable Law.................... 37
Section 13.07. Severability...................... 37
Section 13.08. Equitable Remedies................ 37
Section 13.09. No Waiver......................... 37
Section 13.10. Counterparts...................... 38
Exhibit A Stockholders Agreement
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STOCK EXCHANGE AGREEMENT
AGREEMENT made and entered into on this 20th day of May,
1997, between ▇▇▇▇ ▇. ▇▇▇▇▇ (the "Stockholder") and HSN, INC., a
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Delaware corporation ("HSNi").
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W I T N E S S E T H :
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WHEREAS, the Stockholder is the owner of 12,283,014 shares
(the "Shares") of common stock, no par value ("Common Stock"), of
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Ticketmaster Group, Inc., an Illinois corporation (the "Company");
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WHEREAS, the Stockholder desires to exchange with HSNi, and
HSNi desires to exchange with the Stockholder, the Shares for shares of
common stock, $.01 par value per share ("HSNi Common Stock"), of HSNi,
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upon the terms and subject to the conditions hereinafter set forth; and
WHEREAS, the Stockholder and the Company are entering into
this Agreement to provide for said exchange (the "Exchange") and to
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establish various rights and obligations in connection therewith, upon
the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual premises and
covenants contained herein, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
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"Additional HSNi Shares" shall have the meaning set forth in
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Section 2.02 of this Agreement.
"Affiliate" shall have the meaning set forth in Rule 12b-2
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promulgated by the Commission under the Exchange Act.
"Balance Sheet" shall have the meaning set forth in Section
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3.08 of this Agreement.
"Balance Sheet Date" shall have the meaning set forth in
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Section 3.08 of this Agreement.
"Bank Consent" shall mean the consent or waiver by the banks
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under the Credit Agreement to the transactions contemplated hereby.
"Bank Refinancing" shall have the meaning set forth in
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Section 5.05 of this Agreement.
"Business Day" shall mean any day except a Saturday, Sunday
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or other day on which commercial banks in the City of New York are not
open for the transaction of business.
"Closing" shall have the meaning set forth in Section 7.01 of
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this Agreement.
"Closing Date" shall have the meaning set forth in
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Section 7.01 of this Agreement.
"Commission" shall mean the Securities and Exchange
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Commission.
"Commission Documents" shall have the meaning set
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forth in Section 3.08 of this Agreement.
"Common Stock" shall have the meaning set forth in
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the recitals to this Agreement.
"Company" shall mean Ticketmaster Group, Inc., an
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Illinois corporation.
"Company Information Statement" shall have the
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meaning set forth in Section 6.01 of this Agreement.
"Credit Agreement" shall mean the Company's Credit
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Agreement dated as of November 18, 1994, as amended, among the Company,
its lenders and ▇▇▇▇▇ Fargo Bank, National Association, as agent.
"▇▇▇▇▇▇" shall mean Mr. ▇▇▇▇▇ ▇▇▇▇▇▇.
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"Exchange Act" shall mean the Securities Exchange
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Act of 1934, as amended.
"Fair Market Value" shall mean the unweighted average closing
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price of a share of HSNi Common Stock as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ"), during the period in question or, if the HSNi Common Stock
is no longer quoted on NASDAQ, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the
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principal national securities exchange on which the HSNi Common Stock
is listed or admitted to trading; provided, however, that if the Fair
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Market Value is less than $20 per share, Fair Market Value shall be
deemed to be $20 per share.
"FCC" shall mean the Federal Communications Commission.
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"FCC Excess Shares" shall have the meaning set forth in
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Section 2.02(c) of this Agreement.
"Form 10-K" shall have the meaning set forth in Section 3.08
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of this Agreement.
"Form S-1" shall mean the registration statement of the
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Company on Form S-1, as amended through the date hereof, filed with the
Commission on September 20, 1996.
"GAAP" shall mean United States generally accepted accounting
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principles.
"HSNi Certificate" shall have the meaning set forth in
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Section 4.01 of this Agreement.
"HSNi Class B Stock" shall have the meaning set forth in
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Section 4.02 of this Agreement.
"HSNi Commission Documents" shall have the meaning set forth
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in Section 4.08 of this Agreement.
"HSNi Common Stock" shall have the meaning set forth in the
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recitals to this Agreement.
"HSNi Form 10-K" shall have the meaning set forth in
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Section 4.08 of this Agreement.
"HSNi Form S-4" shall have the meaning set forth in
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Section 4.02 of this Agreement.
"HSNi Shares" shall have the meaning set forth in
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Section 2.01 of this Agreement.
"HSR Act" shall mean ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
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Improvements Act of 1976.
"Information Statement" shall mean the Information Statement
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relating to the Exchange mailed to HSNi shareholders in accordance with
Rule 14c-2 under the Exchange Act.
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"Joint Ventures" shall have the meaning set forth
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in Section 3.01 of this Agreement.
"Laws" shall have the meaning set forth in Section
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3.09 of this Agreement.
"Liberty Agreements" shall have the meaning set
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forth in Section 4.02 of this Agreement.
"Liens" shall mean any lien, claim, charge, restriction,
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pledge, mortgage, security interest or other encumbrance.
"Loss" or "Losses" shall have the meaning set forth
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in Section 11.01 of this Agreement.
"Material Adverse Effect" shall mean a material
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adverse effect on the business, prospects, condition (financial
or otherwise), assets or results of operations of the party
in question.
"Permitted Transferees" shall have the meaning set
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forth in the Stockholders Agreement.
"Representatives" shall have the meaning set forth
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in Section 5.04.
"Restated By-laws" shall mean the By-laws of the
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Company, as amended and restated and in effect on the date
hereof.
"Restated Certificate" shall mean the Articles of
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Incorporation of the Company, as amended and restated and in
effect on the date hereof.
"Second Closing" shall have the meaning set forth
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in Section 7.03 of this Agreement.
"Securities Act" shall mean the Securities Act of
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1933, as amended.
"Shareholders Agreement" shall mean the Shareholders
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Agreement dated as of December 15, 1993 by among ▇▇▇▇ ▇▇▇▇▇, on
the one hand, and HG, Inc. and the other signatories thereto, on the
other hand.
"Shares" shall have the meaning set forth in the
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recitals to this Agreement.
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"Stockholder" shall mean ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇ and his
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successors.
"Stockholders Agreement" shall have the meaning set forth
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in Section 5.08 of this Agreement.
"Subsidiary" shall mean each corporation or other entity of
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which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by the party in
question.
ARTICLE II
EXCHANGE
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Section 2.01. Exchange of Shares for shares of HSNi Common
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Stock. Upon the terms and subject to the conditions hereinafter set
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forth, the Stockholder shall exchange, assign, transfer and deliver the
Shares to HSNi, or to any direct or indirect subsidiary of HSNi
designated by HSNi, at the Closing, as described in Section 7.01; and,
in consideration therefor, HSNi shall issue, exchange, sell and deliver
to the Stockholder an aggregate of 7,238,507 shares (the "HSNi Shares")
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of HSNi Common Stock as provided in Section 2.02 and subject to
adjustment as therein provided.
Section 2.02. Delivery of HSNi Shares. (a) Subject to
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adjustment as provided in subparagraph (b) below, at the Closing, HSNi
shall deliver certificates representing the HSNi Shares, bearing a
legend regarding restrictions on transfer under the Securities Act.
(b) The number of HSNi Shares to be issued to the Stockholder
in exchange for the Shares shall be subject to adjustment as follows:
if the Fair Market Value during the first 20 trading days in July 1998
is less than $29 per share, additional shares ("Additional HSNi
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Shares") of HSNi Common Stock shall be issued to the Stockholder
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as additional consideration in exchange for the Shares. The number of
Additional HSNi Shares to be issued shall equal the difference between
the number obtained by dividing $209,916,709 by the Fair Market Value
and the number of HSNi Shares. Notwithstanding the foregoing, no
adjustment shall be required or made if the Fair Market Value during
any consecutive 20 trading day period commencing on December 1, 1997
and ending on the day immediately prior to the Second Closing equals or
exceeds $29 per share.
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(c) In the event that the issuance of all or any
portion of the Additional HSNi Shares would cause the Stockholder to
be in violation of the rules and regulations of the FCC, the
Stockholder, at his option, may elect to (i) receive in lieu of the
Additional HSNi Shares that may not be issued under FCC law (the "FCC
Excess Shares") non-voting participating preferred stock of HSNi,
convertible upon transfer or upon compliance with FCC regulatory
restrictions into HSNi Common Stock, and designed to be the economic
equivalent of the FCC Excess Shares, (ii) deliver a proxy complying
with FCC law to ▇▇▇▇▇▇ to vote the FCC Excess Shares or (iii) enter
into such other arrangements to comply with FCC law as are acceptable
to HSNi.
