SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934*
(Amendment No. 21)
QVC, Inc.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
747262 10 3
(CUSIP Number)
Stanley L. Wang, Esq.
Senior Vice President and General Counsel
Comcast Corporation
1500 Market Street
Philadelphia, PA 19102
Tel. No. (215) 981-7510
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 4, 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 of
securities, and for any subsequent amendment containing information which
<PAGE>
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).
CUSIP No. 747262 10 3
_________________________________________________________________
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of
Above Persons
COMCAST CORPORATION
23 - 1709202
_________________________________________________________________
(2) Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
_________________________________________________________________
(3) SEC Use Only
_________________________________________________________________
(4) Source of Funds
BK, WC
_________________________________________________________________
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
[ ]
_________________________________________________________________
(6) Citizenship or Place of Organization
Pennsylvania
_________________________________________________________________
Number of (7) Sole Voting Power 0 Shares
Shares
Beneficially (8) Shared Voting Power 23,216,572 Shares
Owned by
Each Reporting (9) Sole Dispositive Power 0 Shares
Person
With (10) Shared Dispositive Power 23,216,572 Shares
_________________________________________________________________
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
23,216,572 Shares (consisting of 8,627,934 Shares held by
Comcast directly, 4,000,000 Shares previously reported to be held by
Barry Diller, 10,255,867 previously reported to be held by Liberty
Media Corporation, a Delaware corporation ("Liberty") and 332,771
Shares held by TeleCommunications, Inc., a Delaware corporation
("TCI") which may be deemed to be beneficially owned by Comcast as
part of a group with Barry Diller, with Liberty and with TCI under
Rule 13d-5 of the Act. See Item 5.)
_________________________________________________________________
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [X]
Excludes shares of Common Stock beneficially owned by the Executive Officers
and Directors of Comcast. The Reporting Person disclaims beneficial ownership
of all such shares. See Item 5.
_________________________________________________________________
(13) Percent of Class Represented by Amount in Row (11)
46.9% See Item 5.
<PAGE>
_________________________________________________________________
(14) Type of Reporting Person (See Instructions)
CO
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Amendment No. 21)
Statement Of
COMCAST CORPORATION
Pursuant to Section 13(d) of the
Securities Exchange Act of 1934
in respect of
QVC, INC.
This Report on Schedule 13D relates to the common stock, par value
$.01 per share (the "Common Stock"), of QVC, Inc. (formerly, "QVC Network,
Inc."), a Delaware corporation (the "Company"). The Report on Schedule 13D
originally filed by Comcast Corporation, a Pennsylvania corporation ("Comcast"
or the "Reporting Person"), as most recently amended by Amendment No. 20
thereto, dated as of July 22, 1994 (as amended, the "Schedule 13D"), is hereby
amended and supplemented as set forth below. The Reporting Person filed
Amendment Nos. 7 through 18 of the Schedule 13D as a member of a Reporting
Group with Barry Diller and Liberty Media Corporation, a Delaware corporation
("Liberty"). Comcast, which may be deemed to be part of a "group" with Barry
Diller and as part of another "group" with Liberty and Tele-Communications,
Inc., a Delaware corporation ("TCI") (in each case within the meaning of Rule
13d-5 under the Act), has elected to file this Report separately and not as
part of a joint filing with Mr. Diller, Liberty or TCI. All information
regarding Barry Diller, Liberty and TCI is provided to the best knowledge of
Comcast but is without verification. All capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Schedule 13D.
Item 2. Identity and Background
-----------------------
Item 2 of the Schedule 13D is hereby amended and supplemented to
include the following information:
As a result of a revised letter agreement, dated August 4, 1994,
among Comcast, Liberty and TCI (the "Bidder Agreement") (which supersedes the
Letter Agreement dated July 21, 1994 between Comcast and Liberty in its
entirety), a copy of which is filed as an exhibit hereto and is incorporated
by reference herein, Comcast, Liberty and TCI may be deemed to be a group
within the meaning of Rule 13d-5 under the Act. As a result of a letter
agreement (the "Diller Agreement"), dated August 4, 1994, among Comcast, Barry
Diller and Arrow Investments, L.P. ("Arrow", and together with Diller and
entities controlled by Diller or Arrow, the "Arrow Group"), a copy of which is
filed as an exhibit hereto and is incorporated by reference herein, Comcast,
Diller and Arrow may be deemed to be a group within the meaning of Rule 13d-5
under the Act. Under the Stockholders Agreement to which Comcast and Barry
<PAGE>
Diller were parties, as previously described in the Schedule 13D, Comcast and
Mr. Diller were deemed to be a group within the meaning of Rule 13d-5 under
the Exchange Act. This Stockholders Agreement is being terminated,
subject to the absence or waiver of any inconsistent agreements (as
described in Item 4 below).
Item 3. Source and Amount of Funds or Other Consideration
_________________________________________________
Item 3 of the Schedule 13D is hereby amended and supplemented to
include the following information:
The total cost of the acquisition (as described in Item 4 below)
of the remainder of the Company's stock not currently owned by Comcast or
Liberty will be approximately $1.42 billion. Comcast and Liberty have agreed
to fund approximately $267 million and $20 million respectively, of the
acquisition with the balance to be provided through debt financing, which,
after the merger will be an obligation of the Company.
Item 4. Purpose of Transaction
______________________
Item 4 of the Schedule 13D is hereby amended and supplemented to
include the following information:
On August 4, 1994, Comcast, Liberty, Comcast QMerger, Inc., a
Delaware corporation ("QMerger"), and the Company executed a definitive merger
agreement (the "Merger Agreement") pursuant to which Comcast and Liberty will
acquire the Company. In accordance with the Merger Agreement, the Offer will
commence on or prior to Thursday, August 11, 1994 for all of the outstanding
shares of Common Stock at a price of $46 per share in cash and for all of the
outstanding shares of Preferred Stock at a price of $460 per share in cash.
Following expiration of the Offer, a wholly-owned subsidiary of QMerger will
merge with and into the Company and any remaining shares of the Company will be
converted into cash at the same price as offered in the Offer. Following the
Merger, Comcast and Liberty will own approximately 57% and 43%, respectively,
of the QMerger.
The Offer is conditioned upon (i) Comcast and Liberty acquiring a
number of Shares which, together with the Shares already owned by Comcast and
Liberty, represent, on a fully diluted basis, a majority of the outstanding
shares of Common Stock of the Company, (ii) Comcast and Liberty obtaining the
requisite financing on satisfactory terms to purchase all of the outstanding
shares of the Company and (iii) the receipt of certain governmental approvals.
The Company has agreed that if the Merger Agreement is terminated
in certain circumstances prior to consummation of the Merger, the Company will
pay $55 million to Comcast and Liberty, which will first be applied to fees
and expenses incurred in connection with the transactions contemplated by the
Merger Agreement, and then will be divided evenly between Comcast and Liberty.
The Board of Directors of the Company has determined that the
transactions contemplated in the Merger Agreement, including the Merger and
the Offer are fair and in the best interests of the Company's shareholders
other than Comcast and Liberty.
Also on August 4, 1994, Comcast, Liberty and TCI executed the
Bidder Agreement pursuant to which Comcast and Liberty, among other things,
amended the Offer from $44 per share of Common Stock to $46 per share of
Common Stock and $460 per share of Preferred Stock. Comcast and Liberty also
agreed to contribute to QMerger their respective holdings in Common Stock, or
securities convertible into Common Stock. Comcast has also agreed to
contribute to QMerger an amount of cash approximately equal to $267 million
<PAGE>
plus the amount necessary to exercise all warrants to acquire Common Stock
that it agreed to simultaneously contribute to QMerger. Liberty agreed to
contribute approximately $20 million cash to QMerger. In addition, Comcast
and Liberty agreed to arrange financing required by the Merger Agreement and
to cause the Company to waive any remaining rights it may have pursuant to the
Company Repurchase Rights (as defined in the Stockholders Agreement).
Comcast, Liberty and TCI have agreed to vote all of their respective shares of
Common Stock in favor of the Merger.
Also on August 4, 1994, Comcast, Arrow and Barry Diller entered
into the Diller Agreement pursuant to which the Stockholders Agreement and
all obligations thereunder were terminated, subject to the absence or
waiver of any inconsistent agreements, provided, however, that if the
Merger Agreement is terminated, the Stockholders Agreement will be restored
immediately. Diller agreed to vote, as a Director of the Company, in favor
of the Merger Agreement and the transactions contemplated therein, subject
to Diller's fiduciary duties as a member of the Board of Directors. The
Arrow Group agreed to tender all shares of Common Stock owned by it
pursuant to the Offer and to vote in favor of the Merger Agreement and the
Merger and against any similar transaction involving the Company unless
Comcast or Liberty consents. Diller and Arrow agreed that neither will
solicit a proposal with respect to an Alternative Transaction (as defined
in the Merger Agreement) other than as permitted under the Merger
Agreement. Further, Comcast agreed to continue Diller's employment under
the Equity Compensation Agreement until December 12, 1994.
The description contained herein of the Bidder Agreement, the
Merger Agreement and the Diller Agreement is qualified in its entirety by
reference to such agreements, copies of which are filed as Exhibits 99.48,
99.49, and 99.50, respectively, hereto and are incorporated by reference
herein.
Notwithstanding anything contained herein, Comcast reserves the
right, depending on other relevant factors to change its intention with
respect to any and all of the matters as referred to in Item 4 of this Report.
Item 5. Interest in Securities of the Issuer
____________________________________
Item 5 is hereby amended and supplemented to include the following
information:
(a) As of the date hereof, the beneficial ownership by Comcast
of equity securities of the Company, the total amounts thereof now outstanding
and the percentage of said ownership are set forth in the table below. Except
as noted therein, such table: (i) includes all of the Company's securities as
to which Comcast has sole voting power or sole investment power and all such
securities as to which Comcast shares voting power or shares investment power;
(ii) assumes that there is no exercise by the Company of its right to require
Comcast to sell certain of the securities held by it to the Company in the
event that certain carriage requirements related to the Company's programming
are not met (the "Company Repurchase Rights"); and (iii) assumes the exercise
of all Warrants, the conversion of all shares of Preferred Stock (all of which
are presently exercisable or convertible) beneficially owned by Comcast and
the adjustment of the number of shares of the Company's Common Stock that
would be outstanding subsequent to such exercise or conversion.
According to the Company's representation in the Merger Agreement,
the number of shares of the Common Stock which were issued and outstanding as
of June 30, 1994 was 40,226,197.
