-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EfXTcV0FVe+vsGByT0pQhsF9x/6h4pmYErAXXhQvkAH8uiE9/NlJcUEViAmFsiqO nQymUbJNDPGqZer9fLc1eA== 0000950123-95-003568.txt : 19951204 0000950123-95-003568.hdr.sgml : 19951204 ACCESSION NUMBER: 0000950123-95-003568 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19951201 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HOME SHOPPING NETWORK INC CENTRAL INDEX KEY: 0000791024 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 592649518 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-38755 FILM NUMBER: 95598660 BUSINESS ADDRESS: STREET 1: 2501 118TH AVE NORTH CITY: ST PETERSBURG STATE: FL ZIP: 33716 BUSINESS PHONE: 8135728585 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TELE COMMUNICATIONS INC /CO/ CENTRAL INDEX KEY: 0000925692 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 841260157 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 5619 DTC PARKWAY CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 3032675500 MAIL ADDRESS: STREET 1: 5619 DTC PARKWAY CITY: ENGLEWOOD STATE: CO ZIP: 90111 FORMER COMPANY: FORMER CONFORMED NAME: TCI LIBERTY HOLDING CO DATE OF NAME CHANGE: 19940620 SC 13D/A 1 AMENDMENT NO. 2 TO SCHEDULE 13D 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D/A Under the Securities Exchange Act of 1934* (Amendment No. 2) HOME SHOPPING NETWORK, INC. (Name of Issuer) Common Stock, par value $.01 per share (Title of Class of Securities) 437351109 (CUSIP Number) Stephen M. Brett, Esq. Senior Vice President and General Counsel Tele-Communications, Inc. 5619 DTC Parkway Englewood, CO 80111 (303) 267-5500 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 27, 1995 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Check the following box if a fee is being paid with this statement [ ]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of less than five percent of such class. See Rule 13d-7.) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page should be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 2 CUSIP No. 827740101 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons Tele-Communications, Inc. 84-1260157 - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member of a Group (a) / / (b) / / - -------------------------------------------------------------------------------- (3) SEC Use Only - -------------------------------------------------------------------------------- (4) Source of Funds - -------------------------------------------------------------------------------- (5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) / / - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- Number of (7) Sole Voting Power 0 shares Shares Bene- ------------------------------------------------------ ficially (8) Shared Voting Power 37,566,702 shares Owned by ------------------------------------------------------ Each Report- (9) Sole Dispositive Power 0 shares ing Person ------------------------------------------------------ With (10) Shared Dispositive Power 37,566,702 shares - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 37,566,702 shares See Item 5 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares /X/ Excludes shares beneficially owned by the executive officers and directors of TCI. See Item 5. - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 41.5% Assumes conversion of Class B Stock into Common Stock. Because each share of Class B Stock generally is entitled to ten votes per share while the Common Stock is entitled to one vote per share, the Reporting Person may be deemed to beneficially own (prior to any conversion of the Class B Stock) equity securities of the Company representing approximately 80% of the voting power of the Company. - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) CO 2 3 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Statement Of TELE-COMMUNICATIONS, INC. Pursuant to Section 13(d) of the Securities Exchange Act of 1934 in respect of HOME SHOPPING NETWORK, INC. This Report on Schedule 13D (the "Schedule 13D") relates to the common stock, par value $.01 per share (the "Common Stock"), of Home Shopping Network, Inc., a Delaware corporation (the "Company"). The Report on Schedule 13D originally filed by Tele-Communications, Inc., a Delaware corporation ("TCI" or the "Reporting Person"), on August 12, 1994, as amended by Amendment No. 1 thereto (collectively, the "TCI Schedule 13D"), is hereby amended and supplemented to include the information contained herein, and this Report constitutes Amendment No. 2 to the TCI Schedule 13D. The summary descriptions contained in this Report of certain agreements and documents are qualified in their entirety by reference to the complete texts of such agreements and documents, filed as Exhibits hereto and incorporated herein by reference. ITEM 4. PURPOSE OF TRANSACTION Item 4 of the TCI Schedule 13D is hereby amended and supplemented by adding the following information thereto: On November 27, 1995, and prior to there being any agreement, arrangement or understanding relating to the transactions described below, Liberty Media Corporation ("Liberty"), a wholly owned subsidiary of TCI, and Silver King Communications, Inc. ("Silver King"), requested that the Board of Directors of the Company consider and approve for purposes of Section 203 of the Delaware General Corporation Law ("Section 203") a transaction pursuant to which Liberty would indirectly transfer all of the shares of Common Stock and Class B Stock of the Company owned by it to Silver King in exchange for shares of Silver King. Such additional shares of Silver King would be held in Silver Co. (as defined in below) pursuant to the arrangements described herein. The Reporting Person has been advised by the Company that the Company's Board of Directors, upon the recommendation of a Special Committee of Independent Directors, approved the transaction, thereby exempting Silver King and certain other 3 4 affiliates of Liberty and Barry Diller from the restrictions upon "business combinations" between an "interested stockholder" (as each such term is defined in Section 203) and the Company contained in Section 203. Following such approval, Liberty, Mr. Diller and Silver King and certain of their affiliates, entered into a series of agreements pursuant to which, subject to the terms and conditions set forth therein, Liberty will indirectly transfer the 20,000,000 shares of Class B Stock and 17,566,702 shares of Common Stock held by TCI (collectively the "TCI HSN Shares") to Silver King (such transactions are referred to collectively as the "Merger and Exchange"). In addition, on such date Liberty and Mr. Diller entered into an amendment to the Stockholders Agreement, dated as of August 24, 1995 (as so amended, the "SK Stockholders Agreement"), with respect to the equity securities of Silver King. The SK Stockholders Agreement provides that Mr. Diller will be entitled to exercise voting authority over all equity securities of Silver King owned by Liberty, Mr. Diller and certain of their respective affiliates, subject to certain restrictions. Pursuant to the SK Stockholders Agreement, substantially all of Liberty's equity interest in Silver King will be held through an entity ("Silver Co.") in which Liberty will hold a non-voting equity interest (which is expected to constitute in excess of 99% of the outstanding equity interests in such entity) and Mr. Diller will hold the entire voting equity interest. Upon the occurrence of certain events described in the SK Stockholders Agreement, Liberty will be entitled to purchase Mr. Diller's equity interest in Silver Co. (subject to the receipt of required regulatory approvals), thus making Silver Co. a wholly owned subsidiary of Liberty. Thereafter, Liberty would be entitled to elect a majority of the directors of Silver King (by virtue of the voting power of the Silver King shares held by Silver Co.) and vote the shares of Silver King, subject to certain rights of Mr. Diller to require Liberty to grant him a proxy to vote such shares upon the occurrence of certain events. Following the Merger and Exchange but without giving effect to certain other pending transactions involving Silver King, Liberty and/or Mr. Diller, it is currently expected that Liberty, Mr. Diller and their respective affiliates (including Silver Co.) will collectively beneficially own 5,359,054 shares of the Common Stock of Silver King and 8,082,000 shares of the Class B Common Stock of Silver King, which shares constitute approximately 59% of the outstanding equity securities of Silver King, which securities would, primarily by virtue of the fact that the shares of Class B Common Stock of Silver King are entitled to cast 10 votes per share while the Common Stock of Silver King is entitled to cast one vote per share, represent approximately 89% of the voting power of the outstanding equity securities of Silver King. In such event, the equity interest to be held by TCI in Silver Co. upon consummation of the Merger and Exchange (as well as the Silver King shares held directly by TCI) would represent an approximately 57% equity interest in Silver King, subject to certain limitations contained in the SK Stockholders Agreement. By virtue of its acquisition of the TCI HSN Shares, Silver King would own shares of Common Stock and Class B Stock representing approximately 41% of the outstanding equity securities of the Company, which shares would represent approximately 80% of the voting power of the outstanding equity securities of the Company. As a result, Silver King would have the power to elect a majority of the members of the Board of Directors of the Company and to determine the outcome of the vote with respect to substantially all matters presented to a vote of the stockholders of the Company or by which such stockholders act by written consent. So long 4 5 as Mr. Diller is entitled to vote the shares of Silver King held by Silver Co., Mr. Diller will have indirect voting control of the Company by virtue of his voting control of Silver King (based upon the anticipated equity capital structure of each of Silver King and the Company upon the consummation of the foregoing transactions). Pursuant to the SK Stockholders Agreement, Diller has agreed that, if so requested by TCI, following the Merger and Exchange he will use his reasonable best efforts to cause one designee of TCI to serve or continue to serve on the Board of Directors of the Company. In addition, Mr. Diller has been elected as the Chairman of the Board of the Company, and Mr. Diller and certain members of his proposed management team were granted options to purchase an aggregate of 16 million shares of Common Stock at an exercise price of $8.50 per share (which shares would represent approximately 15% of the outstanding common stock of the Company (assuming the exercise of all of such options)). The consummation of the transactions described herein is subject to the satisfaction of a number of conditions, including, but not limited to, approval of the stockholders of Silver King of the issuance of the shares of Silver King Common Stock and Class B Common Stock in the Merger and Exchange and certain amendments to its Certificate of Incorporation and the receipt of certain regulatory consents and approvals. The foregoing summary description of certain provisions of the SK Stockholders Agreement and the other agreements described above is qualified in its entirety by reference to the terms and provisions of such agreements, each of which is attached hereto as an Exhibit and incorporated by reference herein. Other than as described herein, neither TCI nor, to the best of TCI's knowledge, any of its executive officers, directors or controlling persons, have any present plans or proposals which relate to or would result in: (a) the acquisition by any person of securities of the Company, or the disposition of securities of the Company; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of the Company or of any of its subsidiaries; (d) any change in the present Board of Directors or management of the Company, including any plans or proposals to change the number or terms of directors or to fill any existing vacancies on the Board of Directors of the Company; (e) any material change in the present capitalization or dividend policy of the Company; (f) any other material change in the Company's business or corporate structure; (g) changes in the Company's charter, by-laws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; (h) causing a class of securities of the Company to be deleted from a national securities exchange or to cease to be authorized to be quoted in any inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or (j) any action similar to any of those enumerated above. Notwithstanding anything contained herein, the Reporting Person reserves the right, depending on other relevant factors, to change its intention with respect to any and all of the matters referred to in the preceding paragraph. 5 6 ITEM 5. INTEREST IN SECURITIES OF THE ISSUER Item 5 of the TCI Schedule 13D is hereby amended and supplemented by adding the following information thereto: As a result of the execution of the SK Stockholders Agreement, the Merger Agreement and the Exchange Agreement, TCI may be deemed to share beneficial ownership of the 20,000,000 shares of Class B Stock and 17,566,702 shares of Common Stock beneficially owned by it with Silver Co. and Silver King. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIP WITH RESPECT TO THE SECURITIES OF THE ISSUER Item 6 of the TCI Schedule 13D is hereby amended and supplemented by adding the following information thereto: The information set forth in Item 4 above is incorporated by reference herein. In connection with the execution of the amendment to the SK Stockholders Agreement, on November 27, 1995, certain affiliates of Liberty and Silver Co. entered into a Merger Agreement (the "Merger Agreement") pursuant to which, subject to the applicable terms and conditions contained therein, an indirect wholly owned subsidiary of TCI holding all of the TCI HSN Shares will be merged with and into Silver Co. (the "Merger"), as a result of which Silver Co. will become the beneficial owner of all of the TCI HSN Shares. In the Merger, Liberty will receive an additional non-voting equity interest in Silver Co. Immediately following the Merger, in accordance with an Exchange Agreement, also dated as of November 27, 1995, between Silver Co. and Silver King (the "Exchange Agreement"), Silver Co. will exchange the TCI HSN Shares for additional shares of Common Stock and Class B Common Stock of Silver King (the "Exchange"). The foregoing summary description of certain provisions of the Letter Agreement, the Merger Agreement and the Exchange Agreement is qualified in its entirety by reference to the terms and provisions of each of the Letter Agreement, the Merger Agreement and the Exchange Agreement, each of which is attached hereto as an Exhibit and incorporated by reference herein. 6 7 ITEM 7. MATERIAL TO BE FILED AS EXHIBITS 3. Press Release issued by Liberty Media Corporation, dated November 27, 1995. 4. Press Release issued by Home Shopping Network, Inc., dated November 27, 1995. 5. Letter Agreement, dated as of August 24, 1995, by and between Liberty Media Corporation and Barry Diller. 6. Letter Agreement, dated as of November 27, 1995, by and between Liberty Media Corporation and Barry Diller. 7. Agreement and Plan of Merger, dated as of November 27, 1995, by and among Silver Management Company, Liberty Program Investments, Inc. and Liberty HSN, Inc. 8. Exchange Agreement, dated as of November 27, 1995, by and between Silver Management Company and Silver King Communications, Inc. 7 8 SIGNATURE After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information in this statement is true, complete and correct. Dated: November 30, 1995 TELE-COMMUNICATIONS, INC. By: /s/Peter R. Barton ------------------------ Name: Peter R. Barton Title: Executive Vice President 8 9 EXHIBIT INDEX 3. Press Release issued by Liberty Media Corporation, dated November 27, 1995. 4. Press Release issued by Home Shopping Network, Inc., dated November 27, 1995. 5. Letter Agreement, dated as of August 24, 1995, by and between Liberty Media Corporation and Barry Diller. 6. Letter Agreement, dated as of November 27, 1995, by and between Liberty Media Corporation and Barry Diller. 7. Agreement and Plan of Merger, dated as of November 27, 1995, by and among Silver Management Company, Liberty Program Investments, Inc. and Liberty HSN, Inc. 8. Exchange Agreement, dated as of November 27, 1995, by and between Silver Management Company and Silver King Communications, Inc. EX-99.3 2 PRESS RELEASE ISSUED BY LIBERTY MEDIA 1 EXHIBIT 3 LIBERTY Media Group FOR IMMEDIATE RELEASE November 27, 1995 Contact: Vivian Carr (303) 721-5406 LIBERTY MEDIA GROUP TO EXCHANGE HSN SHARES FOR INCREASED STAKE IN SILVER KING Englewood, Colorado .... Tele-Communications, Inc. Liberty Media Group ("Liberty") today announced that it has agreed to exchange its controlling interest in Home Shopping Network, Inc. ("HSN") for shares of Silver King Communications, Inc. ("Silver King"). Liberty will receive approximately 11 million newly issued shares of Silver King in exchange for its 37.5 million shares of HSN. After giving effect to the exchange and to Silver King's acquisition of Savoy Pictures Entertainment, Inc. (see Silver King press release of November 27) Liberty will own approximately 45% of Silver King on a fully diluted basis. In addition, it was announced today by HSN that Barry Diller, Chairman and CEO of Silver King, has been named Chairman of HSN. Silver King and HSN will remain publicly traded companies. Under the terms of the transaction, Liberty will contribute all of its HSN shares into a company previously formed by Liberty and Mr. Diller ("Silver Company"). Mr. Diller will hold all of the voting securities of Silver Company and Liberty will own certain non-voting equity securities of Silver Company. Following receipt of all necessary regulatory and shareholder approvals and consummation of the Savoy transaction, Silver Company will exchange its shares of HSN Common Stock 4.855 million shares of Silver King Common Stock and its shares of HSN Class B Common Stock for 6.082 million shares of Silver King Class B Common Stock. As a result of these transactions, and the prior exercise of an option to purchase 2 million shares of Silver King Class B Common Stock, Silver Company will hold approximately 84% of the votes of Silver King. Following completion of the foregoing transactions, HSN will no longer be a consolidated subsidiary of Liberty for financial reporting purposes. Peter Barton, Liberty's President and CEO, said "This transaction is another step in our ongoing objective of aggressively managing our portfolio of assets in order to maximize the equity return to our shareholders. It gives us the opportunity to increase our investment in Silver King while retaining a significant holding in HSN. Barry has tremendous energy and creativity and an uninterrupted record of entrepreneurial success. We believe that his simultaneous leadership of HSN and Silver King creates a unique opportunity for value creation that will benefit the shareholders of both companies." 2 Liberty Media Group is a division of Tele-Communications, Inc. In addition to its interests in Silver King and HSN, Liberty has ownership interests in more than 50 cable television networks, including The Discovery Channel, QVC, CNN, the Family Channel, and numerous regional and national sports networks. Liberty Media Group Series A and B common stock are series of Tele-Communications, Inc. common stock and are traded on the Nasdaq National Market under the symbols LBTYA and LBTYB, respectively. EX-99.4 3 PRESS RELEASE ISSUED BY HOME SHOPPING NETWORK 1 EXHIBIT 4 HOME SHOPPING NETWORK Corporate Communications, P.O. Box 9090, Clearwater, FL 34618-9090 FOR IMMEDIATE RELEASE NOVEMBER 27, 1995 HSN/PRO0436 CONTACT: LOUISE I. CLEARY DILLER APPOINTED CHAIRMAN OF HSN'S BOARD OF DIRECTORS ST. PETERSBURG, FLORIDA -- Home Shopping Network, Inc. (NYSE:HSN) announced today that Barry Diller, currently an HSN director, has been appointed as its new chairman of the board. In addition, Diller and certain members of his proposed management team have been granted options to purchase approximately 15 million shares of the company's common stock at a price of $8.50 per share. HSN also announced that its board of directors has been advised of a proposal by Liberty Media Corporation, which owns shares representing 80 percent of the voting stock of HSN, regarding the transfer of these shares to Silver King Communications, Inc. in exchange for securities of Silver King. Details of the proposed exchange were not released, but consummation of the transaction would be subject to certain steps, including the approval of Silver King shareholders. Diller became chairman of the board and chief executive officer of Silver King in August 1995. Silver King owns 12 television stations which broadcast HSN's programming. The board of directors of HSN will consider this proposed transaction for any action its considers appropriate at a meeting today. # # # - -------------------------------------------------------------------------------- For more information contact: Corporate Communications, Home Shopping Network, Inc. (813) 572-8585 EX-99.5 4 LETTER AGREEMENT DATED AUGUST 24, 1995 1 EXHIBIT 5 LIBERTY MEDIA CORPORATION 8101 EAST PRENTICE AVENUE, SUITE 500 ENGLEWOOD, COLORADO 80111 August 24, 1995 Mr. Barry Diller 1940 Coldwater Canyon Beverly Hills, California 90120 Dear Sir: Reference is made to the Term Sheet attached hereto pursuant to which, subject to the prior receipt of any required approvals of the Board of Directors of Silver King Communications, Inc. ("Silver") under Section 203 of the Delaware General Corporation Law, we have entered into certain agreements with respect to the equity securities of Silver, all as more fully described in the Term Sheet. The Term Sheet contemplates that the agreements contained therein will be superseded by definitive agreements and instruments which will contain provisions incorporating and expanding upon the agreements set forth therein, together with other provisions customary in the case of transactions of this type, and such other provisions as are reasonable and appropriate in the context of the transactions contemplated hereby. Notwithstanding the foregoing, the parties expressly acknowledge that the Term Sheet and this agreement, subject to the prior receipt of any such required approvals of the Board of Directors of Silver, will constitute a binding agreement between them, subject to the terms and preconditions set forth herein and in the Term Sheet, until such definitive agreements are executed and delivered. If such definitive agreements are not executed and delivered, then, subject to the receipt of any such required approvals of the Board of Directors of Silver, the Term Sheet and this agreement shall constitute such definitive agreements. 2 If the foregoing is acceptable to you, please execute the copy of this agreement in the space below, at which time this instrument will constitute a binding agreement between us. Very truly yours, LIBERTY MEDIA CORPORATION By: /s/ Peter R. Barton -------------------- Name: Peter R. Barton Title: President ACCEPTED AND AGREED this 24th day of August, 1995 /s/ Barry Diller ------------ Barry Diller 3 PROJECT NET TERM SHEET Subject to the prior receipt of any required approvals of the Board of Directors of Silver King Communications, Inc., a Delaware corporation ("Silver"), for purposes of Section 203 of the Delaware General Corporation Law ("Section 203"), the following constitute the proposed terms upon which Liberty Media Corporation, a Delaware corporation ("Rockies"), and Barry Diller ("Lasorda") and/or a corporation, partnership or trust at least 90% owned and controlled by Lasorda ("Dodgers") will enter into certain agreements with respect to the equity securities of Silver. It is contemplated that, if the required Section 203 approvals are obtained from the Board of Directors of Silver, definitive agreements will be entered into containing the detailed terms of the matters set forth herein. TRANSACTION At a meeting of the Silver Board of OVERVIEW: Directors, Rockies will present to the Board a proposal whereby: (x) Dodgers and/or Lasorda will purchase the Initial Shares and the Additional Shares from Silver and will be granted the Options by Silver (each, as defined in the Silver Term Sheet); (y) Lasorda will agree to become initially the Chairman of the Board and Chief Executive Officer of Silver and to become a member of the Silver Board of Directors; and (z) Subject to the approval of the Silver Board of Directors, Rockies, Dodgers and Lasorda will enter into the Silver Stockholders Agreement. As soon as practicable following receipt of all required approvals by the Silver Board of the arrangements contemplated by clauses (x) and (y) above (and the execution and delivery of the Silver Term Sheet by the applicable parties thereto), Rockies and Dodgers will enter into the Silver Stockholders Agreement described below. I. SILVER COMPANY ARRANGEMENTS. FORMATION OF Promptly following the date of this Term SILVER COMPANY: Sheet, Rockies and Dodgers will form an entity ("Silver Company"), with Rockies holding a convertible non-voting participating preferred equity interest and Dodgers holding a common equity interest initially constituting all of the voting equity interest in the Silver Company. 