(d) The number of Shares, HSNi Shares and/or Additional
HSNi Shares shall be appropriately and equitably adjusted to reflect
(i) the payment of any dividend or other distribution on such shares,
(ii) any stock split, combination or reclassification of such shares,
or (iii) any consolidation, merger or other event which results in
the conversion or exchange of such shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
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The Stockholder hereby represents and warrants to
HSNi as follows:
Section 3.01. Organization and Good Standing. The
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Company is a corporation duly organized, validly existing and in good
standing under the laws of Illinois, and is duly qualified to transact
business as a foreign corporation and is in good standing in each
jurisdiction in which the nature of the business transacted by it or
the character or location of the properties owned or leased by it
requires such qualification, except where the failure to be so
qualified or in good standing would not have a Material Adverse Effect
on the Company and its Subsidiaries considered as a whole. The Company
has full corporate power and authority to own and manage its properties
and to carry on its business as it is now being (and as it is
currently proposed to be) conducted. The copies of the Company's
Restated Certificate and Restated By-laws and other organizational
documents and instruments (in each case, as amended and/or restated
through the date hereof), filed by the Company with the Commission
prior to the date hereof, are true, complete and correct copies
thereof. The Restated Certificate and the Restated By-laws will be in
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full force and effect on and prior to the Closing Date. Except for the
joint ventures (the "Joint Ventures"), disclosed in the Commission
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Documents filed prior to the date hereof or as set forth on Schedule
3.01 hereof, the Company does not own any interest in any other company
or entity other than the Subsidiaries of the Company. Each Subsidiary
of the Company and, to the knowledge of the Stockholder, each Joint
Venture is duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization and has
the power and authority to own or lease its properties and to conduct
its business as now conducted, except as would not result in any
Material Adverse Effect on the Company and its Subsidiaries considered
as a whole. All outstanding shares of the capital stock of each
Subsidiary of the Company and, to the knowledge of the Stockholder,
equity interests of the Company in each Joint Venture have been validly
issued and are fully paid and nonassessable. Except as disclosed in
the Commission Documents filed prior to the date hereof, there are no
outstanding options, warrants, rights, agreements or commitments of any
nature whatsoever of any third party to subscribe for or purchase any
equity security of any Subsidiary of the Company or, to the knowledge
of the Stockholder, of any Joint Venture or to cause any Subsidiary of
the Company or, to the knowledge of the Stockholder, any Joint Venture
to issue any such equity security.
Section 3.02. Capitalization. The authorized
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capitalization of the Company as of the date hereof consists of:
80,000,000 shares of Common Stock, no par value, one share of series A
redeemable convertible preferred stock, no par value (the "Series A
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Stock"), and 19,999,999 shares of undesignated preferred stock
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no par value ("Preferred Stock"), of which, as of the date hereof
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there were 24,739,715 shares of Common Stock outstanding (and 1,252,942
shares issuable upon exchange of the Class B shares of Ticketmaster
Canada Acquisition Limited) and no shares of Series A Stock or
Preferred Stock outstanding. All such shares outstanding on the date
hereof are, and any shares that will be issued under the Restated
Certificate, when issued, will be, duly authorized, validly issued and
fully paid and nonassessable. Except as disclosed on Schedule 3.02
hereof and other than options to purchase an aggregate of 4,408,251
shares of Common Stock issued pursuant to employee benefit plans of the
Company, there are no outstanding options, warrants, rights, puts,
calls, commitments, or other contracts, arrangements, or understandings
issued by or binding upon the Company requiring or providing for, and
there are no outstanding debt or equity securities of the Company which
upon the conversion, exchange or exercise thereof would require or
provide for, the issuance
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by the Company of any new or additional shares of Common Stock (or any
other securities of the Company which, with notice, lapse of time
and/or payment of monies, are or would be convertible into or
exercisable or exchangeable for shares of Common Stock). There are no
preemptive or other similar rights available to the existing holders of
Common Stock or other securities of the Company.
Section 3.03. Due Authorization; Execution and Delivery. The
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execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Stockholder and
by the Board of Directors of the Company (including such authorization
as may be required so that no state anti-takeover statute or similar
statute or regulation including, without limitation, Section 5/11.75 of
the Illinois Business Corporation Act, is or becomes operative with
respect to this Agreement or the transactions contemplated hereby),
and, except (if applicable) for requirements under Rule 14f-1 under the
Exchange Act to transmit the Company Information Statement to the
Company's stockholders at least 10 days prior to the date that persons
designated by HSNi constitute a majority of the Company's Board, no
other action by the Stockholder or corporate proceedings on the part of
the Company are necessary to authorize this Agreement and to consummate
the transactions contemplated hereby. This Agreement constitutes the
legal, valid and binding obligation of the Stockholder, enforceable
against the Stockholder in accordance with its terms, except that such
enforcement may be subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights, and the remedy of specific performance and
injunctive relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
Section 3.04. Absence of Breach; No Conflict. Except
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as disclosed in the Commission Documents filed prior to the date hereof
or as set forth on Schedule 3.04 hereto, the execution, delivery, and
performance of this Agreement by the Stockholder, and the consummation
by the Stockholder of the transactions contemplated hereby, will not
(a) give rise to a right to (or otherwise) terminate, accelerate the
maturity of or increase any payment due under, conflict with, result in
a breach or violation of any of the terms, conditions or provisions of,
constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, require any approval,
waiver or consent under, or result in the creation or imposition of any
Lien upon any property or assets of the Stockholder, the Company or any
of its
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Subsidiaries pursuant to the terms of, any note, bond, mortgage,
pledge, indenture, deed of trust, lease, agreement, indemnity,
obligation, commitment, instrument, franchise, license, certificate or
permit to which the Company or any of its Subsidiaries is a party or by
which any of their respective properties or assets may be bound; (b)
violate or conflict with any term or provision of the restated
certificate of incorporation, by-laws or equivalent organizational
instruments and documents (in each case, as amended and/or restated
through the date hereof) of the Company or any Subsidiary of the
Company (and in each case as in effect on the Closing Date); (c)
violate any judgment, decree, order, writ, statute, rule or regulation
of any judicial, arbitral, public, or governmental authority having
jurisdiction over the Company, any of its Subsidiaries or any of their
respective properties or assets or (d) to the knowledge of the
Stockholder, violate or conflict with any term or provision of any
Joint Venture. No employment agreement or other contract with any
Company employee contains any provision that would permit such employee
to terminate such agreement or contract or receive additional or
accelerated payments or benefits upon consummation of the transactions
contemplated hereby.
Section 3.05. The Shares. (a) The Shares have
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been duly authorized and legally and validly issued, are fully paid and
nonassessable, and represent all of the issued and outstanding shares
of capital stock of the Company held by the Stockholder.
(b) The Stockholder has full beneficial ownership
of the Shares, subject to his obligations under the Shareholders
Agreement, and on the Closing Date shall possess full authority and
power to convey the same to HSNi, free and clear of any and all Liens,
and preemptive and other similar rights. Except as disclosed on
Schedule 3.05 hereof, the Shareholders Agreement is the only agreement,
arrangement or understanding relating to the Shares to which the
Stockholder is a party, and since December 15, 1993, there have been no
amendments thereto. Schedule 3.05 hereof sets forth the identity of the
persons who have rights under the Shareholders Agreement and the
maximum number of shares of Brick Common Stock as to which each such
person may exercise "Tag-Along Rights" thereunder.
Section 3.06. Investment Purpose. The Stockholder
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is acquiring the HSNi Shares solely for the purpose of investment and
not with view to, or for offer or sale in connection with, any
distribution thereof. The Stockholder acknowledges and understands
that the HSNi Shares may not be sold except in compliance with the
registration requirements
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of the Securities Act, unless an exemption therefrom is
available.
The Stockholder hereby acknowledges and agrees that
upon the original issuance thereof, and until such time as the same is
no longer required under the applicable requirements of the Securities
Act and the rules and regulations thereunder, the certificates
representing the HSNi Shares (including shares of HSNi Common Stock
issuable as Additional HSNi Shares) may bear the following legend on
the reverse side thereof:
"THE SHARES REPRESENTED BY THIS CERTIFICATE (THE `SHARES')
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE LAWS REGULATING THE SALE OF SECURITIES
AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS
REGISTERED OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION
IS NOT REQUIRED."
Section 3.07. Brokers. Other than ▇▇▇▇▇▇▇▇▇▇ Securities,
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the fees of which shall be paid by HSNi (not to exceed the amount
previously disclosed to HSNi), no broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of the Stockholder or the
Company.
Section 3.08. Commission Documents; Financial Information.
