SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934*
(Amendment No. 11)
QVC NETWORK, INC.
________________________________________________________________________
(Name of Issuer)
Common Stock, par value $.01 per share
________________________________________________________________________
(Title of Class of Securities)
747262 10 3
________________________________________________________________________
Stanley S. Wang, Esq. John M. Draper, Esq. Pamela S. Seymon, Esq.
Senior Vice President Senior Vice President Wachtell, Lipton, Rosen
and General Counsel and General Counsel & Katz
Comcast Corporation Liberty Media 51 West 52nd Street
1234 Market Street Corporation New York, New York 10019
Philadelphia, PA 19107 8101 E. Prentice Avenue Tel. No. (212) 403-1000
Tel. No. (215) 981- Suite 500
7510 Englewood, CO 80111
Tel. No. (303) 721-5400
________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
April 25, 1994
________________________________________________________________________
(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
Page 1
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).
Note: This Statement constitutes Amendment No. 10 of a Report on
Schedule 13D of Barry Diller and the Reporting Group, Amendment
No. 24 of a Report on Schedule 13D of Liberty Media Corporation
and Amendment No. 18 of a Report on Schedule 13D of Comcast
Corporation.
Page 2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Amendment No. 11)
Statement Of
COMCAST CORPORATION,
LIBERTY MEDIA CORPORATION
and
BARRY DILLER
Pursuant to Section 13(d) of the
Securities Exchange Act of 1934
in respect of
QVC NETWORK, INC.
This Report relates to the common stock, par value $.01
per share (the "Common Stock"), of QVC Network, Inc., a
Delaware corporation (the "Company"). The Report on
Schedule 13D filed by Comcast Corporation ("Comcast") and
Liberty Media Corporation ("Liberty"), dated December 2,
1992 (the "Original Report") as amended by Comcast, Liberty
and Barry Diller on December 15, 1992 ("Amendment No. 1"),
by Comcast, Liberty and Barry Diller on January 7, 1993
("Amendment No. 2"), by Comcast, Liberty and Barry Diller on
July 19, 1993 ("Amendment No. 3"), by Comcast, Liberty and
Barry Diller on September 21, 1993 ("Amendment No. 4"), by
Comcast, Liberty and Barry Diller on October 14, 1993
("Amendment No. 5"), by Comcast, Liberty and Barry Diller on
October 18, 1993 ("Amendment No. 6"), by Comcast, Liberty
and Barry Diller on November 16, 1993 ("Amendment No. 7"),
by Comcast, Liberty and Barry Diller on December 30, 1993
("Amendment No. 8"), by Comcast, Liberty and Barry Diller on
February 3, 1994 ("Amendment No. 9") and by Comcast, Liberty
and Barry Diller on February 22, 1993 ("Amendment No. 10")
is hereby amended and supplemented as set forth below. This
Report also constitutes Amendment No. 10 of the Schedule 13D
of Barry Diller and the Reporting Group, Amendment No. 24 of
the Schedule 13D of Liberty and Amendment No. 18 of the
Schedule 13D of Comcast. The Original Report, as amended by
Amendment No. 1, Amendment No. 2, Amendment No. 3, Amendment
No. 4, Amendment No. 5, Amendment No. 6, Amendment No. 7,
Amendment No. 8, Amendment No. 9 and Amendment No. 10 is
hereinafter referred to as the "Schedule 13D". All
capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Schedule 13D.
Information with respect to a particular Reporting
Person and its executive officers, directors and controlling
persons, contained in the Schedule 13D as amended hereby, is
given solely by such Reporting Person and no other Reporting
Page 3
Person has responsibility for the accuracy or completeness
of information supplied by such Reporting Person.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 of the Schedule 13D is hereby supplemented
and amended to include the following information:
On April 25, 1994, the Company, BellSouth
Corporation ("BellSouth"), Cox Enterprises, Inc. ("Cox") and
Advance Publications, Inc. ("Advance") entered into a Stock
Option Agreement dated as of February 15, 1994 (including
the exhibits thereto, the "Stock Option Agreement"). The
Stock Option Agreement represents definitive documentation
of the agreements relating to the Company's grant of options
to BellSouth, Cox and Advance to purchase Common Stock as
set forth in the Memorandum of Understanding and the
Commitment Letter (as supplemented by the Letter Agreement)
(each of which agreements has been described previously in
the Schedule 13D).
The Stock Option Agreement provides, in paragraph
6(g), that for a period of 18 months from February 15, 1994,
if the Company proposes to invest in, acquire or form all or
part of an originator, owner or other producer of
programming or content (including, without limitation, a
film studio, network, film library or television programming
producer) in a transaction valued at greater than $250
million, if the Stock Option Agreement has not terminated
with respect to the applicable purchaser thereunder or such
purchaser has acquired shares of Common Stock pursuant to
the Stock Option Agreement, the Company will give such
purchaser along with Comcast (and Liberty, if it has become
a party to the Stockholder's Agreement pursuant to Section 5
of the Liberty-QVC Agreement), to the extent the Company
requires third party financing in connection with such
transaction, a preferential opportunity, subject to
applicable law, to participate meaningfully in any such
transaction on an arm's-length basis and will negotiate in
good faith concerning any such party's participation
therein.
On April 25, 1994, Comcast and Liberty entered
into an Acknowledgement and Agreement dated as of February
15, 1994 (the "Comcast-Liberty Acknowledgement and
Agreement"), pursuant to which Comcast and Liberty
acknowledged and agreed to the above-described paragraph
6(g) of the Stock Option Agreement and further agreed that
such paragraph 6(g) modified and replaced the provisions
contained in paragraph 6 of the Memorandum of Understanding.
In connection with Paramount Termination, on
April 25, 1994, Comcast, BellSouth Corporation, Advance,
Arrow Investments, Cox and Liberty entered into a Letter
Agreement dated as of February 15, 1994 (the "AAS Letter
Agreement"), pursuant to which the parties agreed that the
Page 4
Agreement Among Stockholders was terminated except that (i)
each of Comcast, Liberty and Arrow Investments shall be
required, pursuant to paragraph 4 of the Agreement Among
Stockholders, to vote all of its equity securities of the
Company (to the extent such securities are entitled to vote
with respect thereto) in favor of the issuance of the shares
of Common Stock pursuant to the Stock Option Agreement and
(ii) each of Comcast, Liberty, Arrow Investments and
BellSouth remains bound by paragraph 8 of the Agreement
Among Stockholders (acknowledging the Liberty-QVC
Agreement).
In connection with the Paramount Termination, on
April 25, 1994, BellSouth Corporation, Liberty, Comcast and
Arrow Investments entered into a Letter Agreement dated as
of February 15, 1994 (the "UAS Letter Agreement"), pursuant
to which the parties thereto agreed that the UAS Letter
Agreement, together with the Stock Option Agreement,
constitute the definitive agreement referred to in paragraph
1 of the Understanding Among Stockholders, and the terms of
the Understanding Among Stockholders shall survive as though
incorporated in the UAS Letter Agreement in their entirety,
except that in the event of any conflicts between the terms
in the Understanding Among Stockholders and the Stock Option
Agreement, the Stock Option Agreement shall control.
The Company has withdrawn its Premerger
Notification and Report Form under the HSR Act with respect
to the Company's potential acquisition of Paramount and thus
Liberty and TCI no longer have any obligations under the
Consent Order and the Interim Agreement.
Notwithstanding anything contained herein, each of
the Reporting Persons reserves the right, depending on other
relevant factors, to purchase additional securities of the
Company or change their intention with respect to any and
all of the matters as referred to in Item 4 of this Report.
The description contained herein of each of the
Stock Option Agreement, the Comcast-Liberty Acknowledgement
and Agreement, the AAS Letter Agreement and the UAS Letter
Agreement, is qualified in its entirety by reference to such
document, a copy of which is filed as an exhibit to this
Report and is hereby incorporated by reference herein.
Page 5
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS
OR RELATIONSHIPS WITH RESPECT TO THE
SECURITIES OF THE ISSUER
Item 6 is hereby supplemented and amended to
include the following information:
The information in Item 4 above is hereby
incorporated by reference herein.
Pursuant to the Stock Option Agreement, BellSouth
has agreed that if it purchases Common Stock pursuant
thereto, BellSouth will become a party to the Stockholders
Agreement in accordance with the terms of the Understanding
Among Stockholders.