<TABLE>
<S> <C> <C> <C> <C>
Registered Equity No. of Shares Adjusted Shares % Beneficially
Securities Beneficially Owned to be Outstanding owned
------------------- -------------------- ------------------- ----------------
Comcast Common Stock 8,627,934(1,2) 42,646,697 20.2%
</TABLE>
<PAGE>
(1) The shares of Preferred Stock beneficially owned by Comcast may be
subject to Company Repurchase Rights. The Company Repurchase Rights relating
to the Preferred Stock are exercisable until 2004. However, Comcast and
Liberty have agreed that following the Merger they will cause the Company to
waive all such Company Repurchase Rights.
(2) Includes 720,500 shares of Common Stock issuable upon the conversion
of 72,050 shares of Preferred Stock and 1,700,000 shares of Common Stock
issuable upon the exercise of certain Warrants. Does not include any shares
of Common Stock which may be considered beneficially owned by Comcast as a
result of the relationship of Mr. Brian L. Roberts, Mr. Ralph J. Roberts or
Sural Corporation to Comcast. Also excludes shares of Common Stock
beneficially owned by the Executive Officers and Directors of Comcast and
Sural. Does not include any shares of Common Stock beneficially owned by
Barry Diller, Arrow, Liberty or TCI, who may be deemed to be part of a group
with Comcast within the meaning of Rule 13d-5 under the Act. Mr. Diller has
previously reported on Schedule 13D beneficial ownership of 4,000,000 shares
of Common Stock (which includes options to purchase 3,000,000 shares of Common
Stock which are presently exercisable), Liberty has previously reported on
Schedule 13D beneficial ownership of 10,255,867 shares of Common Stock (which
includes 372,866 shares of Series B and Series C Preferred Stock presently
convertible into 3,728,660 shares of Common Stock) and TCI has previously
reported on Schedule 13D beneficial ownership of 332,771 shares of Common
Stock (which includes 17,922 shares of Series B Preferred Stock presently
convertible into 179,220 shares of Common Stock) which if deemed to be
beneficially owned by Comcast would result in Comcast having beneficial
ownership of 23,216,572 shares of Common Stock or about 46.9% of the fully
diluted outstanding shares of Common Stock.
To the knowledge of Comcast, the number of shares of Common Stock
beneficially owned by its executive officers, directors and controlling
persons listed on Schedule 1 to the Schedule 13D (beneficial ownership of
which shares is disclaimed by Comcast) is set forth below:
No. of Shares of Common
Individual Stock Beneficially Owned
__________ ________________________
Ralph J. Roberts 5,000(3)
Brian L. Roberts 750
Daniel Aaron 1,500
Irving A. Wechsler 12,000
Sheldon M. Bonovitz 1,500(4)
Suzanne F. Roberts 5,000(5)
Anne Wexler 500
Robert B. Clasen 1,000(6)
(3) Excludes 5,000 shares beneficially owned by Suzanne F. Roberts, Mr.
Roberts' wife, as to which shares Mr. Roberts disclaims beneficial ownership.
(4) Excludes 6,500 shares owned by certain trusts of which Mr. Bonovitz
serves as trustee and 1,000 shares beneficially owned by Mr. Bonovitz' wife,
as to which shares Mr. Bonovitz disclaims beneficial ownership.
(5) Excludes 5,000 shares beneficially owned by Ralph J. Roberts, Mrs.
Roberts' husband, as to which shares Mrs. Roberts disclaims beneficial
ownership.
<PAGE>
(6) Mr. Clasen purchased his shares in open market transactions on April
14, 1994 at $39 per share.
(b) Pursuant to the Bidder Agreement, Liberty, TCI and Comcast
have an agreement with respect to the disposition or voting of the outstanding
equity securities of the Company and Comcast has shared beneficial ownership
of Common Stock beneficially owned by Liberty and TCI. Pursuant to the Diller
Agreement, Barry Diller and Comcast have an agreement with respect to the
disposition or voting of the outstanding equity securities of the Company and
Comcast has shared beneficial ownership of Common Stock beneficially owned by
Barry Diller.
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 contained in Item 4 is incorporated herein by
reference.
Comcast, Liberty and TCI (but as to TCI, only with respect to
clauses (i) and (iv) below) have agreed to (i) vote all shares of the
Company's capital stock in which it has, directly or indirectly, the power
to vote or control the voting of, in favor of the Merger and the related
matters provided for in the Merger Agreement, (ii) not sell or dispose of
any shares of the Company's capital stock (or rights to acquire such
shares) owned (now or at any time prior to the Merger), directly or
indirectly, by it or enter into any agreement, arrangement or understanding
with any other person the effect of which is to limit or restrict its right
to vote such shares in accordance with the terms of the Bidder Agreement,
(iii) not enter into any agreement, arrangement or understanding with any
person with respect to the purchase, sale or voting of shares of the
Company, and (iv) not solicit or encourage any Alternative Transaction (as
defined in the Merger Agreement).
Further, if any proposal for an Alternative Transaction which offers
an amount per share greater than that offered in the Merger (a "Superior
Proposal") shall be received by the Company prior to the consummation of the
Merger, Comcast and Liberty agree to use all reasonable efforts, acting in
good faith, to agree on a response to such Superior Proposal.
The description contained herein of the Merger Agreement or the Bidder
Agreement is qualified in its entirety by reference to such agreements, copies
of which are filed as exhibits hereto and are 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:
Exhibit Title
------- -----
99.48 Letter Agreement dated August 4, 1994 among Comcast
Corporation, Liberty Media Corporation and Tele-
Communications, Inc.
99.49 Agreement and Plan of Merger, dated August 4, 1994 among
Comcast Corporation, Liberty Media Corporation, Comcast
QMerger, Inc. and QVC, Inc.
<PAGE>
99.50 Letter Agreement, dated August 4, 1994, among Comcast
Corporation, Liberty Media Corporation and Barry Diller.
99.51 Press Release dated August 4, 1994 of Comcast Corporation and
Liberty Media Corporation.
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: August 8, 1994
COMCAST CORPORATION
By: /s/ Julian A. Brodsky
Name: Julian A. Brodsky
Title: Vice Chairman
EXHIBIT 99.48
COMCAST CORPORATION
1500 Market Street
Philadelphia, PA 19102-4735
August 4, 1994
LIBERTY MEDIA CORPORATION
8101 East Prentice Avenue
Suite 500
Denver, Colorado 80111
Gentlemen:
This letter agreement (the "Agreement") confirms our agreement
with respect to the joint acquisition (the "Acquisition") of QVC, Inc. ("QVC")
on the terms described in the Merger Agreement (the "Merger Agreement") dated
the date hereof among Comcast Corporation ("Comcast"), Liberty Media
Corporation ("Liberty"), Comcast QMerger, Inc. ("QVC Holdings") and QVC. This
Agreement supersedes in its entirety the agreement dated July 21, 1994 between
Comcast and Liberty which, effective upon the execution and delivery of this
Agreement, shall terminate. Simultaneously with the execution of this
Agreement, Comcast, Arrow Investments, L.P. ("Arrow") and Barry Diller are
entering into a letter agreement (the "Letter Agreement") relating to the
Acquisition.
1. The Acquisition. Comcast and Liberty agree to proceed
with the transactions contemplated by this Agreement and the Merger Agreement
jointly and to use all reasonable efforts to cause the transactions
contemplated by this Agreement and the Merger Agreement to be consummated as
promptly as practicable. Until the merger (the "Merger") contemplated by the
Merger Agreement is consummated, except as provided in Section 7, all material
decisions with respect to the Acquisition shall be unanimous. Comcast and
Liberty agree to use all reasonable efforts, acting in good faith, to resolve,
on a mutually acceptable basis, any disagreements they may have with respect
to such material decisions.
In connection with the Acquisition, Comcast and Liberty shall
contribute to QVC Holdings (simultaneously with QVC Holdings' acceptance for
payment of shares tendered pursuant to the Offer (as defined in the Merger
Agreement)) the QVC securities (or shares of QVC common stock into which such
securities are convertible) as are respectively specified on Schedule IV.
Comcast will also contribute at such time to QVC Holdings an amount of cash
equal to (i) the amount necessary to exercise all warrants to acquire QVC
common stock that are contributed by Comcast to QVC Holdings (which warrants
shall be exercised immediately following such contribution) and (ii) $267
million (the "Comcast Additional Contribution"). Liberty will also contribute
at such time to QVC Holdings $20 million, in cash (the "Liberty Additional
Contribution"). Based upon the parties' relative contributions (with all
shares valued at $46 per share of common stock or common stock equivalent) to
QVC Holdings, following the Merger the equity interests in QVC Holdings will
be owned 57.4% by Comcast and 42.6% by Liberty. The parties agree that all
such contributions shall be made by, and the equity interests in QVC Holdings
received in consideration therefor shall be issued to, wholly-owned
subsidiaries of Comcast or Liberty, as the case may be.
The parties agree to work together to arrange the financing
required by the Merger Agreement, as heretofore proposed by Comcast, including
(i) a margin credit facility to be made available to QVC Holdings for purposes
of purchasing shares of QVC capital stock tendered pursuant to the Offer,
which margin credit facility shall be secured by the shares of QVC capital
stock purchased in the Offer and the shares contributed to QVC Holdings as
provided above; and (ii) permanent financing to be put in place in connection
with the Merger consisting of (A) $200 million of subordinated debt of QVC
Holdings and (B) a $950 million senior secured bank facility to be made
available to QVC which, together with the proceeds of such subordinated debt,
shall be used to repay the margin tender offer facility, to pay for shares of
QVC acquired in the Merger, to pay certain fees and expenses of the
transaction (and/or reimburse the parties for certain previously paid fees and
expenses as provided below) and to provide certain working capital to QVC.
Neither Comcast nor Liberty shall be required to give any guarantee or similar
credit support to QVC Holdings or QVC in connection with any such financing
referred to in clauses (i) and (ii) above.
In connection with the consummation of the Merger, Comcast and
Liberty agree to cause QVC (i) to waive any remaining rights that it may have
pursuant to the Company Repurchase Rights (as defined in the Stockholders
Agreement (the "Stockholders Agreement") dated July 16, 1993 among Comcast,
Liberty, Barry Diller and Arrow) (or any similar contingent right of QVC to
reacquire shares of its capital stock) with respect to all shares of capital
stock of QVC (or rights to acquire such shares) currently held by Liberty, TCI
or Comcast (or any of their respective direct and indirect subsidiaries and
affiliates); and (ii) to agree that all of such shares (and related rights)
are vested and no longer subject to such repurchase rights.
2. Post-Merger Structure. Following the Merger, the charter
and by-laws of QVC Holdings will provide that matters submitted to the board
of directors or to the shareholders of QVC Holdings shall be determined by a
majority vote of the directors or shareholders, as the case may be. The
parties also agree that without the consent of Liberty, QVC Holdings may not
take or cause or permit to be taken any of the actions set forth on Schedule I
hereto.
Each of Comcast and Liberty will be entitled to cause its
shares of QVC Holdings to be registered under the Securities Act of 1933 in
the manner set forth in Schedule II hereto, subject to a right of first
refusal by the other party. Unless Liberty through the exercise of its demand
registration rights set forth in Schedule II shall have been the party which
first caused the common stock of QVC Holdings to be registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), then Liberty
may at any time during the 60-day period following the fifth anniversary of
the Merger (or if not previously exercised, at any time during the 60-day
period following each of the sixth, seventh, eighth and ninth anniversaries of
the Merger) exercise its exit rights set forth in Schedule III. All other
transfers (except to majority-owned affiliates that agree to be bound by all of
the terms of the definitive agreement referred to below) will be subject to a
right of first refusal to the other party except that a change of control of
Liberty Parent (as defined in Schedule III), Comcast, any successor controlling
shareholder thereof or any subsidiary thereof in which QVC Holdings securities
do not constitute more than 50% of such subsidiary asset shall not be deemed
to trigger such rights of first refusal.
The foregoing provisions of this Section 2 will be included in
a definitive stockholders' agreement to be prepared and executed by the
parties hereto as soon as practicable, but in any event prior to the
consummation of the Offer.
3. Representations and Warranties of Comcast. Comcast
represents and warrants to Liberty that: (a) Comcast is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, and has full power and authority to execute,
deliver and perform this Agreement and the performance of Comcast's
obligations hereunder have been duly authorized by all necessary action
(corporate or other) on the part of Comcast; (b) this Agreement has been duly
executed and delivered by Comcast and, assuming the due execution and delivery
thereof by Liberty and TCI, is a valid and binding obligation of Comcast,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting the rights of creditors generally and by general
principles of equity; (c) the execution and delivery of this Agreement and the
performance of Comcast's obligations hereunder will not (i) require the
consent, approval or authorization of, or any registration, qualification or
filing with, any governmental agency or authority or any other person or (ii)
conflict with or result in a material breach or violation of (A) any material
agreement to which Comcast is a party or (B) assuming expiration of all
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), without objection to the transactions
contemplated hereby by the DOJ or the FTC, any applicable law or regulation;
(d) except for certain Delaware shareholder suits, there is no litigation,
governmental or other proceeding, investigation or controversy pending or, to
Comcast's knowledge, threatened against Comcast relating to the transactions
contemplated by this Agreement; (e) except for filings under the HSR Act, no
consent, approval or authorization of, nor any registration, qualification or
filing with, any governmental agency or authority or any other person is
required in order for Comcast to execute, deliver or perform this Agreement;
(f) neither Comcast nor any of its subsidiaries or affiliates has any
remaining obligations under the Stockholders Agreement (or any successor or
other similar agreement); and (g) Comcast has good title to all of the QVC
securities set forth under its name on Schedule IV hereto, subject to no
liens, claims or encumbrances (including pursuant to the Stockholders
Agreement or any successor or other similar agreement) other than pursuant to
the Company Repurchase Rights (or any similar contingent rights of QVC).
4. Representations and Warranties of Liberty. Liberty
represents and warrants to Comcast that: (a) Liberty is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and has full power and authority to execute, deliver and perform
this Agreement and the performance of Liberty's obligations hereunder have
been duly authorized by all necessary action (corporate or other) on the part
of Liberty; (b) this Agreement has been duly executed and delivered by Liberty
and, assuming the due execution and delivery thereof by Comcast and TCI, is a
valid and binding obligation of Liberty, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the rights of
creditors generally and by general principles of equity; (c) the execution and
delivery of this Agreement and the performance of Liberty's obligations
hereunder will not (i) require the consent, approval or authorization of, or
any registration, qualification or filing with, any governmental agency or
authority or any other person or (ii) conflict with or result in a material
breach or violation of (A) any material agreement to which Liberty is a party
or (B) assuming expiration of all applicable waiting periods under the HSR Act
without objection to the transactions contemplated hereby by the DOJ or the
FTC, any applicable law or regulation; (d) Liberty has previously made filings
(and the applicable waiting period has expired) under the HSR Act with respect
to the acquisition of up to 49.9% of the shares of common stock of QVC; (e)
except for certain Delaware shareholder suits, there is no litigation,
governmental or other proceeding, investigation or controversy pending or, to
Liberty's knowledge, threatened against Liberty relating to the transactions
contemplated by this Agreement; and (f) except for filings under the HSR Act,
no consent, approval or authorization of, nor any registration, qualification
or filing with, any governmental agency or authority or any other person is
required in order for Liberty to execute, deliver or perform this Agreement;
and (g) Liberty has good and valid title to all of the QVC securities set
forth under its name on Schedule IV hereto, subject to no liens, claims or
encumbrances other than pursuant to the Company Repurchase Rights (or any
similar contingent rights of QVC).
5. Covenants of Liberty, Comcast and TCI. Each of Liberty,
Comcast and TCI (but as to TCI, only with respect to clauses (i) and (iv)
below) agree that it will (i) vote (or, if requested by any other party
hereto, cause QVC Holdings to exercise all warrants and convert all shares of
QVC preferred stock contributed to QVC Holdings and to vote) all shares of QVC
capital stock in respect of which it has, directly or indirectly, the power to
vote or control the voting of, in favor of the Merger and the related matters
provided for in the Merger Agreement; (ii) except for transfers to QVC
Holdings as provided above, not sell or dispose of any shares of QVC capital
stock (or rights to acquire such shares) owned (now or at any time prior to
the Merger), directly or indirectly, by it or enter into any agreement,
arrangement or understanding with any other person the effect of which is to
limit or restrict its right to vote such shares in accordance with the terms
of this Agreement; (iii) not enter into any agreement, arrangement or
understanding with any other person with respect to the purchase, sale or
voting of shares of QVC; and (iv) not solicit or encourage any Alternative
Transaction (as defined in the Merger Agreement).
If any proposal for an Alternative Transaction which offers an
amount per share greater than that offered in the Merger (a "Superior
Proposal") shall be received by QVC prior to the consummation of the Merger,
Comcast and Liberty agree to use all reasonable efforts, acting in good faith,
to agree on a response to such Superior Proposal. If the parties are unable to
agree on such response, each of Liberty and Comcast shall have the right to
propose to QVC one or more other transactions at a price in excess of $46 per
share of QVC common stock; provided that, if both Liberty and Comcast desire
to make proposals and such proposals are different, then Liberty and Comcast
shall use all reasonable efforts to resolve any such difference, or if they
are unable to do so then Lazard Freres & Co. shall determine the manner in
which such difference shall be resolved. Prior to making each such proposal
to QVC, the party making such proposal (the "Proposing Party") shall offer to
the other party (the "Responding Party") the right to participate in such
transaction substantially on the terms contemplated by this Agreement except
that the Comcast Additional Contribution (other than such of it as is
attribute to the Warrant exercise) and the Liberty Additional Contribution
shall be increased proportionately such that QVC Holdings shall continue to be
owned following the Merger 57.4% and 42.6% by Comcast and Liberty,
respectively (such increase to be in cash or such other consideration as the
parties shall agree). If the Responding Party fails to accept such proposal
within 48 hours, this Agreement shall terminate; provided, that
notwithstanding any such termination, the provisions of the first paragraph of
this Section 5 shall remain binding on each party with respect to the most
recent of such proposals made by a Proposing Party to the extent that the
shares of QVC stock held by the Responding Party and TCI (if Liberty is the
Responding Party) are treated in such proposal the same as all other shares
held by QVC shareholders other than the Proposing Party (and any other joint
bidder with the Proposing Party) but only until such Proposing Party withdraws
or otherwise terminates all such proposals (of which withdrawal or termination
such Proposing Party shall promptly notify the other parties hereto). The
provisions of this paragraph shall apply to successive Superior Proposals (as
well as successive responses by a Proposing Party).
In addition, Comcast agrees that in the event Liberty is the
Proposing Party and Comcast has not elected to participate in the transaction
being proposed by Liberty, that Comcast shall cooperate fully with Liberty
with respect to any consents or approvals Comcast is entitled to grant
pursuant to the Letter Agreement, and that upon the written request of
Liberty, Comcast shall grant or withhold such approvals and consents as
Liberty shall direct.
6. Mutual Covenants. Each of Comcast and Liberty agree,
following consummation of the Merger, to cooperate in good faith to cause QVC
and Home Shopping Network, Inc. to pursue jointly business opportunities
outside the United States and Canada. The parties also agree that following
consummation of the Merger, no party shall be under any obligation (legal or
otherwise) to offer to QVC or any other party any business opportunity which
any of them may now or thereafter desire to pursue.
7. Regulatory Approvals. The obligations of the parties
under this Agreement will be conditioned upon the receipt of all necessary
governmental and agency approvals required for the consummation of the
transactions contemplated hereby, including but not limited to, compliance
with all securities laws and the termination of all applicable waiting periods
under the HSR Act; provided that, either Comcast or Liberty shall be entitled
to cause QVC Holdings to terminate the Offer as provided in the Merger
Agreement (and in connection therewith, the Merger Agreement pursuant to
8.01(b)(x) thereof) in the event that all waiting periods applicable to the
Acquisition and the related transactions under the HSR Act have not terminated
prior to December 31, 1994.
8. Fees and Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby (other
than any costs and expenses related to the Comcast Additional Contribution or
the Liberty Additional Contribution, which shall be paid by Comcast and
Liberty, respectively) shall be paid or reimbursed by QVC following the
Merger, or if the Merger is not consummated, then paid by the party incurring
such expenses (except for financing and financial advisory fees not related
to the Comcast Additional Contribution or the Liberty Additional Contribution,
which shall be borne equally by the parties).
If QVC makes a payment pursuant to Section 8.05(b) of the
Merger Agreement, then all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid out of the
proceeds of such payment. After the payment of all such costs and expenses,
any remainder of the proceeds of such payment shall be divided equally between
Comcast and Liberty.
9. Indemnification. If any act or omission of a party
causes the termination of the Merger Agreement pursuant to Section 8.01(b)(z)
thereof, then such party shall indemnify the other party for any loss, damage
or expense such other party may incur or suffer as a result of such
termination. If an act or omission by MergerCo (as defined in the Merger
Agreement) causes such termination pursuant to Section 8.01(b)(z), of if the
acts or omissions of both parties cause or contribute to such loss, damage or
expense, then such loss, damage or expense shall be allocated among Comcast
and Liberty in proportion to the relative fault of each party.
10. Governing Law. This letter shall be governed by and
construed in accordance with the substantive law of the State of New York.
11. Termination. Except as provided in Section 5, the
obligations of the parties hereunder shall only terminate if the Merger
Agreement is terminated pursuant to Section 8.01(a) through (d) thereof or
pursuant to Section 8.01(e) (except in the case of the making of a Superior
Proposal to which the second paragraph of Section 5 above applies).
12. Binding Obligation. It is understood that this letter
agreement constitutes a legally binding obligation of the parties hereto. The
parties acknowledge and agree that the proposed business combination of TCI
and Liberty shall not constitute a sale or transfer of the shares of QVC
capital stock held by Liberty.
Very truly yours,
COMCAST CORPORATION
By: /s/ Brian L. Roberts
--------------------
Name: Brian L. Roberts
Title: President
Agreed to:
LIBERTY MEDIA CORPORATION
By: /s/ Peter Barton
--------------------
Name: Peter Barton
Title: President
TELE-COMMUNICATIONS, INC.
Agreed to, as to clauses (i) and
(iv) of Section 5 only:
By: /s/ John Malone
--------------------
Name: John Malone
Title:
SCHEDULE I
MANAGEMENT STRUCTURE
Management Subsequent to the Merger, the Management
Committee: Committee of QVC Holdings will be comprised of three
representatives appointed by Comcast and two
representatives appointed by Liberty; provided, that each
of such representatives shall be reasonably acceptable to
the other party.
Day-to-Day The day-to-day operations of QVC Holdings
Management: will be managed by Comcast. Comcast shall use reasonable
efforts to manage QVC Holdings in the best interests of
QVC Holdings, subject to the provision of this Agreement.
Significant Neither QVC Holdings nor QVC shall engage in
Transactions: any of the following transactions or take any of the
following actions unless approved in advance by Liberty:
(i) any transaction or action which would result in QVC
Holdings, directly or indirectly, (x)
conducting or engaging in any business other
than the Primary Business, (y) participating
(whether by means of a management, advisory,
operating, consulting or similar agreement or
arrangement) in a business other than the
Primary Business, or (z) having any record or
beneficial equity interest, either as a
principal, trustee, stockholder, partner, joint
venturer or otherwise, in any Person not
primarily engaged in the Primary Business (a
"Restricted Person"); provided, however, that
the beneficial ownership for investment
purposes of ten percent (10%) or less of the
equity of any such Restricted Person shall not
constitute a violation of this clause; the term
"Primary Business" shall mean the business of
(x) marketing of goods or services over any
electronic media (other than principally
entertainment programming) and (y) any
activities ancillary thereto or vertically
integrated therewith (including, without
limitation, manufacturing, production,
warehousing and distribution of such goods and
services and customer financing);
(ii) any transaction not in the ordinary course of
business, launching new or additional channels or
engaging in any new field of business, in each
case, which would result in, or would have a
reasonable likelihood of resulting in, Liberty or
any of its affiliates being required (pursuant to
any law, statute, rule, regulation, order or
judgement promulgated or issued by any court of
competent jurisdiction or the United States
government or any Federal governmental,
regulatory, or administrative authority or agency
or tribunal) to divest itself of its QVC Holdings
securities, or interests therein, or any other
assets of such entity, or which would render such
entity's continued ownership of such stock or
assets illegal or subject to the imposition of a
fine or penalty or which would impose material
restrictions or limitations on such entity's full
rights of ownership (including, without
limitation, voting) thereof or therein;
(iii) the disposition, directly or indirectly by QVC
Holdings (or any subsidiary thereof) in a
transaction or series of transactions not in the
ordinary course of business of QVC Holdings or
any subsidiary of QVC Holdings, of a material
amount of the assets of QVC Holdings or any such
subsidiary (to be defined in the definitive
agreements), except for pledges, grants of
security interests, security deeds, mortgages or
similar encumbrances securing bona fide
indebtedness;
(iv) the merger or consolidation of QVC Holdings or QVC
(except (A) a merger between a wholly-owned
subsidiary and QVC Holdings or QVC where QVC
Holdings or QVC, as the case may be, is the
surviving entity of such merger and where there
is no change in any class or series of
outstanding capital stock of QVC Holdings or
QVC, as the case may be, or (B) a merger
between QVC Holdings and QVC in which QVC
Holdings is the surviving entity of such merger
and there is no change in any class or series
of outstanding capital stock of QVC Holdings)
or the dissolution or liquidation of QVC
Holdings;
(v) any amendments to the Certificate of Incorporation
or By-Laws of QVC Holdings;
(vi) the issuance, grant, offer, sale, acquisition,
redemption or purchase by QVC Holdings or QVC of
any shares of its capital stock or other equity
securities, or any securities convertible into,
or options, warrants or rights of any kind to
subscribe to or acquire, any shares of its
capital stock or other equity securities; any
split-up, combination or reclassification of the
capital stock of QVC Holdings or the entering
into of any contract, agreement, commitment or
arrangement with respect to any of the foregoing,
except that QVC Holdings may issue an aggregate
of up to 1% of its capital stock (at any time
outstanding) pursuant to employee stock options
granted to employees on or after the closing and
repurchase stock or options from present or
former employees;
(vii) the amendment or modification of any outstanding
options, warrants or rights to acquire, or
securities convertible into, shares of the capital
stock or other securities of QVC Holdings or of
any outstanding stock
option or stock purchase plans or agreements;
(viii) the filing by QVC Holdings (or any material
subsidiary thereof) of a petition under the
Bankruptcy Act or any other insolvency law, or the
admission in writing of its bankruptcy, insolvency
or general inability to pay its debts;
(ix) except with the consent of Liberty (such consent
not to be unreasonably withheld), the commencement
or settlement of litigation or arbitration which
is other than in the ordinary course of business
and is likely to have
a material impact on QVC Holdings and its
subsidiaries, taken as a whole;
(x) the entering into by QVC Holdings or any of its
subsidiaries of material contracts, except any
such contract which is connected with carrying on
the Primary Business; and
(xi) (a) without the consent of Liberty, such consent
not to be unreasonably withheld, any transactions
between QVC Holdings or any of its affiliates and
Comcast or any of its affiliates or associates,
other than transactions between Comcast and its
affiliates or
associates and QVC Holdings and its affiliates
that are on armslength terms (which Comcast shall
advise Liberty of) and
(b) agreements between QVC Holdings or its
affiliates and Comcast or its affiliates or
associates relating to
carriage of the Primary Business which are on
terms no more favorable than those granted to
Liberty and its affiliates.
Corporate Notwithstanding anything contained herein, neither
Opportunities: party (nor the directors, officers, members of the
Management Committee, employees or agents of QVC
Holdings or any subsidiary who are also directors,
officers, employees or agents of either party)
shall be obligated to present any corporate opportunity
to QVC Holdings or its subsidiaries and each such party
shall be free to pursue such opportunity for its
sole benefit.
Transfer of Upon the occurrence of a Management Transfer Event (as
Management defined below), day-to-day management of QVC Holdings
Functions: shall be transferred from Comcast to Liberty and
Liberty shall thereafter be entitled to appoint three
representatives of the Management Committee and Comcast
shall be entitled to appoint two such representatives.
From and after the date of the Management Transfer
Event, (a) all rights and obligations of Comcast, as
manager of the business of QVC Holdings, shall
terminate and Liberty shall thereafter succeed to all
such rights and obligations, and (b) any right to
consent to the taking of any action theretofore granted
to Liberty shall become the right of Comcast upon the
same terms and conditions.
The term "Management Transfer Event" shall mean the
first to occur of (x) the delivery of written notice by
Liberty to Comcast exercising Liberty's right to
purchase all of the common stock of QVC Holdings held
by Comcast and its subsidiaries pursuant to Paragraph D
of Schedule III of this Agreement and (y) a Comcast
Purchase Default (as defined in Schedule III of this
Agreement)
SCHEDULE II
Following the Merger, each of Comcast and Liberty shall be entitled to
three demand registrations with respect to their stock of QVC Holdings
pursuant to customary registration rights agreements to be included in the
definitive agreement referred to in paragraph 2 of this Agreement. Prior
to the time QVC Holdings has publicly-traded common stock, the price at
which the nondemanding party may purchase the shares proposed to be
registered of the demanding party pursuant to the right of first refusal
shall be based upon a projected initial secondary public offering price of
QVC Holdings common stock as determined by three investment bankers (one
chosen by Comcast, one chosen by Liberty and, if they cannot agree, by a
third independent investment banker chosen by the first two investment
bankers).
SCHEDULE III
A. In the event that Liberty, through the exercise of its demand
registration rights set forth in Schedule II of this Agreement, shall not
have been the party which first caused the common stock of QVC Holdings to
be registered under the Exchange Act, then Liberty shall have the right at
any time during the 60-day period following the fifth anniversary of the
Merger (or if not previously exercised, at any time during the 60-day
period following each of the sixth, seventh, eighth and ninth anniversaries
of the Merger)) to exercise its exit rights hereunder by notice in writing
to Comcast, whereupon Liberty and Comcast shall seek to agree upon the
"Fair Market Value" of QVC Holdings on the date such notice is given. The
"Fair Market Value" of QVC Holdings shall mean the fair market value of QVC
Holdings on a going concern or liquidation basis, whichever method would
yield the highest valuation. The Fair Market Value of QVC Holdings on a
going concern basis shall take into account such considerations as would
customarily affect the price at which a willing seller would sell and a
willing buyer would buy QVC Holdings as a going concern in an arms-length
transaction in which such buyer purchases all of the stock of QVC Holdings.
The Fair Market Value of QVC Holdings on a liquidation basis shall take
into account tax liabilities that would be incurred on a liquidation
assuming the most tax efficient and practical plan of liquidation.