4 The capital contributions to the Silver Company will be as follows: 1. Rockies will contribute the Silver Option (as defined below) and an amount in cash equal to the aggregate exercise price of the Silver Option. 2. Dodgers will contribute [$100] in cash. Rockies and Dodgers will use all reasonable efforts to seek and obtain FCC approval for the exercise of the Silver Option by the Silver Company and the transactions contemplated hereby. Following the occurrence of a Change in Law (as defined below), (i) Rockies; equity interest in the Silver Company will convert into voting common equity interest having the same pro rata rights, powers and preferences as Dodgers; equity interest in the Silver Company and (ii) Rockies or its designee shall be required to purchase (and Dogers will be required to sell) Dodgers' entire equity interest in the Silver Company for an amount equal to the cash amount invested in the Silver Company by Dodgers plus interest on such amount at the Agreed Rate from the date of such contribution to the date of such purchase, compounded annually (the "Dodgers Interest Purchase Price"). The "Agreed Rate" shall equal the rate of interest per annum in effect from time to time and publicly announced by the Bank of New York as its prime rate of interest. Other than as set forth above, there will be no additional contributions to the Silver Company without the consent of each holder of a voting or non-voting equity interest in the Silver Company. At all times, the percentage equity economic interest in the Silver Company of each of Rockies and Dodgers will be in proportion to the fair market value of the relative contributions that have been made by such Stockholder to the Silver Company (with the fair market value of the Silver Option determined by reference to the "spread" between the market price per share of the Silver Common Stock and the applicable exercise price per share of such option). The capitalization of the Silver Company will be structured in a manner reasonably acceptable to the parties in light of relevant tax, regulatory and capital commitment considerations. MANAGEMENT: The business and affairs of the Silver Company will be managed by a Board of Directors elected by the holders of a majority of the voting equity interests in the Silver Company. Notwithstanding the foregoing, the taking of any action by the 5 Silver Company with respect to (i) to the extent permitted by applicable law, any Fundamental Matter (as defined below) (as applied to the Silver Company, mutatis mutandis) or (ii) any acquisition or disposition (including pledges) of the Silver Option or any other Silver Securities held by the Silver Company, in either case, will require the unanimous approval of each holder of a voting or non-voting equity interest in the Silver Company. TRANSFERS OF Except as otherwise specifically INTERESTS: provided in this Term Sheet, no transfers or other dispositions (including pledges), directly or indirectly, of any interest in the Silver Company will be permitted without the consent of each Stockholder, provided, that Rockies shall be entitled to transfer all or part of its interest in the Silver Company to members of the Rockies Stockholder Group. At such time as (i) Lasorda is no longer the Chairman of the Board and/or Chief Executive Officer and/or President of Silver or (ii) the Dodgers Stockholder Group ceases to own its Eligible Stockholder Amount (as defined below) of Silver Securities, Dodgers shall be required to sell its entire interest in the Silver Company to Rockies (or Rockies' designee) at a price equal to the Dodgers Interest Purchase Price. II. SILVER STOCKHOLDERS AGREEMENT. SCOPE: Simultaneously with the formation of the Silver Company, Rockies and Lasorda will enter into the Silver Stockholders Agreement, which will govern, among other matters, (i) all equity securities of Silver, including any securities exercisable or exchangeable for or convertible into equity securities of Silver (collectively, the "Silver Securities") held by Rockies or Lasorda (each, a "Stockholder") and their respective controlled affiliates (such Stockholder, together with, in the case of Rockies, the controlled affiliates of Rockies and Rockies; publicly held parent corporation ("Rockies Parent"), and, in the case of Lasorda, his 90% owned and controlled affiliates, is referred to as a "Stockholder Group"), (ii) the formation andcapitalization of the Silver Company, (iii) the exchange of certain shares of Silver Common Stock owned by Dodgers for shares of Silver Class B Stock owned by Rockies or the Silver Company and (iv) the right of Lasorda to vote the Silver Securities held by the Rockies Stockholder Group pursuant to the conditional proxy described below under the caption "Dodgers Management Rights," subject to the limitations described herein. Each Stockholder Group will agree that it 6 will not enter into any other agreement with respect to its Silver Securities other than as contemplated hereby. Notwithstanding the foregoing, prior to the time that Rockies acquires Dodgers' interest in the Silver Company in the manner described in this Term Sheet, the Silver Company shall not be deemed to be a member of either the Rockies Stockholder Group or the Dodgers Stockholder Group and, except as specifically set forth in this Term Sheet, any Silver Securities held by the Silver Company (including the option currently held by Rockies to acquire shares of Silver Class B Stock (the "Silver Option") and the shares of Silver Class B Stock subject to the Silver Option) shall not be deemed to be held by either the Rockies Stockholder Group or the Dodgers Stockholder Group. DODGERS Lasorda shall be entitled to exercise MANAGEMENT voting authority and authority to act by RIGHTS: written consent over all Silver Securities owned by each member of the Rockies Stockholder Group, on all matters submitted to a vote of Silver stockholders or by which Silver stockholders may act by written consent pursuant to a conditional proxy (which proxy shall be valid for the full term that this Term Sheet and the Silver Stockholders Agreement that replaces this Term Sheet are effective and is irrevocable and coupled with an interest for purposes of Section 212 of the Delaware General Corporation Law); provided, that each Stockholder agrees, and agrees to cause each member of its Stockholder Group, to take or cause to be taken all reasonable actions required (including to vote or execute a written consent with respect to the Silver Securities held by the Silver Company) (i) prior to a Change in Law (as defined below), to the extent permitted by law, to prevent the taking of any action by Silver with respect to a Fundamental Matter without the consent of both Stockholders and (ii) following a Change in Law, (A) for the election of a slate of directors of Silver, two of whom will be designated by Rockies and the remainder of whom will be designated by Dodgers and (B) to prevent the taking of any action by Silver with respect to a Fundamental Matter without the consent of both Stockholders. Following a Change in Law, subject to applicable law and fiduciary duties and except with respect to (x) any Fundamental Matters, (y) any decision to terminate Lasorda's employment with Silver for Cause and (z) any decision relating to Lasorda's compensation by Silver (except as provided for by the Silver Term Sheet), Rockies shall be required to use its reasonable best efforts to cause its designees on the Silver Board of Directors to vote with respect to any matter presented to a vote 7 of the Silver Board of Directors in the manner instructed by Lasorda. For purposes of this Term Sheet and the Silver Stockholders Agreement, a "Change in Law" shall be deemed to have occurred at such time as Rockies is entitled to exercise full ownership and control over its Silver Securities (including the pro rata portion of the Silver Securities held by the Silver Company represented by Rockies equity interest in the Silver Company) notwithstanding Silver's ownership of its broadcast licenses. FUNDAMENTAL 1. Any transaction not in the MATTERS: ordinary course of business, launching new or additional channels or engaging in any new field of business, in any case, which will result in, or will have a reasonable likelihood of resulting in, Rockies or any member of its Stockholder Group being required under law to divest itself of all or any part of its Silver Securities, or interests therein (including its interest in the Silver Company), or any other material assets of such entity, or which will render such entity's continued ownership of such stock or assets illegal or subject to the imposition of a fine or penalty or which will impose material additional restrictions or limitations on such entity's full rights of ownership (including, without limitation, voting) thereof or therein. 2. The acquisition, disposition (including pledges), grant or issuance, directly or indirectly, by Silver or any of its subsidiaries, of any assets (including debt and/or equity securities) or business (by merger, consolidation or otherwise), or the incurrence of any indebtedness, in any such case (in one transaction or a series of related transactions), with a value of 10% or more of the market value of Silver's outstanding equity securities at the time of such transaction. 3. Any material amendments to the Certificate of Incorporation or Bylaws of Silver. 4. Engaging in any line of business other than media, communications and entertainment products, services and programming. 5. The settlement of any litigation, arbitration or other proceeding which is other than in the ordinary course of business and which involves any material restriction on the conduct of business by Silver or its affiliates or the continued ownership of its assets by Silver or any of its affiliates (in each case, including Rockies). 8 6. Any transaction (other than those contemplated by this Term Sheet) between Silver and its affiliates, on the one hand, and Lasorda and his affiliates, on the other hand, subject to exceptions relating to the size of the proposed transaction and those transactions which are otherwise on an arm's length basis. TERMINATION OF A Stockholder shall cease to be entitled RIGHTS: to exercise any rights under this Term Sheet and the Stockholders Agreement as of the date that its Stockholder Group collectively ceases to own the equivalent of 1,100,000 shares of Silver Common Stock in the case of Dodgers and 1,000,000 shares of Silver Common Stock in the case of Rockies (including, in the case of Rockies, the proportionate number of Silver Securities represented by Rockies' equity interest in the Silver Company), in each case determined on a fully diluted basis (taking into account, in the case of Rockies, the shares issuable upon exercise of the Silver Option and, in the case of Dodgers, all unexercised Options, whether or not then exercisable, and all Silver Additional Shares) (as to each Stockholder, its "Eligible Stockholder Amount"). In addition, Lasorda and each member of his Stockholder Group shall cease to be entitled to exercise any rights under this Term Sheet and the Silver Stockholders Agreement with respect to the following matters at such time as Lasorda is no longer Chairman of the Board and/or Chief Executive Officer and/or President of Silver: i) the matters covered under the caption "Dodgers Management Rights"; ii) the matters covered under the caption "Share Exchange"; and iii) the Dodgers right of first refusal in connection with certain transfers of Silver Securities by the Rockies Stockholder Group pursuant to the second paragraph under the caption "Transfers of Silver Securities". In addition, at such time as Lasorda is no longer Chairman of the Board and/or Chief Executive Officer and/or President of Silver, the Rockies Stockholder Group shall no longer have any obligations under this Term Sheet or the Silver Stockholders Agreement with respect to the matters covered under the caption "Transfers of Silver Securities", except with respect to the Silver Put. 9 Notwithstanding the provisions of the previous two paragraphs, in the event that prior to the date of the exercise of the Silver Option by the Silver Company, Lasorda's employment with Silver is terminated (x) by Silver without Cause (as defined in the Silver Term Sheet) or (y) Lasorda for Good Reason (as defined in the Silver Term Sheet, then to the extent that (i) during the period from such termination until the exercise of the Silver Option by the Silver Company, Lasorda continues to indicate a good faith intention to become Chairman of the Board and/or Chief Executive Officer and/or President of Silver promptly following the exercise of the Silver Option by the Silver Company and (ii) upon such exercise of the Silver Option Lasorda does become the Chairman of the Board and/or Chief Executive Officer and/or President of Silver, such termination of Lasorda's employment will not have the effects specified in the preceding two paragraphs. SHARE EXCHANGE: So long as the Dodgers Stockholder Group holds the Eligible Stockholder Amount of Silver Securities, then Dodgers shall have the right, exercisable from time to time, to require that Rockies or the Silver Company exchange, on a share for share basis, shares of Silver Class B Stock owned by Rockies or the Silver Company, as the case may be, for vested shares of Silver Common Stock owned by Dodgers (in each case not subject to any liens (other than pursuant to the Silver Stockholders Agreement)). Notwithstanding the foregoing, neither Rockies nor the Silver Company shall be required to exchange any shares of Silver Class B Stock for shares of Silver Common Stock to the extent that, after giving effect to such exchange, Rockies will cease to own Silver Securities constituting at least 50% of the total voting power of Silver, determined on a fully diluted basis (taking into account the pro rata portion of the Silver Securities held by the Silver Company represented by Rockies equity interest in the Silver Company). TRANSFERS Subject to the other provisions of this OF SILVER Term Sheet and the Silver Stockholders SECURITIES: Agreement, no Stockholder shall transfer or otherwise dispose of (including pledges), directly or indirectly, any Silver Securities other than (w) transfers of Silver Securities by Lasorda in order to pay taxes arising from the granting, vesting and/or exercise of the Options and/or the payment of bonuses on repayment of the Lasorda Note (as defined in the Silver Term Sheet), (x) transfers of Silver Securities by Rockies to members of the Rockies Stockholder Group or by Lasorda or Dodgers to members of the Dodgers Stockholder Group, (y) a pledge or grant of a security interest in vested Silver Securities (other than the pledge of the Additional Shares and the excess shares (each as defined in the 10 Silver Term Sheet)) in connection with bona fide indebtedness in connection with which the pledgee of the applicable Silver Securities agrees that, upon any default or exercise of its rights under such pledge or security arrangement, it will offer to sell the pledged Silver Securities to the non-pledging Stockholder (or its designee) for an amount equal to the lesser of the applicable amount of such indebtedness and the fair market value of such pledged Silver Securities, and (z) transfers of Options or Silver Securities to Silver by Dodgers or its affiliates in connection with a "cashless" exercise of the Options (which shall be permitted pursuant to the terms thereof). In addition to the foregoing, but subject to a right of first refusal of the other Stockholder (which right shall be assignable): (i) following the fifth anniversary of the date of the Silver Stockholders Agreement either Stockholder may transfer all but not less than all of the Silver Securities held by its Stockholder Group (and, in the case of Rockies, its entire interest in the Silver Company) to an unaffiliated third party, (ii) following the time that Lasorda is no longer the Chairman of the Board and/or Chief Executive Officer and/or President of Silver, Lasorda may transfer all but not less than all of the Silver Securities held by its Stockholder Group to an unaffiliated third party, and (iii) either Stockholder may transfer any portion of the Silver Securities held by its Stockholder Group to an unaffiliated third party, provided that, following such transfer (A) such Stockholder Group retains its Eligible Stockholder Amount of Silver Securities and (B) in the case of Rockies, the outstanding shares of Silver Class B Stock and Silver Common Stock held by Rockies and Dodgers (and the members of their respective Stockholder Groups) and the Silver Company collectively represent 50.1% of the voting power of the outstanding Silver Securities on a fully diluted basis. Notwithstanding the previous sentence (but subject to the conditions contained in the proviso in clause (iii) above), either Stockholder may transfer any of its Silver Securities in one or more transactions that comply with the requirements of Rule 144 or 145 (as applicable) under the Securities Act of 1933 without regard to the right of first refusal described in the previous sentence. Except as otherwise specifically provided in this Term Sheet, neither Stockholder shall be entitled to assign any of its rights under the Silver Stockholders Agreement; and following any transfer of Silver Securities in accordance with the provisions of the previous paragraph (other than to a member of the Stockholder Group of such Stockholder), the assignee of such Silver Securities shall not have any rights or obligations under 11 the Stockholders Agreement with respect to such Silver Securities. If Lasorda ceases to be the Chairman of the Board and/or Chief Executive Officer and/or President of Silver (except as a result of a termination by Silver for Cause) following the third anniversary of the date of this Term Sheet, then during the forty-five day period following the date that Lasorda so ceases to be the Chairman of the Board and/or Chief Executive Officer and/or President of Silver, Dodgers will be entitled to elect to "put" all, but not less than all, of the Silver Securities held by its Stockholder Group to Rockies at their Appraised Value (the "Silver Put"). The purchase price for the Silver Put shall be payable, at Rockies' election, in cash or in any publicly traded class or series of common equity securities of Rockies or its parent (including any class or series of common equity securities of Rockies Parent intended to track the business and assets of Rockies), as to which securities Dodgers will receive customary registration rights. For purposes of the payment of such purchase price, the value of such common equity securities of Rockies or Rockies Parent shall be the average of the closing trading prices of such securities for the 20 trading days ending on the second complete trading day prior to the consummation of such purchase. In order to determine Appraised Value, promptly following the exercise of the Silver Put, each of Dodgers and Rockies shall select an independent investment banking firm who shall promptly make a determination of Appraised Value. If the higher of the two such determinations is greater than 110% of the lower of such determinations, then a third independent investment banking firm shall be selected by such first two investment banking firms, which third investment banking firm shall promptly determine Appraised Value. The Appraised Value shall be the average of the first two appraisals, if only two appraisals are required, or if three appraisals are required, the average of the two appraisals closest in value (or if there are not two closest appraisals, the average of all three such appraisals). In making their determinations, such investment banking firms shall be instructed that the Appraised Value shall be equal to (i) the fair market value of Silver on a going concern basis in a transaction in which the applicable buyer acquires all outstanding Silver Securities multiplied by (ii) the fraction corresponding to the percentage of the fully diluted equity of Silver represented by the Silver Securities owned by the Dodgers Stockholder Group. Such investment banking firms shall also be instructed to assume in making their determination that (i) Lasorda is no longer the Chairman of the Board and/or Chief Executive Officer and/or President of Silver and (ii) that there is no controlling 12 stockholder of Silver. Following the determination of the Appraised Value, Rockies shall be entitled within a 60 day period to elect to either pay the applicable purchase price in the manner set forth above for the Silver Securities held by the Dodgers Stockholder Group or, in the alternative (and notwithstanding the exercise of the Silver Put), to elect to cause Silver to conduct an "auction" in which all of the outstanding Silver Securities shall be sold to a third party (and, in the event of such an election, each Stockholder agrees to cooperate in conducting such "auction" and consummating such sale as promptly and efficiently as practicable); provided, that any member of a Stockholder Group acting alone or together with a group of bidders may bid in and/or be the purchaser in such auction. Notwithstanding any other provision of the Term Sheet, prior to any transfer or other disposition (other than a pledge or grant of a security interest in compliance with clause (y) of the first paragraph under the caption "Transfers of Silver Securities") of Silver Class B Stock (other than pursuant to the provisions described under the caption "Share Exchange" or to a member of such Stockholder's Stockholder Group, to the other Stockholder or, if the non-transferring Stockholder so elects, to a purchaser designated by the non- transferring Stockholder in connection with the exercise by such non- transferring Stockholder of its right of first refusal pursuant to the Silver Stockholders Agreement), all shares of Silver Class B Stock proposed to be so transferred or otherwise disposed of shall be exchanged with the non-transferring Stockholder or the Silver Company, as the case may be, for shares of Silver Common Stock, on a share for share basis, and to the extent such non-transferring Stockholder or the Silver Company, as the case may be, does not own sufficient shares of Silver Common Stock to make such an exchange, such transferring Stockholder shall convert, or cause to be converted, such shares of Silver Class B Stock into shares of Silver Common Stock (or such other Silver Securities into which such shares are then convertible) prior to such transfer. All transfers and exchanges contemplated by this Term Sheet and the Silver Stockholders Agreement shall be subject to limited periods of suspension in order to prevent liability under the federal securities laws. Subject to the restrictions on the transfer of its Silver Securities contained herein and in the Silver Stockholders Agreement, each Stockholder shall be entitled to customary demand and 13 incidental registration rights with respect to the Silver Securities held by its Stockholder Group. EX-99.6 5 LETTER AGREEMENT DATED NOVEMBER 27, 1995 1 EXHIBIT 6 November 27, 1995 LIBERTY MEDIA CORPORATION 8101 East Prentice Avenue, Suite 500 Englewood, Colorado 80111 Mr. Barry Diller 1940 Coldwater Canyon Beverly Hills, California 90210 Dear Sir: Reference is made to the agreement between Liberty Media Corporation ("Rockies") and Barry Diller ("Lasorda"), dated August 24, 1995 (including the related term sheet included therein, the "Prior Agreement"), relating to the securities of Silver King Communications, Inc. ("Silver"). Capitalized terms not otherwise defined in this letter agreement (this "Agreement") shall have the meanings ascribed to such terms in the Prior Agreement. Subject to the prior receipt of any required approvals of the Board of Directors of Home Shopping Network, Inc. ("House") under Section 203 of the Delaware General Corporation Law (the "DGCL"), Rockies and Lasorda hereby agree to the following amendments to the Prior Agreement and the additional agreements contained herein, each of which shall be incorporated in the Silver Stockholders Agreement: 1. Merger and Exchange of Securities. (a) Subject to the satisfaction of certain conditions contained herein and contained in the definitive merger agreement entered into among Liberty Program Investments, Inc. ("Rockies Sub"), Liberty HSN, Inc. ("Rockies House Sub") and Silver Company in connection herewith (the "Merger Agreement"), Rockies House Sub will be merged with and into Silver Company (the "Merger"), which will be the surviving corporation in the Merger. In the Merger, Rockies Sub, the sole stockholder of Rockies House Sub, will receive 3,363,262 shares (the "Merger Consideration Shares") of the Class B Common Stock, par value $.01 per share, of Silver Company (the "Silver Company Non-Voting Stock"). At the time of the Merger, Rockies House Sub will own 17,566,702 shares of House Common Stock and 20,000,000 shares of House Class B Common Stock (collectively, the "House Shares"). Notwithstanding the foregoing, the Merger Consideration Shares to be received by Rockies in the Merger shall be such amount as is necessary to cause the percentage equity economic interest of each of Rockies and Dodgers in Silver Company to be in proportion to the relative fair market values of the contributions of the parties to Silver Company; provided, that notwithstanding the provisions 2 of the Prior Agreement the value of the Silver Option shall be determined by reference to the imputed value of a share of Silver Common Stock to be received by Silver Company in the Exchange. (b) Subject to the satisfaction of certain conditions contained herein and contained in the definitive exchange agreement entered into among Silver Company and Silver in connection herewith (the "Exchange Agreement"), immediately following the Merger, Silver Company will exchange (the "Exchange") the 20,000,000 shares of House Class B Common Stock for 6,082,000 shares of Silver Class B Stock and the 17,566,702 shares of House Common Stock for 4,855,436 shares of Silver Common Stock (collectively, the "Exchange Shares"). (c) Immediately following Rockies' receipt of the Merger Consideration Shares in the Merger, Rockies will transfer up to one-third of the aggregate number of shares of Silver Company Non-Voting Stock owned by it (subject to adjustment in the event the SP Merger (as defined below) is not consummated) to a corporation ("Newco") which will be wholly owned by Lasorda in exchange for a non-interest bearing secured promissory note of Newco in the principal amount of $1,000 (the "Note"). The Note and the related pledge and security agreement will have such terms and provisions as may be reasonably acceptable to Rockies, which terms and provisions shall include, among other matters, that the Note will (i) be non-recourse to Newco, (ii) be secured by a pledge of all of the shares of Silver Company Non-Voting Stock transferred to Newco (the "Pledged Silver Company Shares") and by a pledge of all of the authorized and issued shares of Newco (the "Pledged Newco Shares", and collectively with the Pledged Silver Company Shares, the "Pledged Shares"), (iii) mature on the 20th anniversary of the date of issue and (iv) not be prepayable at the option of the holder. The Pledged Shares may not be assigned, transferred, sold, disposed of, pledged or otherwise encumbered in any manner (including, but not limited to, with respect to the voting thereof) and any attempted disposition of the Pledged Shares shall constitute a breach of the pledge agreement entitling Rockies to exercise upon such pledge and obtain full ownership of such Pledged Shares immediately and without any notice to Lasorda or Newco and, in the event Lasorda or Newco receive any proceeds from an attempted disposition of such Pledged Shares, then Lasorda and/or Newco shall be deemed to hold such proceeds in a constructive trust for the benefit of Rockies and shall promptly pay over to Rockies the amount of any such proceeds. In addition, in the event any dividends are paid or distributions made on the Pledged Shares, then notwithstanding the provisions of the pledge agreement, such dividends or distributions will be paid or distributed directly to Rockies. Newco will have no other assets or liabilities and will engage in no other business except as contemplated by this paragraph (c). Rockies will have a right to purchase, and Lasorda will have a right to require Rockies to purchase, the Pledged Silver Company Shares at any 3 time for $1,000 in cash. Rockies will have the right to purchase all of the outstanding shares of capital stock of Newco at any time for $1,000 in cash. To the extent that the Pledged Shares are entitled to vote upon or consent to any matter to be presented to the stockholders of Newco or Silver Company, as the case may be, Lasorda and/or Newco hereby grants to Rockies (or any person to which the Note is transferred) an irrevocable proxy (which proxy shall be deemed coupled with an interest) to vote such shares or consent to any action. The Note shall be transferable at any time without the consent of Newco and any transferee shall succeed to any and all of Rockies rights with respect to the Note and the Pledged Shares and the other related arrangements contemplated by this paragraph (c). The Note and the other arrangements described in this paragraph (c) shall have such other terms and conditions as the parties may reasonably agree in furtherance of the foregoing. 2. Restructuring Transaction. (a) At any time following the consummation of the Exchange that Rockies is no longer a subsidiary of Rockies' Parent (and provided that a Change in Law has not theretofore otherwise occurred), but in no event prior to the earliest to occur of (i) the termination of the Agreement and Plan of Merger between Savoy Pictures Entertainment, Inc. ("Savoy"), Silver and a wholly owned subsidiary of Silver (the "SP Merger Agreement"), (ii) the eighteen month anniversary of the consummation of the merger between Savoy, Silver and a wholly owned subsidiary of Silver (the "SP Merger"), and (iii) the consummation of the sale, transfer or other disposition by Silver of that number of Silver's broadcast licenses (including any such licenses acquired by Silver in connection with the SP Merger) (the "Licenses") required in connection with any divesture of Licenses which is required pursuant to any Federal Communications Commission ("FCC") rule or regulation, or in accordance with any conditions or requirements specified in any waiver therefrom, as a result of Silver exceeding, as a result of the consummation of the SP Merger, the limitation on the number of Licenses permitted to be owned by any individual or entity, Rockies may request by written notice to Lasorda and Silver that Lasorda use all reasonable efforts to take, and, subject to any applicable fiduciary duties of Lasorda, as a director or officer of Silver, to the stockholders of Silver, use all reasonable efforts to cause Silver to take, such actions as may be reasonably necessary, including, but not limited to, to file any required applications with the FCC and any other governmental or regulatory agency, to obtain any required FCC or other governmental or regulatory consents and approvals, and to undertake any restructuring of Silver's assets, liabilities and businesses, in order that Rockies would be permitted to exercise ownership rights (including voting rights) with respect to the Silver Securities owned by it 4 (including its pro rata interest in any Silver Securities held by the Silver Company) (the "Restructuring Transaction"). (b) Simultaneously with or immediately following the consummation of the Restructuring Transaction, Rockies or its designee shall be required to purchase (and Dodgers will be required to sell) Dodgers' entire equity interest in the Silver Company for an amount equal to the Dodgers Interest Purchase Price. (c) The terms of the Silver Company Non-Voting Stock shall provide that (i) such shares are convertible at the option of the holder thereof into a like number of shares of voting common stock of Silver Company, subject only to the receipt of any required governmental or regulatory consents or approvals and the termination of any applicable waiting period under the HSR Act required in connection with such conversion and (ii) following notice by the holder thereof to Silver Company of its intention to convert such shares, Silver Company shall, and shall cause each of its subsidiaries and affiliates (including Silver) to, seek any required consents or approvals, and make any and all required filings and obtain any and all such consents and approvals with or from any governmental or regulatory agency, including the FCC, and the termination of any applicable waiting period under the HSR Act in connection with such conversion, in each case as promptly as practicable. (d) If a Restructuring Transaction has not occurred within 365 days following the notice referred to in paragraph 2(a) (or, if earlier, such time as Rockies reasonably determines, after consultation with Lasorda, that Lasorda has ceased to use his reasonable efforts to consummate a Restructuring Transaction as required by this Section 2), and a Change in Law has not otherwise occurred by such date, then notwithstanding the restrictions on transfer of the Silver Securities described under the caption "Transfers of Silver Securities" in the Prior Agreement, the Rockies Stockholder Group will be entitled to sell any and all of its Silver Securities (including its entire equity interest in the Silver Company), subject only to (i) a right of first refusal of Dodgers (or its designee), (ii) Rockies' obligation to swap shares of Silver Class B Stock so proposed to be sold for shares of Silver Common Stock owned by the Dodgers Stockholder Group pursuant to the paragraph of the Prior Agreement entitled "Share Exchange" (but without regard to the limitation in the last sentence thereof), and (iii) Rockies' further obligation to convert shares of Silver Class B Stock into shares of Silver Common Stock prior to such a sale (other than to a member of the Dodgers Stockholders Group). Such person or entity (other than a member of the Dodgers Stockholder Group) shall acquire such Silver Securities and/or interest in the Silver Company free and clear of any rights or obligations under the Prior Agreement, this Agreement or the Silver Stockholders Agreement; provided, that such person or entity shall be entitled to such reasonable demand and incidental registration rights with respect to its Silver Securities (including those shares represented by 5 its interest in the Silver Company) as was Rockies under the Prior Agreement and/or the Silver Stockholders Agreement prior to such sale. Except as specifically provided in this paragraph, the sale by Rockies permitted herein will not otherwise alter the rights and obligations of the parties set forth in the Prior Agreement (as amended by this Agreement). 3. Management Structure. The Silver Stockholders Agreement shall provide that upon the earlier to occur of (i) the Restructuring Transaction (which will result in a Change in Law following the consummation thereof) and (ii) a Change in Law (which the parties agree shall include, for purposes of this Agreement and the Prior Agreement, any change in law, rule or regulation, or change in the circumstances of any party or Silver (including, but not limited to, in the case of Rockies, a change in the ownership of a majority of the outstanding common stock of Rockies) or any other event, the effect of which is or would be to permit Rockies or any holder of Rockies' interest in the Silver Company to exercise ownership rights (including voting rights) with respect to the Silver Securities owned by it (including its pro rata portion of any Silver Securities held by the Silver Company)), whether before or after the Merger and/or the Exchange, the management rights of the parties with respect to Silver shall be as follows: (i) Lasorda thereafter would be entitled to designate a mutually agreeable number of the members of the Board of Directors of Silver and Rockies would be entitled to designate the remainder of the directors of Silver (which number designated by Rockies shall, in any event, constitute a majority of the number of directors constituting the entire Silver Board of Directors). In the event that (A) any of Rockies' designees on the Silver Board of Directors vote in a manner inconsistent with the expressed preference of Lasorda (or, unless required by applicable law, abstain from voting) with respect to any matter voted upon by the Silver Board of Directors, and the outcome of such vote is inconsistent with such preference or (B) any member of the Rockies Stockholder Group votes any of its Silver Securities with respect to any matter presented for a vote of the stockholders of Silver in a manner inconsistent with the expressed preference of Lasorda (or abstains from voting) and the outcome of such vote is inconsistent with such preference (including, except as set forth below, decisions relating to Lasorda's employment with Silver), in either case other than (x) any decision to terminate Lasorda's employment with Silver for Cause, (y) any decision relating to Lasorda's compensation by Silver or any of its subsidiaries (except as provided for by the Silver Term Sheet), or (z) any decision relating to a Fundamental Matter (except as set forth in (x), (y) and (z) above, a "Qualifying Disagreement"), then Lasorda shall be entitled to deliver notice of his election (a "Management Election") to exercise his management 6 rights as a result of the occurrence of such Qualifying Disagreement in the manner and to the extent set forth below. (ii) Following a Management Election by Lasorda: (A) Lasorda shall be entitled to exercise his voting authority or authority to act by written consent over all Silver Securities then owned by each member of the Rockies Stockholder Group and the Dodgers Stockholder Group on all matters submitted to a vote of Silver stockholders, or by which Silver stockholders may act by written consent, pursuant to a conditional proxy (which proxy shall be valid for the full remaining term that the Prior Agreement and the Silver Stockholders Agreement that supersedes (to the extent set forth therein) the Prior Agreement is effective and shall be irrevocable and coupled with an interest for purposes of Section 212 of the DGCL), provided, that each Stockholder agrees, and agrees to cause each member of its Stockholder Group, to take or cause to be taken all reasonable actions required (x) for the election of a slate of directors of Silver, two of whom will be designated by Rockies and the remainder of whom will be designated by Lasorda, and (y) to prevent the taking of any action by Silver or its subsidiaries with respect to a Fundamental Matter without the consent of both Stockholders; and (B) subject to applicable law and fiduciary duties and except with respect to any Fundamental Matters and any matter referred to in clause (x) or (y) under clause (i) above, Rockies shall be required to use its reasonable best efforts to cause its designees on the Silver Board of Directors to vote with respect to any matter presented to a vote of the Silver Board of Directors in the manner instructed by Lasorda. (iii) Lasorda shall cease to be entitled to exercise any rights under this Agreement or the Stockholders Agreement with respect to the matters set forth in this Section 3 upon the occurrence of any of the following: (x) Lasorda is no longer Chairman of the Board and/or Chief Executive Officer and/or President of Silver and (y) the Dodgers Stockholder Group ceases to own its Eligible Stockholder Amount of Silver Securities. (iv) Each of Rockies and Lasorda agrees, and agrees to cause each member of its Stockholder Group, to take all reasonable actions required (including to vote or execute a written consent with respect to the Silver Securities held by the Silver Company) in order to give effect to the provisions of this Section 3. In this connection, (A) following the earlier to occur of the events specified in clauses (i) and (ii) of the introductory paragraph of this Section 3, if so requested by Rockies, all representatives of Lasorda and/or the Dodgers Stockholder Group on the Silver Board of Directors shall immediately resign (other than the representative(s) to be designated by Lasorda pursuant to clause (i)) and (B) 7 following a Management Election, if so requested by Lasorda, all representatives of Rockies on the Silver Board of Directors shall resign immediately (other than two persons designated by Rockies). 4. Contribution to Silver Company. In the event that (a) a Change in Law occurs prior to the date upon which Rockies is required to transfer the Silver Option and cash to the Silver Company and (b) the change in structure described in this Section would not result in any material delay or additional review of Lasorda's application to the FCC regarding a change in control of Silver (the "CINC Approval"), or otherwise materially delay the consummation of such change in control, then Rockies shall not be required to make such contribution but shall instead exercise the Silver Option promptly following the receipt of the CINC Approval. All shares of Silver Class B Stock received by it upon such exercise shall be held by Rockies and shall immediately become subject to the Silver Stockholders Agreement. In such event, the parties shall use their respective commercially reasonable efforts to amend the Merger Agreement and the Exchange Agreement to provide that Rockies shall exchange the House Shares directly with Silver in exchange for the Exchange Shares on the basis set forth in the Exchange Agreement, mutatis mutandis. Such transaction would be structured in a manner reasonably acceptable to the parties in light of relevant tax and regulatory considerations. In such event, the management structure described in Section 3 would apply as to the parties respective management rights as to Silver. 5. Fundamental Matters. Upon the consummation of the Merger and the Exchange, the indicated paragraphs of the definition of the term "Fundamental Matters" in the Prior Agreement shall be amended in their entirety to read as follows: "(2) The acquisition, disposition (including pledges), directly or indirectly, by Silver or any of its subsidiaries, of any assets (including debt and/or equity securities) or business (by merger, consolidation or otherwise), the grant or issuance of any debt or equity securities of Silver or any of its subsidiaries, the redemption, repurchase or reacquisition of any debt or equity securities of Silver or any of its subsidiaries by Silver or any such subsidiary, or the incurrence of any indebtedness, or any combination of the foregoing, in any such case, in one transaction or any series of transactions in a six month period, with a value of 10% or more of the market value of Silver's outstanding equity securities at the time of such transaction." "(4) Engaging in any line of business other than media, communications and entertainment products, services and programming, and electronic retailing." 8 6. Covenant of Lasorda. Lasorda hereby covenants and agrees with Rockies that, if so requested by Rockies, following the Merger he will use his reasonable best efforts to cause one designee of Rockies to serve or continue to serve on the Board of Directors of House. 7. Consent of Rockies and Lasorda Regarding Certain Transactions. For purposes of the provisions of the Prior Agreement and this Agreement regarding Dodgers Management Rights and Fundamental Matters, each of Rockies and Lasorda hereby consents and agrees to the taking of any action by any of Lasorda, the Silver Company or Silver, which action is reasonably necessary or appropriate to approve and consummate the transactions (including the related amendments to the Silver Certificate of Incorporation and other actions to be taken by the Silver stockholders (including the approval by Silver stockholders of the additional options to purchase Silver Common Stock to be granted to Lasorda (which grant shall be made in respect of, and subject to, the consummation of each of the Exchange and the SP Merger), as approved by the Compensation Committee of the Silver Board of Directors in connection herewith)) contemplated by each of the Merger Agreement, the Exchange Agreement and the SP Merger Agreement, provided, that the applicable parties shall not enter into, or permit any material amendment to, or waiver or modification of material rights or obligations under the SP Merger Agreement without the prior written consent of Rockies (which consent shall not be unreasonably withheld). 8. Reasonable Efforts. Each of Rockies and Lasorda agrees to use, and to cause each of its respective officers, directors, employees, affiliates and representatives to use, all reasonable efforts and take all reasonable actions required or necessary to consummate the transactions contemplated by this Agreement and the Prior Agreement (including, without limitation, the Merger and the Exchange) and to cause the conditions to each of the respective parties' obligations to consummate the foregoing transactions to be satisfied. 9. Liabilities under the Federal Securities Laws. The exercise of any rights hereunder or under the Prior Agreement or the Silver Stockholders Agreement by either Rockies or Dodgers and/or Lasorda shall be subject to such reasonable delay as may be required to prevent the other Stockholder Group from incurring any liability under the federal securities laws. 10. Miscellaneous. This agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements to be fully performed therein and without regard to principles of conflict of laws. This Agreement, together with the Prior Agreement, incorporates the entire understanding of the parties with respect to the subject matter herein and therein and supersedes all previous understandings, discussions, negotiations and agreements with respect to 9 such subject matter. The Prior Agreement, as amended pursuant to the specific terms of this Agreement, is hereby ratified and confirmed in all respects; provided, however, that in the event of any conflict between the terms of this Agreement and the terms of the Prior Agreement, the terms of this Agreement shall be deemed to supersede the conflicting terms of the Prior Agreement. This Agreement may be executed in counterparts, (including its rights and obligations under the Prior Agreement) each of which shall be deemed an original and all of which shall constitute one and the same instrument. Except as otherwise provided herein, neither party may assign this Agreement without the prior written consent of the other party. 10 If the foregoing is acceptable to you, please execute the copy of this agreement in the space below, at which time this Agreement will constitute a binding agreement between us. Very truly yours, LIBERTY MEDIA CORPORATION By: /s/ Robert R. Bennett ------------------------------- Name: Robert R. Bennett Title: Executive Vice President ACCEPTED AND AGREED this 27th day of November, 1995 By: /s/ Barry Diller ---------------------------- Barry Diller EX-99.7 6 AGREEMENT AND PLAN OF MERGER 1 EXHIBIT 7 AGREEMENT AND PLAN OF MERGER DATED AS OF NOVEMBER 27, 1995 BY AND AMONG SILVER MANAGEMENT COMPANY, LIBERTY PROGRAM INVESTMENTS, INC. AND LIBERTY HSN, INC. 2 TABLE OF CONTENTS