The Stock Option Agreement, among other things,
also provides (as contemplated by the Memorandum of
Understanding) that after BellSouth becomes a party to the
Stockholders Agreement, so long as Comcast, Arrow
Investments, Liberty or BellSouth remains an Eligible
Stockholder, the Company will not take any action to (i)
block or prevent open market purchases by such Eligible
Stockholder or Liberty (if it has become a party to the
Stockholders Agreement under the terms of the Liberty-QVC
Agreement) of Common Stock so long as such entity's total
fully diluted voting power of the Company does not exceed
35% of the fully diluted outstanding voting power of the
Company or (ii) discriminate against such Eligible
Stockholder or Liberty (if it has become a party to the
Stockholders Agreement pursuant to the Liberty-QVC
Agreement) as a stockholder or deprive BellSouth, Comcast,
Arrow Investments or Liberty (if it has become a party to
the Stockholders Agreement pursuant to the Liberty-QVC
Agreement) of full rights as a stockholder of the Company.
The description contained herein of certain terms
of the Stock Option Agreement is qualified in its entirety
by reference to such document, a copy of which is filed as
an exhibit to this Report and which is hereby incorporated
by reference herein.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Item 7 of the Schedule 13D is hereby supplemented
and amended by adding the following information thereto:
99.40 Stock Option Agreement dated as of February 15,
1994, among QVC Network, Inc., BellSouth
Corporation, Cox Enterprises, Inc. and Advance
Publications, Inc. (including exhibits).
99.41 Acknowledgement and Agreement dated as of February
15, 1994, by Comcast Corporation and Liberty Media
Corporation (regarding paragraph 6(g) of Stock
Option Agreement).
Page 6
99.42 Letter Agreement dated as of February 15, 1994,
among Comcast Corporation, BellSouth Corporation,
Advance Publications, Inc., Arrow Investments,
L.P., Cox Enterprises, Inc. and Liberty Media
Corporation (regarding termination of certain
provisions of the Agreement Among Stockholders).
99.43 Letter Agreement dated as of February 15, 1994,
among BellSouth Corporation, Liberty Media
Corporation, Comcast Corporation and Arrow
Investments, L.P. (regarding final documentation
relating to the Understanding Among Stockholders).
Page 7
SIGNATURE
After reasonable inquiry and to the best of their
knowledge and belief, the undersigned certify that the
information in this statement is true, complete and correct.
Dated: April 28, 1994
COMCAST CORPORATION
By: /s/ Arthur R. Block
---------------------------
Name: Arthur R. Block
Title: Vice President
LIBERTY MEDIA CORPORATION
By: /s/ Robert R. Bennett
---------------------------
Name: Robert R. Bennett
Title: Senior Vice-President
/s/ Barry Diller
---------------------------
Barry Diller
Page 8
EXHIBIT INDEX
Page Number
Exhibit in Sequentially
Number Title Numbered Statement
- ------ ----- ------------------
99.40 Stock Option Agreement dated
as of February 15, 1994 among
QVC Network, Inc., BellSouth
Corporation, Cox Enterprises,
Inc. and Advance Publications,
Inc. (including exhibits)
99.41 Acknowledgement and Agreement
dated as of February 15, 1994,
by Comcast Corporation and
Liberty Media Corporation
(regarding paragraph 6(g) of
Stock Option Agreement).
99.42 Letter Agreement dated as of
February 15, 1994, among Comcast
Corporation, BellSouth Corporation,
Advance Publications, Inc., Arrow
Investments, L.P., Cox Enterprises,
Inc. and Liberty Media Corporation
(regarding termination of certain
provisions of the Agreement Among
Stockholders).
99.43 Letter Agreement dated as of
February 15, 1994, among BellSouth
Corporation, Liberty Media Corporation,
Comcast Corporation and Arrow
Investments, L.P. (regarding final
documentation relating to the
Understanding Among Stockholders).
Exhibit 99.40
-------------
CONFORMED COPY
STOCK OPTION AGREEMENT dated as of
February 15, 1994 (this "Stock Option Agree-
ment"), among QVC NETWORK, INC., a Delaware
corporation (the "Company"), COX ENTERPRISES,
INC., a Delaware corporation ("Cox"), ADVANCE
PUBLICATIONS, INC., a New York corporation
("Advance"), and BELLSOUTH CORPORATION, a
Georgia corporation ("BellSouth", and Cox,
Advance and BellSouth each individually a
"Purchaser").
WHEREAS the Company had proposed to acquire (the
"Acquisition") Paramount Communications Inc., a Delaware
corporation; and
WHEREAS the Acquisition has been abandoned, and
each Purchaser wishes to have the option to acquire from the
Company shares of the Company's Common Stock, par value
$.01 per share (the "Common Stock"), as provided in this
Stock Option Agreement.
NOW, THEREFORE, in consideration of the
representations, warranties and agreements herein contained,
the parties hereto agree as follows:
1. Grant of Options. The Company hereby grants
to (i) BellSouth an irrevocable option (the "BellSouth
Option") to purchase 8,627,934 shares of Common Stock (the
"BellSouth Optioned Shares") for a purchase price of
$517,676,040 (the "BellSouth Purchase Price"), (ii) Cox an
irrevocable option (the "Cox Option") to purchase
2,833,333 shares of Common Stock (the "Cox Optioned Shares")
for a purchase price of $170,000,000 (the "Cox Purchase
Price") and (iii) Advance an irrevocable option (the
"Advance Option") to purchase 2,833,333 shares of Common
Stock (the "Advance Optioned Shares") for a Purchase Price
of $170,000,000 (the "Advance Purchase Price"). The period
during which the BellSouth Option, the Cox Option or the
Advance Option may be exercised (the "Option Period") shall
begin on the date hereof and shall end (the "Option
Expiration Date") at 5:00 p.m. on the later of the date that
is (i) August 15, 1994, or (ii) if receipt of the approval
of the stockholders of the Company of the issuance of the
BellSouth Optioned Shares, the Cox Optioned Shares or the
Advance Optioned Shares is required pursuant to Section 5(i)
of Part III of Schedule D of the By-laws of the National
Association of Securities Dealers, Inc. (the "Stockholder
Approval"), ten Business Days after the stockholders vote
with respect to such matter (whether or not such approval is
received, and provided that consummation of a Closing (as
defined in Section 2(a)) shall remain subject to
2
satisfaction of all conditions contained herein, including,
without limitation, the conditions contained in
Sections 8(iv) and 9(v)).
2. Exercise of the Options; Termination.
(a) BellSouth, Cox or Advance may exercise the BellSouth
Option, Cox Option or Advance Option, as the case may be, in
whole only at any time during the Option Period. In the
event that BellSouth, Cox or Advance wishes to exercise the
BellSouth Option, the Cox Option or the Advance Option, as
the case may be, such exercising party shall give written
notice thereof (the date of such notice being the "Notice
Date") to the Company and the closing in connection there-
with (a "Closing") shall take place at the offices of
Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New
York, N.Y. 10019, on a date (subject to the provisions of
paragraph (b) below) not later than the later of ten
Business Days following the Notice Date or two Business Days
following the satisfaction or waiver of the Closing
conditions contained in Sections 8 and 9 of this Stock
Option Agreement; provided, however, that (subject to the
provisions of paragraph (b) below) if a Closing does not
occur before the tenth Business Day after the Option Expira-
tion Date (the "Option Termination Date"), the BellSouth
Option, the Cox Option or the Advance Option, as the case
may be, shall automatically terminate on such date and the
parties with respect to whom such termination has occurred
shall have no further rights or obligations hereunder.
(b) To the extent that the condition to Bell-
South's obligation to purchase the BellSouth Optioned Shares
set forth in Section 8(vii) hereof (the "MFJ Condition") has
not been satisfied, the Closing with respect thereto (but
not the Option Period) may be delayed by BellSouth (if Bell-
South has given the written notice of exercise described
above during the Option Period) until the tenth Business Day
after satisfaction of the MFJ Condition, and the consum-
mation of the exercise of the BellSouth Option may be
conditioned upon satisfaction of the MFJ Condition;
provided, however, that if the Company fulfills its obliga-
tions pursuant to Section 6(c) hereof and BellSouth never-
theless is unable to acquire the BellSouth Optioned Shares
as a result of the failure of the MFJ Condition to be
satisfied on or prior to February 15, 1996, then the
BellSouth Option shall automatically be terminated on such
date and the Closing with respect thereto shall not occur
(the "MFJ Option Termination Date"). BellSouth agrees to
provide the Company prompt written notice of the receipt of
approval, waiver or other resolution of any MFJ problems,
with the date for the Closing then being the 10th Business
Day after the day such notice is given. The term "Business
3
Day" shall mean any day of the year other than a day on
which banks are required or authorized to be closed in the
City of New York.
(c) On the Option Expiration Date, if the Bell-
South Option, the Cox Option, or the Advance Option, as the
case may be, has not been exercised on or before such date,
or upon termination of the Bellsouth Option, the Cox Option
or the Advance Option, as the case may be, on the Option
Termination Date or the MFJ Option Termination Date, the
terms of this Stock Option Agreement shall thereafter become
void and have no effect as to the Company and the Purchaser
with respect to whom such termination or expiration occurs,
and no such party shall have any liability to the other such
party hereto or directors or officers in respect thereof,
except for the obligations set forth in Section 6(f), and
except that nothing herein will relieve any party from lia-
bility for any breach of this Stock Option Agreement (except
a non-wilful breach of the representations and warranties in
Sections 4 and 5, in which case termination of this Stock
Option Agreement shall be the sole remedy) prior to such
termination.