B. If Liberty and Comcast are unable to agree upon the Fair Market Value
within 30 days, then such value shall be determined pursuant to the
appraisal process hereafter described. Liberty and Comcast shall, within
15 days after the expiration of such 30-day period, each designate a
qualified independent appraiser to determine such value. Such appraisers
shall submit their written appraisals not later than 45 days after the date
of their retention. If the amount of the higher of the two appraisals is
greater than 110% of the amount determined in the lower appraisal, then a
third qualified independent appraiser designated by the first two qualified
independent appraisers shall be retained promptly by Liberty and Comcast
and shall deliver its written appraisal within 30 days after the date of
such retention. If any valuation is made pursuant to such appraisal
process, the value to be determined shall be the average of the first two
appraisals, if only two appraisals are required, or if three appraisals are
required, the average of the two closest appraisals (or if there are not
two closest appraisals, the average of all three such appraisals). The
term "qualified independent appraiser" shall mean a nationally recognized
appraiser or investment banking firm with substantial experience in
evaluating significant communications properties, including cable
television programming businesses, that is not directly or indirectly
affiliated with any party to this Agreement and which has no interest
(other than the receipt of customary fees) in any of the transactions
contemplated hereby.
C. Comcast shall have the right (exercisable by notice in writing to
Liberty within 30 days after the determination of such Fair Market Value)
to purchase all of the common stock of QVC Holdings held by Liberty and its
subsidiaries for an amount (the "Liberty Exit Price") equal to the fraction
of the Fair Market Value represented by such common stock as a percentage
of the fully diluted common stock of QVC Holdings (after giving effect to
any consideration that would be received by QVC Holdings upon the exercise
of any options or warrants). The purchase price of each share of preferred
stock or other securities of QVC Holdings convertible without payment of
further consideration into common stock of QVC Holdings shall be determined
by reference to the number of shares of common stock of QVC Holdings into
which such share may be converted. The purchase price of each warrant or
option or other securities of QVC Holdings exercisable in respect of shares
of common stock of QVC Holdings shall be the applicable purchase price of
the underlying share of common stock of QVC Holdings, less the applicable
exercise price per share. If Comcast exercises such right, Comcast shall
have the right to pay such purchase price in (at Comcast's election) one or
more of the following: (i) cash; (ii) a Comcast promissory note maturing
not later than three years after issuance and having an interest rate
(determined by appraisal if the parties cannot agree) that, taking into
account the terms of such note, would cause such note to trade at par
immediately following its issuance; provided that, Comcast may only pay the
Liberty Exit Price with such a promissory note if the interest rate thereon
does not exceed 500 basis points over the three-year treasury note rate on
the date of issuance of such note; or (iii) shares of Comcast common stock
or other equity securities having an aggregate Average Market Price (as of
the date the last of such appraisals are delivered to Comcast and Liberty)
equal to the Liberty Exit Price; provided, that such Comcast common stock
or other equity securities have been previously listed or traded on a
national securities exchange or quoted on an inter-dealer quotation system.
The term "Average Market Price" shall mean the average for the twenty prior
trading days of the closing sales price of such security in the
over-the-counter market, as reported by NASDAQ, or if listed on a national
securities exchange, as reported on the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which such securities are listed or
admitted for trading (as such Average Market Price shall be adjusted for
splits, recapitalizations, stock dividends and other events occurring
during such twenty trading day period). Notwithstanding Comcast's election
as to the form in which to pay the Liberty Exit Price, Liberty shall have
the right, exercisable within 5 days of Comcast's written notice to it as
to the form of consideration in which it intends to pay the Liberty Exit
Price, to require that Comcast pay such amount by delivering to it Comcast
common stock or other equity securities having an aggregate Average Market
Price equal to the Liberty Exit Price; provided that, Comcast shall not be
obligated to issue stock if (i) it would represent more than 4.9% of the
outstanding common stock or more than 4.9% of the stockholder voting power
of Comcast; or (ii) such issuance would result in, or would have a
reasonable likelihood of resulting in, Comcast or any of its affiliates
being required (pursuant to any law, statute, rule, regulation, order or
judgement promulgated or issued by any court of competent jurisdiction or
the United States government or any Federal governmental, regulatory, or
administrative authority or agency or tribunal) to divest itself of any of
its assets, or would render its continued ownership of such assets illegal
or subject to the imposition of a fine or penalty or would impose material
restrictions or limitations on its full rights of ownership of its assets.
In the event Comcast elects to deliver Comcast stock to Liberty as
aforesaid, it shall also grant to Liberty rights substantially equivalent
to the registration rights set forth in Schedule II hereto with respect to
the registration of such shares of Comcast stock. Any closing of the
purchase of the QVC Holdings common stock held by Liberty and its
subsidiaries pursuant to this Schedule III shall be consummated as soon as
practicable after receipt of all applicable regulatory approvals, but in
any event not later than the 135th day following the date upon which the
form of the consideration to be paid to Liberty in payment of the Liberty
Exit Price shall have been determined in accordance with this Paragraph
(the "Liberty Determination Date"); provided however, that in the event
Comcast is prohibited from consummating such purchase by such date because
of the entry of any injunction, order, or decree or the enactment of any
law or regulation, in each case subsequent to the date Liberty notifies
Comcast of its exercise of the Liberty Exit Right, then the date by which
such purchase was to be consummated pursuant to the foregoing clause shall
be extended for an additional period ending on the earlier to occur of (x)
the 10th day following the date such purchase is no longer prohibited as
aforesaid and (y) the 195th day following the Liberty Determination Date.
D. In the event that Comcast (x) shall fail to elect to purchase Liberty's
shares of QVC common stock within the time period specified or (y)
following an election to so purchase, shall fail to consummate such
purchase by the date specified in Paragraph C (the event specified in
clause (y) is hereafter referred to as the "Comcast Purchase Default"),
then Liberty shall have the right (exercisable by notice in writing to
Comcast within 30 days thereafter) to purchase all of the common stock of
QVC Holdings held by Comcast and its subsidiaries for an amount (the
"Comcast Exit Price") equal to the fraction of the Fair Market Value
represented by such common stock as a percentage of the fully diluted
common stock of QVC Holdings (after giving effect to any consideration that
would be received by QVC Holdings upon the exercise of any options or
warrants). The purchase price of each share of preferred stock or other
securities of QVC Holdings convertible without payment of further
consideration into common stock of QVC Holdings shall be determined by
reference to the number of shares of common stock of QVC Holdings into
which such share may be converted. The purchase price of each warrant or
option or other securities of QVC Holdings exercisable in respect of shares
of common stock of QVC Holdings shall be the applicable purchase price of
the underlying share of common stock of QVC Holdings, less the applicable
exercise price per share. If Liberty exercises such right, Liberty shall
have the right to pay such purchase price in (at Liberty's election) one or
more of the following: (i) cash; (ii) a promissory note issued by Liberty
(or if it is a subsidiary, issued by its ultimate parent entity) ("Liberty
Parent") maturing not later than three years after issuance and having an
interest rate (determined by appraisal if the parties cannot agree) that,
taking into account the terms of such note, would cause such note to trade
at par immediately following its issuance; provided that, Liberty may only
pay the Comcast Exit Price with such a promissory note if the interest rate
thereon does not exceed 500 basis points over the three-year treasury note
rate on the date of issuance of such note; or (iii) shares of Liberty
Parent common stock or other equity securities of Liberty Parent having an
aggregate Average Market Price (as of the date the last of such appraisals
are delivered to Liberty and Comcast) equal to the Comcast Exit Price;
provided that such Liberty Parent common stock or other equity securities
have been previously listed or traded on a national securities exchange or
quoted on an inter-dealer quotation system. Notwithstanding Liberty's
election as to the form in which to pay the Comcast Exit Price, Comcast
shall have the right, exercisable within 5 days of Liberty's written notice
to it as to the form of consideration in which it intends to pay the
Comcast Exit Price, to require that Liberty pay such amount by delivering
to it Liberty Parent stock having an aggregate Average Market Price equal
to the Comcast Exit Price; provided that, Liberty Parent shall not be
obligated to issue stock if (i) it would represent more than 4.9% of the
outstanding common stock or more than 4.9% of the stockholder voting power
of Liberty Parent; or (ii) if such issuance would result in, or would have
a reasonable likelihood of resulting in, Liberty Parent or any of its
affiliates being required (pursuant to any law, statute, rule, regulation,
order or judgement promulgated or issued by any court of competent
jurisdiction or the United States government or any Federal governmental,
regulatory, or administrative authority or agency or tribunal) to divest
itself of any of its assets or would render its continued ownership of such
stock or assets illegal or subject to the imposition of a fine or penalty
or would impose material restrictions or limitations on its full rights of
ownership of its assets. In the event Liberty elects to deliver Liberty
Parent stock to Comcast as aforesaid, it shall also grant to Comcast rights
substantially equivalent to the registration rights set forth in Schedule
II hereto with respect to the registration of such shares of Liberty Parent
stock. Any closing of the purchase of the QVC Holdings common stock held
by Comcast and its subsidiaries pursuant to this Schedule III shall be
consummated as soon as practicable after receipt of all applicable
regulatory approvals, but in any event not later than the 135th day
following the date upon which the form of the consideration to be paid to
Comcast in payment of the Comcast Exit Price shall have been determined in
accordance with this Paragraph (the "Comcast Determination Date"); provided
however, that in the event Liberty is prohibited from consummating such
purchase by such date because of the entry of any injunction, order, or
decree or the enactment of any law or regulation, in each case subsequent
to the date Comcast notifies Liberty of its exercise of the Comcast Exit
Right, then the date by which such purchase was to be consummated pursuant
to the foregoing clause shall be extended for an additional period ending
on the earlier to occur of (x) the 10th day following the date such
purchase is no longer prohibited as aforesaid and (y) the 195th day
following the Comcast Determination Date.
E. In the event that Liberty (x) shall fail to elect to purchase Comcast's
shares of QVC common stock within the time period specified or (y)
following an election to so purchase, shall fail to consummate such
purchase by the date specified in Paragraph D, then Liberty and Comcast
shall use their best efforts to sell QVC Holdings. Liberty, Comcast or any
of their respective affiliates may be purchasers (individually or as part
of a group) in any such sale.