Page ---- ARTICLE I THE MERGER AND RELATED MATTERS . . . . . . . . . . . . . . . . . . . . 2 SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 SECTION 1.2 Conversion of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 SECTION 1.3 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 SECTION 1.4 Certificate of Incorporation of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . 3 SECTION 1.5 Bylaws of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 SECTION 1.6 Directors and Officers of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . 4 SECTION 1.7 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ARTICLE II REPRESENTATIONS AND WARRANTIES OF SILVER CO. . . . . . . . . . . . . . . . . . 4 SECTION 2.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 SECTION 2.2 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 SECTION 2.3 Validity of Merger Consideration Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 SECTION 2.4 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 SECTION 2.5 No Approvals or Notices Required; No Conflict with Instruments . . . . . . . . . . . . . . . . . 6 SECTION 2.6 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ARTICLE III REPRESENTATIONS AND WARRANTIES OF ROCKIES SUB AND ROCKIES HOUSE SUB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 SECTION 3.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 SECTION 3.2 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 3.3 Capitalization; Validity of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 3.4 Assets of Rockies House Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 3.5 Liabilities of Rockies House Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 SECTION 3.6 No Approvals or Notices Required; No Conflict with Instruments . . . . . . . . . . . . . . . . . 9 SECTION 3.7 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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Page ---- ARTICLE IV COVENANTS AND OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . 10 SECTION 4.1 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 4.2 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 4.3 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 4.4 House Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 4.5 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 4.6 No Amendment of Exchange Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 ARTICLE V CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 5.1 Conditions Precedent to the Obligations of Silver Co., Rockies Sub and Rockies House Sub . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (a) Absence of Injunctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 (b) No Proceedings or Adverse Enactments . . . . . . . . . . . . . . . . . . . . . . . . . . 13 (c) HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 (d) Receipt of Governmental Approvals and Consents . . . . . . . . . . . . . . . . . . . . . 13 (e) Satisfaction of Conditions to the Exchange . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 5.2 Conditions Precedent to the Obligations of Rockies Sub and Rockies House Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 (a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 13 (b) Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (c) Silver Co. Capital Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (d) Capitalization of Silver Co. and Validity of Stock Prior to Closing. . . . . . . . . . 14 (e) No Impediments to the Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (f) No Proceedings or Adverse Enactments Affecting Merger Consideration Shares . . . . . . . 14 (g) Lasorda Management Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (h) Officer's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (i) Other Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (j) No Adverse Change or Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 (k) Audited Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 (l) Consummation of SP Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 5.3 Conditions Precedent to the Obligations of Silver Co . . . . . . . . . . . . . . . . . . . . . . 16 (a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 16 (b) Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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Page ---- (c) Officer's Certificates . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 (d) Other Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 ARTICLE VI TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 6.1 Termination and Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 6.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 7.1 Failure to Consummate the Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 7.2 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 7.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 7.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 7.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 7.6 Assignment; Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 7.7 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 7.8 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 7.9 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 7.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 7.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 7.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 7.13 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-iii- 5 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER, dated as of November 27, 1995, by and among Silver Management Company, a Delaware corporation ("Silver Co."), Liberty Program Investments, Inc., a Wyoming corporation ("Rockies Sub") and an indirect wholly-owned subsidiary of Liberty Media Corporation, a Delaware corporation ("Rockies"), and Liberty HSN, Inc., a Colorado corporation and a wholly-owned subsidiary of Rockies Sub ("Rockies House Sub"). RECITALS: WHEREAS, Rockies House Sub owns 17,566,702 shares of the Common Stock, par value $.01 per share (the "House Common Stock"), of Home Shopping Network, Inc., a Delaware corporation ("House"), and 20,000,000 shares of the Class B Common Stock, par value $.01 per share (the "House Class B Stock"), of House (collectively, the "House Shares"); WHEREAS, the House Board of Directors has approved the transactions contemplated hereby and the Exchange Agreement (as hereinafter defined) being entered into simultaneously herewith (including for purposes of Section 203 of the Delaware General Corporation Law (the "DGCL")); WHEREAS, immediately following the consummation of the merger contemplated hereby, Silver Co. desires to exchange (the "Exchange") with Silver King Communications, Inc., a Delaware corporation ("Silver"), all of the shares of House Common Stock which it will acquire as a result of such merger for newly issued shares of Common Stock, par value $.01 per share (the "Silver Common Stock"), of Silver and all of the shares of House Class B Stock which it will acquire as a result of such merger for newly issued shares of Class B Common Stock, par value $.01 per share (the "Silver Class B Stock"), of Silver, all pursuant to that certain Exchange Agreement, dated as of the date hereof, by and between Silver Co. and Silver (the "Exchange Agreement"); WHEREAS, Rockies Sub, Rockies House Sub and Silver Co. wish to set forth their agreement as to the terms and conditions upon which Rockies House Sub will be merged with and into Silver Co., as a result of which merger Silver Co. will be the surviving corporation. NOW, THEREFORE, in consideration of the premises and of the respective covenants, representations, warranties and agreements herein contained, the parties hereto agree as follows: 6 ARTICLE I THE MERGER AND RELATED MATTERS SECTION 1.1 The Merger. (a) Upon the terms and subject to the conditions of this Agreement, at the Effective Time (as such term is defined in Section 1.1(b) hereof), Rockies House Sub shall be merged with and into Silver Co. (the "Merger") in accordance with the provisions of the DGCL and the Colorado Business Corporation Act (the "Colorado Code"), the separate corporate existence of Rockies House Sub shall cease, and Silver Co. shall continue as the surviving corporation under the laws of the State of Delaware (the "Surviving Corporation"). (b) The Merger shall become effective at the time (the "Effective Time") of the later to occur of (i) the filing with the Delaware Secretary of State of a certificate of merger (the "Certificate of Merger") in such form as is required by, and executed in accordance with, the applicable provisions of the DGCL and (ii) the filing of appropriate articles of merger (the "Articles of Merger") with the Colorado Secretary of State in accordance with the provisions of Section 7-111-105 of the Colorado Code, or at such later time as may be agreed to by Rockies Sub and Silver Co. and specified in the Certificate of Merger and the Articles of Merger. Provided that this Agreement has not been terminated pursuant to Article VI, the parties will cause the Certificate of Merger to be filed with the Delaware Secretary of State and the Articles of Merger to be filed with the Colorado Secretary of State as soon as practicable after the Closing (as defined in Section 1.7). (c) The Merger shall have the effects set forth in Sections 259, 260 and 261 of the DGCL and in Section 7-111-106 of the Colorado Code. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the properties, rights, privileges, powers and franchises of Rockies House Sub and Silver Co. shall vest in the Surviving Corporation, and all debts, liabilities and duties of Rockies House Sub and Silver Co. shall become the debts, liabilities and duties of the Surviving Corporation. If, at any time after the Effective Time, the Surviving Corporation considers or is advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of either Rockies House Sub or Silver Co., or otherwise to carry out the intent and purposes of this Agreement, the officers and directors of the Surviving Corporation will be authorized to execute and deliver, in the name and on behalf of each of Rockies House Sub and Silver Co., all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of each of Rockies House Sub and Silver Co., all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise carry out the intent and purposes of this Agreement. -2- 7 SECTION 1.2 Conversion of Stock. At the Effective Time: (a) By virtue of the Merger and without any action on the part of the holder thereof, the outstanding shares of common stock of Rockies House Sub, par value $1.00 per share, shall be converted into and represent the right to receive, and shall be exchangeable for, as provided in Section 1.3 hereof, an aggregate of 3,363,262 newly issued, fully paid and nonassessable shares of the Class B Common Stock, par value $.01 per share of Silver Co. (the "Silver Co. Class B Common Stock"). The shares of Silver Co. Class B Common Stock to be issued as consideration in the Merger are collectively referred to herein as the "Merger Consideration Shares." At the Effective Time, all such shares of common stock of Rockies House Sub shall automatically be cancelled and retired and cease to exist. Following the Effective Time, such shares shall no longer be deemed to be outstanding, and each holder of a certificate representing any such shares shall cease to have any rights with respect thereto, except the right to receive the shares of Silver Co. Class B Common Stock to be issued in consideration therefor upon the surrender of such certificate in accordance with Section 1.3 hereof, without interest. (b) Each share of Class A Common Stock, par value $.01 per share of Silver Co. (the "Silver Co. Class A Common Stock") then issued and outstanding shall remain issued and outstanding and unchanged by the Merger. (c) Each share of Class B Common Stock, par value $.01 per share, of Silver Co. (the "Silver Co. Class B Common Stock") then issued and outstanding shall remain issued and outstanding and unchanged by the Merger. SECTION 1.3 Exchange of Certificates. At the Closing (as defined below), upon surrender to Silver Co. of the certificates which immediately prior to the Effective Time represented the outstanding shares of common stock of Rockies House Sub, Silver Co. shall deliver to Rockies Sub the Merger Consideration Shares payable in respect of such shares. The stock certificate or certificates representing the Merger Consideration Shares delivered to Rockies Sub pursuant to this Agreement shall be dated the Closing Date (as defined below) and shall be issued to and registered in the name of Rockies Sub, or a designee of Rockies Sub, if Rockies Sub so directs. SECTION 1.4 Certificate of Incorporation of the Surviving Corporation. The certificate of incorporation of Silver Co. as in effect immediately prior to the Effective Time shall be the certificate of incorporation of the Surviving Corporation after the Merger until thereafter amended as provided by law. SECTION 1.5 Bylaws of the Surviving Corporation. The bylaws of Silver Co. as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Corporation after the Merger until thereafter amended as provided by law. -3- 8 SECTION 1.6 Directors and Officers of the Surviving Corporation. The directors and officers of Silver Co. immediately prior to the Effective Time shall be (until their respective successors are elected and qualified) the directors and officers of the Surviving Corporation after the Merger. SECTION 1.7 Closing. The Closing of the transactions contemplated by this Agreement (the "Closing") shall take place (i) at the offices of Baker & Botts, L.L.P., 885 Third Avenue, New York, New York 10022, at 10:00 a.m., local time, on the second business day following the day on which the last of the conditions set forth in Sections 5.1(c), 5.1(d), 5.1(e), 5.2(b) (other than any actions to be taken at the Closing), 5.2(c), 5.2(e), 5.2(l) and 5.3(b) (other than any actions to be taken at the Closing) hereof is fulfilled or waived (subject to applicable law) or (ii) at such other time and place and on such other date as Silver Co. and Rockies Sub shall agree (the "Closing Date"). ARTICLE II REPRESENTATIONS AND WARRANTIES OF SILVER CO. Silver Co. hereby makes the following representations and warranties to Rockies Sub and Rockies House Sub: SECTION 2.1 Organization and Qualification. Silver Co. (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation; (ii) has all requisite corporate power and authority to carry on its business as it is now conducted and to own, lease and operate the properties it now owns, leases or operates at the places currently located and in the manner currently used and operated and (iii) is duly qualified or licensed and in good standing to do business in each jurisdiction in which the properties owned, leased or operated by it or the nature of the business conducted by it makes such qualification or license necessary. Silver Co. has delivered or made available to Rockies Sub true and complete copies of its certificate of incorporation and bylaws, each as amended to date and currently in effect (respectively, the "Silver Co. Charter" and the "Silver Co. Bylaws"). SECTION 2.2 Authorization and Validity of Agreement. The execution, delivery and performance of this Agreement by Silver Co. and the consummation of the transactions contemplated hereby have been duly and validly authorized by the board of directors of Silver Co. and by the requisite vote of the stockholders of Silver Co. entitled to vote thereon. Silver Co. has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the Merger and the other transactions contemplated hereby. No other corporate proceedings on the part of Silver Co. or any of its subsidiaries are necessary to authorize the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Silver Co. and, assuming the due authorization, execution and delivery of this -4- 9 Agreement by Rockies Sub and Rockies House Sub, constitutes a legal, valid and binding obligation of Silver Co. enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights generally or by principles governing the availability of equitable remedies. SECTION 2.3 Validity of Merger Consideration Shares. The shares of Silver Co. Class B Common Stock to be issued to Rockies Sub pursuant to the Merger, upon issuance and delivery in accordance with the terms and conditions of this Agreement, will be duly authorized, validly issued, fully paid and non-assessable, and except as contemplated by this Agreement or the definitive term sheet attached to the letter to Barry Diller ("Lasorda") from Rockies, dated August 24, 1995, as amended by the letter to Lasorda, dated as of the date hereof, pursuant to which Rockies and Lasorda have entered into certain agreements with respect to the equity securities of Silver, all as described therein (as amended, the "Term Sheet"), will be free of any liens, claims, charges, security interests, pledges, voting or stockholder agreements, encumbrances or equities of any kind whatsoever, will not be issued in violation of any preemptive rights and will vest in Rockies Sub full rights with respect thereto, including the right to vote such Merger Consideration Shares on all matters properly presented to the stockholders of Silver Co. or to consent to the taking of certain actions, all to the extent set forth in the Silver Co. Charter. The shares of Silver Co. Class B Common Stock to be issued in the Merger will have identical rights, powers, privileges and preferences as the Silver Co. Class B Common Stock outstanding immediately prior to the Closing Date. SECTION 2.4 Capitalization. As of the Closing Date, the authorized capital stock of Silver Co. shall consist of (i) 1 share of Silver Co. Class A Common Stock, of which 1 share shall be issued and outstanding and held beneficially and of record by Arrow Holdings, LLC, a California limited liability company ("Arrow") and (ii) 3,978,262 shares of Silver Co. Class B Common Stock, of which 615,000 shares shall be issued and outstanding and held beneficially and of record by Rockies Sub (assuming the contribution of the Silver Option and cash equal to the exercise price thereof pursuant to (and as defined in) the Term Sheet); as of the Closing Date, no other shares of capital stock of Silver Co. shall be issued and outstanding or held by Silver Co. in its treasury. The respective rights, preferences, privileges, limitations and restrictions of the Silver Co. Class A Common Stock and the Silver Co. Class B Common Stock shall be as set forth in the Silver Co. Charter. Except pursuant to this Agreement and the transactions contemplated by the Term Sheet, as of the Closing Date, there shall be no outstanding or authorized subscriptions, options, warrants, calls, rights, commitments or any other agreements of any character to or by which Silver Co. will be a party or by which it shall be bound which, directly or indirectly, will obligate Silver Co. to issue, deliver or sell or cause to be issued, delivered or sold any shares of capital stock or other equity interests of Silver Co. or any securities convertible into, or exercisable or exchangeable for, or evidencing the right to subscribe for any such shares of capital stock or other equity interests of Silver Co. or obligating Silver Co. to grant, extend or enter into any such subscription, option, warrant, call or right. All shares of Silver Co. Class A Common Stock and Silver Co. Class B Common Stock subject to issuance -5- 10 as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and non-assessable and not subject to preemptive rights. Other than as contemplated by the Term Sheet or the Silver Co. Charter, as of the Closing Date, there shall be no obligations, contingent or otherwise, of Silver Co. or any of its subsidiaries to repurchase, redeem or otherwise acquire any shares of Silver Co. Class A Common Stock or Silver Co. Class B Common Stock or the capital stock of any subsidiary or to provide funds to make any material investment (in the form of a loan, capital contribution or otherwise) in any such subsidiary or any other entity other than guarantees of obligations of subsidiaries entered into in the ordinary course of business. SECTION 2.5 No Approvals or Notices Required; No Conflict with Instruments. The execution and delivery by Silver Co. of this Agreement do not, and the performance by Silver Co. of its obligations hereunder and the consummation of the transactions contemplated hereby, including the issuance of the Merger Consideration Shares, will not: (i) conflict with or violate the Silver Co. Charter or the Silver Co. Bylaws or the charter or bylaws of any subsidiary of Silver Co., in each case as amended to date; (ii) require any consent, approval, order or authorization of or other action by any court, administrative agency or commission or other governmental authority or instrumentality, foreign, United States federal, state or local (each such entity a "Governmental Entity" and each such action a "Governmental Consent") or any registration, qualification, declaration or filing with or notice to any Governmental Entity (a "Governmental Filing"), in each case on the part of or with respect to Silver Co., the absence or omission of which would, either individually or in the aggregate, have a material adverse effect on the transactions contemplated hereby or on the business, assets, results of operations or financial condition of Silver Co., except for (A) the filing of the Certificate of Merger with the Delaware Secretary of State, (B) the filing of the Articles of Merger with the Colorado Secretary of State, and (C) the Governmental Filings required pursuant to the pre-merger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder (the "HSR Act") and the expiration or termination of any applicable waiting period with respect to the Merger under the HSR Act; (iii) require, on the part of Silver Co., any consent by or approval of (a "Contract Consent") or notice to (a "Contract Notice") any other person or entity (other than a Governmental Entity), the absence or omission of which would, either individually or in the aggregate, have a material adverse effect on the transactions contemplated hereby or on the business, assets, results of operations or financial condition of Silver Co.; (iv) conflict with, result in any violation or breach of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or the loss of any material benefit under or -6- 11 the creation of any lien, security interest, pledge, charge, claim, option, right to acquire, restriction on transfer, voting restriction or agreement, or any other restriction or encumbrance of any nature whatsoever on any assets pursuant to (any such conflict, violation, breach, default, right of termination, cancellation or acceleration, loss or creation, a "Violation") any "Contract" (which term shall mean and include any note, bond, indenture, mortgage, deed of trust, lease, franchise, permit, authorization, license, contract, instrument, employee benefit plan or practice, or other agreement, obligation, commitment or concession of any nature) to which Silver Co. is a party, by which Silver Co. or any of its assets or properties is bound or pursuant to which Silver Co. is entitled to any rights or benefits, except for such Violations which would not, either individually or in the aggregate, have a material adverse effect on the transactions contemplated hereby or on the business, assets, results of operations or financial condition of Silver Co.; or (v) assuming that the Governmental Consents and Governmental Filings specified in clause (ii) of this Section 2.5 are obtained, made and given (and any related waiting period is terminated or otherwise expires), result in a Violation of, under or pursuant to any law, rule, regulation, order, judgment or decree applicable to Silver Co. or by which any of its properties or assets are bound. SECTION 2.6 Brokers or Finders. No agent, broker, investment banker, financial advisor or other person or entity is or will be entitled, by reason of any agreement, act or statement by Silver Co. or any of its directors, officers, employees or affiliates, to any financial advisory, broker's, finder's or similar fee or commission, to reimbursement of expenses or to indemnification or contribution in connection with any of the transactions contemplated by this Agreement, except as set forth in Schedule 2.6 hereto. ARTICLE III REPRESENTATIONS AND WARRANTIES OF ROCKIES SUB AND ROCKIES HOUSE SUB Each of Rockies Sub and Rockies House Sub hereby makes the following representations and warranties to Silver Co.: SECTION 3.1 Organization and Qualification. Each of Rockies Sub and Rockies House Sub (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation; (ii) has all requisite corporate power and authority to carry on its business as it is now conducted and to own, lease and operate the properties it now owns, leases or operates at the places currently located and in the manner currently used and operated and (iii) is duly qualified or licensed and in good standing to do business in each jurisdiction in which the properties owned, leased or operated by it or the nature of the business conducted by it makes such qualification or license necessary. Each of Rockies Sub and Rockies -7- 12 House Sub has delivered or made available to Silver Co. true and complete copies of its certificate of incorporation and bylaws, each as amended to date and currently in effect (respectively, the "Rockies Sub Charter," the "Rockies House Sub Charter," the "Rockies Sub Bylaws" and