3. Payment of Purchase Price and Delivery of
Certificates for Optioned Shares. At a Closing of the Bell-
South Option, the Cox Option or the Advance Option, as the
case may be, (i) BellSouth will pay the Company the Bell-
South Purchase Price, Cox will pay the Company the Cox
Purchase Price and Advance will pay the Company the Advance
Purchase Price, in each case by wire or intrabank transfer
in immediately available funds to an account or accounts
designated by the Company as far in advance of such Closing
as is reasonably practicable and (ii) the Company will
deliver to BellSouth, Cox or Advance, as the case may be, a
duly executed certificate or certificates representing the
BellSouth Optioned Shares, Cox Optioned Shares or Advance
Optioned Shares, as the case may be, registered in the name
of BellSouth, Cox or Advance, as the case may be, in the
denominations designated by BellSouth, Cox or Advance, as
the case may be, in its notice of exercise.
4. Representations and Warranties of Company.
The Company hereby makes the following representations and
warranties to each Purchaser (except the representation and
warranty set forth in paragraph (o), which is for the sole
benefit of BellSouth):
(a) Corporate Existence. The Company and each
corporation which is a "significant subsidiary" as defined
in Regulation S-X under the Securities Act of 1993, as
amended (the "Securities Act"), of the Company (a "Signif-
4
icant Subsidiary") is a corporation duly organized, validly
existing and in good standing under the laws of the state of
its incorporation and has full corporate power and authority
to own and operate its properties and conduct its business
as now conducted by it. Each of the Company and each
Significant Subsidiary is duly qualified as a foreign
corporation to transact business and is in good standing in
each jurisdiction in which such corporation owns or leases
substantial properties or in which the conduct of its
business requires such qualification and in which failure of
such corporation to be so qualified and in good standing
would have a material adverse effect upon the business,
financial condition or results of operations of the Company
and its consolidated subsidiaries considered as a whole.
(b) Authorization; Enforcement. The Company has
full corporate power and authority to execute and deliver
this Stock Option Agreement and (subject to obtaining the
Stockholder Approval) to perform its obligations hereunder
in accordance with its terms. The Company has taken all
necessary corporate action to authorize the execution and
delivery of this Stock Option Agreement and (other than
obtaining the Stockholder Approval) the consummation of the
transactions contemplated hereby. This Stock Option Agree-
ment is a valid and legally binding obligation of the
Company, enforceable in accordance with its terms (assuming
due authorization, execution and delivery by each Pur-
chaser), subject to bankruptcy, insolvency, reorganization
and other laws affecting creditors' rights generally and to
general equity principles.
(c) Compliance with Law. (i) Neither the
Company nor any Significant Subsidiary has received notice,
nor believes that it is in violation of any statute, regu-
lation or order of, or any restriction imposed by, the
United States of America, any state, municipality or other
political subdivision having jurisdiction over it or any
agency thereof, in respect of the conduct of its business or
the ownership of its properties, that is expected to have a
material adverse effect on the business, financial condition
or results of operations of the Company and its consolidated
subsidiaries considered as a whole.
(ii) Subject to expiration or early termination
of the applicable waiting period under the HSR Act (as
defined in paragraph (e) of this Section 4), the execution
and delivery by the Company of this Stock Option Agreement
does not, and the performance by the Company of its obli-
gations hereunder and the transactions contemplated hereby
will not, violate any provision of any material law or
5
regulation, or any existing writ or decree of any court or
governmental authority applicable to it.
(d) Compliance with Obligations. (i) Neither
the Company nor any Significant Subsidiary is in violation
of or in default under any obligation, agreement, covenant
or condition contained in its Certificate of Incorporation
or By-laws, or in any contract, lease or other instrument to
which it is a party (or which is binding on it or its
assets), other than for such violations or defaults the
occurrence of which would not have a material adverse effect
on the business, financial condition or results of opera-
tions of the Company and its consolidated subsidiaries
considered as a whole.
(ii) The execution and delivery by the Company of
this Stock Option Agreement does not, and the performance by
the Company of its obligations hereunder and the trans-
actions contemplated hereby will not, violate, conflict with
or constitute a breach of, or a default under, its Restated
Certificate of Incorporation or By-laws, or any other
material agreement or instrument to which it is a party (or
which is binding on it or its assets) and will not result in
the creation of any lien on, or security interest in, any of
its assets.
(e) Consents and Approvals. All consents,
approvals, authorizations and orders (other than (i) under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act") and (ii) Stockholder Approval)
required for the Company to execute and deliver this Stock
Option Agreement and to consummate the transactions contem-
plated hereby have been obtained.
(f) Exchange Act Reports. Each of the Company's
(i) Annual Reports on Form 10-K, for the fiscal years ended
after January 31, 1990, (ii) Quarterly Reports on Form 10-Q
for the current fiscal year and (iii) proxy statement for
the most recently called annual meeting (collectively, the
"SEC Documents"), has been duly and timely filed, and when
filed was in substantial compliance with the requirements of
the Securities Exchange Act of 1934 and the applicable rules
and regulations of the Securities and Exchange Commission
thereunder (the "Exchange Act"). Each of the SEC Documents
was complete and correct in all material respects as of its
date and, as of its date, did not contain any untrue state-
ment of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading.
6
(g) Financial Condition. The consolidated
balance sheets of the Company and its consolidated subsid-
iaries as of (i) January 31, 1990, 1991 and 1992, and
(ii) October 31, 1993, together with consolidated statements
of operations, shareholders' equity and cash flows for the
fiscal year then ended in the case of (i) above, or the
three months and nine months then ended, in the case of (ii)
above, contained in the SEC Documents and, in the case of
(i) above, certified by KPMB Peat Marwick, fairly present
the financial condition of the Company and its consolidated
subsidiaries and the results of their operations and changes
in financial position as of the dates and for the periods
referred to and have been prepared in accordance with
generally accepted accounting principles in the United
States consistently applied (except, in the case of (ii)
above, that the consolidated financial statements have been
prepared in accordance with Exchange Act Form 10-Q and do
not necessarily reflect all normal audit adjustments
throughout the periods involved).
(h) Litigation. Except as disclosed in the SEC
Documents or as otherwise disclosed in writing to each Pur-
chaser and identified as an exception to this representa-
tion, there is no legal action, suit, investigation or
proceeding pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its
subsidiaries or the assets of any of them which is expected
by the Company to materially and adversely affect the busi-
ness, financial condition or results of operations of the
Company and its consolidated subsidiaries considered as a
whole, or its ability to perform or observe any obligation
or condition under this Stock Option Agreement.
(i) Material Adverse Change. Except as disclosed
in the SEC Documents or as otherwise disclosed in writing to
each Purchaser prior to the exercise of the BellSouth
Option, Cox Option or Advance Option, as the case may be,
there has been no material adverse change in the business,
financial condition, results of operations or prospects, of
the Company and its consolidated subsidiaries since
October 31, 1993, it being understood that the incurrence
and payment of fees and expenses related to the Acquisition
shall not give rise to or result in a breach of this
representation.
(j) Governmental Investigations. To the knowl-
edge of the Company, except as disclosed to each Purchaser
in writing and identified as an exception to this represen-
tation, there are no pending or threatened governmental
investigations or proceedings against the Company or any of
its controlled affiliates or against any officers, directors
7
or employees of the Company or any of its controlled
affiliates, related to possible violations of any material
Federal, state or local law.
(k) Outstanding Capital Stock. As of the date
hereof, the authorized capital stock of the Company consists
of 175,000,000 shares of Common Stock and 5,000,000 shares
of Preferred Stock, par value $.10 per share. As of
February 28, 1994, 27,788 shares of Series B Preferred
Stock, 530,757 shares of Series C Preferred Stock,
938 shares of Series D Preferred Stock and 39,902,822 shares
of Common Stock were validly issued and outstanding, fully
paid and nonassessable. The Company is the sole beneficial
owner of all of the outstanding capital stock of each
Significant Subsidiary and has good and valid title to all
shares of such outstanding capital stock, free and clear of
all liens and encumbrances, and all shares of such
outstanding capital stock are duly authorized and validly
issued and outstanding, fully paid and nonassessable.
Except for the rights set forth in the Stockholders
Agreement (as defined in Section 6(e)) and the Understanding
Among Stockholders (as defined in Section 8(viii)), there
are no preemptive or similar rights in respect of the
capital stock of the Company or any Significant Subsidiary.