F. Notwithstanding anything contained herein, the parties agree to use all
reasonable efforts to consummate any such purchase and sale pursuant to
this Schedule III in a tax-free transaction or, if not available, most tax
efficient method available. In the event that the party whose QVC Holdings
securities are to be purchased pursuant to this Schedule III (the "Selling
Party") shall notify the party required to purchase the Selling Party's QVC
Holdings securities (the "Purchasing Party") at the time of its election to
exercise its right to cause the other party to purchase, as to a structure
of the transactions contemplated by the Liberty Exit Right or the Comcast
Exit Right which is otherwise in accordance with the provisions of
Paragraphs C or D above (as applicable) and which such Selling Party
reasonably believes to be tax-free or the most tax efficient structure for
such transaction (the "Proposed Structure"), and if requested by the
Purchasing Party within 10 days of receipt of notice of the Proposed
Structure, such Selling Party shall deliver an opinion of counsel (such
counsel to be reasonably acceptable to the Purchasing Party) reasonably
confirming the tax free or tax efficient nature of the Proposed Structure,
then such sale shall be consummated in accordance with the Proposed
Structure unless, within 15 days of the last to occur of the notice as to
the Proposed Structure or such opinion of counsel, the Purchasing Party
delivers to the Selling Party a notice setting forth an alternate structure
for such transaction (the "Alternate Structure"), which is no less
favorable from a tax standpoint to the Selling Party than the Proposed
Structure (as evidenced by an opinion of counsel addressed to and
reasonably acceptable to the Selling Party) and which does not result in
the creation of restrictions or limitations applicable to the Selling Party
which are, in the good faith, reasonable judgment of the Selling Party,
more onerous to it than those which would result in the Proposed Structure,
then the parties shall proceed to consummate such transaction in accordance
with the Alternate Structure.
SCHEDULE IV
QVC Securities held
by Comcast and Liberty
to be contributed to QVC Holdings
I. Liberty
Common Stock: 6,527,207 shares
Class C. Preferred Stock: 372,866 shares (convertible
into 3,728,660 shares of Common Stock)
II. Comcast
Common Stock: 6,207,434 shares
Class C. Preferred Stock: 72,050 shares (convertible
into 720,500 shares of Common Stock)
Warrants to Purchase Common Stock: 1,700,000
Exhibit 99.49
-------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
among
QVC, INC.,
COMCAST CORPORATION,
LIBERTY MEDIA CORPORATION
and
COMCAST QMERGER, INC.
dated as of August 4, 1994
-------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
THE OFFER AND THE MERGER
SECTION 1.01. The Offer....................................... 1
SECTION 1.02. Company Action.................................. 2
SECTION 1.03. Directors....................................... 4
SECTION 1.04. The Merger...................................... 5
SECTION 1.05. Action by Stockholders.......................... 5
SECTION 1.06. Proxy Statement................................. 6
SECTION 1.07. Closing......................................... 6
SECTION 1.08. Effective Time.................................. 7
SECTION 1.09. Effect of the Merger............................ 7
SECTION 1.10. Certificate of Incorporation.................... 7
SECTION 1.11. Bylaws.......................................... 7
SECTION 1.12. Directors and Officers.......................... 8
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities........................ 8
SECTION 2.02. Exchange of Certificates and Cash............... 9
SECTION 2.03. Stock Transfer Books............................ 11
SECTION 2.04. Stock Options; Payment Rights................... 11
SECTION 2.05. Dissenting Shares............................... 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF QVC
SECTION 3.01. Organization and Qualifications;
Subsidiaries.................................... 12
SECTION 3.02. Certificate of Incorporation and
Bylaws.......................................... 13
SECTION 3.03. Capitalization.................................. 13
SECTION 3.04. Authority Relative to This
Agreement....................................... 14
SECTION 3.05. No Conflict; Required Filings and
Consents........................................ 15
SECTION 3.06. Compliance...................................... 16
SECTION 3.07. SEC Filings; Financial Statements............... 16
SECTION 3.08. Absence of Certain Changes and
Events.......................................... 18
<PAGE>
SECTION 3.09. Employee Benefit Plans.......................... 18
SECTION 3.10. Opinion of Financial Advisor.................... 19
SECTION 3.11. Brokers......................................... 19
SECTION 3.12. Taxes........................................... 19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMCAST, LIBERTY
AND BUYER
SECTION 4.01. Organization and Qualification.................. 20
SECTION 4.02. Authority Relative to This
Agreement....................................... 20
SECTION 4.03. No Conflict; Required Filings and
Consents........................................ 21
SECTION 4.04. SEC Filings, Financial Statements............... 22
SECTION 4.05. Brokers......................................... 23
SECTION 4.06. Organization and Qualification.................. 23
SECTION 4.07. Authority Relative to This
Agreement....................................... 23
SECTION 4.08. No Conflict; Required Filings and
Consents........................................ 23
SECTION 4.09. SEC Filings, Financial Statements............... 24
SECTION 4.10. Brokers......................................... 25
SECTION 4.11. Organization and Qualification.................. 26
SECTION 4.12. Certificate of Incorporation and
Bylaws.......................................... 26
SECTION 4.13. Authority Relative to This
Agreement....................................... 26
SECTION 4.14. No Conflict; Required Filings and
Consents........................................ 26
SECTION 4.15. Brokers......................................... 27
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by QVC Pending the
Merger.......................................... 28
ARTICLE VI
ADDITIONAL COVENANTS
SECTION 6.01. Access to Information;
Confidentiality................................. 29
SECTION 6.02. No Solicitation................................. 30
SECTION 6.03. Directors' and Officers' Indemnification and
Insurance....................................... 31
SECTION 6.04. Notification of Certain Matters................. 32
SECTION 6.05. Further Action; Best Efforts.................... 32
SECTION 6.06. Public Announcements............................ 33
<PAGE>
SECTION 6.07. Conveyance Taxes................................ 33
SECTION 6.08. Gains Tax....................................... 34
SECTION 6.09. Obligations of Buyer............................ 34
SECTION 6.10. Severance Policy; Employee
Benefits........................................ 34
SECTION 6.11. FCC Approvals................................... 35
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.01. Conditions to Obligations of Each Party to Effect the
Merger.......................................... 35
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination..................................... 36
SECTION 8.02. Effect of Termination........................... 37
SECTION 8.03. Amendment....................................... 38
SECTION 8.04. Waiver.......................................... 38
SECTION 8.05. Fees, Expenses and Other Payments............... 38
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Effectiveness of Representations, Warranties and
Agreements...................................... 39
SECTION 9.02. Notices......................................... 39
SECTION 9.03. Certain Definitions............................. 41
SECTION 9.04. Headings........................................ 41
SECTION 9.05. Severability.................................... 41
SECTION 9.06. Entire Agreement................................ 42
SECTION 9.07. Assignment...................................... 42
SECTION 9.08. Parties in Interest............................. 42
SECTION 9.09. Governing Law................................... 42
SECTION 9.10. Enforcement of the Agreement.................... 42
SECTION 9.11. Counterparts.................................... 43
ANNEX I Conditions to Offer
<PAGE>
Index of Defined Terms
Term Section
- ---- -------
affiliate 9.03
Agreement PREAMBLE
Alternative Transaction 6.02
Bidding Agreement 4.08
business day 9.03
Buyer PREAMBLE
Buyer Material Adverse Effect 4.13
Certificates 2.02
Claim 6.03
Code 2.02
Comcast PREAMBLE
Comcast Material Adverse Effect 4.01
Comcast SEC Reports 4.04
Common Merger Consideration 2.01
Common Shares 1.01
Confidentiality Agreements 6.01
control 9.03
Delaware Law PREAMBLE
Dissenting Shares 2.05
Effective Time 1.08
ERISA 3.09
Exchange Act 3.05
Exchange Agent 2.02
Exchange Fund 2.02
Expenses 8.05
Fair Market Value 6.02
FCC 6.11
Gains Tax 6.08
Governmental Entity 3.05
HSR Act 3.05
Indemnified Parties 6.03
IRS 3.09
Liberty PREAMBLE
Liberty Material Adverse Effect 4.06
Liberty SEC Reports 4.09
Material QVC Subsidiary 3.01
Merger PREAMBLE
Merger Consideration 2.02
MergerCo PREAMBLE
Minimum Condition 1.01
Offer Documents 1.01
Offer PREAMBLE
Options 3.03
Preferred Shares 1.01
Preferred Merger Consideration 2.01
Proxy Statement 1.06
<PAGE>
QVC PREAMBLE
QVC Common Stock 1.01
QVC Disclosure Schedule 3.03
QVC Material Adverse Effect 3.01
QVC Plans 3.09
QVC Preferred Stock 1.01
QVC SEC Reports 3.07
QVC Stock 1.01
QVC Stock Options 3.03
QVC Subsidiary 3.01
Respective Representatives 6.01
Restated Certificate of Incorporation 3.05
Schedule 14D-9 1.02
SEC 3.01
Securities Act 3.07
Shares 1.01
subsidiary 9.03
Surviving Corporation 1.04
taxes 3.12
Transactions 1.02
Transfer Taxes 6.08
Transmittal Documents 2.02
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 4, 1994 (the
"Agreement"), among COMCAST CORPORATION, a Pennsylvania corporation
("Comcast"), LIBERTY MEDIA CORPORATION, a Delaware corporation ("Liberty"),
COMCAST QMERGER, INC., a Delaware corporation ("Buyer"), and QVC, INC., a
Delaware corporation ("QVC").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware ("Delaware Law"), Buyer will make the offer described in Section 1.01
below (the "Offer") and thereafter QVC and Buyer will enter into a business
combination transaction pursuant to which a wholly-owned subsidiary of Buyer
("MergerCo") will merge with and into QVC (the "Merger");
WHEREAS, the Board of Directors of QVC has determined that the
Offer and the Merger are fair to, and in the best interests of, QVC and its
stockholders and has approved and adopted this Agreement, has approved the
Offer and the Merger and the other transactions contemplated hereby and has
recommended approval and adoption of this Agreement and approval of the Merger
by the stockholders of QVC; and
WHEREAS, the Board of Directors of each of Comcast, Liberty and
Buyer have approved and adopted this Agreement and have approved the Offer and
the Merger and the other transactions contemplated hereby;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth in
this Agreement, the parties hereto agree as follows:
ARTICLE I
<PAGE>
THE OFFER AND THE MERGER
SECTION 1.01. The Offer. (a) Provided that nothing shall have
occurred that would result in a failure to satisfy any of the conditions set
forth in paragraphs (a) through (d) of Annex I hereto, Buyer (or a subsidiary
of Buyer) shall, as promptly as practicable after the date hereof, but in no
event later than five business days following the public announcement of the
terms of this Agreement, commence an offer to purchase (i) all of the
outstanding shares (the "Common Shares") of Common Stock, par value $.01 per
share, of QVC (the "QVC Common Stock") at a price of $46.00 per Common Share,
and (ii) all of the outstanding shares (the "Preferred Shares") of QVC Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, par
value $.10 per share, (collectively, the "QVC Preferred Stock") at a price of
$460 per Preferred Share, in each case net to the seller in cash. For purposes
of this Agreement, "Shares" means the Common Shares and the Preferred Shares
and "QVC Stock" means the QVC Common Stock and the QVC Preferred Stock.