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The Company's Form S-1 filed with the Commission on September 20, 1996,
as amended, the Company's Form 10-K in respect of the fiscal year ended
January 31, 1997 (the "Form 10-K"), and each report, schedule, proxy,
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information statement or registration statement (including all
exhibits and schedules thereto and documents incorporated by reference
therein) filed by the Company with the Commission on or before the
Closing Date are collectively referred to as the "Commission
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Documents". As of their respective filing dates, the Commission
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Documents complied (or will comply) in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules
and regulations of the Commission thereunder applicable to such
Commission Documents, and as of their respective dates none of the
Commission Documents contained (or will contain) any untrue statement
of a material fact or omitted (or will omit) to state a material fact
required to be stated therein or necessary in
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order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of
the Company included in the Commission Documents comply (or will
comply) as of their respective dates as to form in all material
respects with applicable accounting requirements and the published
rules and regulations of the Commission with respect thereto (except as
may be indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Form 10-Q promulgated by the Commission),
and present fairly (or will present fairly) as of their respective
dates, in all material respects, the consolidated financial position of
the Company and the Subsidiaries as at the dates thereof and the
consolidated results of their operations and their consolidated cash
flows for each of the respective periods, in conformity with GAAP. As
used in this Agreement, the consolidated balance sheet of the Company
and its Subsidiaries at January 31, 1997 included in the Form 10-K is
hereinafter referred to as the "Balance Sheet", and January 31, 1997 is
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hereinafter referred to as the "Balance Sheet Date."
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Except as and to the extent expressly set forth in the
Balance Sheet, or the notes, schedules or exhibits thereto, or as
disclosed in the Form 10-K or Schedule 3.08 hereof, (i) as of the
Balance Sheet Date, neither the Company nor its Subsidiaries had any
liabilities or obligations (whether absolute, contingent, accrued or
otherwise) that would be required to be included on a balance sheet or
in the notes, schedules or exhibits thereto prepared in accordance with
GAAP and (ii) since the Balance Sheet Date, neither the Company nor any
of its Subsidiaries has incurred any such liabilities or obligations
other than in the ordinary course of business.
Section 3.09. Approvals; Compliance with Laws.
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(a) Except (i) as disclosed in the Commission Documents filed prior to
the date hereof or as set forth on Schedule 3.09(a) hereof and (ii) for
any filings, notices, applications and other information as may be
required to be made or supplied pursuant to the HSR Act or the Exchange
Act, no notices, reports or other filings are required to be made by
the Stockholder, the Company or any of its Subsidiaries with, nor are
any consents, registrations, applications, approvals, permits, licenses
or authorizations required to be obtained by the Stockholder, the
Company or any of its Subsidiaries from, any public or governmental
authority or other third party in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby.
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(b) Except as set forth on Schedule 3.09(b) or as
set forth in the Commission Documents filed prior to the date hereof
and except as would not result in any Material Adverse Effect on the
Company and its Subsidiaries considered as a whole, the business of the
Company and each of its Subsidiaries has been and is presently being
conducted in compliance with all applicable federal, state, county and
local ordinances, statutes, rules, regulations and laws (collectively
"Laws").
----
Section 3.10. Litigation. Except as would not result in any
----------
Material Adverse Effect on the Company and its Subsidiaries considered
as a whole, there are no judicial, administrative or arbitral actions,
suits, claims, inquiries, investigations or proceedings (whether of a
public or private nature) pending or, to the knowledge of the
Stockholder, threatened against the Company, any of its Affiliates
(relating to the Company or its Subsidiaries) or any of the Company's
Subsidiaries.
Section 3.11. Related Party Transactions. Except
--------------------------
as set forth on Schedule 3.11 hereto or as disclosed in the Commission
Documents filed prior to the date hereof, since January 1, 1996, there
is no transaction required to be disclosed under the Securities Act or
the Exchange Act pursuant to which an Affiliate of the Company and/or
any person who beneficially owns (within the meaning of Rule 13d-3
promulgated under the Exchange Act) five percent or more of the
outstanding Common Stock of the Company (other than the Subsidiaries)
has borrowed any monies from or has outstanding any indebtedness or
other similar obligations to the Company or any Subsidiary of the
Company. Except as disclosed in the Commission Documents filed prior to
the date hereof or as set forth on Schedule 3.11 hereto, since January
1, 1996, there is no transaction required to be disclosed under the
Securities Act or the Exchange Act pursuant to which an Affiliate of
the Company and/or any person who beneficially owns (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) five percent or more
of the outstanding Common Stock of the Company (other than the
Subsidiaries) (a) owns any direct or indirect interest of any kind in,
or is a director, officer, employee, partner or Associate (as such term
is defined in Rule 12b-2 under the Exchange Act) of, or consultant
or lender to, or borrower from, or has the right to participate
in the management, operations or profits of, any person or entity which
is (i) a competitor, supplier, customer, distributor, lessor, tenant,
creditor or debtor of the Company or any Subsidiary of the Company,
(ii) engaged in a
-12-
business related to the business of the Company or any Subsidiary of
the Company or (iii) participating in any transaction to which the
Company or any Subsidiary of the Company is a party or (b) is otherwise
a party to any contract, arrangement or understanding with the Company
or any Subsidiary of the Company. To the knowledge of the Stockholder,
each of the contracts, arrangements or understandings set forth on
Schedule 3.11 hereto to which the Company or any Subsidiary of the
Company is a party provides for terms and conditions that are no less
favorable to the Company than could be obtained from a non-Affiliate
third-party in an arm's-length transaction.
Section 3.12. Absence of Certain Events; No Material
--------------------------------------
Adverse Change. Except as disclosed in the Commission Documents
--------------
filed prior to the date hereof, since the Balance Sheet Date, the
Company and its Subsidiaries have conducted their business operations
in the ordinary course and there has not occurred any event or
condition having or, that the Stockholder believes is likely to have, a
Material Adverse Effect on the Company and its Subsidiaries considered
as a whole. Without limiting the generality of the foregoing, other
than as is disclosed in the Commission Documents filed prior to the
date hereof or on Schedule 3.12 hereto, since the Balance Sheet Date
there has not occurred:
(a) any change or agreement to change the character or nature
of the business of the Company or any of its Subsidiaries;
(b) any purchase, sale, transfer, assignment, conveyance or
pledge of the assets or properties of the Company or any of its
Subsidiaries (including by merger or otherwise), except in the ordinary
course of business;
(c) any waiver or modification by the Company or any of its
Subsidiaries of any right or rights of substantial value, or any
payment, direct or indirect, in satisfaction of any liability, in each
case, having a Material Adverse Effect on the Company and its
Subsidiaries considered as a whole;
(d) any liability, contract, agreement, license or other
commitment entered into or assumed by or on behalf of the Company or
any of its Subsidiaries relating to a merger or acquisition or to the
business, assets or properties of the Company or any of its
Subsidiaries (whether oral or written), except in the ordinary course
of business;
-13-
(e) any loan, advance or capital expenditure by the Company
or any of its Subsidiaries, except for loans, advances and capital
expenditures made in the ordinary course of business;
(f) any change in the accounting principles, methods,
practices or procedures followed by the Company in connection with
the business of the Company or any change in the depreciation or
amortization policies or rates theretofore adopted by the Company in
connection with the business of the Company and its Subsidiaries;
(g) any declaration or payment of any dividends, or other
distributions in respect of the outstanding shares of capital stock of
the Company or any of its Subsidiaries (other than dividends and
distributions declared or paid by its wholly-owned Subsidiaries or by
Joint Ventures);
(h) other than in connection with the exercise of employee
stock options outstanding on the date hereof, any issuance of any
shares of capital stock of the Company or any of its Subsidiaries or
any other change in the authorized capitalization of the Company or any
of its Subsidiaries;
(i) other than options granted to employees in the ordinary
course of business prior to the date hereof, any grant or award of any
options, warrants, conversion rights or other rights to acquire any
shares of capital stock of the Company or any of its Subsidiaries; or
(j) any increase in the compensation or benefits of any
director, officer or other key employee of the Company or any of its
Subsidiaries not required by an agreement or plan as in effect on the
Balance Sheet Date to any such person.
Section 3.13. Full Disclosure. All of the statements made
---------------
by the Stockholder in this Agreement (including, without limitation,
the representations and warranties made by the Stockholder herein and
in the schedules and exhibits hereto which are incorporated by
reference herein and which constitute an integral part of this
Agreement) do not (and on the Closing Date shall not) include or
contain any untrue statement of a material fact, and do not (and on the
Closing Date shall not) omit to state any material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading. Other than as is disclosed in the Commission Documents
filed prior to the date hereof, there is no material fact as to the
Company or its Subsidiaries which
-14-
the Stockholder has not disclosed to HSNi and which, in the reasonable
judgment of the Stockholder, has had or will have a Material Adverse
Effect on the Company and its Subsidiaries considered as a whole.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HSNI
--------------------------------------
HSNi hereby represents and warrants to the Stockholder as
follows:
Section 4.01. Organization and Good Standing.