The Company has previously delivered to each Purchaser true,
complete and correct copies of the Restated Certificate of
Incorporation and By-laws of the Company, which are in full
force and effect on the date hereof. Except as provided in
this Stock Option Agreement and the Liberty-QVC Agreement
dated as of November 11, 1993 (the "Repurchase Agreement"),
between the Company and Liberty Media Corporation
("Liberty"), as disclosed in the SEC Documents, or as
disclosed to each Purchaser in writing and identified as an
exception to this representation, there are no outstanding
options, warrants, agreements, convertible or exchangeable
securities or other commitments pursuant to which the
Company or any Significant Subsidiary is obligated to issue,
sell, purchase, repurchase, return or redeem any shares of
capital stock or other securities of the Company or any
Significant Subsidiary and there are not any securities of
the Company or any Significant Subsidiary reserved for such
purpose.
(l) Common Stock. The BellSouth Optioned Shares,
the Cox Optioned Shares and the Advance Optioned Shares to
be issued in accordance with the terms of this Stock Option
Agreement have been duly authorized; upon issuance to the
Purchasers as provided hereunder, such shares will be
validly issued, fully paid and nonassessable; and such
shares are not subject to any preemptive or similar rights.
8
(m) Nasdaq National Market. The outstanding
Common Stock has been included for quotation in the Nasdaq
National Market. The Company's agreement with the NASD with
respect thereto is in full force and effect and no action
has been taken or threatened by the NASD with respect to the
suspension from trading of the Common Stock.
(n) Securities Act Registration. Assuming the
accuracy of the representation contained in paragraph (g) of
Section 5 with respect to the applicable Purchaser, the
issuance and sale of the BellSouth Optioned Shares, the Cox
Optioned Shares and the Advance Optioned Shares, as the case
may be, will be exempt from the registration and prospectus
delivery requirements of the Securities Act.
(o) MFJ Activities. Set forth on Exhibit 1 is a
complete list, as of the date hereof, of (i) all interLATA
transmission facilities and services (including, without
limitation, satellite uplink facilities, satellite trans-
ponders, receive-only earth stations and 800 numbers) and
(ii) any activities which constitute the manufacture or
distribution of telecommunications equipment or the manu-
facture of customer premises equipment (but not the
distribution of customer premises equipment) (collectively,
"MFJ Activities"), owned or provided by the Company or any
of its subsidiaries. Neither the Company nor any of its
subsidiaries directly or indirectly, engages or partici-
pates, alone or with any individual or entity, whether as a
principal, agent, reseller, representative, consultant or
independent contractor, in any MFJ Activity, other than
activities listed on Exhibit 1. For purposes of this Stock
Option Agreement, "interLATA" means telecommunications
between a point or points located in one LATA, or within one
service area of an independent telephone company associated
with that LATA, and a point or points located in one or more
LATAs or points outside a LATA, in each case as LATAs and
associated telephone company areas have been approved in the
Modification of Final Judgment entered August 24, 1982, by
the U.S. District Court of the District of Columbia (the
"MFJ"). BellSouth acknowledges that the Company has no
expertise in MFJ matters and that the Company's knowledge
with respect to MFJ matters consists solely of BellSouth's
descriptions of such matters.
9
5. Representations and Warranties of Each Pur-
chaser. Each Purchaser hereby severally with respect to
itself only, and not jointly, makes the following repre-
sentations and warranties to the Company (except that the
representation and warranty contained in paragraph (i) is
made solely by BellSouth):
(a) Corporate Existence. Such Purchaser is a
corporation, duly organized, validly existing and in good
standing under the laws of its state of incorporation.
(b) Authorization; Enforcement. Such Purchaser
has full power and authority to execute and deliver this
Stock Option Agreement, and to perform its obligations under
and as contemplated by this Stock Option Agreement in
accordance with its terms. Such Purchaser has taken all
necessary action to authorize the execution and delivery of
this Stock Option Agreement and the transactions contem-
plated hereby. This Stock Option Agreement is a valid and
legally binding obligation of such Purchaser, enforceable in
accordance with its terms (assuming due authorization,
execution and delivery by the Company), subject to bank-
ruptcy, insolvency, reorganization and other laws affecting
creditors' rights generally and to general equity
principles.
(c) Compliance with Law. (i) Such Purchaser has
not received notice, and does not believe, that it is in
violation of any statute, regulation or order of, or any
restriction imposed by, the United States of America, any
state, municipality or political subdivision having juris-
diction over it or any agency thereof, in respect of the
conduct of its business or the ownership of its properties,
that it expects to materially and adversely affect the
ability of the Purchaser to consummate the transactions
contemplated by this Stock Option Agreement.
(ii) Subject to the consents and approvals listed
in paragraph (e) of this Section 5, the execution and
delivery by such Purchaser of this Stock Option Agreement
does not, and the performance by such Purchaser of its
obligations and the transactions contemplated hereby will
not, violate any provision of any material law or regula-
tion, or any existing writ or decree of any court or
governmental authority applicable to it.
(d) Compliance with Obligations. (i) Such
Purchaser is not in violation of or in default under any
obligation, agreement, covenant or condition contained in
its organizational documents or by-laws, or in any contract,
lease or other instrument to which it is a party (or which
10
is binding on its assets), other than such violations or
defaults the occurrence of which would not materially and
adversely affect such Purchaser's ability to consummate the
transactions contemplated by this Stock Option Agreement.
(ii) The execution and delivery by such Purchaser
of this Stock Option Agreement does not, and the performance
by such Purchaser of its obligations hereunder and the
transactions contemplated hereby will not, violate, conflict
with or constitute a breach of, or a default under, any
charter or similar instrument, or any other material
agreement or instrument to which it is a party or which is
binding on it or its assets.
(e) Consents and Approvals. All consents,
approvals, authorizations and orders (other than (i) under
the HSR Act, (ii) with respect to BellSouth, matters related
to the MFJ and (iii) the Stockholder Approval) of
governmental or other third parties required for such
Purchaser to execute and deliver this Stock Option
Agreement, and to consummate the transactions contemplated
hereby have been obtained.
(f) Litigation. There is no legal action, suit,
investigation or proceeding pending or, to the knowledge of
such Purchaser, threatened against or affecting such
Purchaser or any of its subsidiaries or the assets of any of
them which is expected by such Purchaser materially and
adversely to affect its ability to perform or observe any
obligation or condition under, or consummate the
transactions contemplated by, this Stock Option Agreement.
(g) Status and Investment Intent. Such Purchaser
is an "accredited investor" within the meaning of Regulation
D under the Securities Act, and it is purchasing the
securities hereunder for its own account and (subject to its
property being at all times within its control) not with a
view to any resale, distribution or other disposition
thereof.
(h) Governmental Investigation. To the knowledge
of such Purchaser there are no pending or threatened
governmental investigations or proceedings against it or any
of its controlled affiliates or against any officers,
directors or employees of such Purchaser or any of its
controlled affiliates which are expected by such Purchaser
to materially and adversely affect its ability to perform or
observe any obligation or condition under this Stock Option
Agreement.
11
(i) MFJ Activity. BellSouth represents that, to
its knowledge, neither the Company nor any of its subsidiar-
ies, directly or indirectly engages or participates, alone
or with any individual or entity, as a principal, agent,
reseller, representative, consultant or independent con-
tractor, in any MFJ Activity, other than activities listed
on Exhibit 1. BellSouth further represents that, to its
knowledge, the Company's implementation of its Q-2
programming will not result in the Company engaging or
participating, alone or with any individual or entity, as a
principal, agent, reseller, representative, consultant or
independent contractor, in any MFJ Activity. The parties
acknowledge that BellSouth's representations hereunder are
made in reliance upon the truthfulness and completeness of
the responses to the questions BellSouth has asked the
Company.
6. Covenants of the Parties. Each of the Company
and each Purchaser makes the following covenants applicable
to it (provided, however, that paragraphs (c), (d), (e), (i)
and (m) are made only between and for the benefit of the
Company and BellSouth, and that paragraphs (k) and (n) are
made only between and for the benefit of the Company and
each of Cox or Advance, as the case may be):
(a) Stockholder Approval. As promptly as
practicable (which may be as late as the Company's next
annual stockholders meeting), the Company shall call a
stockholders meeting to obtain Stockholder Approval for the
issuance of the BellSouth Optioned Shares, the Cox Optioned
Shares and the Advance Optioned Shares and shall use its
reasonable best efforts to obtain the Stockholder Approval.
(b) Reservation of Common Stock. The Company
shall reserve and keep available out of its authorized but
unissued shares of Common Stock the full number of the
BellSouth Optioned Shares, the Cox Optioned Shares and the
Advance Optioned Shares.