(b) The Offer shall be subject to the conditions set forth in
Annex I hereto. Buyer shall not, without the prior written consent of QVC,
make any change in the terms or conditions of the Offer that is adverse to the
holders of QVC Stock, change the form of consideration to be paid in the
Offer, decrease the price per Share payable in the Offer or the number of
Shares sought in the Offer, waive the Minimum Condition (as defined in Annex
I) or impose conditions to the Offer in addition to those set forth in Annex I.
(c) As soon as practicable on the date of commencement of the
Offer, Comcast, Liberty and Buyer shall file with the SEC (as defined in
Section 3.01) a Tender Offer Statement on Schedule 14D-1 and, together with
QVC, a Rule 13E-3 Transaction Statement on Schedule 13E-3, with respect to the
Offer which will contain the offer to purchase and form of the related letter
of transmittal (together with any supplements or amendments thereto,
collectively the "Offer Documents"). QVC agrees to provide Comcast, Liberty
and Buyer with such information concerning QVC as any of such parties may
reasonably request in connection with the preparation of the Schedule 13E-3.
Each party hereto agrees promptly to supplement, update and correct any
information provided by it for use in the Offer Documents if and to the extent
that it is or shall have become incomplete, false or misleading. Each of
Comcast, Liberty and Buyer agrees to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required
by applicable federal securities laws. QVC and its counsel shall be given an
opportunity to review and comment on the Schedule 14D-1 prior to its being
filed with the SEC.
SECTION 1.02. Company Action. (a) QVC hereby consents to the
Offer and represents that its Board of Directors, at a meeting duly called and
held, has unanimously (other than the directors affiliated with Comcast) (i)
determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to and in the best interest of
QVC's stockholders (other than Comcast and Liberty and their affiliates), (ii)
approved this Agreement and the transactions contemplated hereby, including
the Offer and the Merger, which approval satisfies in full the requirements of
Delaware Law (including all approvals required under Section 203 of Delaware
Law in connection with the consummation of the transactions contemplated
hereby (the "Transactions") and the contribution by each of Comcast and
Liberty of Shares and other QVC Securities to Buyer in connection with the
consummation of the Offer) and (iii) subject to its fiduciary duties under
applicable law, resolved to recommend acceptance of the Offer, and approval
and adoption of this Agreement and the Merger, by its stockholders. QVC
<PAGE>
further represents that Allen & Company Incorporated has delivered to QVC's
Board of Directors its written opinion dated the date hereof that the
consideration to be paid in the Offer and the Merger is fair to the holders of
Shares (other than Comcast and Liberty) from a financial point of view. To
the best of QVC's knowledge, all of its directors (other than those directors
affiliated with Comcast) and executive officers intend either to tender their
Shares pursuant to the Offer or to vote in favor of the Merger. QVC will
promptly furnish Buyer with a list of its stockholders, mailing labels and any
available listing or computer file containing the names and addresses of all
record holders of Shares and lists of securities positions of Shares held in
stock depositories, in each case true and correct as of the most recent
practicable date, and will provide to Buyer such additional information
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Buyer may
reasonably request in connection with the Offer.
(b) As soon as practicable on the day that the Offer is
commenced QVC will file with the SEC a Solicitation/Recommendation Statement
on Schedule 14D-9 (the "Schedule 14D-9") which shall reflect the
recommendations of QVC's Board of Directors referred to above. Each party
hereto agrees promptly to supplement, update and correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it is
or shall have become incomplete, false, or misleading. QVC agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to
the extent required by applicable federal securities laws. Buyer and its
counsel shall be given an opportunity to review and comment on the Schedule
14D-9 prior to its being filed with the SEC.
SECTION 1.03. Directors. (a) Effective upon the acceptance
for payment by Buyer of any Shares, Buyer shall be entitled to designate the
number of directors, rounded up to the next whole number, on QVC's Board of
Directors that equals the product of (i) the total number of directors on
QVC's Board of Directors (giving effect to the election of any additional
directors pursuant to this Section) and (ii) the percentage that the number of
Shares owned by Buyer, Comcast, Liberty or any of their respective wholly owned
subsidiaries (including Shares accepted for payment) bears to the total number
of Shares outstanding, and QVC shall take all action necessary to cause
Buyer's designees to be elected or appointed to QVC's Board of Directors,
including, without limitation, increasing the number of directors or seeking
and accepting resignations of incumbent directors. At such times, QVC will
use its best efforts to cause individuals designated by Buyer to constitute
the same percentage as such individuals represent on QVC's Board of Directors
of (x) each committee of the Board (other than any committee of the Board
established to take action under this Agreement), (y) each board of directors
of each QVC Subsidiary (as defined in Section 3.01) and (z) each committee of
each such board (in each case rounded up to the next whole number).
Notwithstanding the foregoing, until such time as Buyer acquires a majority of
the outstanding Common Shares on a fully-diluted basis, QVC shall use its
reasonable best efforts to ensure that all of the members of the Board of
Directors and such boards and committees as of the date hereof who are not
employees of QVC shall remain members of the Board of Directors and such
boards and committees until the Effective Time (as defined in Section 1.06).
(b) QVC's obligations to appoint designees to the Board of
Directors shall be subject to Section 14(f) of the Exchange Act (as defined in
Section 3.05) and Rule 14f-1 promulgated thereunder and any other required
material regulatory approvals. QVC shall promptly take all actions required
pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section and shall include in the Schedule 14D-9 such information
<PAGE>
with respect to QVC and its officers and directors (and to the extent required
by law, those persons designated by Buyer) as is required under Section 14(f)
and Rule 14f-1 to fulfill its obligations under this Section 1.03. Buyer will
supply to QVC in writing and be solely responsible for any information with
respect to itself and its nominees, officers, directors and affiliates
required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Buyer's
designee(s) pursuant to this Section and prior to the Effective Time (defined
in Section 1.08), any amendment or termination of this Agreement, grant by QVC
of any extension for the performance or waiver of the obligations or other
acts of Buyer, Comcast or Liberty or waiver of QVC's rights hereunder, or
action with respect to any QVC (or Surviving Corporation) employee benefit
plan or option agreement, including, without limitation, any equity
compensation agreement, shall require the concurrence of a majority of QVC's
directors then in office who are directors on the date hereof, or are
directors (other than directors designated by Buyer in accordance with Section
1.03(a) and other than the directors affiliated with Comcast) designated by
such persons to fill any vacancy.
SECTION 1.04. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Delaware Law,
at the Effective Time (as defined in Section 1.08), Buyer shall cause MergerCo
to be merged with and into QVC. As a result of the Merger, the separate
existence of MergerCo shall cease and QVC shall continue as the surviving
corporation of the Merger (the "Surviving Corporation") under the name "QVC,
Inc."
SECTION 1.05. Action by Stockholders. If required by
applicable law to consummate the Merger, QVC, acting through its Board of
Directors, shall, in accordance with applicable law, its Certificate of
Incorporation and bylaws: (i) as soon as practicable after consummation of
the Offer, duly call, give notice of, convene and hold a special meeting of
stockholders for the purpose of adopting this Agreement and approving the
Merger; (ii) subject to its fiduciary duties on the basis of advice of
independent counsel, include in any proxy statement the determination and
recommendation of the Board of Directors to the effect that the Board of
Directors, having determined that this Agreement and the transactions
contemplated hereby are in the best interests of QVC and its stockholders, has
approved this Agreement and such transactions and recommends that the
stockholders vote in favor of the approval and adoption of this Agreement and
the Merger; and (iii) use its best efforts, subject to its fiduciary duties on
the basis of advice of independent counsel, to obtain the necessary approval
of this Agreement and the Merger by stockholders. Comcast, Liberty, MergerCo
and Buyer shall vote all Shares acquired in the Offer, or heretofore owned, in
favor of the Merger.
SECTION 1.06. Proxy Statement. (a) As promptly as
practicable after consummation of the Offer, QVC shall prepare and file with
the SEC (if necessary) a proxy statement relating to the meeting of QVC's
stockholders to be held in connection with the Merger (together with any
amendments thereof or supplements thereto, the "Proxy Statement"). Comcast,
Liberty, MergerCo and Buyer shall furnish to QVC all information concerning
Comcast, Liberty and Buyer as QVC may reasonably request in connection with
the preparation of the Proxy Statement. As promptly as practicable after the
Proxy Statement has been cleared by the SEC, QVC shall mail the Proxy
Statement to its stockholders. The Proxy Statement shall include the
recommendation of the Board of Directors of QVC in favor of the Merger, unless
otherwise necessary due to the applicable fiduciary duties of the directors of
QVC, as determined by such directors in good faith after consultation with, and
<PAGE>
based upon the advice of, outside counsel.
(b) The information supplied by each of Comcast, Liberty,
MergerCo and Buyer for inclusion in the Proxy Statement shall not, at (i) the
time the Proxy Statement (or any amendment thereof or supplement thereto) is
first mailed to the stockholders of QVC, (ii) the time of the QVC
stockholders' meeting contemplated by such Proxy Statement, and (iii) the
Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading. If at any time prior to the
Effective Time any event or circumstance relating to any party hereto, or
their respective officers or directors, should be discovered by such party
which should be set forth in an amendment or a supplement to the Proxy
Statement, such party shall promptly inform QVC and Buyer thereof and take
appropriate action in respect thereof.
(c) Notwithstanding anything in the foregoing to the contrary,
in the event that Comcast, Liberty, MergerCo, Buyer and/or any other direct or
indirect subsidiary thereof, shall acquire at least 90 percent of the
outstanding shares of each class of capital stock of QVC, Comcast, Liberty and
QVC hereby agree to take all necessary and appropriate action (subject to
Section 1.07 hereof) to cause the Merger to become effective as promptly as
practicable after the expiration of the Offer and the satisfaction or waiver
of the conditions set forth in Article VII hereof, without a meeting of QVC's
stockholders, in accordance with Section 253 of Delaware Law.
SECTION 1.07. Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 8.01 and subject to the satisfaction or, if permissible,
waiver of the conditions set forth in Article VII, the closing of the Merger
will take place as promptly as practicable (and in any event, subject to the
proviso at the end of this sentence, within ten business days) after
satisfaction or waiver of the conditions set forth in Article VII, at the
offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York,
unless another date, time or place is agreed to in writing by the parties
hereto, provided that the Closing shall not occur prior to October 21, 1994.
SECTION 1.08. Effective Time. As promptly as practicable
after the satisfaction or, if permissible, waiver of the conditions set forth
in Article VII (but subject to Section 1.07 hereof), the parties hereto shall
cause the Merger to be consummated by filing a certificate of merger with the
Secretary of State of the State of Delaware and by making any related filings
required under Delaware Law in connection with the Merger. The Merger shall
become effective at such time (but not prior to October 21, 1994) as the
certificate of merger is duly filed with the Secretary of State of the State
of Delaware or at such later time as is specified in the certificate of merger
(the "Effective Time").
