Letter Agreement - On Command Video Corp. and COMSAT Video Enterprises Inc.
LETTER AGREEMENT
DECEMBER 8, 1995
We agree as follows:
1. JULY 1995 TRANSACTION. The transaction reflected in the
Constribution Agreement dated August 1, 1995 pursuant to which 1,905,882 shares
of the Common Stock of On Command Video Corporation ("OCV") were issued to
COMSAT Video Enterprises, Inc. ("CVE") will be reviewed in its entirety by an
independent investment banker, assisted to the extent it deems necessary or
appropriate by independent counsel selected by it, and reasonably acceptable to
all parties hereto, with respect to the value of the consideration received by
OCV in such transaction and the value of the OCV shares. The independent
investment banker will perform its review based upon information and
circumstances existing, or that with the exercise of additional reasonable
investigation could have existed, as of the time of the transaction, and will
make recommendations as to whether such transaction should be modified with
respect to the number of shares issued to CVE. It will be
instructed to discuss Allen & Company Incorporated's ("Allen") July 1995
fairness opinion with Allen. If any recommendations would result in a
reduction in the number of OCV shares issued to CVE in the transaction, CVE
shall have the election either to pay additional cash to OCV or the minority
stockholders of OCV, to return shares to OCV or to reallocate a portion of
CVE's shares to the minority stockholders of OCV. The independent investment
banker, and the scope of its engagement, must be acceptable to all parties to
this Agreement. In any event, the review by the investment banker must be
completed not later than February 10, 1996. All parties will give complete
cooperation to the investment banker and its counsel and provided to them all
information that they reasonably require. The conclusions of the independent
investment banker will be implemented by the parties and will be binding on all
of them. In no event, however, will the number of shares of OCV issued to CVE
be increased. The reasonable fees and expenses of such review will be borne by
OCV.
2. FUTURE TRANSACTIONS BETWEEN OCV AND COMSAT AND ANY OF ITS
AFFILIATES. Any material transactions in the future between OCV and CVE or any
of its affiliates will be subject to the fiduciary duties of CVE as a majority
stockholder of OCV, including, where necessary or appropriate based upon the
advice of independent counsel to OCV, the prior approval of independent
directors of OCV, acting with the advice of independent counsel and, to the
extent the independent directors and independent counsel deem necessary or
appropriate, independent financial experts.
3. LIQUIDITY. Allen or another investment banker selected by Hilton
Hotels Corporation ("Hilton") will, if Hilton requests and at Hilton's expense,
be engaged to attempt to locate a buyer for Hilton's equity interests in OCV at
fair market value
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(based on an enterprise theory of valuation). If Hilton so requests, all of
the parties hereto agree to cooperate in respect of such sales efforts. The
Right of First Refusal Agreement is terminated as to Hilton; provided, however,
that no sale may be made to any party that is a competitor of OVC in hotel
video services. If Ascent Entertainment Group, Inc.'s Registration Statement
on Form S-1 has not been declared effective by February 10, 1996, CVE will
negotiate in good faith with Hilton with respect to further facilitating
liquidity options with respect to Hilton's equity interest in OCV. If CVE
disposes of all or any portion of its interests in OCV to any person that is
not an affiliate of OCV, Hilton will be afforded an opportunity to dispose of a
pro rata portion of its position in OCV on the same terms.
4. Miscellaneous Provisions. This Agreement is specifically
enforceable, and Hilton agrees that its sole remedy with respect to the
financial and procedural fairness of the July transaction is enforcement of the
procedures set forth herein. This agreement is governed by California law,
without regard to conflicts of laws principles, but such election shall have no
effect on the law governing the fairness of the July transaction and other
transactions with OCV. No presumption will exist against the drafter of this
Agreement, and the provisions of statues or applicable principles of law to the
contrary are waived. In any legal proceedings relating to this Agreement, the
prevailing party will be entitled to recover, in addition to any other
appropriate relief, legal fees and costs. Except as expressly set forth herein,
no party is waiving or releasing any right of remedy.
HILTON HOTELS CORPORATION ASCENT ENTERTAINMENT GROUP, INC.
By: /s/ WILLIAM C. LEBOU, JR. By: /s/ ARTHUR M. AARON
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Name: William C. Lebou, Jr. Name: Arthur M. Aaron
Title: Senior Vice President and Title: V.P., Business and Legal
General Counsel Affairs
COMSAT CORPORATION COMSAT VIDEO ENTERPRISES, INC.
By: By: /s/ ARTHUR M. AARON
---------------------------- --------------------------------
Name: Name: Arthur M. Aaron
Title: Title: V.P., Business and Legal
Affairs
ON COMMAND VIDEO CORPORATION
By:
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Name:
Title: