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Exhibit 99.35
[CONFORMED COPY]
AGREEMENT
AGREEMENT, dated as of October 19, 1997, between Liberty Media
Corporation, a Delaware corporation ("Liberty") and Universal Studios, Inc., a
Delaware corporation ("Universal"). Capitalized terms used herein without
definition have the meanings ascribed to such terms in the Stockholders
Agreement (as defined below).
WHEREAS, Liberty and Universal are parties to that certain Investment
Agreement, dated as of October 19, 1997 (as amended and restated as of December
18, 1997, the "Investment Agreement"), among Universal, Liberty, HSN, Inc. (the
"Company") and Home Shopping Network, Inc., the Governance Agreement, dated as
of October 19, 1997 (the "Governance Agreement"), among Universal, Liberty,
Xxxxx Xxxxxx ("Xxxxxx") and the Company, and the Stockholders Agreement, dated
as of October 19, 1997 (the "Stockholders Agreement"), among Universal, Liberty,
Xxxxxx and the Company;
WHEREAS, pursuant to the Investment Agreement, the Governance
Agreement, the Stockholders Agreement and the other agreements contemplated by
the Investment Agreement, Liberty and Universal have specified certain of their
respective rights and obligations with respect to the Company and each other;
and
WHEREAS, in furtherance of the foregoing, and consistent with FCC
requirements, Liberty and Universal desire to confirm certain agreements
relating to the Company to become effective at such time as Xxxxxx is no longer
Chief Executive Officer ("CEO") of the Company or has become Disabled (as
defined in the Governance Agreement);
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and obligations hereinafter set forth, the parties hereto hereby agree
as follows:
1. Interim Arrangements. Following the CEO Termination Date or such
time as Xxxxxx becomes Disabled, subject to any required FCC approvals, Liberty
and Universal shall cooperate in good faith and use their respective reasonable
best efforts to appoint an interim CEO (the "Interim CEO") of the Company who
shall be mutually acceptable to them and shall be independent of each of Liberty
and Universal. If Universal elects, within the time period set forth in Section
2 below, to effect the Station Divestiture pursuant to Section 2 below, subject
to the receipt of any required FCC approvals, Liberty shall grant such interim
CEO a proxy to vote its Common Shares pending the completion of the Station
Divestiture (whereupon such proxy would be automatically revoked). Liberty shall
cause the Interim CEO to vote its Common Shares, at Universal's option (or, if
Liberty Beneficially Owns (as defined in the Governance Agreement) a greater
percentage of the Total Equity Securities (as defined in the Governance
Agreement) than Universal, at Liberty's option), (i) at his discretion or (ii)
in the same proportion as the public stockholders. Liberty and Universal shall
cooperate to cause the Company not to present any matters for a vote of
stockholders (or request its stockholders to vote by written consent) pending
completion of the Station Divestiture, except as may be necessary to complete
the Station Divestiture in accordance with paragraph 2 below.
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2. Station Divestiture. Following the CEO Termination Date or such
time as Xxxxxx becomes Disabled, if Universal so elects by written notice (the
"Divestiture Notice") to the Company and Liberty within 60 days following the
first to occur of either such date, subject to applicable law, the Company shall
cause a divestiture of the Company's television stations (the "Station
Divestiture") to occur as promptly as practicable as provided under Section 9.14
of the Investment Agreement. In such event, the Company, Liberty and Universal
agree to use their respective best efforts to cause the Station Divestiture to
be structured as a pro rata distribution (the "Spin-Off") of 100% of the common
equity interests in the Regulated Subsidiary (as defined in the Investment
Agreement) to the holders of the Common Shares as of the record date for such
distribution which would be tax-free to the stockholders of the Company and in
which the stockholders of the Company would receive, subject to applicable law,
common equity securities having equivalent voting rights to their respective
shares of the Parent Common Stock and the Parent Class B Stock. If
notwithstanding such best efforts such distribution cannot be accomplished on a
tax-free basis to the stockholders of the Company, the Company will use its best
efforts to sell the Regulated Subsidiary; provided that if the Board of
Directors of the Company (other than any directors who are nominees of Universal
or Liberty) determines that a taxable Spin-Off of the Regulated Subsidiary, when
compared with a sale, would represent a superior alternative based upon, among
other factors, the advice from an independent investment banking firm that a
taxable Spin-Off would represent a superior alternative from a financial point
of view, the Company shall consummate a taxable Spin-Off. In connection with any
taxable Spin-Off, (i) Universal agrees to reimburse Liberty for any actual tax
liability incurred or payable by Liberty (including to TCI under Liberty's tax
sharing agreement with TCI) as a result of the Spin-Off with respect to the