(c) Satisfaction of MFJ Condition. Exhibit 2
sets forth the steps that the Company is required to take to
permit BellSouth to purchase the BellSouth Optioned Shares
pursuant to this Stock Option Agreement in compliance with
the MFJ (the "MFJ Transactions"). As promptly as
practicable, the Company and BellSouth shall use their
reasonable best efforts to permit BellSouth to make the
investments contemplated hereby (including acquiring the
BellSouth Optioned Shares pursuant to the terms of this
Stock Option Agreement or participating in certain
acquisitions and joint ventures as contemplated by Section
6(g)) without violation of the MFJ. Without limiting the
12
foregoing, the Company agrees to effectuate the MFJ
Transactions promptly, and in any event within one year of
the date hereof.
(d) Other MFJ Related Activities. So long as (i)
the Option Period has not expired, (ii) BellSouth has
exercised the BellSouth Option to acquire the BellSouth
Optioned Shares and is attempting in good faith to cause the
satisfaction of all conditions to Closing with respect to
such exercise, including the MFJ Condition, or (iii)
BellSouth continues to own at least 2,588,380 shares of
Common Stock (as adjusted consistently with the provisions
of Section 7), the Company will avoid engaging in new
activities in a manner that would, in BellSouth's good faith
judgment, based upon the written advice of counsel (which
may be internal corporate counsel), advance written notice
of which has been provided to the Company, result in a
potential violation of the MFJ, as applicable to BellSouth,
subject to BellSouth's obligation to make all reasonable
efforts to permit the Company to undertake an activity it
wishes to pursue without any such violation. In connection
with the Company's obligation to avoid conducting new
activities in a manner that would result in a violation of
the MFJ, such activities may be conducted in a separate
entity in which BellSouth owns no interest (or otherwise
structured to BellSouth's reasonable satisfaction) so long
as (i) BellSouth shall have been given a reasonable
opportunity (including obtaining the Company's reasonable
cooperation) to take steps to conduct such potentially
violative activities (or a portion thereof, to the extent
reasonable) in the Company in a manner or to the extent
permitted by the MFJ and (ii) the Company will have the
right to reacquire such activities from such other entity if
such potentially violative activities are no longer
prohibited by the MFJ; provided, however, that the
reservation of such reacquisition right does not result in a
material economic detriment to the Company.
(e) Open Market Purchases. After BellSouth
becomes a party to the Stockholders Agreement dated as of
July 16, 1993, among Comcast Corporation ("Comcast"), Arrow
Investments, L.P. ("Arrow"), Liberty and Barry Diller (the
"Stockholders Agreement") and so long as Comcast, Liberty,
Arrow or BellSouth, as the case may be, remains an Eligible
Stockholder thereunder, the Company will not take any action
to (i) block or prevent open market purchases by such
Eligible Stockholder (or Liberty, if it has become a party
to the Stockholders Agreement pursuant to Section 5 of the
Repurchase Agreement) of shares of Common Stock so long as
such entity's total fully diluted voting power of the
Company does not exceed 35% of the fully diluted outstanding
13
voting power of the Company or (ii) discriminate against
such Eligible Stockholder (or Liberty, if it has become a
party to the Stockholders Agreement pursuant to Section 5 of
the Repurchase Agreement) as a stockholder or deprive
BellSouth, Comcast or Arrow (or Liberty, if it has become a
party to the Stockholders Agreement pursuant to Section 5 of
the Repurchase Agreement) of full rights as a stockholder of
the Company.
(f) Additional Information and Confidentiality.
Prior to the termination of this Stock Option Agreement with
respect to a Purchaser, the Company agrees to provide such
Purchaser with all information which such Purchaser may
reasonably request concerning the Company's business,
financial condition and prospects. Such Purchaser agrees to
keep all such information (and other confidential
information previously supplied to such Purchaser)
confidential and not to use such information other than in
connection with its investment hereunder or to disclose any
such information to any third party unless (i) it receives
the express written consent of the Company, (ii) such
information otherwise is or becomes publicly available
(except where such Purchaser knows that such information
became publicly available as a result of a breach of any
confidentiality arrangement) or (iii) in its reasonable
judgment it is required by applicable law to do so, and then
only to the extent it is so required, in each case, to the
extent practicable, only after notice to and consultation
with the Company. In the event that this Stock Option
Agreement is terminated, such Purchaser shall forthwith
return to the Company or destroy all information (including
all copies of any documents) obtained by such Purchaser and
required to be kept confidential pursuant to this paragraph.
(g) Certain Acquisitions and Ventures. For a
period of 18 months from the date hereof, if the Company
proposes to invest in, acquire or form all or part of an
originator, owner or other producer of programming or
content (including, without limitation, a film studio,
network, film library or television programming producer) in
a transaction valued at greater than $250 million, if this
Stock Option Agreement has not terminated with respect to a
Purchaser or such Purchaser has acquired shares of Common
Stock pursuant to this Stock Option Agreement, the Company
will give such Purchaser along with Comcast (and Liberty, if
it has become a party to the Stockholder's Agreement
pursuant to Section 5 of the Repurchase Agreement), to the
extent the Company requires third party financing in
connection with such transaction, a preferential opportunity
to participate meaningfully in any such transaction on an
arm's-length basis and will negotiate in good faith
14
concerning any such party's participation therein. In
connection with the foregoing but subject to the obligations
of BellSouth and the Company set forth in Section 6(c)
hereof, none of Comcast, Cox, Advance, Liberty or BellSouth
shall be entitled to any such preferential opportunity, to
the extent it is not legally permitted to participate in the
relevant transaction.
(h) Certain Consents and Approvals. Each of the
Company and such Purchaser shall use its reasonable efforts
to obtain, or to assist the other in obtaining, as soon as
practicable (i) expiration or early termination of the
applicable waiting period under the HSR Act and (ii) all
other governmental approvals required in connection with the
transactions contemplated by this Stock Option Agreement.
(i) Operations in Ordinary Course. From the date
hereof until the Closing hereunder with respect to BellSouth
or termination of this Stock Option Agreement with respect
to BellSouth, except for those actions consented to by
BellSouth in advance in writing, the Company shall conduct
its business in the ordinary course and substantially in
accordance with past practice. For purposes of this
covenant, any actions that under the Company's practices
existing on the date hereof are taken or authorized to be
taken by the executive officers of the Company without
approval of the Board of Directors shall constitute ordinary
course. In addition, any action taken by the Company with
the approval of the Eligible Stockholders (as defined in the
Stockholders Agreement) or its Board of Directors shall be
deemed to be in the ordinary course and substantially in
accordance with past practice if the Eligible Stockholders
or the directors designated by the Eligible Stockholders
voted in favor of such action pursuant to and in compliance
with Paragraph 3(a) of the Understanding Among Stockholders
(as defined in Section 8(viii)).
(j) Transfers; Restrictive Legend. Each
Purchaser acknowledges that the shares of Common Stock to be
issued pursuant to this Stock Option Agreement have not been
registered under the Securities Act and may be sold or
disposed of in the absence of such registration only
pursuant to an exemption from such registration. The
certificates evidencing shares of Common Stock to be issued
pursuant to this Stock Option Agreement shall bear the
following legend until such time as such Purchaser or any
transferee thereof delivers an opinion of counsel reasonably
acceptable to the Company to the effect that such legend is
no longer required:
15
THESE SECURITIES WERE SOLD IN A PRIVATE PLACEMENT,
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY BE OFFERED OR SOLD ONLY IF
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR IF AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
In addition, certificates evidencing the BellSouth
Optioned Shares shall bear the following additional legend:
THESE SECURITIES MAY BE SUBJECT TO THE RESTRICTIONS
CONTAINED IN THE STOCKHOLDERS AGREEMENT DATED AS OF
JULY 16, 1993, AMONG THE SIGNATORIES THERETO, AS MAY BE
AMENDED FROM TIME TO TIME, COPIES OF WHICH MAY BE
OBTAINED WITHOUT CHARGE FROM THE SECRETARY OF QVC
NETWORK, INC.
(k) Obtaining Consents. At any time from the
date hereof, if any legally imposed condition exists to the
issuance of Common Stock pursuant to the Cox Option or the
Advance Option, Cox or Advance may notify the Company that
it intends to exercise the Cox Option or the Advance Option,
as applicable, upon the satisfaction of any such legally
imposed condition and request that the Company use its
reasonable efforts to assist Cox or Advance in satisfying
such condition (including cooperating with the preparation
of, or participating in, any governmental filing or
application required to be made by Cox or Advance);
provided, however, that (i) any such request by Cox or
Advance shall not obligate Cox or Advance to exercise the
Cox Option or the Advance Option, as applicable, and (ii) if
Cox or Advance elects not to exercise the Cox Option or the
Advance Option, as the case may be, such Purchaser shall
indemnify the Company for the costs and expenses incurred by
the Company in taking any action requested by such Purchaser
pursuant to this paragraph that would not have been
otherwise required under this Stock Option Agreement. Any
such condition shall not extend the Option Termination Date.