------------------------------
HSNi is a corporation duly organized, validly existing and in good
standing under the laws of Delaware, and is duly qualified to transact
business as a foreign corporation and is in good standing in each
jurisdiction in which the nature of the business transacted by it or
the character or location of the properties owned or leased by it
requires such qualification, except where the failure to be so
qualified or in good standing would not have a Material Adverse Effect
on HSNi and its Subsidiaries considered as a whole. HSNi has full
corporate power and authority to own and manage its properties and to
carry on its business as it is now being (and as it is currently
proposed to be) conducted. The copies of HSNi's certificate of
incorporation (the "HSNi Certificate"), by-laws and other
----------------
organizational documents and instruments (in each case, as amended
and/or restated through the date hereof), heretofore delivered to the
Stockholder, are true, complete and correct copies thereof. Each
Subsidiary is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization and
has the power and authority to own or lease its properties and to
conduct its business as now conducted, except as would not result in
any Material Adverse Effect on HSNi and its Subsidiaries considered as
a whole. All outstanding shares of the capital stock of each HSNi
Subsidiary have been validly issued and are fully paid and
nonassessable. Except as set forth in the HSNi Form 10-K, there are no
outstanding options, warrants, rights, agreements or commitments of any
nature whatsoever of any third party to subscribe for or purchase any
equity security of any Subsidiary or to cause any Subsidiary to issue
any such equity security.
Section 4.02. Capitalization. The authorized
--------------
capitalization of HSNi as of the date hereof consists of: 150,000,000
shares of HSNi Common Stock, $.01 par value per share, 30,000,000
shares of HSNi Class B Common Stock, $.01 par value per share ("HSNi
----
Class B Stock"), and 15,000,000
-------------
-15-
shares of preferred stock, $.01 par value per share, of HSNi ("HSNi
----
Preferred Stock"), of which, as of May 1, 1997, there were 36,094,593
---------------
shares of HSNi Common Stock outstanding, 10,225,056 shares of HSNi
Class B Stock outstanding and no shares of HSNi Preferred Stock
outstanding. All such shares outstanding on the date hereof are, and
any shares that will be issued under the HSNi Certificate, when issued,
will be, duly authorized, validly issued and fully paid and
nonassessable. Other than (a) options to purchase an aggregate of
11,359,592 shares of HSNi Common Stock issued pursuant to employee
benefit plans and agreements of HSNi as of ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) rights
to acquire shares of HSNi Class B Stock and HSNi Common Stock under
agreements (the "Liberty Agreements") described in a Joint Proxy
------------------
Statement/Prospectus dated November 20, 1996 filed by HSNi with the
Commission on Form S-4 (the "HSNi Form S-4") and (c) shares of HSNi
-------------
Common Stock issuable upon exercise or conversion, as the case may be,
of Savoy Warrants, Savoy Options, Savoy Debentures, the Savoy Note,
HSNi Options and HSNi Debentures (each such term as defined in the HSNi
Form S-4), as of the date hereof, there are no outstanding options,
warrants, rights, puts, calls, commitments, or other contracts,
arrangements, or understandings issued by or binding upon HSNi
requiring or providing for, and there are no outstanding debt or equity
securities of HSNi which upon the conversion, exchange or exercise
thereof would require or provide for, the issuance by HSNi of any new
or additional shares of HSNi Common Stock (or any other securities of
HSNi which, with notice, lapse of time and/or payment of monies, are or
would be convertible into or exercisable or exchangeable for shares of
HSNi Common Stock). There are no preemptive or other similar rights
available to the existing holders of HSNi Common Stock or other
securities of HSNi.
Section 4.03. Due Authorization; Execution and Delivery. The
-----------------------------------------
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by the HSNi Board of Directors (including such authorization
as may be required so that no state anti-takeover statute or similar
statute or regulation including, without limitation, Section 203 of the
Delaware Business Corporation Act, is or becomes operative with respect
to this Agreement or the transactions contemplated hereby) and by the
requisite consent of HSNi stockholders acting by consent pursuant to
HSNi's By-laws and, except for notification requirements under HSNi's
By-laws and under Rule 14c-2 under the Exchange Act to deliver the
Information Statement to HSNi stockholders at least 20 calendar
-16-
days prior to consummation of the Exchange, no other corporate
proceedings on the part of HSNi are necessary to authorize this
Agreement and to consummate the transactions contemplated hereby. This
Agreement constitutes the legal, valid and binding obligation of HSNi,
enforceable against HSNi in accordance with its terms, except that such
enforcement may be subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights, and the remedy of specific performance and
injunctive relief may, as the case may be, subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought.
Section 4.04. Absence of Breach; No Conflict. Except as set
------------------------------
forth on Schedule 4.04 hereto, the execution, delivery, and performance
of this Agreement by HSNi, and the consummation by HSNi of the
transactions contemplated hereby, will not (a) give rise to a right to
(or otherwise) terminate, accelerate the maturity of or increase any
payment due under, conflict with, result in a breach or violation of
any of the terms, conditions or provisions of, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute
a default) under, require any approval, waiver or consent under, or
result in the creation or imposition of any Lien upon any property or
assets of HSNi or any Subsidiary pursuant to the terms of, any note,
bond, mortgage, pledge, indenture, deed of trust, lease, agreement,
indemnity, obligation, commitment, instrument, franchise, license,
certificate or permit to which HSNi or any of its Subsidiaries is a
party or by which any of their respective properties or assets may be
bound; (b) violate or conflict with any term or provision of the
certificate of incorporation, by-laws or equivalent organizational
instruments and documents (in each case, as amended and/or restated
through the date hereof) of HSNi or any of its Subsidiaries (in each
case as in effect on the Closing Date); or (c) violate any judgment,
decree, order, writ, statute, rule or regulation of any judicial,
arbitral, public, or governmental authority having jurisdiction over
HSNi, any of its Subsidiaries or any of their respective properties or
assets except as would not result in a Material Adverse Effect on HSNi
and its Subsidiaries considered as a whole.
Section 4.05. The HSNi Shares. The HSNi Shares have been,
---------------
and any Additional HSNi Shares will be, duly authorized and legally and
validly issued, are (or will be) fully paid and nonassessable.
Section 4.06. Investment Purpose. HSNi is acquiring
------------------
the Shares solely for the purpose of investment and not
-17-
with view to, or for offer or sale in connection with, any distribution
thereof. HSNi acknowledges and understands that the Shares may not be
sold except in compliance with the registration requirements of the
Securities Act, unless an exemption therefrom is available.
HSNi hereby acknowledges and agrees that upon the transfer by
the Stockholder of the Shares to HSNi, and until such time as the same
is no longer required under the applicable requirements of the
Securities Act and the rules and regulations thereunder, the
certificates representing the Shares may bear the following legend on
the reverse side thereof:
"THE SHARES REPRESENTED BY THIS CERTIFICATE (THE `SHARES')
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE LAWS REGULATING THE SALE OF SECURITIES
AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS
REGISTERED OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION
IS NOT REQUIRED."
Section 4.07. Brokers. Other than ▇▇▇▇▇ & Company
-------
Incorporated, the fees of which shall be solely the responsibility of
HSNi, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements
made by or on behalf of HSNi.
Section 4.08. Commission Documents; Financial Information.
-------------------------------------------
The HSNi Form 10-K in respect of the fiscal year ended December 31,
1996 (the "HSNi Form 10-K"), and each report, schedule, proxy,
information statement or registration statement (including all exhibits
and schedules thereto and documents incorporated by reference therein)
filed by HSNi with the Commission following the date thereof and on or
before the Closing Date are collectively referred to as the "HSNi
Commission Documents". As of their respective filing dates, the HSNi
Commission Documents complied (or will comply) in all material respects
with the requirements of the Securities Act and the rules and
regulations of the Commission thereunder applicable to such HSNi
Commission Documents, and as of their respective dates none of the HSNi
Commission Documents contained (or will contain) any untrue statement
of a material fact or omitted (or will omit) to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The financial
-18-
statements of HSNi included in the HSNi Commission Documents comply (or
will comply) as of their respective dates as to form in all material
respects with applicable accounting requirements and the published
rules and regulations of the Commission with respect thereto (except as
may be indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Form 10-Q promulgated by the Commission),
and present fairly (or will present fairly) as of their respective
dates, in all material respects, the consolidated financial position of
HSNi and its Subsidiaries as at the dates thereof and the consolidated
results of their operations and their consolidated cash flows for each
of the respective periods, in conformity with GAAP. As used in this
Agreement, the consolidated balance sheet of HSNi and its Subsidiaries
at March 31, 1997 included in the HSNi Form 10-Q filed with the
Commission in respect of the fiscal quarter ended March 31, 1997 is
hereinafter referred to as the "HSNi Balance Sheet", and March 31, 1997
------------------
is hereinafter referred to as the "HSNi Balance Sheet Date."
-----------------------
Except as and to the extent expressly set forth in the HSNi
Balance Sheet, or the notes, schedules or exhibits thereto, or as
disclosed in the HSNi Form 10-K, (i) as of the HSNi Balance Sheet Date,
neither HSNi nor its Subsidiaries had any liabilities or obligations
(whether absolute, contingent, accrued or otherwise) that would be
required to be included on a balance sheet or in the notes, schedules
or exhibits thereto prepared in accordance with GAAP and (ii) since the
HSNi Balance Sheet Date, neither HSNi nor any of its Subsidiaries has
incurred any such liabilities or obligations other than in the ordinary
course of business.