equity interest in the Regulated Subsidiary received by Liberty held by Liberty
in an amount not to exceed $50 million and (ii) the Company, Universal and
Liberty will use their reasonable best efforts to minimize the tax liability
incurred by stockholders of the Company as a result of such Spin-Off. In
connection with the Station Divestiture, the Company will enter into a ten-year
affiliation agreement with the Regulated Subsidiary which, subject to clause
(ii) of the preceding sentence, will provide that the Regulated Subsidiary will
broadcast programming produced by the Company on customary terms and conditions,
including arms' length payment obligations. If required in order to accomplish
the Station Divestiture as a Spin-Off, Liberty agrees to, at its election, do
one or more of the following in order to facilitate such distribution: (i)
accept regular voting common equity securities of the Regulated Subsidiary in
respect of its shares of the Parent Class B Stock, (ii) grant a proxy to the CEO
of the Regulated Subsidiary to vote its shares of the Regulated Subsidiary, or
(iii) contribute all or part of its shares of the Regulated Subsidiary to an
entity similar to a BDTV Unrestricted Entity of which the CEO of the Regulated
Subsidiary would have voting control; provided that if Liberty takes any of the
actions specified in clauses (i), (ii) or (iii) of this Section 2, the CEO of
the Regulated Subsidiary shall be mutually acceptable to Liberty and Universal,
notwithstanding Section 4(i) to the contrary. In making its selection among the
actions described in clauses (i), (ii) and (iii) of the preceding sentence,
Liberty shall balance in good faith the benefits and burdens of such action or
inaction to Liberty, the Company and Universal.
3. Transfer. If Universal elects to effect the Station Divestiture
within the time period set forth in Section 2, Liberty agrees not to Transfer,
directly or indirectly, any Common Shares for fourteen months following the CEO
Termination Date or such date as
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Xxxxxx becomes Disabled if such Transfer would result in Universal and Liberty
(and their respective Stockholder Groups) ceasing to own the Minimum Stockholder
Amount so long as Universal does not voluntarily Transfer at any time following
the Closing in one or more transactions an aggregate of more than 3% of the
outstanding Common Shares (determined as of the date of the consummation of the
closing pursuant to Section 1.5(f) of the Investment Agreement).
4. Post-Spin-Off Arrangements with Respect to the Regulated
Subsidiary. Following the Spin-Off, there will be no voting agreement, rights or
obligations between Universal and Liberty with respect to the Regulated
Subsidiary except Universal and Liberty agree that: (i) they will cooperate in
good faith and use their reasonable best efforts to select the person who shall
initially become the CEO of the Regulated Subsidiary immediately following the
Spin-Off and who shall be mutually acceptable to them; provided that if (x) one
party Beneficially Owns less than 15% of the Total Equity Securities and (y) the
other party Beneficially Owns (a) more than 15% of the Total Equity Securities
and (b) at least 5% more of Total Equity Securities than the party described in
(x), then the party described in (y) shall select the CEO who shall be
reasonably satisfactory to the party described in (x), (ii) the veto rights with
respect to the Regulated Subsidiary shall be substantially similar to the
Fundamental Changes contained in the Governance Agreement, provided that if
either party's Beneficial Ownership of equity in the Regulated Subsidiary is
less than 10%, such party will cease to have veto rights; (iii) they will each
have the right to nominate directors of the Regulated Subsidiary on a pro rata
basis with their equity ownership, subject to applicable law, provided that if
either party's Beneficial Ownership of equity in the Regulated Subsidiary is
less than 5%, such party will cease to have the right to nominate any directors,
(iv) they will each have registration rights with respect to the equity
securities of the Regulated Subsidiary that they receive in the Spin-Off on a
basis consistent with the registration rights that they have with respect to the
Common Stock of the Company in Section 5.07 of the Governance Agreement and (v)
they will each have preemptive rights with respect to the equity securities of
the Regulated Subsidiary on a consistent basis with the preemptive rights set
forth in the Investment Agreement. Calculations of all Beneficial Ownership
amounts in Section 4(i) and in Sections 8 and 9 below shall be determined in
accordance with the terms of the Governance Agreement. The rights specified in
clauses (ii), (iii) and (v) shall not be transferable. Calculations of all
Beneficial Ownership amounts in Section 4.(ii) and (iii) shall be determined in
accordance with Rule 13d-3 under the Exchange Act, except that Universal or
Liberty, as the case may be, shall be deemed to be the beneficial owner of any
equity securities which may be acquired by it, whether within 60 days or
thereafter, upon the conversion, exchange or exercise of any warrants, options,
rights or other securities issued by the Company or any Subsidiary thereof.