the "Rockies House Sub Bylaws." SECTION 3.2 Authorization and Validity of Agreement. The execution, delivery and performance of this Agreement by each of Rockies Sub and Rockies House Sub and the consummation of the transactions contemplated hereby have been duly and validly authorized by the board of directors of each of Rockies Sub and Rockies House Sub and by the stockholder(s) of Rockies House Sub. Each of Rockies Sub and Rockies House Sub has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the Merger and the other transactions contemplated hereby. No other corporate proceedings on the part of either Rockies Sub or Rockies House Sub or any of their respective subsidiaries are necessary to authorize the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by each of Rockies Sub and Rockies House Sub and, assuming the due authorization, execution and delivery of this Agreement by Silver Co., constitutes a legal, valid and binding obligation of each of Rockies Sub and Rockies House Sub, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights generally or by principles governing the availability of equitable remedies. SECTION 3.3 Capitalization; Validity of Stock. The authorized capital stock of Rockies House Sub consists solely of 5000 shares of common stock, par value $1.00 per share (the "Rockies House Sub Common Stock"), of which 1000 shares of Rockies House Sub Common Stock are issued and outstanding, all of which are held of record and owned beneficially by Rockies Sub. No shares are reserved for issuance upon exercise of outstanding stock options, no shares are held by Rockies House Sub in its treasury, and no shares are held by any subsidiary of Rockies House Sub. The shares of Rockies House Sub Common Stock held by Rockies Sub are duly authorized, validly issued, fully paid and non-assessable, and are held by Rockies Sub free of any liens, claims, charges, security interests, pledges, voting or stockholder agreements, encumbrances or equities of any kind whatsoever. Such shares were not issued in violation of any preemptive rights. SECTION 3.4 Assets of Rockies House Sub. Rockies House Sub's assets consist solely of the House Shares. Rockies House Sub is the record and beneficial owner of the House Shares, and such shares are held by Rockies House Sub free of any liens, claims, charges, security interests, pledges, voting or stockholder agreements, encumbrances or equities, other than pursuant to this Agreement, the Term Sheet and certain voting restrictions contained in the Stipulation and Agreement of Compromise, Settlement and Release entered into in the action entitled 7547 Corp. v. Liberty Media Corp., et al. in the Delaware Chancery Court and approved by such court on January 27, 1995 (the "Section 203 Settlement Agreement"). Except for this Agreement, the Term Sheet, certain voting restrictions contained in the Section 203 Settlement -8- 13 Agreement and the transactions contemplated hereby and thereby, there are no agreements, arrangements, warrants, options, puts, calls, rights or other commitments or understandings of any character to which Rockies House Sub, Rockies Sub or Rockies is a party or by which any of them is bound and relating to the sale, purchase, redemption, conversion, exchange, registration, voting or transfer of any of the House Shares. Following the Effective Time, the Surviving Corporation will hold the House Shares, free and clear of any liens, claims, charges, security interests, pledges, voting or stockholder agreements, encumbrances or options (other than any of the foregoing created by Silver Co. or the Surviving Corporation), and will have full rights of ownership with respect to the House Shares, including the right to vote the House Shares on all matters properly presented to the stockholders of House to the extent and in the manner set forth in the certificate of incorporation of House as in effect on the date hereof. SECTION 3.5 Liabilities of Rockies House Sub. At the Closing, Rockies House Sub will have no liabilities, whether contingent or fixed or otherwise (other than as may arise pursuant to this Agreement or the transactions contemplated hereby). Since its formation, Rockies House Sub has conducted no business other than the holding of the House Shares. SECTION 3.6 No Approvals or Notices Required; No Conflict with Instruments. The execution and delivery by each of Rockies Sub and Rockies House Sub of this Agreement do not, and the performance by each of Rockies Sub and Rockies House Sub of their respective obligations hereunder and the consummation of the transactions contemplated hereby will not: (i) conflict with or violate the Rockies Sub Charter, the Rockies House Sub Charter, the Rockies Sub Bylaws or the Rockies House Sub Bylaws; (ii) require any Governmental Consent or Governmental Filing, in each case on the part of or with respect to each of Rockies Sub and any subsidiary of Rockies Sub, the absence or omission of which would, either individually or in the aggregate, have a material adverse effect on the transactions contemplated hereby, except for (A) the filing of the Articles of Merger with the Colorado Secretary of State and (B) the Governmental Filings required pursuant to the pre- merger notification requirements of the HSR Act and the expiration or termination of any applicable waiting period with respect to the Merger under the HSR Act; (iii) require, on the part of Rockies Sub, Rockies House Sub or House any stockholder approval that has not been obtained; (iv) except for any required consent or waiver under the Second Amended and Restated Credit Agreement, dated as of August 30, 1994 (as amended by the First Amendment thereto, dated as of March 29, 1995, and as further amended by the Second Amendment thereto, dated as of June 28, 1995 and by the Third Amendment thereto, dated as of September 28, 1995) among House and certain of its subsidiaries, LTCB Trust Company as Agent, and the banks that are signatories thereto (the "House Credit -9- 14 Agreement"), require, on the part of Rockies Sub or any subsidiary of Rockies Sub any Contract Consent or Contract Notice, the absence or omission of which would, either individually or in the aggregate, have a material adverse effect on the transactions contemplated hereby; (v) except for any required consent or waiver under the House Credit Agreement, conflict with or result in any Violation of any Contract to which Rockies Sub or any subsidiary of Rockies Sub is a party, or by which Rockies Sub or any subsidiary of Rockies Sub, or any of their respective assets or properties is bound, except for such Violations which would not, either individually or in the aggregate, have a material adverse effect on the transactions contemplated hereby; or (vi) assuming that the Governmental Filings specified in clause (ii) of this Section 3.6 are obtained, made and given, result in a Violation of, under or pursuant to any law, rule, regulation, order, judgment or decree applicable to Rockies Sub or any subsidiary of Rockies Sub or by which any of their respective properties or assets are bound, except for such Violations which would not, either individually or in the aggregate, have a material adverse effect on the transactions contemplated hereby. SECTION 3.7 Brokers or Finders. No agent, broker, investment banker, financial advisor or other person or entity is or will be entitled, by reason of any agreement, act or statement by Rockies Sub or Rockies House Sub, any of their respective subsidiaries, directors, officers, employees or affiliates, to any financial advisory, broker's, finder's or similar fee or commission, to reimbursement of expenses or to indemnification or contribution in connection with any of the transactions contemplated by this Agreement. ARTICLE IV COVENANTS AND OTHER AGREEMENTS SECTION 4.1 Reasonable Efforts. Subject to the terms and conditions of this Agreement and applicable law, each of the parties shall use its reasonable efforts to take, or cause to be taken, all actions, and do, or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement as soon as reasonably practicable, including such actions or things as either party hereto may reasonably request in order to cause any of the conditions to such other party's obligation to consummate such transactions specified in Article V to be fully satisfied. Without limiting the generality of the foregoing, the parties shall (and shall cause their respective subsidiaries, and use their reasonable efforts to cause their respective affiliates, directors, officers, employees, agents, attorneys, accountants and representatives, to) consult and fully cooperate with and provide reasonable assistance to each other in (i) obtaining all necessary Contract Consents and Governmental Consents, and giving all necessary Contract Notices to and making all necessary -10- 15 Governmental Filings and all other necessary filings with and applications and submissions to any Governmental Entity or other person or entity; (ii) filing all applicable Pre-Merger Notification and Report Forms required under the HSR Act as a result of the transactions contemplated by this Agreement and promptly complying with any requests for additional information and documentary material that may be requested pursuant to the HSR Act; (iii) lifting any permanent or preliminary injunction or restraining order or other similar order issued or entered by any court or Governmental Entity (an "Injunction") of any type referred to in Section 5.1; (iv) providing all such information about such party, its subsidiaries and its officers, directors, partners and affiliates and making all applications and filings as may be necessary or reasonably requested in connection with any of the foregoing; and (v) in general, consummating and making effective the transactions contemplated hereby; provided, however, that in order to obtain any consent, approval, waiver, license, permit, authorization, registration, qualification or other permission or action or the lifting of any Injunction referred to in clauses (i) and (iii) of this sentence, no party shall be required to (x) pay any consideration, to divest itself of any of, or otherwise rearrange the composition of, its assets or to agree to any conditions or requirements which are materially adverse or burdensome or (y) amend, or agree to amend, in any material respect any Contract. Prior to making any application to or filing with any Governmental Entity or other person or entity in connection with this Agreement, each of Silver Co. and Rockies Sub shall provide the other party with drafts thereof and afford the other party a reasonable opportunity to comment on such drafts. SECTION 4.2 Public Announcements. Each party agrees that it shall not, and shall use its reasonable efforts to cause its affiliates, directors, officers, employees and authorized representatives not to, issue any press release, make any public announcement or furnish any written statement to its employees or stockholders generally concerning the transactions contemplated by this Agreement without the consent of the other party (which consent shall not be unreasonably withheld), except to the extent required by applicable law or any listing agreement with or other applicable requirements of a national securities exchange or the applicable requirements of the NASD (and in such case such party shall, to the extent consistent with timely compliance with such requirement, consult with the other party prior to making the required release, announcement or statement). SECTION 4.3 Confidentiality. Each party shall, and shall use its reasonable efforts to cause its officers, employees and authorized representatives to, (i) hold in confidence all confidential information obtained by it from the other party or such other party's officers, employees or authorized representatives pursuant to this Agreement (unless such information is or becomes publicly available or readily ascertainable from public or published information or trade sources through no wrongful act of such first party) and (ii) use all such data and information solely for the purpose of consummating the transactions contemplated hereby, except, in either case, as may be otherwise required by law or legal process or as may be necessary or appropriate in connection with the enforcement of, or any litigation concerning, this Agreement. In the event a party is required by applicable law or legal process to disclose any confidential information of the other party, such first party will provide the other party with prompt notice -11- 16 thereof to enable such other party to seek an appropriate protective order. In the event this Agreement is terminated, each party shall promptly return, if so requested by the other party, all nonpublic documents obtained from such other party in connection with the transactions contemplated hereby and any copies thereof which may have been made by such first party and shall use its reasonable efforts to cause its officers, employees and authorized representatives to whom such documents were furnished promptly to return such documents and any copies thereof any of them may have made. SECTION 4.4 House Shares. Silver Co. shall not, directly or indirectly, transfer, assign, sell, pledge or otherwise encumber or authorize or propose the transfer, assignment, sale, pledge or encumbrance of any of the House Shares acquired or to be acquired by it pursuant to the Merger except in connection with the consummation of the Exchange. SECTION 4.5 Notification of Certain Matters. Rockies Sub and/or Rockies House Sub shall give prompt notice to Silver Co., and Silver Co. shall give prompt notice to Rockies Sub, of the occurrence, or failure to occur, of any event, which occurrence or failure to occur would be likely to cause (a) any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect, (b) any material failure of Silver Co. or Rockies Sub and Rockies House Sub, as the case may be, or of any officer, director, employee or agent thereof, to comply with or satisfy any covenant or agreement to be complied with or satisfied by it under this Agreement or (c) the failure to be satisfied of any condition to the parties' respective obligations to consummate the transactions contemplated hereby and by the Exchange Agreement. Notwithstanding the foregoing, the delivery of any notice pursuant to this Section shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. SECTION 4.6 No Amendment of Exchange Agreement. Silver Co. shall not amend or otherwise alter or waive any of its rights or obligations (including any conditions on its obligations to consummate the transactions contemplated thereby or any amendment to Silver's obligations to consummate the transactions contemplated thereby) under the Exchange Agreement in any material respect without the prior written consent of Rockies Sub. ARTICLE V CONDITIONS SECTION 5.1 Conditions Precedent to the Obligations of Silver Co., Rockies Sub and Rockies House Sub. The obligations of each of Silver Co., Rockies Sub and Rockies House Sub to consummate the transactions contemplated by this Agreement are subject to the satisfaction at or prior to the Closing Date of each of the following conditions, any or all of which may be waived in whole or in part by the parties, to the extent permitted by applicable law: -12- 17 (a) Absence of Injunctions. No Injunction or other legal restraint or prohibition preventing consummation of the transactions contemplated hereby as provided herein shall be in effect. (b) No Proceedings or Adverse Enactments. There shall not have been any action taken, or any statute, rule, regulation, order, judgment or decree enacted, promulgated, entered, issued or enforced by any Governmental Entity, and there shall be no action, suit, proceeding or investigation pending or threatened which makes the transactions contemplated by this Agreement illegal or imposes, or is reasonably likely to result in the imposition of, material damages or penalties in connection therewith. (c) HSR Act. All applicable waiting periods under the HSR Act shall have expired or been terminated without commencement of litigation by the appropriate governmental enforcement agency to restrain the transactions contemplated hereby. (d) Receipt of Governmental Approvals and Consents. All Governmental Consents as are required in connection with the consummation of the transactions contemplated hereby shall have been obtained and shall be in full force and effect and all Governmental Filings as are required in connection with the consummation of such transactions shall have been made, and all waiting periods, if any, applicable to the consummation of such transactions imposed by any Governmental Entity shall have expired, other than those which, if not obtained, in force or effect, made or expired (as the case may be) would not, either individually or in the aggregate, have a material adverse effect on the transactions contemplated hereby. (e) Satisfaction of Conditions to the Exchange. All of the conditions to the respective parties' obligations to consummate the Exchange as set forth in Article V of the Exchange Agreement shall have been satisfied without regard to any waiver thereof, except for those conditions which by their nature may only be satisfied as of the closing of the Exchange and any waivers permitted by Section 4.6 hereof. SECTION 5.2 Conditions Precedent to the Obligations of Rockies Sub and Rockies House Sub. The obligation of each of Rockies Sub and Rockies House Sub to consummate the transactions contemplated by this Agreement is also subject to the satisfaction, at or prior to the Closing Date, of each of the following conditions, any or all of which may be waived in whole or in part by Rockies Sub or Rockies House Sub, to the extent permitted by applicable law: (a) Accuracy of Representations and Warranties. All representations and warranties of Silver Co. contained in this Agreement shall, if specifically qualified by materiality, be true and correct and, if not so qualified, be true and correct in all material respects in each case as of the Closing Date (except to the extent such representations and warranties speak as of a specified earlier date), except for changes expressly permitted or contemplated by this Agreement. -13- 18 (b) Performance of Agreements. Silver Co. shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by it at or prior to the Closing Date. (c) Silver Co. Capital Contribution. The capital contributions to Silver Co. contemplated by the first two paragraphs of the section entitled "Formation of Silver Company" of the Term Sheet shall have been consummated. (d) Capitalization of Silver Co. and Validity of Stock Prior to Closing. Immediately prior to the Closing, (i) one share of Silver Co. Class A Common Stock shall be issued and outstanding and held beneficially and of record by Arrow and 615,000 shares shall be reserved for issuance upon conversion of outstanding shares of Silver Co. Class B Common Stock and (ii) 615,000 shares of Silver Co. Class B Common Stock shall be issued and outstanding and held beneficially and of record by Rockies Sub; no other shares of capital stock of Silver Co. shall be authorized for issuance and no other shares of capital stock of Silver Co. shall be outstanding or reserved for issuance, and no shares shall be held by Silver Co. in its treasury, except as specifically contemplated by this Agreement. (e) No Impediments to the Exchange. There shall be no circumstance or condition as of the Closing, in the good faith judgment of Rockies Sub, that will prevent or impede the consummation of the Exchange immediately following the Closing. (f) No Proceedings or Adverse Enactments Affecting Merger Consideration Shares. There shall not have been any action taken, or any statute, rule, regulation, order, judgment or decree enacted, promulgated, entered, issued or enforced by any Governmental Entity, and there shall be no action, suit or proceeding pending or threatened which would, as of or after the Closing, impose material limitations on the ability of Rockies Sub effectively to exercise full rights of ownership of the Merger Consideration Shares (including, to the extent such Merger Consideration Shares have voting rights, the right to vote such shares on all matters properly presented to the stockholders of Silver Co.). (g) Lasorda Management Role. Lasorda shall be the Chief Executive Officer and/or Chairman of the Board and/or President of Silver and shall be the Chairman of the Board of House. (h) Officer's Certificates. Rockies Sub shall have received a certificate of Silver Co. dated the Closing Date, signed by an executive officer of Silver Co. certifying that the conditions set forth in Sections 5.1(e), 5.2 (a) and 5.2(b) have been satisfied, which certification shall have been given by such officers after due inquiry. (i) Other Deliveries. All other documents and instruments required under this Agreement to have been delivered by Silver Co. to Rockies Sub or Rockies House Sub at or prior -14- 19 to the Closing or as Rockies Sub or Rockies House Sub shall have reasonably requested, shall have been delivered by Silver Co. (j) No Adverse Change or Development. Except with respect to the Reserved Matters (as defined below), subsequent to August 31, 1995, there shall not have occurred any change or development in or affecting the assets, liabilities, business, operations, or financial condition of Silver which in any case or in the aggregate would, in the reasonable judgment of the Board of Directors of Rockies, represent a material adverse effect upon Silver and its subsidiaries, taken as a whole. For purposes of this paragraph (j), the term "Reserved Matters" shall mean any information relating to the assets, liabilities, business operations or financial condition of Silver which is contained in, is reasonably discernable from, results from, or which is or has become known to, as applicable, any of the following: (i) any reports or statements filed by Silver with the SEC with respect to periods subsequent to August 31, 1995 and prior to the date of this Agreement; (ii) any information delivered to Rockies or its representatives prior to the date of this Agreement, in connection with any investigation, discussions, reviews or analyses of the business and affairs of Silver conducted by Rockies or its representatives, or otherwise; and (iii) with respect to any current or recurring negative financial or operating trend, information with respect to Silver, any continuance (including any continued or accelerated deterioration) thereof, beyond the date hereof, which information is contained in the Reserved Matters referred to in clauses (i) and (ii) above. (k) Audited Financial Statements. Except to the extent contained in the matters referred to in clauses (i) and (ii) of the Reserved Matters, the audited financial statements of Silver, as of and for the fiscal year ended August 31, 1995, contained in the Annual Report on Form 10-K of Silver for the fiscal year ended August 31, 1995, as amended, shall have been prepared in accordance with generally accepted accounting principles, applied on a consistent basis throughout the fiscal year ended August 31, 1995, (except as may be indicated in the notes thereto) and shall have fairly presented the consolidated financial position of Silver and its consolidated subsidiaries as of August 31, 1995 and the consolidated results of its operations and cash flows for the fiscal year ended August 31, 1995, except for such failures to have been prepared and/or to have fairly presented the foregoing as do not, individually or in the aggregate, represent a material adverse effect on the assets, liabilities, business, operations or financial condition of Silver and its subsidiaries, taken as a whole. (l) Consummation of SP Merger. The merger between Savoy Pictures Entertainment, Inc. ("Savoy") and a wholly- owned subsidiary of Silver (the "SP Merger") shall have been consummated in accordance with that certain Agreement and Plan of Merger, dated as of the date hereof, between Silver and Savoy (the "SP Merger Agreement") or, in the event -15- 20 the SP Merger Agreement has previously been terminated, the failure to obtain a Governmental Consent of the FCC required in connection with the consummation of the SP Merger shall not have been a material factor in the failure of the SP Merger to have been consummated. SECTION 5.3 Conditions Precedent to the Obligations of Silver Co. The obligation of Silver Co. to consummate the transactions contemplated by this Agreement is also subject to the satisfaction, at or prior to the Closing Date, of each of the following conditions, any or all of which may be waived in whole or in part by Silver Co., to the extent permitted by applicable law: (a) Accuracy of Representations and Warranties. All representations and warranties of Rockies Sub and Rockies House Sub contained in this Agreement shall, if specifically qualified by materiality, be true and correct and, if not so qualified, be true and correct in all material respects in each case as of the date of this Agreement and (except to the extent such representations and warranties speak as of a specified earlier date) on and as of the Closing Date, with the same force and effect as though made on and as of the Closing Date, except for changes expressly permitted or contemplated by this Agreement. (b) Performance of Agreements. Each of Rockies Sub and Rockies House Sub shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by them at or prior to the Closing Date. (c) Officer's Certificates. Silver Co. shall have received a certificate of each of Rockies Sub and Rockies House Sub dated the Closing Date, signed by an executive officer of Rockies Sub or Rockies House Sub, as the case may be, certifying that the conditions set forth in Sections 5.3 (a) or (b) have been satisfied, which certification shall have been given by such officers after due inquiry. (d) Other Deliveries. All other documents and instruments required under this Agreement to have been delivered by Rockies Sub or Rockies House Sub to Silver Co. at or prior to the Closing, or as Silver Co. shall reasonably request, shall have been delivered by Rockies Sub or Rockies House Sub. ARTICLE VI TERMINATION SECTION 6.1 Termination and Abandonment. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing, (i) by mutual written consent of Rockies Sub and Silver Co.; or (ii) by either Rockies Sub or Silver Co.: (A) if the Closing shall not have occurred before May 30, 1996 (provided, that if the -16- 21 Merger shall not have been consummated as of such date as a result of the failure to have been satisfied of the condition contained in Section 5.2(l) and such condition, in the reasonable opinion of the parties, is likely to have been satisfied on or prior to August 30, 1996, then such date shall be extended to August 30, 1996); provided that the right to terminate this Agreement pursuant to this clause (ii)(A) shall not be available to any party whose failure to perform any of its obligations under this Agreement required to be performed by it at or prior to the Closing has resulted in the failure of the Closing to occur before such date, (B) if there has been a material breach by the other party of any of its representations, warranties, covenants or agreements contained in this Agreement and such breach shall not have been cured within five business days after written notice thereof shall have been received by the party alleged to be in breach or (C) if any court of competent jurisdiction or other competent Governmental Entity shall have issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting any of the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and nonappealable. SECTION 6.2 Effect of Termination. In the event of any termination of this Agreement by Rockies Sub, Rockies House Sub or Silver Co. pursuant to Section 6.1, this Agreement forthwith shall become void, and there shall be no liability or obligation on the part of any party hereto, except that Sections 4.3 and 7.3 shall survive the termination of this Agreement and except that nothing herein will relieve a party from liability for any breach of this Agreement occurring prior to such termination. ARTICLE VII MISCELLANEOUS SECTION 7.1 Failure to Consummate the Exchange. In the event that the Merger is consummated, but, for any reason whatsoever, the Exchange is not consummated immediately thereafter and on the same date in a manner reasonably satisfactory (and in accordance with the Exchange Agreement) to Rockies Sub and its counsel, then, notwithstanding any provision of this Agreement apparently to the contrary, (i) Rockies Sub and Rockies House Sub shall have no further obligations under this Agreement (except as provided in Section 6.2) and (ii) in addition to any other rights or remedies which Rockies Sub and Rockies House Sub may have pursuant hereto or at law or in equity, Rockies Sub, for itself and on behalf of Rockies House Sub, shall have the unconditional right to rescind the transactions consummated pursuant to this Agreement, in which event Silver Co. shall take all such actions as may be necessary to make such rescission fully effective, including, but not limited to, upon the request of Rockies Sub, transferring the House Shares held by the Surviving Corporation to Rockies Sub upon delivery by Rockies Sub of the Merger Consideration Shares. SECTION 7.2 Further Assurances. From and after the Closing Date, each of Silver Co., Rockies Sub and Rockies House Sub shall, at any time and from time to time, make, execute -17- 22 and deliver, or cause to be made, executed and delivered, such instruments, agreements, consents and assurances and take or cause to be taken all such actions as may reasonably be requested by any other party hereto to effect the purposes and intent of this Agreement. SECTION 7.3 Expenses. Except as otherwise provided herein, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall occur. SECTION 7.4 Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given on (i) the day on which delivered personally or by telecopy (with prompt confirmation by mail) during a business day to the appropriate location listed as the address below, (ii) three business days after the posting thereof by United States registered or certified first class mail, return receipt requested, with postage and fees prepaid or (iii) one business day after deposit thereof for overnight delivery. Such notices, requests, demands, waivers or other communications shall be addressed as follows: (a) if to Silver Co. to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Pamela S. Seymon, Esq. Telecopier No.: 212-403-2000 (b) if to Rockies Sub or Rockies House Sub, to such party, care of: Liberty Media Corporation 8101 East Prentice Avenue, Suite 500 Englewood, Colorado 80111 Attention: Peter M. Barton, President Telecopier No.: (303) 721-5415 with a copy to: Baker & Botts, L.L.P. 885 Third Ave. New York, NY 10022-4834 Attention: Frederick McGrath, Esq. Telecopier: (212) 705-5125 -18- 23 or to such other person or address as any party shall specify by notice in writing to the other party. SECTION 7.5 Entire Agreement. This Agreement (including the documents referred to herein) constitutes the entire agreement with respect to the subject matter hereof between the parties and supersedes all prior agreements and understandings, oral and written, between the parties with respect to the subject matter hereof. SECTION 7.6 Assignment; Binding Effect; Benefit. Neither this Agreement nor any of the rights, benefits or obligations hereunder may be assigned by any party without the prior written consent of the other parties hereto. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. SECTION 7.7 Amendment. This Agreement may be amended prior to the Effective Time by Silver Co. and Rockies Sub, by action taken by their respective Boards of Directors at any time before or after approval of the Merger by the stockholders of Silver Co. and Rockies House Sub, but after any such approval, no amendment shall be made which by law requires further approval by such stockholders without such further approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of Silver Co. and Rockies Sub. SECTION 7.8 Extension; Waiver. Rockies Sub or Silver Co. may, to the extent legally allowed, (i) extend the time specified herein for the performance of any of the obligations of the other party, (ii) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered pursuant hereto, (iii) waive compliance by the other party with any of the agreements or covenants of such other party contained herein or (iv) waive any condition to such waiving party's obligation to consummate the transactions contemplated hereby or to any of such waiving party's other obligations hereunder. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party. Any such extension or waiver by any party shall be binding on such party but not on the other party entitled to the benefits of the provision of this Agreement affected unless such other party also has agreed to such extension or waiver. No such waiver shall constitute a waiver of, or estoppel with respect to, any subsequent or other breach or failure to comply strictly with the provisions of this Agreement. The failure of any party to insist on strict compliance with this Agreement or to assert any of its rights or remedies hereunder or with respect hereto shall not constitute a waiver of such rights or remedies. Whenever this Agreement requires or permits consent or approval by any party, such consent or approval shall be effective if given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 7.8. -19- 24 SECTION 7.9 Survival. The representations and warranties made by Silver Co. in Sections 2.1, 2.2, 2.4, 2.5 and 2.6 shall survive the Closing until the expiration of the statute of limitations period applicable to claims that may be asserted against Silver Co. in respect of the matters covered thereby; the representations and warranties made by each of Rockies Sub and Rockies House Sub in Sections 3.1, 3.2, 3.4, 3.5, 3.6 and 3.7 shall survive the Closing until the expiration of the statute of limitations period applicable to claims that may be asserted against each of Rockies Sub and Rockies House Sub in respect of the matters covered thereby; the representations and warranties of Silver Co. in Section 2.3 and of each of Rockies Sub and Rockies House Sub in Section 3.3 shall survive indefinitely. No other representations or warranties of the parties contained in this Agreement shall survive the Closing. In addition, the covenants and agreements in Sections 4.3, 4.4, and 4.6 and Article VII shall also survive the Closing until the expiration of the statute of limitations period applicable to claims that may be asserted in respect of the matters covered thereby. SECTION 7.10 Interpretation. When a reference is made in this Agreement to Sections, Articles or Schedules, such reference shall be to a Section, Article or Schedule (as the case may be) of this Agreement unless otherwise indicated. When a reference is made in this Agreement to a "party" or "parties", such reference shall be to a party or parties to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". The use of any gender herein shall be deemed to be or include the other genders and the use of the singular herein shall be deemed to be or include the plural (and vice versa), wherever appropriate. The use of the words "hereof", "herein", "hereunder" and words of similar import shall refer to this entire Agreement, and not to any particular article, section, subsection, clause, paragraph or other subdivision of this Agreement, unless the context clearly indicates otherwise. SECTION 7.11 Severability. If any provision of this Agreement or the application thereof to any person or circumstance is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, provided that, if any provision hereof or the application thereof shall be so held to be invalid, void or unenforceable by a court of competent jurisdiction, then such court may substitute therefor a suitable and equitable provision in order to carry out, so far as may be valid and enforceable, the intent and purpose of the invalid, void or unenforceable provision. To the extent that any provision shall be judicially unenforceable in any one or more states, such provision shall not be affected with respect to any other state, each provision with respect to each state being construed as several and independent. -20- 25 SECTION 7.12 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument. SECTION 7.13 Applicable Law. This Agreement and the legal relations between the parties shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflict of laws rules thereof. -21- 26 IN WITNESS WHEREOF, the parties hereto have executed this Agreement and Plan of Merger as of the date first above written. SILVER MANAGEMENT COMPANY /s/ Barry Diller ----------------------------------- By: Barry Diller Title: President LIBERTY PROGRAM INVESTMENTS, INC. /s/ Robert R. Bennett ----------------------------------- By: Robert R. Bennett Title: Executive Vice President LIBERTY HSN, INC. /s/ Robert R. Bennett ----------------------------------- By: Robert R. Bennett Title: Executive Vice President EX-99.8 7 EXCHANGE AGREEMENT 1 EXHIBIT 8 EXCHANGE AGREEMENT DATED AS OF NOVEMBER 27, 1995 BY AND BETWEEN SILVER KING COMMUNICATIONS, INC. AND SILVER MANAGEMENT COMPANY 2 TABLE OF CONTENTS
Page ---- ARTICLE I SALE AND EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.1 Exchange of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE II REPRESENTATIONS AND WARRANTIES OF SILVER . . . . . . . . . . . . . . . . . . . 2 SECTION 2.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 SECTION 2.2 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 SECTION 2.3 Validity of Silver Shares, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 SECTION 2.4 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 SECTION 2.5 No Approvals or Notices Required; No Conflict with Instruments . . . . . . . . . . . . . . . . . . 4 SECTION 2.6 DGCL Section 203 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 SECTION 2.7 Opinion of Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 SECTION 2.8 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SILVER CO. . . . . . . . . . . . . . . . . . . 6 SECTION 3.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 SECTION 3.2 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 SECTION 3.3 Ownership and Validity of House Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 SECTION 3.4 No Approvals or Notices Required; No Conflict with Instruments . . . . . . . . . . . . . . . . . . 8 SECTION 3.5 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ARTICLE IV COVENANTS AND OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . 9 SECTION 4.1 Silver Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 SECTION 4.2 Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 SECTION 4.3 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 4.4 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 4.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 4.6 Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 4.7 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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Page ---- ARTICLE V CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 5.1 Conditions Precedent to the Obligations of Silver and Silver Co. . . . . . . . . . . . . . . . . . 12 (a) Absence of Injunctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (b) No Proceedings or Adverse Enactments . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (c) Stockholder Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (d) Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (e) HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (f) Receipt of Governmental Approvals and Consents . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 5.2 Conditions Precedent to the Obligations of Silver Co. . . . . . . . . . . . . . . . . . . . . . . . 13 (a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 13 (b) Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 (c) No Proceedings or Adverse Enactments Affecting Silver Shares . . . . . . . . . . . . . . . 13 (d) Control of Silver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 (e) Officer's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 (f) Other Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 (g) Lasorda Management Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 5.3 Conditions Precedent to the Obligations of Silver . . . . . . . . . . . . . . . . . . . . . . . . . 13 (a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 14 (b) Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (c) Officer's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (d) Other Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (e) Lasorda Management Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (f) No Adverse Change or Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (g) Audited Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE VI TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 6.1 Termination and Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 6.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 7.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 7.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 7.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 7.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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Page ---- SECTION 7.5 Assignment; Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 7.6 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 7.7 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 7.8 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 7.9 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 7.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 7.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 7.12 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5 EXCHANGE AGREEMENT EXCHANGE AGREEMENT, dated as of November 27, 1995, by and between SILVER KING COMMUNICATIONS, INC., a Delaware corporation ("Silver"), and SILVER MANAGEMENT COMPANY, a Delaware corporation ("Silver Co."). RECITALS: WHEREAS, upon consummation of the transactions contemplated by the Agreement and Plan of Merger (the "Merger Agreement"), dated the date hereof by and among Silver Co., Liberty Program Investments, Inc., a Wyoming corporation and Liberty HSN, Inc., a Colorado corporation ("Rockies House Sub") pursuant to which Rockies House Sub will be merged with and into Silver Co. (the "Merger"), Silver Co. will own 17,566,702 shares of the Common Stock, par value $.01 per share (the "House Common Stock"), of Home Shopping Network, Inc., a Delaware corporation ("House") and 20,000,000 shares of the Class B Common Stock, par value $.01 per share (the "House Class B Stock"), of House (such shares of House Common Stock and House Class B Stock held by Silver Co. are collectively referred to herein as the "House Shares"); WHEREAS, the House Board of Directors has approved the transactions contemplated hereby and the Merger Agreement being entered into simultaneously herewith (including for purposes of Section 203 of the Delaware General Corporation Law (the "DGCL")); WHEREAS, Silver desires to acquire, and Silver Co. desires to transfer to Silver, the House Shares; WHEREAS, in exchange for the House Shares, Silver Co. desires to acquire, and Silver desires to issue to Silver Co., the number of shares of Silver's Common Stock, par value $.01 per share (the "Silver Common Stock"), and the number of shares of Silver's Class B Common Stock, par value $.01 per share (the "Silver Class B Stock") described in Section 1.1 below; NOW, THEREFORE, in consideration of the premises and the respective representations, warranties, covenants and agreements set forth herein, the parties hereto agree as follows: ARTICLE I SALE AND EXCHANGE OF SHARES SECTION 1.1 Exchange of Shares. In reliance on the representations and warranties and other agreements of the other party contained herein and upon the terms and subject to the conditions set forth herein, on the Closing Date (as defined in Section 1.2) the parties will make the following exchange (the "Exchange"): 6 (i) Silver Co. will transfer, assign and convey to Silver, and Silver will acquire and accept from Silver Co., all shares of House Common Stock and all shares of House Class B Stock held by Silver Co. immediately following the Merger, and (ii) Silver will issue, convey and deliver to Silver Co., and Silver Co. will acquire and accept from Silver, 4,855,436 shares of Silver Common Stock in exchange for the 17,566,702 shares of House Common Stock and 6,082,000 shares of Silver Class B Stock in exchange for the 20,000,000 shares of House Class B Stock (such shares of Silver Common Stock and Silver Class B Stock are collectively referred to herein as the "Silver Shares"). SECTION 1.2 Closing. The Exchange shall take place at a Closing (the "Closing") which shall be (i) at the offices of Baker & Botts, L.L.P., 885 Third Avenue, New York, New York 10022, at 10:00 a.m., local time, on the second business day following the day on which the last of the conditions set forth in Sections 5.1(c), 5.1(d), 5.1(e), 5.1(f), 5.2(b) (other than any actions to be taken at the Closing), 5.2(c) and 5.3(b) (other than any actions to be taken at the Closing) hereof is fulfilled or, if legally permissible, waived or (ii) at such other time and place and on such other date as Silver and Silver Co. shall agree (the "Closing Date"). At the Closing, simultaneously with the delivery by Silver Co. of certificates representing the House Shares, with appropriate stock powers attached, duly endorsed, and with any necessary documentary or transfer tax stamps duly affixed and cancelled, Silver will deliver to Silver Co. a certificate or certificates representing the Silver Common Stock and Silver Class B Stock to be issued, conveyed and delivered to Silver Co. pursuant to Section 1.1, with any necessary documentary or transfer tax stamps duly affixed and cancelled, dated the Closing Date, and such certificates shall be issued to and registered in the name of Silver Co. The House Shares and the Silver Shares shall be so delivered, in each case, free and clear of all liens, claims, charges, preemptive rights and other encumbrances other than pursuant to the Merger Agreement and this Agreement. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SILVER Silver hereby makes the following representations and warranties to Silver Co.: SECTION 2.1 Organization and Qualification. Silver (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation; (ii) has all requisite corporate power and authority to carry on its business as it is now conducted and to own, lease and operate the properties it now owns, leases or operates at the places currently located and in the manner currently used and operated and (iii) is duly qualified or licensed and in good standing to do business in each jurisdiction in which the properties owned, leased or operated by it or the nature of the business conducted by it makes such qualification or license necessary, except, in the case of clause (iii) where the failure to be so qualified or licensed, or in good standing would not have a material adverse effect on the business, assets or condition (financial or otherwise) of Silver and its subsidiaries, taken as a -2- 7 whole. Silver has delivered or made available to Silver Co. true and complete copies of its Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws, each as amended to date and currently in effect (respectively, the "Silver Charter" and the "Silver Bylaws"). SECTION 2.2 Authorization and Validity of Agreement. (a)The execution, delivery and performance of this Agreement by Silver and the consummation of the transactions contemplated hereby have been duly and validly authorized by the board of directors of Silver. (b) Except for the approval of (x) this Agreement, (y) the issuance of the Silver Shares and (z) the Silver Charter Amendment (as defined below) by the stockholders of Silver: (i) Silver has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the Exchange and the other transactions contemplated hereby, (ii) no other corporate proceedings on the part of Silver or any of its subsidiaries are necessary to authorize the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, (iii) this Agreement has been duly and validly executed and delivered by Silver and, assuming the due authorization, execution and delivery of this Agreement by Silver Co., constitutes a legal, valid and binding obligation of Silver, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights generally or by principles governing the availability of equitable remedies. SECTION 2.3 Validity of Silver Shares, etc. Subject to the filing and effectiveness of the Silver Charter Amendment as contemplated in Section 4.1, the shares of Silver Common Stock and Silver Class B Stock to be issued by Silver to Silver Co. pursuant to the Exchange, upon issuance and delivery in accordance with the terms and conditions of this Agreement, will be duly authorized, validly issued, fully paid and non-assessable, and, except as set forth on Schedule 2.3, will be free of any liens, claims, charges, security interests, preemptive rights, pledges, voting or stockholder agreements, encumbrances or equities of any kind whatsoever, will not be issued in violation of any preemptive rights and will vest in Silver Co. full rights with respect thereto, including the right to vote the Silver Shares on all matters properly presented to the stockholders of Silver to the extent set forth in the Silver Charter. The Silver Charter, upon amendment as contemplated by Section 4.1, will provide that the Silver Class B Stock to be authorized for issuance pursuant to this agreement will have identical rights, powers, privileges and preferences as the outstanding Silver Class B Stock. In addition, the issuance of the Silver Shares will not violate the stockholder voting rights, policies and requirements of the National Association of Securities Dealers, Inc. ("NASD"), assuming such issuance is approved by the stockholders of Silver pursuant to the DGCL and in accordance with Section 6(i) of Part III of Schedule D of the NASD By-Laws (the "NASD Shareholder Approval Policy"). -3- 8 SECTION 2.4 Capitalization. (a) The authorized capital stock of Silver consists of (i) 30,000,000 shares of Silver Common Stock, (ii) 2,415,945 shares of Silver Class B Stock, and (iii) 50,000 shares of Preferred Stock, par value $.01 per share (the "Silver Preferred Stock"), of which, as of November 20, 1995, (x) 6,975,882 shares of Silver Common Stock are issued and outstanding, 2,295,347 shares are reserved for issuance upon exercise of outstanding stock options and 2,415,945 shares are reserved for issuance upon conversion of existing Silver Class B Stock, no shares are held by Silver in its treasury and no shares are held by any subsidiary of Silver; (y) 2,415,945 shares of Silver Class B Stock are issued and outstanding, no shares are reserved for issuance upon exercise of outstanding stock options, no shares are held by Silver in its treasury and no shares are held by any subsidiary of Silver; and (z) no shares of Silver Preferred Stock are issued or outstanding, reserved for issuance upon exercise of outstanding stock options, or held by Silver in its treasury or by any subsidiary of Silver, and no series of Silver Preferred Stock has been designated or authorized. (b) All issued and outstanding shares of Silver Common Stock and Silver Class B Stock have been validly issued and are fully paid and nonassessable, are not subject to and have not been issued in violation of any preemptive rights and have not been issued in violation of any federal or state securities laws. The respective rights, preferences, privileges, limitations and restrictions of the Silver Common Stock, the Silver Class B Stock and Silver Preferred Stock are as set forth in the Silver Charter. Except as set forth on Schedule 2.4 or as disclosed on the reports, forms, schedules, registration statements and proxy statements originally filed with the SEC (as defined below) by Silver with respect to periods or events after January 1, 1994 and prior to the date hereof (the "Silver SEC Reports") pursuant to the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (respectively the "Securities Act" and the "Exchange Act"), there are no outstanding or authorized subscriptions, options, warrants, calls, rights, commitments or any other agreements of any character to or by which Silver or any of its subsidiaries is a party or is bound which, directly or indirectly, obligate Silver or any of its subsidiaries to issue, deliver or sell or cause to be issued, delivered or sold any shares of capital stock or other equity interests of Silver or any securities convertible into, or exercisable or exchangeable for, or evidencing the right to subscribe for any such shares of capital stock or other equity interests or obligating Silver or any of its subsidiaries to grant, extend or enter into any such subscription, option, warrant, call or right. All shares of Silver Common Stock, Silver Class B Stock and/or Silver Preferred Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and non-assessable and not subject to preemptive rights. Except as is disclosed in the Silver SEC Reports or as set forth in Schedule 2.4, there are no obligations, contingent or otherwise, of Silver or any of its subsidiaries to repurchase, redeem or otherwise acquire any shares of Silver Common Stock, Silver Class B Stock or Silver Preferred Stock or the capital stock of any subsidiary or to provide funds to make any material investment (in the form of a loan, capital contribution or otherwise) in any such subsidiary or any other entity other than guarantees of obligations of subsidiaries entered into in the ordinary course of business. SECTION 2.5 No Approvals or Notices Required; No Conflict with Instruments. The execution and delivery by Silver of this Agreement do not, and the performance by Silver of its -4- 9 obligations hereunder and the consummation of the transactions contemplated hereby including the issuance of the Silver Shares will not: (i) assuming the Silver Charter Amendment is approved and is filed and becomes effective as contemplated in Section 4.1, conflict with or violate the Silver Charter, as so amended, or the Silver Bylaws or the charter or bylaws of any subsidiary of Silver, in each case as amended to date; (ii) require any consent, approval, order or authorization of or other action by any court, administrative agency or commission or other governmental authority or instrumentality, foreign, United States federal, state or local (each such entity a "Governmental Entity" and each such action a "Governmental Consent") or any registration, qualification, declaration or filing with or notice to any Governmental Entity (a "Governmental Filing"), in each case on the part of or with respect to Silver or any subsidiary of Silver, the absence or omission of which would, either individually or in the aggregate, have a material adverse effect on the transactions contemplated hereby or on the business, assets, results of operations or financial condition of Silver and its subsidiaries, taken as a whole, except for (A) the filing of the Silver Charter Amendment with the Delaware Secretary of State (as contemplated by Section 4.1), (B) the filing with the Securities and Exchange Commission (the "SEC") of the Proxy Statement (as defined in Section 4.2) required in connection with this Agreement and the transactions contemplated hereby and (C) the Governmental Filings required pursuant to the pre-merger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder (the "HSR Act") and the expiration or termination of any applicable waiting period with respect to the Exchange under the HSR Act; (iii) require, on the part of Silver or any subsidiary of Silver, any consent by or approval of (a "Contract Consent") or notice to (a "Contract Notice") any other person or entity (other than a Governmental Entity), the absence or omission of which would, either individually or in the aggregate, have a material adverse effect on the transactions contemplated hereby or on the business, assets, results of operations or financial condition of Silver and its subsidiaries, taken as a whole, other than the approval by the Silver stockholders of the Silver Charter Amendment pursuant to the DGCL and the issuance of the Silver Shares in accordance with the NASD Shareholder Approval Policy; (iv) except as set forth on Schedule 2.5, conflict with, result in any violation or breach of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or the loss of any material benefit under or the creation of any lien, security interest, pledge, charge, claim, option, right to acquire, restriction on transfer, voting restriction or agreement, or any other restriction or encumbrance of any nature whatsoever on any assets pursuant to (any such conflict, violation, breach, default, right of termination, cancellation or acceleration, loss or creation, a "Violation") any "Contract" (which term shall mean and include any note, bond, indenture, mortgage, deed of trust, lease, franchise, permit, -5- 10 authorization, license, contract, instrument, employee benefit plan or practice, or other agreement, obligation, commitment or concession of any nature) to which Silver or any subsidiary of Silver is a party, by which Silver, any subsidiary of Silver or any of their respective assets or properties is bound or pursuant to which Silver or any subsidiary of Silver is entitled to any rights or benefits, except for such Violations which would not, either individually or in the aggregate, have a material adverse effect on the transactions contemplated hereby or on the business, assets, results of operations or financial condition of Silver and its subsidiaries, taken as a whole; or (v) assuming that the Silver Charter Amendment has been approved and filed and become effective pursuant to the DGCL as contemplated in Section 4.1, that the Silver stockholders have approved the issuance of the Silver Shares in accordance with the NASD Shareholder Approval Policy, and that the Governmental Consents and Governmental Filings specified in clause (ii) of this Section 2.5 are obtained, made and given, result in a Violation of, under or pursuant to any law, rule, regulation, order, judgment or decree applicable to Silver or any subsidiary of Silver or by which any of their respective properties or assets are bound. SECTION 2.6 DGCL Section 203. The Exchange and the related transactions contemplated hereby have been approved in all respects by the Board of Directors of House, including for purposes of Section 203 of the DGCL, and following the Exchange, Silver shall not be subject to the restrictions on "business combinations" with "interested stockholders" contained therein. SECTION 2.7 Opinion of Advisor. Silver's Board of Directors has received the written opinion of CS First Boston (the "CS First Boston Opinion") (a copy of which opinion has been delivered to Silver Co.) that, as of the date of this Agreement, the terms of the Exchange are fair to Silver's stockholders from a financial point of view. SECTION 2.8 Brokers or Finders. Other than pursuant to a written agreement with CS First Boston (a copy of which has been previously furnished to Silver Co.) and as disclosed in Schedule 2.8, no agent, broker, investment banker, financial advisor or other person or entity is or will be entitled, by reason of any agreement, act or statement by Silver or any of its subsidiaries, directors, officers, employees or affiliates, to any financial advisory, broker's, finder's or similar fee or commission, to reimbursement of expenses or to indemnification or contribution in connection with any of the transactions contemplated by this Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SILVER CO. Silver Co. hereby makes the following representations and warranties to Silver: SECTION 3.1 Organization and Qualification. Silver Co. (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation; (ii) has all requisite corporate power and authority to carry on its business as it is -6- 11 now conducted and to own, lease and operate the properties it now owns, leases or operates at the places currently located and in the manner currently used and operated and (iii) is duly qualified or licensed and in good standing to do business in each jurisdiction in which the properties owned, leased or operated by it or the nature of the business conducted by it makes such qualification or license necessary. As of the date hereof, Silver Co. has no subsidiaries. As of the Closing, Silver Co. will have no subsidiaries other than Silver, and by its execution and delivery of this Agreement, Silver Co. shall not be deemed to have made any representations, warranties, covenants or other agreements with respect to or on behalf of Silver (it being understood that any breach by Silver of any of its representations, warranties, covenants or other agreements made herein shall not be considered in determining the truth, accuracy, completeness or performance of, or compliance with, any representation, warranty, covenant or agreement made by Silver Co. herein). Silver Co. has delivered or made available to Silver true and complete copies of its certificate of incorporation and bylaws, each as amended to date and currently in effect (respectively, the "Silver Co. Charter" and the "Silver Co. Bylaws"). SECTION 3.2 Authorization and Validity of Agreement. The execution, delivery and performance of this Agreement by Silver Co. and the consummation of the transactions contemplated hereby have been duly and validly authorized by the board of directors and by the requisite vote of the stockholders of Silver Co. entitled to vote thereon. Silver Co. has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the Exchange and the other transactions contemplated hereby. No other corporate proceedings on the part of Silver Co. are necessary to authorize the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Silver Co. and, assuming the due authorization, execution and delivery of this Agreement by Silver, constitutes a legal, valid and binding obligation of Silver Co., enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights generally or by principles governing the availability of equitable remedies. SECTION 3.3 Ownership and Validity of House Shares. Upon consummation of the Merger and immediately prior to the Exchange, Silver Co. will own beneficially and of record the House Shares, free of any liens, claims, charges, security interests, pledges, voting or stockholder agreements, encumbrances or equities. Except for this Agreement, the Merger Agreement, the definitive term sheet, attached to the letter to Barry Diller ("Lasorda") from Rockies, dated August 24, 1995, as amended by the letter to Lasorda, dated as of the date hereof, pursuant to which Rockies and Lasorda have entered into certain agreements with respect to the equity securities of Silver, all as described therein (the "Term Sheet"), and the transactions contemplated hereby and thereby and except for certain voting restrictions contained in the Stipulation and Agreement of Compromise, Settlement and Release entered into in the action entitled 7547 Corp. v. Liberty Media Corp., et al. in the Delaware Chancery Court and approved by such court on January 27, 1995 (the "Section 203 Settlement Agreement"), there are no agreements, arrangements, warrants, options, puts, calls, rights or other commitments or understandings of any character to which Silver Co. is a party or by which it is bound and relating to the issuance, sale, purchase, redemption, conversion, exchange, registration, voting or transfer of any of the House -7- 12 Shares. Upon consummation of the Exchange, Silver will hold the House Shares free and clear of any liens, claims, charges, security interests, pledges, voting or stockholder agreements, encumbrances or options (other than any of the foregoing created by Silver), and will have full rights of ownership with respect to the House Shares, including the right to vote the House Shares on all matters properly presented to the stockholders of House to the extent set forth in the certificate of incorporation of House as in effect on the date hereof. SECTION 3.4 No Approvals or Notices Required; No Conflict with Instruments. The execution and delivery by Silver Co. of this Agreement do not, and the performance by Silver Co. of its obligations hereunder and the consummation of the transactions contemplated hereby will not: (i) conflict with or violate the Silver Co. Charter or the Silver Co. Bylaws; (ii) require any Governmental Consent or Governmental Filing, in each case on the part of or with respect to each of Silver Co., the absence or omission of which would, either individually or in the aggregate, have a material adverse effect on the transactions contemplated hereby, except for the Governmental Filings required pursuant to the pre-merger notification requirements of the HSR Act, and the expiration or termination of any applicable waiting period with respect to the Exchange under the HSR Act; (iii) require, on the part of Silver Co. any Contract Consent or Contract Notice, the absence or omission of which would, either individually or in the aggregate, have a material adverse effect on the transactions contemplated hereby; (iv) conflict with or result in any Violation of any Contract to which Silver Co. is a party, or by which Silver Co., or any of its assets or properties is bound, except for such Violations which would not, either individually or in the aggregate, have a material adverse effect on the transactions contemplated hereby; or (v) assuming that the Governmental Consents and Governmental Filings specified in clause (ii) of this Section 3.4 are obtained, made and given, result in a Violation of, under or pursuant to any law, rule, regulation, order, judgment or decree applicable to Silver Co. or by which any of its properties or assets are bound, except for such Violations which would not, either individually or in the aggregate, have a material adverse effect on the transactions contemplated hereby. SECTION 3.5 Brokers or Finders. No agent, broker, investment banker, financial advisor or other person or entity is or will be entitled, by reason of any agreement, act or statement by Silver Co., any of its directors, officers, employees or affiliates (other than Silver), to any financial advisory, broker's, finder's or similar fee or commission, to reimbursement of expenses or to indemnification or contribution in connection with any of the transactions contemplated by this Agreement. -8- 13 ARTICLE IV COVENANTS AND OTHER AGREEMENTS SECTION 4.1 Silver Stockholders Meeting. Silver will take all action necessary in accordance with Delaware law, the Silver Charter, the Silver Bylaws and the requirements of the NASD and the SEC to convene a meeting of its stockholders (the "Silver Stockholders Meeting") as promptly as practicable to consider and vote upon (a) an amendment to the Silver Charter (the "Silver Charter Amendment") (i) increasing the authorized number of shares of Silver Class B Stock by the amount necessary to permit the issuance and delivery of the Silver Shares to Silver Co. in accordance with Section 1.1 and the transactions contemplated hereby (together with amendments to such other provisions as may be reasonably necessary to reflect such increase in the authorized capital stock of Silver) and (ii) deleting all provisions in the Silver Charter which require that the holders of the Silver Common Stock and the Silver Class B Stock vote as separate classes on certain specified matters so long as at least 2,280,000 shares of Silver Class B Stock are outstanding and (b) approval of the issuance of the Silver Shares in accordance with the NASD Shareholder Approval Policy (the "NASD Vote"). The Board of Directors of Silver shall recommend that the stockholders of Silver vote in favor of the Silver Charter Amendment and the transactions contemplated hereby (including the NASD Vote). Silver shall use its best efforts to solicit from its stockholders proxies in favor of such approvals. SECTION 4.2 Proxy Statement. (a) Silver shall prepare and file with the SEC, as soon as reasonably practicable, a preliminary proxy statement and a form of proxy for use at the Silver Stockholders Meeting relating to the vote of Silver's stockholders with respect to the Silver Charter Amendment, the NASD Vote and the transactions contemplated hereby (together with any amendments or supplements thereto, in each case in the form or forms mailed to Silver's stockholders, the "Proxy Statement"). Silver will use all reasonable efforts to have, or cause, the Proxy Statement to be cleared by the SEC as promptly as practicable and to cause the Proxy Statement to be mailed to stockholders of Silver at the earliest possible date. Silver Co. shall promptly furnish to Silver such information regarding Silver Co. and its officers and directors as may be reasonably requested by Silver for inclusion in the Proxy Statement. (b) Silver covenants that none of the information concerning Silver, its subsidiaries, or any of its affiliates, directors, officers, employees, agents or representatives which is included or incorporated by reference in the Proxy Statement will, at the time the Proxy Statement or any amendment or supplement thereto is filed with the SEC, at the time of mailing of the Proxy Statement or any amendment or supplement thereto to Silver's stockholders or at the time of the Silver Stockholders Meeting, be false or misleading with respect to any material fact, or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Silver covenants that the Proxy Statement shall comply as to form in all material respects with the applicable provisions of the Exchange Act and the rules and regulations thereunder. (c) Silver Co. covenants that none of the information supplied or to be supplied by Silver Co. or any of its affiliates (other than Silver), directors, officers, employees, agents or -9- 14 representatives in writing specifically for inclusion in the Proxy Statement will, at the time the Proxy Statement or any amendment or supplement thereto is filed with the SEC, at the time of mailing of the Proxy Statement or any amendment or supplement thereto to Silver's stockholders or at the time of the Silver Stockholders Meeting, be false or misleading with respect to any material fact, or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. SECTION 4.3 Reasonable Efforts. Subject to the terms and conditions of this Agreement and applicable law, each of the parties shall use its reasonable efforts to take, or cause to be taken, all actions, and do, or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement as soon as reasonably practicable, including such actions or things as either party hereto may reasonably request in order to cause any of the conditions to such other party's obligation to consummate such transactions specified in Article V to be fully satisfied. Without limiting the generality of the foregoing, the parties shall (and shall cause their respective subsidiaries, and use their reasonable efforts to cause their respective affiliates, directors, officers, employees, agents, attorneys, accountants and representatives, to) consult and fully cooperate with and provide reasonable assistance to each other in (i) the preparation and filing with the SEC of the Proxy Statement and any necessary amendments of or supplements thereto; (ii) seeking to have the Proxy Statement cleared by the SEC as soon as reasonably practicable after filing with the SEC; (iii) obtaining all necessary Governmental Consents and Contract Consents, and giving all necessary Contract Notices to and making all necessary Governmental Filings and other necessary filings with and applications and submissions to, any Governmental Entity or other person or entity; (iv) filing all applicable Pre-Merger Notification and Report Forms required under the HSR Act as a result of the transactions contemplated by this Agreement and promptly complying with any requests for additional information and documentary material that may be requested pursuant to the HSR Act; (v) lifting any permanent or preliminary injunction or restraining order or other similar order issued or entered by any court or Governmental Entity (an "Injunction") of any type referred to in Section 5.1; (vi) providing all such information about such party, its subsidiaries and its officers, directors, partners and affiliates and making all applications and filings as may be necessary or reasonably requested in connection with any of the foregoing; and (vii) in general, consummating and making effective the transactions contemplated hereby; provided, however, that in order to obtain any consent, approval, waiver, license, permit, authorization, registration, qualification or other permission or action or the lifting of any Injunction referred to in clauses (iii) and (v) of this sentence, no party shall be required to (x) pay any consideration, to divest itself of any of, or otherwise rearrange the composition of, its assets or to agree to any conditions or requirements which are materially adverse or burdensome or (y) amend, or agree to amend, in any material respect any Contract. Prior to making any application to or filing with any Governmental Entity or other person or entity in connection with this Agreement, each of Silver and Silver Co. shall provide the other party with drafts thereof and afford the other party a reasonable opportunity to comment on such drafts. SECTION 4.4 Public Announcements. Each party agrees that it shall not, and shall use its