Section 4.09. Approvals; Compliance with Laws.
-------------------------------
(a) Except (i) as set forth on Schedule 3.09(a) hereof and (ii) for any
filings, notices, applications and other information as may be required
to be made or supplied pursuant to the HSR Act or the Exchange Act, no
notices, reports or other filings are required to be made by HSNi, or
any of its Subsidiaries with, nor are any consents, registrations,
applications, approvals, permits, licenses or authorizations required
to be obtained by HSNi or any of its Subsidiaries from, any public or
governmental authority or other third party in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
(b) Except as would not result in any Material Adverse Effect
on HSNi and its Subsidiaries considered as a whole, the business of
HSNi and its Subsidiaries has been and
-19-
is presently being conducted in compliance with all applicable Laws.
Section 4.10. Litigation. Except as would not result in any
----------
Material Adverse Effect on HSNi and its Subsidiaries considered as a
whole, there are no judicial, administrative or arbitral actions,
suits, claims, inquiries, investigations or proceedings (whether of a
public or private nature) pending or, to the knowledge of HSNi,
threatened against HSNi, any of its controlled Affiliates or any of the
HSNi Subsidiaries.
Section 4.11. Related Party Transactions. Except as disclosed
--------------------------
in the HSNi Form S-4 or the HSNi Commission Documents, since January 1,
1996, no officer or director of HSNi has borrowed any monies from or
has outstanding any indebtedness or other similar obligations to HSNi
or any Subsidiary of HSNi. Except as disclosed in the HSNi Form S-4 or
the HSNi Commission Documents, since January 1, 1996, no officer or
director of HSNi (a) owns any direct or indirect interest of any kind
in, or is a director, officer, employee, partner or Associate (as such
term is defined in Rule 12b-2 under the Exchange Act) of, or consultant
or lender to, or borrower from, or has the right to participate in the
management, operations or profits of, any person or entity which is (i)
a competitor, supplier, customer, distributor, lessor, tenant, creditor
or debtor of HSNi or any Subsidiary of HSNi, (ii) engaged in a business
related to the business of HSNi or any Subsidiary of HSNi or (iii)
participating in any transaction to which HSNi or any Subsidiary of
HSNi is a party or (b) is otherwise a party to any contract,
arrangement or understanding with HSNi or any Subsidiary of HSNi.
Section 4.12. Absence of Certain Events; No Material Adverse
----------------------------------------------
Change. Except as disclosed in the HSNi Form 10-K, since the HSNi
------
Balance Sheet Date HSNi and its Subsidiaries have conducted their
business operations in the ordinary course and there has not occurred
any event or condition having or, that management believes is likely to
have, a Material Adverse Effect on HSNi and its Subsidiaries considered
as a whole. Without limiting the generality of the foregoing, other
than as is disclosed in the HSNi Commission Documents filed prior to
the date hereof or on Schedule 4.11 hereto, since the HSNi Balance
Sheet Date there has not occurred:
(a) any change or agreement to change the character or nature
of the business of HSNi or any of its Subsidiaries;
-20-
(b) any purchase, sale, transfer, assignment, conveyance or
pledge of the assets or properties of HSNi or its Subsidiaries, except
in the ordinary course of business;
(c) any waiver or modification by HSNi or any HSNi Subsidiary
of any right or rights of substantial value, or any payment, direct or
indirect, in satisfaction of any liability, in each case, having a
Material Adverse Effect on HSNi and its Subsidiaries considered as a
whole;
(d) any loan, advance or capital expenditure by HSNi or any
of its Subsidiaries, except for loans, advances and capital
expenditures made in the ordinary course of business;
(e) any change in the accounting principles, methods,
practices or procedures followed by HSNi in connection with the
business of HSNi or any change in the depreciation or amortization
policies or rates theretofore adopted by HSNi in connection with the
business of HSNi and its Subsidiaries; or
(f) any declaration or payment of any dividends, or other
distributions in respect of the outstanding shares of capital stock of
HSNi or any HSNi Subsidiary (other than dividends declared or paid by
wholly-owned Subsidiaries);
(g) other than in connection with the exercise of employee
stock options or the conversion of outstanding convertible debt
instruments, any issuance of any shares of capital stock of HSNi or any
HSNi Subsidiary or any other change in the authorized capitalization of
the Company or any HSNi Subsidiary, except as contemplated by this
Agreement or the Liberty Agreement; or
(h) any grant or award of any options, warrants, conversion
rights or other rights to acquire any shares of capital stock of HSNi
or any HSNi Subsidiary, except as contemplated by this Agreement or
except pursuant to employee benefit plans, programs or arrangements in
the ordinary course of business consistent with past practice.
Section 4.13. Full Disclosure. All of the statements
---------------
made by HSNi in this Agreement (including, without limitation, the
representations and warranties made by HSNi herein and in the schedules
and exhibits hereto which are incorporated by reference herein and
which constitute an integral part of this Agreement) do not (and on the
Closing Date shall not) include or contain any untrue statement of a
material fact, and do not (and on the Closing Date shall not)
-21-
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Other than as
is disclosed in the Form S-4 or the HSNi Commission Documents filed
prior to the date hereof, there is no material fact as to HSNi or its
Subsidiaries which HSNi has not disclosed to the Stockholder and which,
in the reasonable judgment of HSNi, has had or will have a Material
Adverse Effect on HSNi and its Subsidiaries considered as a whole.
ARTICLE V
COVENANTS OF THE PARTIES
------------------------
Section 5.01. Additional HSNi Shares. HSNi hereby
----------------------
covenants to the Stockholder that it shall reserve and keep available
out of its authorized but unissued shares of HSNi Common Stock
(including any shares of HSNi Common Stock held by HSNi in its
corporate treasury), for the purpose of effecting the adjustment in
full of the number of HSNi Shares deliverable hereunder in accordance
with Section 2.02 of this Agreement, such number of its duly authorized
shares of HSNi Common Stock as shall be sufficient to effect such
adjustment.
Section 5.02. Registration Rights. (a) HSNi
-------------------
hereby grants the Stockholder certain registration rights on the basis
of one demand registration right for each 4,000,000 shares of Common
Stock being exchanged hereunder, together with customary piggyback
registration rights relating thereto. Accordingly, HSNi hereby
covenants to the Stockholder that following the one year anniversary
of the Closing Date, if requested by the Stockholder, it shall be
required promptly to cause the HSNi Shares and the Additional HSNi
Shares, if any, owned by the Stockholder or his Affiliates to be
registered under the Securities Act in order to permit the Stockholder
or such Affiliate to sell such shares in one or more (but not more than
three) registered public offerings (each, a "Demand Registration"). The
Stockholder shall also be entitled to customary piggyback registration
rights. If the amount of shares sought to be registered by the Stock-
holder and his Affiliates pursuant to any Demand Registration is
reduced by more than 50% pursuant to any underwriters' cutback, then
the Stockholder may elect to request the Company to withdraw such
registration, in which case, such registration shall not count as one
of the Stockholder's three Demand Registrations. If the Stockholder
requests that any Demand Registration be an underwritten offering, then
the
-22-
Stockholder shall select the underwriter(s) to administer the offering,
provided that such underwriter(s) shall be reasonably satisfactory to
HSNi. If a Demand Registration is an underwritten offering and the
managing underwriter advises the Stockholder in writing that in its
opinion the total number or dollar amount of securities proposed to be
sold in such offering is such as to materially and adversely affect the
success of such offering, then HSNi will include in such registration,
first, the securities of the Stockholder, and, thereafter, any
securities to be sold for the account of others who are participating
in such registration (as determined by HSNi). In connection with any
Demand Registration or inclusion of the Stockholder's or his
Affiliate's shares in a piggyback registration, the Company, the
Stockholder and/or his Affiliates shall enter into an agreement
containing terms (including representations, covenants and indemnities
by HSNi and the Stockholder), and shall be subject to limitations,
conditions, and blackout periods, customary for a secondary offering by
a selling stockholder. The costs of the registration (other than
underwriting discounts, fees and commissions) shall be paid by HSNi.
HSNi shall not be required to register such shares if the Stockholder
would be permitted to sell the HSNi Shares and/or Additional HSNi
Shares in the quantities proposed to be sold and at such time under
Rule 144 of, or other exemption from, the Securities Act.
(b) If HSNi and the Stockholder cannot agree as to what
constitutes customary terms within 10 days of the Stockholder's request
for registration (whether in a Demand Registration or a piggyback
registration), then such determination shall be made by a law firm of
national reputation mutually acceptable to HSNi and the Stockholder.
Section 5.03. HSR Filings. Following the date hereof, the
-----------
Stockholder and HSNi shall, and the Stockholder shall use all
reasonable efforts to cause the Company to, file promptly any forms
required under applicable law and take any other action reasonably
requested in connection with obtaining the expiration or termination of
the waiting period under the HSR Act.