5. Post-Spin-Off Arrangements with Respect to the Company. Following
the Spin-Off, Liberty and Universal agree that they shall continue to have the
same respective rights and obligations under the Stockholders Agreement, subject
to Section 6.2 thereof. In addition, each of Liberty and Universal shall
continue to be entitled to the same number of Board seats as they are entitled
to under the Governance Agreement from time to time following the CEO
Termination Date.
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6. Preservation of FCC Licenses. Each of Liberty and Universal agree
that they will not take any action pursuant to this Agreement that would not be
permitted by applicable law or would cause the loss or termination of the
Company's FCC licenses or cause the FCC to fail to renew such licenses; provided
that Liberty and Universal will use their commercially reasonable efforts to
enter into alternative arrangements to preserve such licenses for the Company.
7. Arrangements Absent Station Divestiture. If Universal has not given
the Divestiture Notice within the 60-day period set forth in Section 2, that it
intends to effect the Station Divestiture, Liberty and Universal shall, at the
request of Universal, negotiate in good faith, based on their respective equity
interests and with a view toward their respective rights under the Stockholders
Agreement and the Governance Agreement, mutually satisfactory arrangements and
agreements with respect to each other and the Company, consistent with FCC
requirements, it being understood that, the party with a greater equity interest
in the Company shall be entitled to relatively more influence with respect to
the business and affairs of the Company.
8. Reasonable Best Efforts by the Company. Subject to Section 2 and
the Company's obligations under the Investment Agreement, so long as either (i)
Universal and the members of its Stockholder Group Beneficially Own at least 40%
of the Total Equity Securities of the Company and no other stockholder of the
Company Beneficially Owns a greater percentage of the Total Equity Securities of
the Company than Universal or (ii) Liberty and Universal and the respective
members of their Stockholder Groups collectively Beneficially Own at least 50.1%
of the Total Equity Securities of the Company, the Company agrees to use its
reasonable best efforts to enable the parties to achieve the purposes of this
Agreement.
9. Duration of Agreement. (a) Universal shall cease to be entitled to
any rights and shall cease to have any obligations under this Agreement upon the
earlier to occur of (i) such time as Universal no longer has rights under
Section 9.14 of the Investment Agreement or (ii) such time as Universal shall
cease to Beneficially Own Equity Securities representing at least 7.5% of the
voting power of the Total Equity Securities.
(b) Liberty shall cease to be entitled to any rights and shall cease
to have any obligations under this Agreement upon the earlier to occur of (i)
the Liberty Termination Date or (ii) such time as Liberty shall cease to
Beneficially Own Equity Securities representing at least 7.5% of the voting
power of the Total Equity Securities.
(c) The Company shall cease to have any obligations under this
Agreement at such time as Universal and Liberty no longer have any rights or
obligations under this Agreement in accordance with (a) and (b) above.
10. Definitive Agreements. Universal, Liberty and the Company agree
that, in connection with implementing the Spin-Off, they will cooperate in good
faith to prepare definitive documents containing the terms set forth herein and
other terms as they may mutually agree to the extent not inconsistent with the
terms set forth herein; provided that if definitive agreements are not executed,
this Agreement shall continue to be binding in all respects.
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11. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
12. Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
13. Remedies. Each party hereto acknowledges that money damages would
not be an adequate remedy in the event that any of the covenants or agreements
in this Agreement are not performed in accordance with its terms, and it is
therefore agreed that in addition to and without limiting any other remedy or
right it may have, the non-breaching party will have the right to an injunction,
temporary restraining order or other equitable relief in any court of competent
jurisdiction enjoining any such breach and enforcing specifically the terms and
provisions hereof. All rights, powers and remedies provided under this Agreement
or otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise or beginning of the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
14. Notices. Any notice, request, claim, demand or other communication
under this Agreement shall be in writing, shall be either personally delivered,
delivered by facsimile transmission, or sent by reputable overnight courier
service (charges prepaid) to the address for such Person set forth below or such
other address as the recipient party has specified by prior written notice to
the other parties hereto and shall be deemed to have been given hereunder when
receipt is acknowledged for personal delivery or facsimile transmission or one
day after deposit with a reputable overnight courier service.
If to Universal:
Universal Studios, Inc.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
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Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Liberty:
Liberty Media Corporation
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxx & Xxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxxx X. XxXxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Company:
c/o HSN, Inc.
0 XXX Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without giving effect to
the principles of conflicts of law.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
UNIVERSAL STUDIOS, INC.
By:/s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President
LIBERTY MEDIA CORPORATION
By:/s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: President and CEO
HSN, INC. (with respect to Sections 2 and 8)
By:/s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Office of the Chairman