(l) Cooperation. The parties shall cooperate
with one another in determining whether any action by or in
respect of, or filing with, any governmental body, agency,
official or authority is required, or any actions, consents,
approvals or waivers are required to be obtained from
parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Stock
Option Agreement. Subject to the terms and conditions of
this Stock Option Agreement, the Company and each Purchaser
agree to use their reasonable best efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws
and regulations to consummate and implement, as soon as
16
reasonably practicable, the transactions contemplated by
this Stock Option Agreement.
(m) Stockholders Agreement. At the Closing of
the BellSouth Option, BellSouth agrees to become a party to
the Stockholders Agreement in accordance with the terms of
the Understanding Among Stockholders.
17
(n) Registration Rights. The Company will use
reasonable efforts to provide each of Advance and Cox, if
such entity purchases shares of Common Stock pursuant to its
option hereunder, with one demand registration of such
shares purchased hereunder (or a portion thereof, but not
less than 25% of the shares so purchased), subject to such
selling entity entering into a registration rights agreement
reasonably acceptable to the Company. Such registration
rights shall not be transferable and may be exercised at any
time after the first anniversary of the purchase of shares
hereunder and not after the third anniversary thereof. The
entity requesting registration shall bear all of the
Company's expenses in connection with the registration and
sale of such entity's shares.
7. Adjustments Upon Changes in Capitalization.
If on or after the date of this Stock Option Agreement there
shall occur any stock dividend, stock split,
recapitalization, combination or exchange of shares, merger,
consolidation, reorganization or other change or transaction
of or by the Company as a result of which (i) shares of any
class of stock, other securities, cash or other property
would have been issued in respect of the BellSouth Optioned
Shares, the Cox Optioned Shares or the Advance Optioned
Shares had such shares been outstanding at such time (the
"Additional Property") or (ii) the Common Stock issuable as
the BellSouth Optioned Shares, the Cox Optioned Shares or
the Advance Optioned Shares shall be changed into the same
or a different number of shares of the same or another class
of stock or other securities (the "New Optioned
Securities"), then, upon the Closing of the acquisition of
the BellSouth Optioned Shares, the Cox Optioned Shares or
the Advance Optioned Shares, BellSouth, Cox or Advance, as
the case may be, shall receive for the BellSouth Purchase
Price, Cox Purchase Price or the Advance Purchase Price
payable upon such Closing (x) in the case of clause (i)
above, the BellSouth Optioned Shares, the Cox Optioned
Shares or the Advance Optioned Shares plus the Additional
Property and (y) in the case of clause (ii) above, the New
Optioned Securities.
8. Conditions to Obligations of each Purchaser.
The obligations of each Purchaser to consummate a Closing
after the exercise of the BellSouth Option, the Cox Option
or the Advance Option, as the case may be, are, at the
option of such Purchaser, subject to the satisfaction of the
following conditions precedent (except the conditions
precedent contained in paragraphs (vii) and (viii) are for
the sole benefit of BellSouth):
18
(i) Representations and Warranties. The
representations and warranties made by the Company in
this Stock Option Agreement shall have been true and
correct when made and, except for the representations
set forth in paragraphs (c), (d), (f), (g), (h), (i),
(j), (m) and (o) of Section 4 (the "Exercise
Representations"), shall be true and correct on the
date of Closing as though such representations and
warranties were made on and as of such date, and the
Exercise Representations (except, with respect to Cox
and Advance, paragraph (o) of Section 4) shall have
been true and correct on the date the BellSouth Option,
Cox Option or Advance Option, as the case may be, was
exercised (except that, in each case, representations
and warranties that are made as of a specific date need
be true and correct only as of such date).
(ii) Compliance with Agreements and Conditions.
The Company shall have performed and complied in all
material respects with all agreements, obligations and
conditions required by this Stock Option Agreement to
be performed or complied with by the Company at or
before the date of Closing (unless such agreement,
obligation or condition was not for the benefit of the
relevant Purchaser).
(iii) Litigation. There shall not then be in
effect any order enjoining or restraining the
acquisition of the BellSouth Optioned Shares, the Cox
Optioned Shares or the Advance Optioned Shares, as the
case may be, or the other transactions contemplated by
this Stock Option Agreement, and there shall not then
be threatened or instituted any action or proceeding by
any governmental body or agency with respect to the
acquisition of the BellSouth Optioned Shares, the Cox
Optioned Shares or the Advance Optioned Shares or the
other transactions contemplated by this Stock Option
Agreement.
(iv) Stockholder Approval. To the extent required
in connection with the purchase of the BellSouth
Optioned Shares, the Cox Optioned Shares or the Advance
Optioned Shares pursuant to the terms of this Stock
Option Agreement, the Company shall have received the
Stockholder Approval.
(v) Certificate. Such Purchaser shall have
received a certificate executed on behalf of the
Company by an executive officer acceptable to the
Purchaser and dated the date of Closing, to the effect
19
that the conditions set forth in clauses (i), (ii) and
(iv) above have been satisfied.
(vi) Requisite Approvals. The Company and such
Purchaser shall have obtained all requisite consents or
approvals from each Federal, state and any other
governmental agency, authority or regulatory body
necessary in order to permit the acquisition and sale
and issuance of the BellSouth Optioned Shares, the Cox
Optioned Shares or the Advance Optioned Shares, as the
case may be, and the consummation of the other
transactions contemplated under this Stock Option
Agreement, and all HSR Act and other governmental
waiting periods applicable to such transactions shall
have expired.
(vii) MFJ Condition. The Company shall have
effected the MFJ Transactions and BellSouth shall have
concluded, in its good faith judgment based upon the
written advice of counsel (which may be internal
corporate counsel) that BellSouth's acquisition of the
BellSouth Optioned Shares as contemplated by this Stock
Option Agreement would not result in a potential
violation of the MFJ.
(viii) Performance of Understanding Among
Stockholders. Liberty Media Corporation, Comcast and
Arrow Investments, L.P. shall have performed all their
obligations pursuant to the Understanding Among
Stockholders dated as of November 11, 1993, among
BellSouth and such parties (the "Understanding Among
Stockholders"); BellSouth shall, concurrently with the
Closing of the BellSouth Option, become a party to the
Stockholders Agreement as contemplated by the
Understanding Among Stockholders; and the Stockholders
Agreement shall, concurrently with the Closing of the
BellSouth Option, be amended as contemplated by the
Understanding Among Stockholders in connection with a
purchase of BellSouth Optioned Shares pursuant to this
Stock Option Agreement.
9. Conditions to Obligations of the Company. The
obligations of the Company to consummate a Closing after the
exercise by a Purchaser of the BellSouth Option, the Cox
Option or the Advance Option, as the case may be, are, at
the option of the Company, subject to the satisfaction of
the following conditions precedent:
(i) Representations and Warranties. The
representations and warranties made by such Purchaser
in this Stock Option Agreement shall have been true and
20
correct when made, and shall be true and correct on the
date of Closing as though such representations and
warranties were made on and as of such date (except
that representations and warranties that are made as of
a specific date need be true and correct only as of
such date).
(ii) Compliance with Agreements and Conditions.
Such Purchaser shall have performed and complied in all
material respects with all agreements, obligations and
conditions required by this Stock Option Agreement to
be performed or complied with by such Purchaser at or
before the date of Closing.
(iii) Litigation. There shall not then be in
effect any order enjoining or restraining the sale and
issuance of the BellSouth Optioned Shares, the Cox
Optioned Shares or the Advance Optioned Shares, as the
case may be, or the other transactions contemplated by
this Stock Option Agreement, and there shall not then
be threatened or instituted any action or proceeding by
any governmental body or agency with respect to the
sale and issuance of the BellSouth Optioned Shares, the
Cox Optioned Shares or the Advance Optioned Shares, as
the case may be, or the other transactions contemplated
by this Stock Option Agreement.
(iv) Certificate. The Company shall have received
a certificate executed on behalf of such Purchaser by
an executive officer acceptable to the Company to the
effect that the conditions set forth in clauses (i) and
(ii) above have been satisfied.
(v) Stockholder Approval. To the extent required
in connection with the sale and issuance of the
BellSouth Optioned Shares, the Cox Optioned Shares or
the Advance Optioned Shares, as the case may be,
pursuant to the terms of this Stock Option Agreement,
the Company shall have received the Stockholder
Approval.
(vi) Requisite Approvals. The Company and such
Purchaser shall have obtained all requisite consents or
approvals from each Federal, state and any other
governmental agency, authority or regulatory body
necessary in order to permit the acquisition and sale
and issuance of the BellSouth Optioned Shares, the Cox
Optioned Shares or the Advance Optioned Shares, as the
case may be, and the consummation of the other
transactions contemplated by this Stock Option
Agreement, and all HSR Act and other governmental
21
waiting periods applicable to such transactions shall
have expired.