Section 5.04. Access to Information. (a) From the date
---------------------
hereof until the Closing, (i) the Stockholder shall use all reasonable
efforts to cause the Company and its Subsidiaries and each of the
Company's and its Subsidiaries' officers, directors, employees, agents,
representatives, accountants and counsel (collectively,
"Representatives") to, and (ii) HSNi and its Subsidiaries and each of
---------------
HSNi's and its Subsidiaries' Representatives shall: (x) afford the
officers, employees and authorized agents, accountants, counsel
-23-
and representatives of the other party reasonable access to its
offices, properties, plants, other facilities, books and records and to
those officers, directors, employees, agents, accountants and counsel
who have any knowledge relating to its business and (y) furnish to the
officers, employees and authorized agents, accountants, counsel and
representatives of the other party such additional financial and
operating data and other information regarding its assets, properties
and goodwill as the other party may from time to time reasonably
request. All information obtained by a party or its Representatives
pursuant to this Section 5.04 shall be kept confidential in accordance
with the provisions of Article XII hereof.
Section 5.05. Further Action. Each of the parties hereto
--------------
shall use all reasonable efforts to take, or cause to be taken, all
appropriate action, do or cause to be done all things necessary, proper
or advisable under applicable law, and execute and deliver such
documents and other papers, as may be required to carry out the
provisions of this Agreement and consummate and make effective the
transactions contemplated by this Agreement (including, without
limitation, promptly preparing, filing with the Commission and mailing
to stockholders, in the case of HSNi, the Information Statement and, in
the case of the Stockholder (and to the extent required), the Company
Information Statement). HSNi and the Stockholder shall, and the
Stockholder shall use all reasonable efforts to cause the Company to
(a) cooperate with the parties hereto in order to obtain any consents
(including, without limitation, the Bank Consent) required to be
obtained or to otherwise take action to effectuate the transactions
contemplated hereby (including without limitation refinancing the
Credit Agreement on terms reasonably acceptable to the Company and HSNi
(the "Bank Refinancing") if the Bank Consent is not obtained) and (b)
take such action as is required so as to cause the representations and
warranties made by such party to be true at and as of the Closing, the
covenants contained herein to be complied with and the conditions to
the parties' obligations to proceed to the Closing to be satisfied.
Section 5.06. Conduct of Business. Except as contemplated by
-------------------
this Agreement, during the period from the date of this Agreement to
the Closing, the Stockholder shall use all reasonable efforts to cause
the Company and its Subsidiaries to carry on their businesses in the
ordinary course consistent with past practice and in compliance in all
material respects with all applicable laws and regulations and, to the
extent consistent therewith, shall use all reasonable
-24-
efforts to preserve intact their current business organizations, use
reasonable efforts to keep available the services of their current
officers and other key employees and preserve their relationships with
those persons having business dealings with them to the end that their
goodwill and ongoing businesses shall be unimpaired at the Closing.
Without limiting the generality of the foregoing, during the period
from the date of this Agreement to the Closing, the Stockholder shall
use all reasonable efforts to cause the Company and its Subsidiaries
not to (without the consent of HSNi) take any action that would cause
the representations and warranties made in paragraphs (a) through (j)
of Section 3.12 to be untrue. In addition, as an accommodation to HSNi
to facilitate an orderly transition, the Stockholder will continue to
serve as Chairman of the Company for a period not to exceed six months
following the Closing.
Section 5.07. Tag-Along Rights. HSNi hereby confirms that it
----------------
has been informed of the "Tag-Along Rights" provided for in the
Shareholders Agreement and hereby agrees, subject to the accuracy of
the last two sentences of Section 3.05(b) of this Agreement, to
purchase shares of Common Stock from those Company shareholders who
exercise their "Tag-Along Rights" in accordance with the terms of the
Shareholders Agreement and will provide demand registration rights to
such holders on the basis of one demand registration right for each
4,000,000 shares of Common Stock sold to HSNi pursuant to such tag-
along right. In addition, to the extent any such exchanging holder
receives under this Agreement more than 1% of HSNi's outstanding equity
securities, such holder shall be permitted to "piggyback" on any demand
registration by the Stockholder if at the time thereof such holder
cannot sell his or its HSNi shares received pursuant to his or its tag-
along right under Rule 144 under the Securities Act (or its equivalent)
without volume limitation. The Stockholder shall be solely responsible
for giving notices to such holders in connection with any such
registration.
Section 5.08. Stockholders Agreement. In connection with the
----------------------
Closing, the Stockholder shall enter into the Stockholders Agreement
attached hereto as Exhibit A (the "Stockholders Agreement") with the
----------------------
parties thereto. HSNi shall use all reasonable efforts to cause ▇▇▇▇▇▇
and Liberty Media Corporation to enter into the Stockholders Agreement.
-25-
ARTICLE VI
DIRECTORS
---------
Section 6.01. Director Election. Prior to the Closing, the
-----------------
Stockholder shall use all reasonable efforts to cause the directors of
the Company and the Company to exercise all authority under applicable
law (including, without limitation, if required, preparing, filing and
mailing to the Company's stockholders an information statement (the
"Company Information Statement") in accordance with Rule 14f-1 under
-----------------------------
the Exchange Act) so that, effective upon the Closing, the Board of
Directors of the Company shall consist of up to a majority of persons
designated by HSNi (the precise number of which shall be determined by
HSNi). Such designees shall be reasonably satisfactory to the Company's
directors in the exercise of their fiduciary duties to the Company's
stockholders. HSNi shall cooperate with the Company and shall provide
to the Company the information required to be contained in the Company
Information Statement, to the extent the Company Information Statement
is required under the Exchange Act, concerning the persons proposed by
HSNi to serve as Company directors.
Section 6.02. HSNi Director Appointment. Prior to the
-------------------------
Closing, HSNi shall take such action under applicable law so that,
effective upon the Closing, the Stockholder shall be elected to serve
as a director of HSNi. Subject to applicable law (including the rules
and regulations of the FCC), so long as the Stockholder has not
disposed of one-third or more of the HSNi Shares acquired hereunder
(appropriately adjusted for stock splits, stock dividends,
combinations, reorganizations and the like), other than to his
Permitted Transferees (provided that at all times the Stockholder is
the beneficial owner of at least 5% of HSNi's outstanding equity
securities (assuming for this purpose that all HSNi equity securities
issuable under the Liberty Agreements are outstanding)), HSNi shall
take all necessary action to cause the Stockholder (or a designee of
the Stockholder acceptable to HSNi) to be included in the slate of
nominees recommended by the HSNi Board and shall use all reasonable
efforts to cause the election of the Stockholder or such designee.
-26-
ARTICLE VII
CLOSING; SECOND CLOSING
-----------------------
Section 7.01. Closing. Subject to the provisions of Articles
-------
VIII and IX hereof and unless otherwise agreed by the parties, the
closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Wachtell, Lipton, ▇▇▇▇▇ &
-------
▇▇▇▇, ▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 a.m., Eastern
time, on July 9, 1997; provided, however, that if the conditions set
-------- -------
forth in Sections 8.03, 8.05, 8.09, 9.06, 9.07 and 9.08 shall not have
been satisfied or, where legally permissible, waived by such date, the
Closing shall occur on the second Business Day after the last of such
conditions has been satisfied or waived, at such time and place as is
specified above. The date of the Closing is referred to in this
Agreement as the "Closing Date."
------------
Section 7.02. Deliveries. At or prior to the Closing, the
----------
parties shall deliver all documents, instruments, certificates and
writings required to be executed and delivered by them at or prior to
the Closing pursuant to this Agreement.
Section 7.03. Second Closing. If an adjustment in the number
--------------
of HSNi Shares to be delivered in the Exchange is required to be made
under Section 2.02(b), a second closing (the "Second Closing") shall
--------------
take place at the offices of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, ▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 a.m., Eastern time, on the fifth
Business Day following the determination of the number of Additional
HSNi Shares to be delivered in accordance with Section 2.02(b).
Section 7.04. Deliveries at Second Closing. At the Second
----------------------------
Closing, HSNi shall deliver to the Stockholder, against receipt
therefor, certificates representing the Additional HSNi Shares and/or
the FCC Excess Shares bearing a legend as set forth in Section 3.06.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
THE STOCKHOLDER TO EXCHANGE, SELL AND DELIVER THE SHARES
--------------------------------------------------------
The obligations hereunder of the Stockholder to exchange,
sell and deliver the Shares to HSNi, and accept delivery of the HSNi
Shares, are subject to the satisfaction,
-27-
at or before the Closing, of each of the following conditions set forth
in Section 8.01 through Section 8.10 below. These conditions are for
the Stockholder's sole benefit and may be waived by the Stockholder (in
whole or in part) at any time in his sole discretion.
Section 8.01. Accuracy of HSNi's Representations and
--------------------------------------
Warranties. The representations and warranties of HSNi contained in
----------
Article IV hereof shall be true and correct as of the date when made
and as of the Closing Date, as though made on such date (except that
representations and warranties made as of a specific date need be true
and correct only as of such date), and the Stockholder shall have
received a certificate attesting thereto signed by a duly authorized
officer or agent of HSNi.