reasonable efforts to cause its affiliates, directors, officers, employees and authorized representatives not to, issue any press release, make any public announcement or furnish any -10- 15 written statement to its employees or stockholders generally concerning the transactions contemplated by this Agreement without the consent of the other party (which consent shall not be unreasonably withheld), except to the extent required by applicable law or any listing agreement with or other applicable requirements of a national securities exchange or the applicable requirements of the NASD (and in such case such party shall, to the extent consistent with timely compliance with such requirement, consult with the other party prior to making the required release, announcement or statement). SECTION 4.5 Confidentiality. Each party shall, and shall use its reasonable efforts to cause its officers, employees and authorized representatives to (i) hold in confidence all confidential information obtained by it from the other party or such other party's officers, employees or authorized representatives pursuant to this Agreement (unless such information is or becomes publicly available or readily ascertainable from public or published information or trade sources through no wrongful act of such first party) and (ii) use all such data and information solely for the purpose of consummating the transactions contemplated hereby, except, in either case, as may be otherwise required by law or legal process or as may be necessary or appropriate in connection with the enforcement of, or any litigation concerning, this Agreement. In the event a party is required by applicable law or legal process to disclose any confidential information of the other party, such first party will provide the other party with prompt notice thereof to enable such other party to seek an appropriate protective order. In the event this Agreement is terminated, each party shall promptly return, if so requested by the other party, all nonpublic documents obtained from such other party in connection with the transactions contemplated hereby and any copies thereof which may have been made by such first party and shall use its reasonable efforts to cause its officers, employees and authorized representatives to whom such documents were furnished promptly to return such documents and any copies thereof any of them may have made. SECTION 4.6 Merger Agreement. Silver Co. shall not amend or otherwise alter or waive any of its rights or obligations (including any conditions on its obligations to consummate the transactions contemplated thereby) under the Merger Agreement in any material respect without the prior written consent of Silver. SECTION 4.7 Notification of Certain Matters. Silver shall give prompt notice to Silver Co., and Silver Co. shall give prompt notice to Silver, of the occurrence, or failure to occur, of any event, which occurrence or failure to occur would be likely to cause (a) any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect, (b) any material failure of Silver or Silver Co., as the case may be, or of any officer, director, employee or agent thereof, to comply with or satisfy any covenant or agreement to be complied with or satisfied by it under this Agreement or (c) the failure to be satisfied of any condition to the parties' respective obligations to consummate the transactions contemplated hereby and by the Merger Agreement. Notwithstanding the foregoing, the delivery of any notice pursuant to this Section shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. -11- 16 ARTICLE V CONDITIONS PRECEDENT SECTION 5.1 Conditions Precedent to the Obligations of Silver and Silver Co. The obligations of each of Silver and Silver Co. to consummate the transactions contemplated by this Agreement are subject to the satisfaction at or prior to the Closing Date of each of the following conditions, any or all of which may be waived in whole or in part by the parties, to the extent permitted by applicable law: (a) Absence of Injunctions. No Injunction or other legal restraint or prohibition preventing consummation of the transactions contemplated hereby as provided herein shall be in effect. (b) No Proceedings or Adverse Enactments. There shall not have been any action taken, or any statute, rule, regulation, order, judgment or decree enacted, promulgated, entered, issued or enforced by any Governmental Entity, and there shall be no action, suit, proceeding or investigation pending or threatened which makes the transactions contemplated by this Agreement illegal or imposes, or is reasonably likely to result in the imposition of, material damages or penalties in connection therewith. (c) Stockholder Approvals. The Silver Charter Amendment and the transactions contemplated hereby shall have been approved by the requisite vote of the stockholders of Silver under Delaware law, the Silver Charter, the Silver Bylaws, and the Silver Charter Amendment shall have been filed with the Delaware Secretary of State in accordance with the DGCL and become effective under the DGCL. The issuance of the Silver Shares shall have been approved by the requisite vote of the stockholders of Silver in accordance with the NASD Shareholder Approval Policy. (d) Consummation of the Merger. Immediately prior in time to the Closing, the Merger and the transactions contemplated thereby shall have been consummated in accordance with the Merger Agreement. (e) HSR Act. All applicable waiting periods under the HSR Act shall have expired or been terminated without commencement of litigation by the appropriate governmental enforcement agency to restrain the transactions contemplated hereby. (f) Receipt of Governmental Approvals and Consents. All Governmental Consents as are required in connection with the consummation of the transactions contemplated hereby shall have been obtained and shall be in full force and effect and all Governmental Filings as are required in connection with the consummation of such transactions shall have been made, and all waiting periods, if any, applicable to the consummation of such transactions imposed by any Governmental Entity shall have expired, other than those which, if not obtained, in force or effect, made or expired (as the case may be) would not, either individually or in the aggregate, have a material adverse effect on the transactions contemplated hereby. -12- 17 SECTION 5.2 Conditions Precedent to the Obligations of Silver Co. The obligation of Silver Co. to consummate the transactions contemplated by this Agreement is also subject to the satisfaction, at or prior to the Closing Date, of each of the following conditions, any or all of which may be waived in whole or in part by Silver Co., to the extent permitted by applicable law: (a) Accuracy of Representations and Warranties. All representations and warranties of Silver contained in this Agreement shall, if specifically qualified by materiality, be true and correct and, if not so qualified, be true and correct in all material respects in each case as of the date of this Agreement and (except to the extent such representations or warranties speak as of a specified earlier date) on and as of the Closing Date, with the same force and effect as though made on and as of the Closing Date, except for changes expressly permitted or contemplated by this Agreement. (b) Performance of Agreements. Silver shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by it at or prior to the Closing Date. (c) No Proceedings or Adverse Enactments Affecting Silver Shares. There shall not have been any action taken, or any statute, rule, regulation, order, judgment or decree enacted, promulgated, entered, issued or enforced by any Governmental Entity, and there shall be no action, suit or proceeding pending or threatened which would, as of or after the Closing, impose material limitations on the ability of Silver Co. effectively to exercise full rights of ownership of the Silver Shares (including, to the extent such Silver Shares have voting rights, the right to vote such shares on all matters properly presented to the stockholders of Silver). (d) Control of Silver. Immediately after the Exchange, Silver Co. shall have "control" (as defined in Section 368(c) of the Internal Revenue Code of 1986, as amended) of Silver, and Silver Co. shall own a majority of the voting power of the outstanding equity securities of Silver. (e) Officer's Certificates. Silver Co. shall have received a certificate of Silver, dated the Closing Date, signed by an executive officer of Silver Co. certifying that the conditions set forth in Sections 5.2 (a) and (b) have been satisfied, which certification shall have been given by such officer after due inquiry. (f) Other Deliveries. All other documents and instruments required under this Agreement to have been delivered by Silver to Silver Co. at or prior to the Closing or as Silver Co. shall have reasonably requested, shall have been delivered by Silver. (g) Lasorda Management Role. Lasorda shall be Chairman of the Board and/or Chief Executive Officer and/or President of Silver and shall be Chairman of the Board of House. SECTION 5.3 Conditions Precedent to the Obligations of Silver. The obligation of Silver to consummate the transactions contemplated by this Agreement is also subject to the -13- 18 satisfaction, at or prior to the Closing Date, of each of the following conditions, any or all of which may be waived in whole or in part by Silver, to the extent permitted by applicable law: (a) Accuracy of Representations and Warranties. All representations and warranties of Silver Co. contained in this Agreement shall, if specifically qualified by materiality, be true and correct and, if not so qualified, be true and correct in all material respects, in each case as of the Closing Date (except to the extent such representations and warranties speak as of a specified earlier date), except for changes expressly permitted or contemplated by this Agreement. (b) Performance of Agreements. Silver Co. shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by them at or prior to the Closing Date. (c) Officer's Certificates. Silver shall have received a certificate of Silver Co. dated the Closing Date, signed by an executive officer of Silver Co. certifying that the conditions set forth in Sections 5.3 (a) and (b) have been satisfied, which certification shall have been given by such officer after due inquiry. (d) Other Deliveries. All other documents and instruments required under this Agreement to have been delivered by Silver Co. to Silver at or prior to the Closing, or as Silver shall reasonably request, shall have been delivered by Silver Co. (e) Lasorda Management Role. Lasorda shall be Chairman of the Board and/or Chief Executive Officer and/or President of Silver and the Chairman of the Board of House; provided, however, that to the extent the failure of the foregoing condition to be satisfied is primarily the result of any action by Lasorda (including his resignation, his termination or removal for Cause (as defined in the Silver Term Sheet), or his failure to cause himself to be elected or appointed to such positions at Silver at any time following the Control Date (as defined in the Term Sheet)), then the condition set forth in this Section 5.3(e) shall nevertheless be deemed satisfied. (f) No Adverse Change or Development. Except with respect to the Reserved Matters (as defined below), subsequent to December 31, 1994, there shall not have occurred any change or development in or affecting the assets, liabilities, business, operations, or financial condition of House which in any case or in the aggregate would, in the reasonable judgment of the Board of Directors of Silver, represent a material adverse effect upon House and its subsidiaries, taken as a whole. For purposes of this paragraph (f), the term "Reserved Matters" shall mean any information relating to the assets, liabilities, business, operations or financial condition of House which is contained in, is reasonably discernable from, results from, or which is or has become known to, as applicable, any of the following: (i) any reports or statements filed by House with the SEC with respect to periods subsequent to December 31, 1994 and prior to the date of this Agreement; -14- 19 (ii) any information obtained or reviewed by, or otherwise delivered to, Silver or to Barry Diller or his representatives ("Diller") as a result of or in connection with Diller's service on the Board of Directors of House or the Executive Committee thereof prior to the date of this Agreement, in connection with any investigation, discussions, reviews or analyses of the business and affairs of House conducted by Diller, or otherwise; (iii) with respect to any current or recurring negative financial or operating trend, information with respect to House (which trends may include, but are not limited to, sales, cost of goods sold, inventories, liquidity, commission payments to cable operators and the rate of returned goods), any continuance (including any continued or accelerated deterioration) thereof, beyond the date hereof, which information is contained in the Reserved Matters referred to in clauses (i) and (ii) above; and (iv) any adverse changes or developments which are directly or indirectly caused by Diller and/or senior management of House (including, but not limited to, its Chairman of the Board) hired or appointed subsequent to November 22, 1995, including but not limited to, the adoption, implementation, expansion or change in any Board of Directors or managerial directives or accounting and financial reporting policies and/or any other changes in the nature or manner of operation of House's business. (g) Audited Financial Statements. Except to the extent contained in the matters referred to in clauses (i) and (ii) of the Reserved Matters, the audited financial statements of House, as of and for the fiscal year ended December 31, 1994, contained in the Annual Report on Form 10-K of House for the fiscal year ended December 31, 1994, as amended, shall have been prepared in accordance with generally accepted accounting principles, applied on a consistent basis throughout the fiscal year ended December 31, 1994, (except as may be indicated in the notes thereto) and shall have fairly presented the consolidated financial position of House and its consolidated subsidiaries as of December 31, 1994 and the consolidated results of its operations and cash flows for the fiscal year ended December 31, 1994, except for such failures to have been prepared and/or to have fairly presented the foregoing as do not, individually or in the aggregate, represent a material adverse effect on the assets, liabilities, business, operations or financial condition of House and its subsidiaries, taken as a whole. ARTICLE VI TERMINATION SECTION 6.1 Termination and Abandonment. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing, (i) by mutual written consent of Silver Co. and Silver; (ii) by either Silver Co. or Silver: (A) if the Closing shall not have occurred before August 30, 1996 (or, if earlier, the termination of the -15- 20 Merger Agreement pursuant to Section 6.1(ii)(A)), provided, that the right to terminate this Agreement pursuant to this clause (ii)(A) shall not be available to any party whose failure to perform any of its obligations under this Agreement required to be performed by it at or prior to the Closing has resulted in the failure of the Closing to occur before such date, (B) if there has been a material breach by the other party of any of its representations, warranties, covenants or agreements contained in this Agreement and such breach shall not have been cured within five business days after written notice thereof shall have been received by the party alleged to be in breach or (C) if any court of competent jurisdiction or other competent Governmental Entity shall have issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting any of the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and nonappealable or (iii) by Silver or Silver Co., if the required approvals of the stockholders of Silver contemplated by this Agreement shall not have been obtained by reason of the failure to obtain the required vote upon a vote taken at a meeting of stockholders duly convened therefor or at any adjournment thereof. SECTION 6.2 Effect of Termination. In the event of any termination of this Agreement by Silver Co. or Silver pursuant to Section 6.1, this Agreement forthwith shall become void, and there shall be no liability or obligation on the part of any party hereto, except that Sections 4.5 and 7.2 shall survive the termination of this Agreement and except that nothing herein will relieve a party from liability for any breach of this Agreement occurring prior to such termination. ARTICLE VII MISCELLANEOUS SECTION 7.1 Further Assurances. From and after the Closing Date, each of Silver and Silver Co. shall, at any time and from time to time, make, execute and deliver, or cause to be made, executed and delivered, such instruments, agreements, consents and assurances and take or cause to be taken all such actions as may reasonably be requested by any other party hereto to effect the purposes and intent of this Agreement. SECTION 7.2 Expenses. Except as otherwise provided herein, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall occur. SECTION 7.3 Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given on (i) the day on which delivered personally or by telecopy (with prompt confirmation by mail) during a business day to the appropriate location listed as the address below, (ii) three business days after the posting thereof by United States registered or certified first class mail, return receipt requested, with postage and fees prepaid or -16- 21 (iii) one business day after deposit thereof for overnight delivery. Such notices, requests, demands, waivers or other communications shall be addressed as follows: (a) if to Silver to: Silver King Communications, Inc. 12425 28th Street North St. Petersburg, Florida 33716 Attention: Steven H. Grant Telecopier: (813) 572-1349 with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019-5150 Attention: Pamela S. Seymon, Esq. Telecopier No.: (212) 403-2000 (b) if to Silver Co., to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019-5150 Attention: Pamela S. Seymon, Esq. Telecopier No.: (212) 403-2000 with a copy to the following: Liberty Media Corporation 8101 East Prentice Avenue, Suite 500 Englewood, Colorado 80111 Attention: Peter M. Barton, President Telecopier No.: (303) 721-5415 Baker & Botts, L.L.P. 885 Third Avenue New York, New York 10022-4834 Attention: Frederick McGrath, Esq. Telecopier No.: (212) 705-5125 or to such other person or address as any party shall specify by notice in writing to the other party. -17- 22 SECTION 7.4 Entire Agreement. This Agreement (including the documents referred to herein) constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, oral and written, between the parties with respect to the subject matter hereof. SECTION 7.5 Assignment; Binding Effect; Benefit. Neither this Agreement nor any of the rights, benefits or obligations hereunder may be assigned by any party without the prior written consent of the other parties hereto. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. SECTION 7.6 Amendment. This Agreement may be amended, superseded or cancelled, only by a written instrument specifically stating that it amends, supersedes or cancels this Agreement, executed by all parties hereto. SECTION 7.7 Extension; Waiver. Silver Co. or Silver may, to the extent legally allowed, (i) extend the time specified herein for the performance of any of the obligations of the other party, (ii) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered pursuant hereto, (iii) waive compliance by the other party with any of the agreements or covenants of such other party contained herein or (iv) waive any condition to such waiving party's obligation to consummate the transactions contemplated hereby or to any of such waiving party's other obligations hereunder. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party. Any such extension or waiver by any party shall be binding on such party but not on the other party entitled to the benefits of the provision of this Agreement affected unless such other party also has agreed to such extension or waiver. No such waiver shall constitute a waiver of, or estoppel with respect to, any subsequent or other breach or failure to comply strictly with the provisions of this Agreement. The failure of any party to insist on strict compliance with this Agreement or to assert any of its rights or remedies hereunder or with respect hereto shall not constitute a waiver of such rights or remedies. Whenever this Agreement requires or permits consent or approval by any party, such consent or approval shall be effective if given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 7.7. SECTION 7.8 Survival. The representations and warranties made by Silver in Sections 2.1, 2.2, 2.4, 2.5, 2.6, 2.7 and 2.8 shall survive the Closing until the expiration of the statute of limitations period applicable to claims that may be asserted against Silver in respect of the matters covered thereby; the representations and warranties made by Silver Co. in Sections 3.1, 3.2 and 3.5 shall survive the Closing until the expiration of the statute of limitations period applicable to claims that may be asserted against Silver Co. in respect of the matters covered thereby; the representations and warranties of Silver in Section 2.3, and of Silver Co. in Section 3.3, shall survive indefinitely; no other representations and warranties of the parties contained in this Agreement shall survive the Closing. In addition, the covenants and agreements in Section -18- 23 4.5 and Article VII shall also survive the Closing until the expiration of the statute of limitations period applicable to claims that may be asserted in respect of the matters covered thereby. SECTION 7.9 Interpretation. When a reference is made in this Agreement to Sections, Articles or Schedules, such reference shall be to a Section, Article or Schedule (as the case may be) of this Agreement unless otherwise indicated. When a reference is made in this Agreement to a "party" or "parties", such reference shall be to a party or parties to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". The use of any gender herein shall be deemed to be or include the other genders and the use of the singular herein shall be deemed to be or include the plural (and vice versa), wherever appropriate. The use of the words "hereof", "herein", "hereunder" and words of similar import shall refer to this entire Agreement, and not to any particular article, section, subsection, clause, paragraph or other subdivision of this Agreement, unless the context clearly indicates otherwise. Notwithstanding anything herein to the contrary, for purposes of this Agreement Silver shall not be deemed to be a subsidiary or an affiliate of Silver Co., and the subsidiaries, directors, officers, employees and affiliates of Silver shall not be deemed to be subsidiaries, directors, officers, employees or affiliates of Silver Co. SECTION 7.10 Severability. If any provision of this Agreement or the application thereof to any person or circumstance is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, provided that, if any provision hereof or the application thereof shall be so held to be invalid, void or unenforceable by a court of competent jurisdiction, then such court may substitute therefor a suitable and equitable provision in order to carry out, so far as may be valid and enforceable, the intent and purpose of the invalid, void or unenforceable provision. To the extent that any provision shall be judicially unenforceable in any one or more states, such provision shall not be affected with respect to any other state, each provision with respect to each state being construed as several and independent. SECTION 7.11 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument. SECTION 7.12 Applicable Law. This Agreement and the legal relations between the parties shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflict of laws rules thereof. -19- 24 IN WITNESS WHEREOF, the parties hereto have executed this Exchange Agreement as of the date first above written. SILVER KING COMMUNICATIONS, INC. /s/ Steven H. Grant -------------------------------- By: Steven H. Grant Title: Executive Vice President SILVER MANAGEMENT COMPANY /s/ Barry Diller -------------------------------- By: Barry Diller Title: President -----END PRIVACY-ENHANCED MESSAGE-----