10. Further Assurances. If a Purchaser shall
exercise the BellSouth Option, the Cox Option or the Advance
Option, as the case may be, in accordance with the terms of
this Stock Option Agreement, from time to time and without
additional consideration the Company will execute and
deliver, or cause to be executed and delivered, such
additional or further transfers, assignments, endorsements,
and other instruments as such Purchaser may reasonably
request for the purpose of effectively transferring
ownership of the BellSouth Optioned Shares, the Cox Optioned
Shares or the Advance Optioned Shares, as the case may be,
to such Purchaser as contemplated by this Stock Option
Agreement.
11. Assignment. Neither this Stock Option
Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any party without the prior
written consent of the other party, except that a Purchaser
may assign, in its sole discretion, any or all of its
rights, interests and obligations hereunder to any direct or
indirect wholly-owned subsidiary of such Purchaser;
provided, however, that at all times such entity remains a
direct or indirect wholly-owned subsidiary of such
Purchaser. Subject to the preceding sentence, this Stock
Option Agreement will be binding upon, inure to the benefit
of and be enforceable by the parties and their respective
successors and assigns.
12. General Provisions. (a) Specific Per-
formance. The parties hereto acknowledge that damages would
be an inadequate remedy for any breach of the provisions of
this Stock Option Agreement and agree that the obligations
of the parties hereunder shall be specifically enforceable.
(b) Expenses. Whether or not the BellSouth
Option, the Cox Option or the Advance Option is exercised,
all costs and expenses incurred in connection with this
Stock Option Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expense.
(c) Amendments. This Stock Option Agreement may
not be amended except by an instrument in writing signed by
each of the parties hereto.
(d) Notices. All notices and other
communications hereunder shall be validly given or served,
as the case may be, if in writing and delivered personally
or mailed by registered or certified mail (return receipt
22
requested) or sent by facsimile to the parties at the
following addresses (or at such other address for a party as
shall be specified by like notice):
(i) if to the Company, to:
QVC Network, Inc.
1365 Enterprise Drive
Goshen Corporate Park
West Chester, PA 19380
Attention: Neal S. Grabell, Esq.
Senior Vice President and General
Counsel
Fax: (610) 430-2380
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Pamela S. Seymon, Esq.
Fax: (212) 403-2000
(ii) if to BellSouth, to:
BellSouth Corporation
1155 Peachtree Street, N.E.
Atlanta, GA 30367-6000
Attention: Walter H. Alford, Esq.
Fax: (404) 249-5908
With a copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
Worldwide Plaza
New York, New York 10019
Attention: Philip A. Gelston, Esq.
Fax: (212) 474-3700
23
(iii) if to Cox, to:
Cox Enterprises, Inc.
1400 Lake Hearn Drive
Atlanta, GA 30319
Attention: John R. Dillon
Fax: (404) 843-5104
With a copy to:
Dow, Lohnes & Albertson
1255 Twenty-Third Street
Washington, DC 20037
Attention: Stuart Sheldon, Esq.
Fax: (202) 857-2900
(iv) if to Advance:
Advance Publications, Inc.
c/o Newark Morning Ledger Co.
Star-Ledger Plaza
Newark, NJ 07101
Attention: Donald E. Newhouse
Fax: (201) 621-2604
With a copy to:
Sabin, Bermant & Gould
350 Madison Avenue
New York, NY 10017
Attention: Craig D. Holleman, Esq.
Fax: (212) 692-4406
(e) Interpretation. When a reference is made in
this Stock Option Agreement to Sections or Exhibits, such
reference shall be to a Section or Exhibit to this Stock
Option Agreement unless otherwise indicated. The headings
contained in this Stock Option Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Stock Option Agreement.
(f) Counterparts. This Stock Option Agreement
may be executed in one or more counterparts, all of which
shall be considered one and the same agreement, and shall
become effective when one or more of the counterparts have
been signed by each of the parties and delivered to the
24
other parties, it being understood that all parties need not
sign the same counterpart.
(g) Entire Agreement; Third-Party Beneficiaries.
This Stock Option Agreement (including the documents and
instruments referred to herein and Exhibits 3, 4 and 5 and
the agreements referred to therein) (i) constitutes the
entire agreement and supersedes all prior agreements and
understandings (including, without limitation, the
Memorandum of Understanding dated November 11, 1993, between
BellSouth and the Company, the Commitment Letter dated
November 19, 1993, between BellSouth and the Company and the
Equity Commitment Letter dated November 11, 1993, among
Comcast, the Company, Cox and Advance, each as heretofore
amended), both written and oral, among the parties with
respect to the subject matter hereof and (ii) is not
intended to confer upon any person other than the parties
hereto any rights or obligations hereunder, except with
respect to (x) paragraphs (e) and (g) of Section 6, which
are for the explicit benefit of the persons mentioned
therein and (y) paragraph (m) of Section 6, which is for the
benefit of the Eligible Stockholders, and such paragraphs
may not be amended, waived or altered to the detriment of
any person benefitting therefrom without the written consent
of such person.
(h) SUBMISSION TO JURISDICTION; CONSENT TO
SERVICE OF PROCESS. WITH RESPECT TO ANY CLAIM ARISING OUT
OF, OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
STOCK OPTION AGREEMENT, (A) THE COMPANY AND EACH PURCHASER
EACH IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES
DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW
YORK CITY, AND (B) THE COMPANY AND EACH PURCHASER EACH
IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY
TIME TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF, OR RELATING TO THE TRANSACTIONS
CONTEMPLATED BY, THIS STOCK OPTION AGREEMENT, BROUGHT IN ANY
SUCH COURT, IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM AND FURTHER IRREVOCABLY
WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, THAT SUCH
COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. THE
COMPANY AND EACH PURCHASER EACH AGREES THAT SERVICE OF
PROCESS UPON IT IN ANY SUCH SUIT, ACTION OR PROCEEDING SHALL
BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON
IT IF GIVEN IN THE MANNER SET FORTH IN SECTION 12(d);
PROVIDED, HOWEVER, THAT SUCH SERVICE SHALL NOT BE EFFECTIVE
IF MADE ONLY BY FACSIMILE.
25
(i) GOVERNING LAW. THIS STOCK OPTION AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER
APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
[page intentionally short]
26
IN WITNESS WHEREOF, the Company and each Purchaser
have caused this Stock Option Agreement to be signed by
their respective officers thereunto duly authorized, all as
of the date first written above.
QVC NETWORK, INC.,
by
/s/ Neal S. Grabell
___________________________
Name: Neal S. Grabell
Title: Senior Vice President
and General Counsel
BELLSOUTH CORPORATION,
by
/s/ Charles C. Miller, III
___________________________
Name: Charles C. Miller, III
Title: Vice President -
Strategic Planning & Corporate
Developement
COX ENTERPRISES, INC.,
by
/s/ John R. Dillon
___________________________
Name: John R. Dillon
Title: Senior Vice President
ADVANCE PUBLICATIONS, INC.,
by
/s/ Donald E. Newhouse
___________________________
Name: Donald E. Newhouse
Title: President
STOCK OPTION AGREEMENT
EXHIBIT 1
MFJ Activities
1. In connection with its electronic retailing business, the
Company directly or indirectly (i) provides a toll-free 800
number available to the public and (ii) distributes its
programming to affiliates in multiple LATA's through uplink
facilities owned, directly or indirectly, by the Company
and satellite transponders leased, directly or indirectly,
by the Company. It is BellSouth's current view that the
foregoing activities are not violations of the MFJ,
assuming the Company has title at the time of sale (which
may be deemed to occur as late as the time of shipping) to
all goods promoted and sold through its electronic
retailing programs.
STOCK OPTION AGREEMENT
EXHIBIT 2
MFJ Transactions
1. To the extent that the Company may currently be engaged in
manufacturing telecommunications equipment, the Company
shall cease such activities.
2. The Company shall operate in a fashion such that within 15
Business Days after the exercise of the BellSouth Option,
the Company shall be able to operate, and shall operate, in
a fashion such that it has title at the time of sale (which
may be deemed to occur as late as the time of shipping) to
all goods promoted and sold through its electronic retailing
programs.