Section 8.02. Performance by HSNi. HSNi shall have
-------------------
performed, satisfied and complied with, in all material respects, all
covenants, agreements, and conditions required by this Agreement to be
performed, satisfied or complied with by it on or prior to the Closing
Date, and the Stockholder shall have received a certificate attesting
thereto signed by a duly authorized officer or agent of HSNi.
Section 8.03. HSR Act. The waiting periods under the HSR Act
-------
applicable to the Stockholder's acquisition of the HSNi Shares and to
HSNi's acquisition of the Shares shall have expired or have been
earlier terminated.
Section 8.04. No Injunction. No temporary, preliminary or
-------------
permanent injunction or any order by any federal or state court of
competent jurisdiction shall have been issued which prohibits or
otherwise seeks to prohibit, restrain, enjoin or delay the consummation
of any of the transactions contemplated by this Agreement.
Section 8.05. Information Statements. Twenty calendar days
----------------------
shall have elapsed from the mailing of the Information Statement to
HSNi stockholders, and, if required under the Exchange Act, 10 calendar
days shall have elapsed from the mailing of the Company Information
Statement to the Company's stockholders.
Section 8.06. Stockholders Agreement. The Stockholders
----------------------
Agreement shall be executed and delivered by ▇▇▇▇▇▇ and Liberty Media
Corporation.
Section 8.07. No Adverse Action or Decision. There shall be
-----------------------------
no action, suit, investigation or proceeding
-28-
pending with, or to the knowledge of the Stockholder, threatened by,
any public or governmental authority, against or affecting HSNi or the
Stockholder or their respective properties or rights, before any court,
arbitrator or administrative or governmental body which (a) seeks to
restrain, enjoin or prevent the consummation of the transactions
contemplated by this Agreement, or (b) challenges the validity or
legality of any transactions contemplated by this Agreement or seeks to
recover damages or to obtain other relief in connection with any such
transactions.
Section 8.08. No Material Adverse Effect.
--------------------------
(a) There shall not have occurred and there shall not
otherwise exist any condition, event or development having, or likely
to have (in the reasonable judgment of the Stockholder), a Material
Adverse Effect on HSNi and its Subsidiaries considered as a whole.
(b) ▇▇▇▇▇▇ shall not have ceased serving HSNi as its Chief
Executive Officer and Chairman of the Board.
Section 8.09. Approvals and Consents. HSNi shall have duly
----------------------
obtained, received or effected (and all applicable waiting and
termination periods, if any, including any extensions thereof, under
any applicable law, statute, regulation or rule shall have expired or
terminated) all authorizations, consents, approvals, licenses,
franchises, permits and certificates by or of, and shall have made all
filings and effected all notifications, registrations and
qualifications with, all federal, state and local governmental and
▇▇▇▇▇▇ ▇▇▇▇ authorities necessary for the consummation of the
transactions contemplated hereby. The Bank Consent shall have been
obtained or, in lieu thereof, the Bank Refinancing shall have been
effected.
Section 8.10. Proceedings. All corporate and other
-----------
proceedings to be taken by HSNi in connection with the transactions
contemplated by this Agreement and all documents reflecting or
evidencing such proceedings shall be reasonably satisfactory in scope,
form and substance to the Stockholder and his legal counsel, and the
Stockholder and his legal counsel shall have received all such duly
executed counterpart originals or certified or other copies of such
documents and instruments as they may reasonably request.
-29-
ARTICLE IX
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF HSNI TO EXCHANGE, ISSUE AND DELIVER THE SHARES
-------------------------------------------------
The obligations of HSNi hereunder to exchange, issue and
deliver the HSNi Shares, and accept delivery of the Shares, are subject
to the satisfaction, at or before the Closing, of each of the following
conditions set forth in Section 9.01 through Section 9.08 below. These
conditions are for HSNi's sole benefit and may be waived (in whole or
in part) at any time in its sole discretion.
Section 9.01. Accuracy of the Stockholder's Representations
---------------------------------------------
and Warranties. The representations and warranties of the Stockholder
--------------
contained in Article III hereof shall be true and correct as of the
date when made and as of the Closing Date, as though made on such date
(except that representations and warranties made as of a specific date
need be true and correct only as of such date), and HSNi shall have
received a certificate attesting thereto signed by the Stockholder.
Section 9.02. Performance by the Stockholder. The
------------------------------
Stockholder shall have performed, satisfied and complied with, in all
material respects, all covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with on or prior
to the Closing Date, and HSNi shall have received a certificate
attesting thereto signed by the Stockholder.
Section 9.03. No Adverse Action or Decision. There shall be
-----------------------------
no action, suit, investigation or proceeding pending with, or to the
knowledge of HSNi, threatened by, any public or governmental authority,
against or affecting the Company or its properties or rights, before
any court, arbitrator or administrative or governmental body which (a)
seeks to restrain, enjoin or prevent the consummation of the
transactions contemplated by this Agreement, or (b) challenges the
validity or legality of any transactions contemplated by this Agreement
or seeks to recover damages or to obtain other relief in connection
with any such transactions.
Section 9.04. No Material Adverse Effect. There shall not
--------------------------
have occurred and there shall not otherwise exist any condition, event
or development having, or likely to have (in the reasonable judgment of
HSNi), a Material Adverse Effect on the Company and its Subsidiaries
considered as a whole.
-30-
Section 9.05. No Injunction. No temporary, preliminary or
-------------
permanent injunction or any order by any federal or state court of
competent jurisdiction shall have been issued or threatened which
prohibits or otherwise seeks to prohibit, restrain, enjoin or delay the
consummation of any of the transactions contemplated by this Agreement.
Section 9.06. Approvals and Consents. The Company and the
----------------------
Stockholder, as applicable, shall have duly obtained, received or
effected (and all applicable waiting and termination periods, if any,
including any extensions thereof, under any applicable law, statute,
regulation or rule, shall have expired or terminated) all
authorizations, consents, approvals, licenses, franchises, permits and
certificates by or of, and shall have made all filings and effected all
notifications, registrations and qualifications with, all federal,
state and local governmental and regulatory authorities necessary for
the consummation of the transactions contemplated hereby. The Bank
Consent shall have been obtained or, in lieu thereof, the Bank
Refinancing shall have been effected.
Section 9.07. HSR Act. The waiting periods under the HSR Act
-------
applicable to the Stockholder's acquisition of the HSNi Shares and to
HSNI's acquisition of the Shares shall have expired or have been
earlier terminated.
Section 9.08. Information Statements. Twenty calendar days
----------------------
shall have elapsed from the mailing of the Information Statement to
HSNi stockholders, and, if required under the Exchange Act, 10 calendar
days shall have elapsed from the mailing of the Company Information
Statement to the Company's stockholders.
Section 9.09. Proceedings. All corporate and other
-----------
proceedings to be taken by the Company in connection with the
transactions contemplated by this Agreement and all documents
reflecting or evidencing such proceedings shall be reasonably
satisfactory in scope, form and substance to HSNi and its legal
counsel, and HSNi and its legal counsel shall have received all such
duly executed counterpart originals or certified or other copies of
such documents and instruments as they may reasonably request.
ARTICLE X
TERMINATION; EXPENSES
---------------------
Section 10.01. Termination by Mutual Written Consent. This
-------------------------------------
Agreement may be terminated and the transactions
-31-
contemplated hereby may be abandoned, for any reason, at any time prior
to the Closing Date, by the mutual written consent of the Stockholder
and HSNi.
Section 10.02. Termination by the Stockholder or HSNi. This
--------------------------------------
Agreement may be terminated and the transactions contemplated hereby
may be abandoned by action of the Stockholder or HSNi if and to the
extent that (a) the Closing shall not have occurred at or prior to 5:00
p.m., Eastern time, on December 31, 1997; provided, however, that the
-------- -------
right to terminate this Agreement under this Section 10.02 shall not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of
the Closing Date to occur on or before such date; or (b) any court or
governmental authority of competent jurisdiction shall have issued an
order, decree, writ or ruling or taken any other action, or there shall
be in effect any statute, rule or regulation, temporarily,
preliminarily or permanently restraining, enjoining or otherwise
prohibiting the Exchange or the consummation of the transactions
contemplated by this Agreement.
Section 10.03. Termination by HSNi. This Agreement may be
-------------------
terminated and the transactions contemplated hereby may be abandoned by
action of HSNi, if (a) the Stockholder shall have failed to comply in
any material respect with any of the covenants or agreements contained
in this Agreement to be complied with or performed by the Stockholder
at or prior to such date of termination, and the Stockholder shall not,
within a reasonable period of time after notice of such failure, have
cured or commenced prompt and diligent measures which would promptly
cure such failure, (b) there shall have been a misrepresentation or
breach by the Stockholder with respect to any representation or
warranty made by him in this Agreement which would entitle HSNi not to
consummate the transactions contemplated hereby under Article IX and
such misrepresentation or breach cannot be cured prior to the Closing
Date, or (c) there shall have occurred and be continuing any condition,
event or development having, or reasonably likely to have, a Material
Adverse Effect on the Company and its Subsidiaries considered as a
whole.
