EXHIBIT 4
November 27, 1995
LIBERTY MEDIA CORPORATION
0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Mr. Xxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Dear Sir:
Reference is made to the agreement between Liberty
Media Corporation ("Rockies") and Xxxxx Xxxxxx ("Xxxxxxx"),
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
Xxxxxxx 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 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 Xxxxxxx 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
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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 Xxxxxxx or
Newco and, in the event Xxxxxxx or Newco receive
any proceeds from an attempted disposition of
such Pledged Shares, then Xxxxxxx 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
Xxxxxxx will have a right to require Rockies to
purchase, the Pledged Silver Company Shares at
any 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, Xxxxxxx 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
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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 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 divestiture 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 Xxxxxxx and
Silver that Xxxxxxx use all reasonable efforts
to take, and, subject to any applicable
fiduciary duties of Xxxxxxx, 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
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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 (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 Xxxxxxx, that Xxxxxxx has
ceased to use his reasonable efforts to
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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 Stockholder 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 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
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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) Xxxxxxx 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 Xxxxxxx (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 Xxxxxxx (or abstains from voting) and
the outcome of such vote is inconsistent
with such preference (including, except as
set forth below, decisions relating to
Xxxxxxx'x employment with Silver), in
either case other than (x) any decision to
terminate Xxxxxxx'x employment with Silver
for Cause, (y) any decision relating to
Xxxxxxx'x compensation by Silver or any of
its subsidiaries (except as provided for by
the Silver Term Sheet), or (z) any decision
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relating to a Fundamental Matter (except as
set forth in (x), (y) and (z) above, a
"Qualifying Disagreement"), then Xxxxxxx
shall be entitled to deliver notice of his
election (a "Management Election") to
exercise his management 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 Xxxxxxx:
(A) Xxxxxxx 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
Xxxxxxx, 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 Xxxxxxx.
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(iii) Xxxxxxx 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) Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx
and/or the Dodgers Stockholder Group on the
Silver Board of Directors shall immediately
resign (other than the representative(s) to
be designated by Xxxxxxx pursuant to clause
(i)) and (B) following a Management
Election, if so requested by Xxxxxxx, 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 Xxxxxxx'x
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
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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
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entertainment products, services and
programming, and electronic
retailing."
6. Covenant of Xxxxxxx. Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx hereby
consents and agrees to the taking of any action
by any of Xxxxxxx, 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
Xxxxxxx (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 Xxxxxxx
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
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entertainment products, services and
programming, and electronic retailing."
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
Xxxxxxx 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 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.
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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/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
ACCEPTED AND AGREED
this 27th day of November, 1995
By: /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
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