STOCK OPTION AGREEMENT
EXHIBIT 3
February 15, 1994
TERMINATION OF CERTAIN PROVISIONS OF
THE AGREEMENT AMONG STOCKHOLDERS
In connection with QVC Network, Inc.'s ("QVC") termination
of its proposed acquisition of Paramount Communications Inc.,
the parties hereto agree and acknowledge that the Agreement
Among Stockholders, dated as of November 11, 1993, shall be
terminated and that the parties thereto shall have no rights or
obligations thereunder except that (i) Comcast Corporation,
Liberty Media Corporation and Arrow Investments, L.P. shall be
bound by the provisions of paragraph 4 thereof with respect to
shares of QVC Common Stock to be issued pursuant to the Stock
Option Agreement, dated as of February 15, 1994, among QVC, Cox
Enterprises, Inc., Advance Publications, Inc. and BellSouth
Corporation and (ii) Comcast Corporation, Liberty Media
Corporation, Arrow Investments, L.P., and BellSouth Corporation
shall be bound by the provisions of paragraph 8 thereof.
COMCAST CORPORATION ARROW INVESTMENT, L.P.
By: Arrow Investments, Inc.
General Partner
By: ------------------ By: -----------------------
BELLSOUTH CORPORATION COX ENTERPRISES, INC.
By: ------------------ By: -----------------------
ADVANCE PUBLICATIONS, INC. LIBERTY MEDIA CORPORATION
By: ------------------ By: -----------------------
STOCK OPTION AGREEMENT
EXHIBIT 4
February 15, 1994
Re: Stock Option Agreement dated as of February 15, 1994, among
QVC Network, Inc. ("QVC"), Cox Enterprises, Inc., Advance
Publications, Inc. and BellSouth Corporation ("BellSouth")
In connection with the execution of the above-referenced
Stock Option Agreement by the parties thereto, the undersigned
entities acknowledge and agree to the terms of paragraph 6(g)
thereof, and further agree that such paragraph shall modify and
replace the provisions contained in paragraph 6 of the
Memorandum of Understanding, dated November 11, 1993, between
BellSouth and QVC, as in effect on the date hereof.
COMCAST CORPORATION
By: ------------------
LIBERTY MEDIA CORPORATION
By: ------------------
STOCK OPTION AGREEMENT
EXHIBIT 5
February 15, 1994
FINAL DOCUMENTATION RELATING TO
UNDERSTANDING AMONG STOCKHOLDERS
In connection with QVC Network, Inc.'s termination of its
proposed acquisition of Paramount Communications Inc., the
parties hereto agree that this agreement, together with the
Stock Option Agreement dated as of February 15, 1994 (the
"Option Agreement") among QVC Network, Inc., Cox Enterprises,
Inc., Advance Publications, Inc. and BellSouth Corporation,
constitute the definitive agreement referred to in Paragraph 1
of the Understanding Among Stockholders, dated as of
November 11, 1993 (the "UAS"), and the terms of such agreement
shall survive as though incorporated herein in their entirety,
except that in the event of any conflicts between terms in the
UAS and in the Option Agreement, the Option Agreement shall
control.
BELLSOUTH CORPORATION
By: ------------------
LIBERTY MEDIA CORPORATION
By: ------------------
COMCAST CORPORATION
By: ------------------
ARROW INVESTMENTS, L.P.
By: Arrow Investments, Inc.
General Partner
By: ------------------
Schedule 4(j)
Governmental Investigations
1. More than two years ago, the United States Federal
Trade Commission and the Office of the Attorney General of
Oregon conducted separate informal investigations into the
comparative pricing practices of QVC. QVC providedethe
information requested and has not received any further
information regarding either investigation, and no action has
been taken by either office.
2. Whether the Company must collect sales tax in certain
states has not been conclusively resolved. To the best of the
Company's knowledge there are no pending investigations or other
proceedings in any states related to this issue. QVC collects
sales tax in five state (Pennsylvania, Minnesota, Virginia,
Texas and Colorado). QVC has agreements with taxing authorities
in several other states to provide for prospective collection
and, subject to such collection, the agreements release QVC from
its obligation, if any, based on sales predating such agreement.
In approximately four states, there is no sales or use tax. In
the remaining states, QVC has received no assessments, has no
agreements with such states, and has had no contact with such
states in over a year.
Schedule 4(k)
Outstanding Capital Stock
Warrants: As of February 28, 1994, there are outstanding
warrants to purchase approximately 2,010,000 shares of Common
Stock, at prices ranging from approximately $10.00 to
approximately $17.00 per share. The warrants expire between
April 1994 and October 1996.
Options: As of November 22, 1993, the Company has granted
options to purchase approximately 8,019,925 shares of Common
Stock, at prices ranging from approximately $5 to approximately
$70. Some of the options are currently exercisable, and the
exercise periods end as late as December, 2002. These options
have been granted pursuant to the Company's employee stock
option plans, as well as independently of such plans.
Convertible Preferred Stock: Each share of the Company's
Series B Preferred Stock, Series C Preferred Stock, and Series D
Preferred Stock is convertible into ten shares of Common Stock.
As of February 28, 1994, there were 27,788 outstanding shares of
Series B Preferred Stock, 530,757 outstanding shares of Series C
preferred stock and 938 outstanding shares of Series D Preferred
Stock.
Stock Redemption Rights: Pursuant to certain Equity
Participation Agreements, the Company has the right to redeem
the shares of Common Stock granted to the participating
affiliates in connection with their Affiliation Agreements, in
the event such affiliates fail to meet certain obligations.
Future Issuance: It is anticipated that from time to time
the Company may issue in the ordinary course additional equity
securities or options to purchase equity securities to employees
and consultants, as well as for carriage.
February 15, 1994 Exhibit 99.41
Re: Stock Option Agreement dated as of February 15, 1994, among
QVC Network, Inc. ("QVC"), Cox Enterprises, Inc., Advance
Publications, Inc. and BellSouth Corporationn("
In connection with the execution of the above-referenced
Stock Option Agreement by the parties thereto, the undersigned
entities acknowledge and agree to the terms of paragraph 6(g)
thereof, and further agree that such paragraph shall modify and
replace the provisions contained in paragraph 6 of the
Memorandum of Understanding, dated November 11, 1993, between
BellSouth and QVC, as in effect on the date hereof.
COMCAST CORPORATION
By: /s/ Arthur R. Block
-------------------
LIBERTY MEDIA CORPORATION
By: /s/ Peter Barton
-------------------
Exhibit 99.42
February 15, 1994
TERMINATION OF CERTAIN PROVISIONS OF
THE AGREEMENT AMONG STOCKHOLDERS
In connection with QVC Network, Inc.'s ("QVC") termination
of its proposed acquisition of Paramount Communications Inc.,
the parties hereto agree and acknowledge that the Agreement
Among Stockholders, dated as of November 11, 1993, shall be
terminated and that the parties thereto shall have no rights or
obligations thereunder except that (i) Comcast Corporation,
Liberty Media Corporation and Arrow Investments, L.P. shall be
bound by the provisions of paragraph 4 thereof with respect to
shares of QVC Common Stock to be issued pursuant to the Stock
Option Agreement, dated as of February 15, 1994, among QVC, Cox
Enterprises, Inc., Advance Publications, Inc. and BellSouth
Corporation and (ii) Comcast Corporation, Liberty Media
Corporation, Arrow Investments, L.P., and BellSouth Corporation
shall be bound by the provisions of paragraph 8 thereof.
COMCAST CORPORATION ARROW INVESTMENT, L.P.
By: Arrow Investments, Inc.
General Partner
By: /s/ Arthur R. Block By: /s/ Barry Diller
---------------------- -------------------
BELLSOUTH CORPORATION COX ENTERPRISES, INC.
By: /s/ Charles C. Miller, By: /s/ John R. Dillon
III -------------------
----------------------
ADVANCE PUBLICATIONS, INC. LIBERTY MEDIA CORPORATION
By: /s/ Donald E. Newhouse By: /s/ Peter Barton
---------------------- -------------------
Exhibit 99.43
February 15, 1994
FINAL DOCUMENTATION RELATING TO
UNDERSTANDING AMONG STOCKHOLDERS
In connection with QVC Network, Inc.'s termination of its
proposed acquisition of Paramount Communications Inc., the
parties hereto agree that this agreement, together with the
Stock Option Agreement dated as of February 15, 1994 (the
"Option Agreement") among QVC Network, Inc., Cox Enterprises,
Inc., Advance Publications, Inc. and BellSouth Corporation,
constitute the definitive agreement referred to in Paragraph 1
of the Understanding Among Stockholders, dated as of
November 11, 1993 (the "UAS"), and the terms of such agreement
shall survive as though incorporated herein in their entirety,
except that in the event of any conflicts between terms in the
UAS and in the Option Agreement, the Option Agreement shall
control.
BELLSOUTH CORPORATION
By: /s/ Charles C. Miller, III
---------------------------
LIBERTY MEDIA CORPORATION
By: /s/ Peter Barton
---------------------------
COMCAST CORPORATION
By: /s/ Arthur R. Block
---------------------------
ARROW INVESTMENTS, L.P.
By: Arrow Investments, Inc.
General Partner
By: /s/ Barry Diller
---------------------------