Section 10.04. Termination by the Stockholder. This
------------------------------
Agreement may be terminated and the transactions contemplated hereby
may be abandoned by action of the Stockholder, at any time prior to the
Closing Date, if (a) HSNi shall have failed to comply in any material
respect with any of the covenants or agreements contained in this
Agreement to be complied with or performed by HSNi at or prior to such
date of termination and HSNi shall not, within a reasonable period of
-32-
time after notice of such failure, have cured or commenced prompt and
diligent measures which would promptly cure such failure, (b) there
shall have been a misrepresentation or breach by HSNi with respect to
any representation or warranty made by it in this Agreement which would
entitle the Stockholder not to consummate the transactions
contemplated hereby under Article VIII and such misrepresentation or
breach cannot be cured prior to the Closing Date, (c) there shall have
occurred and be continuing any condition, event or development having,
or reasonably likely to have, a Material Adverse Effect on HSNi and its
Subsidiaries considered as a whole, or (d) ▇▇▇▇▇▇ shall have ceased
serving HSNi as its Chief Executive Officer and Chairman of the Board.
Section 10.05. Expenses. Except as provided in Section 3.7
--------
hereof, each party shall be responsible for the payment of any expenses
incurred by such party (including fees and expenses of counsel)
incurred in connection with this Agreement and the transactions
contemplated hereby.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------------------
Except as set forth below in the proviso to this Article XI,
the representations and warranties of the parties set forth in this
Agreement shall not survive the Closing Date; provided, however, that
-------- -------
(a) the representations and warranties of the Stockholder set forth in
Sections 3.03, 3.05, 3.06 and 3.07 of this Agreement shall survive the
Closing Date indefinitely, and (b) the representations and warranties
of HSNi set forth in Sections 4.03, 4.05, 4.06 and 4.07 of this
Agreement shall survive the Closing Date and continue indefinitely. All
covenants of the parties contained in this Agreement that contemplate
action following the Closing shall survive the Closing; all other
covenants shall terminate at the Closing.
ARTICLE XII
CONFIDENTIALITY
---------------
Each party hereto agrees that any nonpublic information
heretofore delivered, provided or made available to it or to be
provided to it in the future, shall not be used to the detriment of
HSNi, the Company or any of their respective Subsidiaries or their
business or operations and shall be
-33-
kept confidential and not disclosed to any third party; provided,
--------
however, that disclosure of such information may be made (a) to any
-------
officers, directors, general partners, representatives, shareholders,
agents, employees, Affiliates and Associates of the person receiving
such information who agree to keep the nonpublic information
confidential to the same extent and degree as provided herein, or (b)
to the extent the same: (i) shall be or hereinafter become publicly
available other than as a result of a disclosure by the party receiving
such information; (ii) was lawfully available to the party receiving
such information prior to its having received such information; (iii)
becomes available to the party receiving such information from a source
other than the party providing such information, provided such source
is not known to the receiving party to be bound by a duty of
confidentiality to the party providing such information; or (iv) shall
be required to be disclosed by law or during the course of or in
connection with any litigation or other proceeding, provided that the
party so required to make disclosure shall notify the party provided
such information of its obligation to disclose such information and
shall fully cooperate with the party which provided such information in
order to protect such confidentiality, or (c) by any party in
connection with the enforcement of its rights hereunder (to the minimum
extent necessary to enforce such rights, as determined in good faith by
the party seeking to enforce such right).
ARTICLE XIII
MISCELLANEOUS
-------------
Section 13.01. Notices. Except as otherwise provided
-------
herein, whenever it is provided herein that any notice, demand,
request, consent, approval, declaration or other communication shall
or may be given to or served upon any of the parties by any other
party, or whenever any of the parties desires to give or serve upon any
other communication with respect to this Agreement, each such notice,
demand, request, consent, approval, declaration or other communication
shall be in writing and either shall be delivered in person with
receipt acknowledged or sent by registered or certified mail, return
receipt requested, postage prepaid, or by overnight mail or courier, or
delivery service or by telecopy and confirmed by telecopy answerback,
addressed as follows:
-34-
(a) If to the Stockholder, to:
-------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Irell & ▇▇▇▇▇▇▇
1800 Avenue of the Stars
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇
(b) If to HSNi, to:
--------------
HSN, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
With a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
or at such other address as may be substituted by notice given as
herein provided. The furnishing of any notice required hereunder may
be waived in writing by the party entitled to receive such notice.
Every notice, demand, request, consent, approval, declaration or
other communication hereunder shall be deemed to have been duly given
or served on (A) the date on which personally delivered, with receipt
acknowledged, (B) the date on which telecopied and confirmed
-35-
by telecopy answerback, (C) the next Business Day if delivered by
overnight or express mail, courier or delivery service, or (D) three
Business Days after the same shall have been deposited in the United
States mail, as the case may be. Failure or delay in delivering copies
of any notice, demand, request, consent, approval, declaration or other
communication to the persons designated above to receive copies shall
in no way adversely affect the effectiveness of such notice, demand,
request, consent, approval, declaration or other communication.
Section 13.02. Entire Agreement. This Agreement
----------------
(together with the annex, schedules and exhibits hereto which are
incorporated by reference herein) together with the Stockholders
Agreement represent the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes
any and all prior oral and written agreements, arrangements and
understandings among the parties hereto with respect to such subject
matter, and can be amended, supplemented or changed, and any provision
hereof can be waived, only by a written instrument making specific
reference to this Agreement signed by the party against whom
enforcement of any such amendment, supplement, modification or waiver
is sought.
Section 13.03. Successors and Assigns. This Agreement
----------------------
shall be binding upon the parties hereto and their respective
successors and permitted assigns. Neither the Stockholder nor HSNi may
assign its rights hereunder without the prior written consent of the
other party hereto.
Section 13.04. Paragraph Headings. The paragraph headings
------------------
contained in this Agreement are for general reference purposes only and
shall not affect in any manner the meaning or interpretation of the
terms or other provisions of this Agreement.
Section 13.05. Reasonable Efforts. Whenever in this
------------------
Agreement the Stockholder is required to use all reasonable efforts to
cause the Company to take or refrain from taking any action, the
Stockholder shall not be required to breach his fiduciary duties to the
Company in causing the Company to take or refrain from taking such
action. Notwithstanding the foregoing, in the event the Company fails
to comply with the covenants contained herein despite the Stockholder's
efforts, for purposes of HSNi's rights under this Agreement, such
failure shall be a breach of the applicable covenant, permitting, to
the full extent of HSNi's rights under this Agreement, HSNi to
terminate this Agreement, and there shall be no liability on the part
of the
-36-
Stockholder for the Company's failure (provided the Stockholder acts
in good faith).
Section 13.06. Applicable Law. This Agreement shall
--------------
be governed by, construed and enforced in accordance with the laws of
the State of New York, applicable to contracts to be made, executed,
delivered and performed wholly within such state, and in any case,
without regard to the conflicts of law principles of such state.
Section 13.07. Severability. If at any time subsequent to the
------------
date hereof, any provision of this Agreement shall be held by any court
of competent jurisdiction to be illegal, void or unenforceable, such
provision shall be of no force and effect, but the illegality or
unenforceability of such provision shall have no effect upon and shall
not impair the enforceability of any other provision of this Agreement.
Section 13.08. Equitable Remedies. The parties hereto
------------------
agree that irreparable harm would occur in the event that any of the
covenants contained in this Agreement were not performed in all
material respects by the parties hereto in accordance with their
specific terms or conditions or were otherwise breached, and that money
damages are an inadequate remedy for breach thereof because of the
difficulty of ascertaining and quantifying the amount of damage that
will be suffered by the parties hereto in the event that such covenants
are not performed in accordance with their terms or are otherwise
breached. It is accordingly hereby agreed that the parties hereto shall
be entitled to an injunction or injunctions to restrain, enjoin and
prevent breaches and violations of any of the covenants contained in
this Agreement by the other parties and to enforce specifically the
terms and provisions hereof in any court of the United States or any
state having competent jurisdiction, such remedy being in addition to
and not in lieu of, any other rights and remedies to which the other
parties are entitled to at law or in equity.
Section 13.09. No Waiver. The failure of any party at any
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time or times to require performance of any provision hereof shall not
affect the right at a later time to enforce the same. No waiver by any
party of any condition, and no breach of any provision, term, covenant,
representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to
be construed as a further or continuing waiver of any such condition or
of the breach of any other provision, term, covenant, representation or
warranty of this Agreement.
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Section 13.10. Counterparts. This Agreement may be executed
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in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute but one and the same
original instrument.
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IN WITNESS WHEREOF, the parties hereto have duly
executed and delivered this Agreement, as of the day and year
first above written.
▇▇▇▇ ▇. ▇▇▇▇▇
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇
Attorney in Fact
HSN, INC.
By /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: Office of the Chairman
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