SECTION 1.09. Effect of the Merger. From and after the
Effective Time, the Surviving Corporation shall possess all the rights,
privileges, powers and franchises and be subject to all of the restrictions,
disabilities and duties of QVC and MergerCo, and the Merger shall otherwise
have the effects, all as provided under Delaware Law.
SECTION 1.10. Certificate of Incorporation. The certificate
of incorporation of MergerCo in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law, except that the name of the Surviving
Corporation shall be "QVC, Inc.", provided that (i) the par value of the
common stock of the Surviving Corporation shall not be $.01 per share, or (ii)
there shall be such other changes made to the certificate of incorporation of
<PAGE>
the Surviving Corporation or otherwise as shall be reasonably acceptable to
the parties hereto as shall be necessary or appropriate in order for the
Merger and the Transactions to qualify as a reclassification under Delaware
Law.
SECTION 1.11. Bylaws. The bylaws of MergerCo in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended
in accordance with applicable law.
SECTION 1.12. Directors and Officers. From and after the
Effective Time, until successors are duly elected or appointed and qualified
(or earlier resignation or removal) in accordance with applicable law, (i) the
directors of MergerCo at the Effective Time shall be the directors of the
Surviving Corporation and (ii) the officers of QVC at the Effective Time shall
be the officers of the Surviving Corporation.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities. At the Effective
Time, by virtue of the Merger and without any action on the part of Buyer or
MergerCo, QVC or the holders of any of the following securities:
(a) Each share of QVC Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares of QVC
Common Stock to be canceled pursuant to Section 2.01(b) and any
Dissenting Shares (as defined in Section 2.05)) shall be converted
into the right to receive $46.00 in cash, without interest
(the "Common Merger Consideration"). Each share of QVC Preferred
Stock issued and outstanding immediately prior to the Effective Time
(other than any shares of QVC Preferred Stock to be canceled pursuant
to Section 2.01(b) and any Dissenting Shares), shall be
converted into the right to receive $460.00 in cash, without interest
(the "Preferred Merger Consideration"). At the Effective Time, all
shares of QVC Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and
each certificate previously evidencing any such shares shall
thereafter represent the right to receive, upon the surrender of such
certificate in accordance with the provisions of Section 2.02, the
Common Merger Consideration or the Preferred Merger
Consideration, as the case may be. The holders of such certificates
previously evidencing such shares of QVC Stock outstanding
immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of QVC Stock except as otherwise
provided herein or by law.
(b) Each share of QVC Stock held in the treasury of QVC or by
any wholly owned subsidiary thereof and each share of QVC Stock owned
by Buyer and MergerCo or any of its subsidiaries, immediately prior
to the Effective Time shall automatically be canceled and
extinguished without any conversion thereof and no payment shall be
made with respect thereto.
(c) Each share of common stock of MergerCo outstanding
immediately prior to the Effective Time shall be converted into and
become one share of common stock of the Surviving Corporation with
the same rights, powers and privileges as the shares so
converted and shall constitute the only outstanding shares of capital
<PAGE>
stock of the Surviving Corporation.
SECTION 2.02. Exchange of Certificates and Cash. (a)
Exchange Agent. Prior to the Effective Time, Buyer shall deposit, or shall
cause to be deposited, with or for the account of a bank or trust company
designated by Comcast, which shall be reasonably satisfactory to QVC (the
"Exchange Agent"), for the benefit of the holders of shares of QVC Stock
(other than Dissenting Shares), for exchange in accordance with this Article
II, through the Exchange Agent, an amount in cash equal to the Common Merger
Consideration and the Preferred Merger Consideration payable pursuant to
Section 2.01(a) in exchange for all of the outstanding shares of QVC Stock
(such cash funds are hereafter referred to as the "Exchange Fund"). The
Exchange Agent shall, pursuant to irrevocable instructions, deliver the Merger
Consideration (as defined in paragraph (b) below) to be paid and issued
pursuant to Section 2.01(a) out of the Exchange Fund to holders of shares of
QVC Stock. The Exchange Fund shall not be used for any other purpose. Any
interest, dividends or other income earned on the investment of cash held in
the Exchange Fund shall be for the account of Buyer.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, Buyer will instruct the Exchange Agent to mail to
each holder of record of a certificate or certificates which immediately prior
to the Effective Time evidenced outstanding shares of QVC Stock (other than
Dissenting Shares) (the "Certificates"), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to
the Certificates shall pass, only upon proper delivery of the Certificates to
the Exchange Agent and shall be in such form and have such other provisions as
Buyer may reasonably specify) and (ii) instructions to effect the surrender of
the Certificates in exchange for cash. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Buyer together with such letter of transmittal, duly executed, and
such other customary documents as may be required pursuant to such
instructions (collectively, the "Transmittal Documents"), the holder of such
Certificate shall be entitled to receive in exchange therefor an amount in cash
which such holder has the right to receive pursuant to Section 2.01(a) (the
"Merger Consideration"), and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of shares of QVC Stock
which is not registered in the transfer records of QVC, the Merger
Consideration may be issued and paid in accordance with this Article II to a
transferee if the Certificate evidencing such shares of QVC Stock is presented
to the Exchange Agent, accompanied by all documents required to evidence and
effect such transfer and by evidence that any applicable stock transfer taxes
have been paid. The Merger Consideration will be delivered by the Exchange
Agent as promptly as practicable following surrender of a Certificate and the
related Transmittal Documents, and cash payments may be made by check (unless
otherwise required by a depositary institution in connection with the
book-entry delivery of securities). No interest will be payable on such Merger
Consideration regardless of any delay in making payments. Until surrendered
as contemplated by this Section 2.02, each Certificate shall be deemed at any
time after the Effective Time to evidence only the right to receive, upon such
surrender, the Merger Consideration, without interest.
(c) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of QVC Stock for six months
after the Effective Time shall be delivered to Buyer, upon demand, and any
holders of QVC Stock who have not theretofore complied with this Article II
shall thereafter look only to Buyer for the Merger Consideration to which they
are entitled pursuant to this Article II.
<PAGE>
(d) No Liability. Neither Buyer, Comcast, Liberty, the
Surviving Corporation nor QVC shall be liable to any holder of shares of QVC
Stock for any cash from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(e) Withhold Rights. Buyer or the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of QVC Stock such amounts
as Buyer or the Exchange Agent is required to deduct and withhold with respect
to the making of such payment under the United States Internal Revenue Code of
1986, as amended (the "Code"), or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by Buyer or the Exchange
Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of QVC Stock in
respect of which such deduction and withholding was made by Buyer or the
Exchange Agent.
SECTION 2.03. Stock Transfer Books. At the Effective Time,
the stock transfer books of QVC shall be closed, and there shall be no further
registration of transfers of shares of QVC Stock thereafter on the records of
QVC. On or after the Effective Time, any Certificates presented to the
Exchange Agent or the Surviving Corporation for any reason shall be converted
into the Merger Consideration.
SECTION 2.04. Stock Options; Payment Rights. At the Effective
Time, each outstanding QVC Stock Option (as defined in Section 3.03) to
purchase shares of QVC Common Stock, whether or not then exercisable, shall be
canceled and the holder thereof shall be entitled to receive, and shall
receive, cash in an amount equal to the difference between $46.00 and the per
share exercise price thereof, multiplied by the number of shares issuable
pursuant to such QVC Stock Option, provided, that if such QVC Stock Option was
not issued pursuant to an employee benefit plan meeting the requirements
described in Rule 16b-3 of the Exchange Act (as hereinafter defined), and is
held by a person subject to the short swing profit recovery provisions of
Section 16(b) of the Exchange Act, such QVC Stock Option shall not be canceled
at the Effective Time and shall remain an obligation of the Surviving
Corporation and shall remain enforceable in accordance with the terms thereof.
The Surviving Corporation shall perform all of QVC's obligations under all QVC
Stock Options and shall honor all rights with respect thereto, and the
Surviving Corporation shall have no right of offset, counterclaim, reduction,
recoupment or similar right with respect to any such QVC Stock Options or any
Optionee's rights with respect thereto, on any basis whatsoever.
SECTION 2.05. Dissenting Shares. (a) Notwithstanding any
other provision of this Agreement to the contrary, shares of QVC Stock that
are outstanding immediately prior to the Effective Time and which are held by
stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall be entitled to and shall have demanded
properly in writing appraisal for such shares in accordance with Section 262 of
Delaware Law and who shall not have withdrawn such demand or otherwise have
forfeited appraisal rights (collectively, the "Dissenting Shares") shall not
be converted into or represent the right to receive the Merger Consideration.
Such stockholders shall be entitled to receive payment of the appraised value
of such shares of QVC Stock held by them in accordance with the provisions of
Delaware Law, except that all Dissenting Shares held by stockholders who shall
have failed to perfect or who effectively shall have withdrawn, forfeited or
lost their rights to appraisal of such shares of QVC Stock under Delaware Law
shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration, upon surrender, in the manner
<PAGE>
provided in Section 2.02, of the certificate or certificates that formerly
evidenced such shares of QVC Stock.
(b) QVC shall give Buyer prompt notice of any demands for
appraisal received by it, withdrawals of such demands, and any other
instruments served pursuant to Delaware Law and received by QVC and relating
thereto. QVC and Buyer shall jointly direct all negotiations and proceedings
with respect to demands for appraisal under Delaware Law. Neither QVC nor
Buyer shall, except with the prior written consent of the other, make any
payment with respect to any demands for appraisal, or offer to settle, or
settle, any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF QVC
QVC hereby represents and warrants to Comcast, Liberty and
Buyer that:
SECTION 3.01. Organization and Qualifications; Subsidiaries.
(a) Each of QVC and each Material QVC Subsidiary (as defined below) is a
corporation, partnership or other legal entity duly incorporated or organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation or organization and has the requisite power and authority
and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a QVC Material Adverse Effect (as defined below). QVC and
each Material QVC Subsidiary is duly qualified or licensed as a foreign
corporation to transact business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated
by it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing that would not, individually or in the aggregate, have a material
adverse effect on the business, results of operations or financial condition
of QVC and the QVC Subsidiaries, taken as a whole (a "QVC Material Adverse
Effect").
(b) Each subsidiary of QVC (a "QVC Subsidiary") that
constitutes a Significant Subsidiary of QVC within the meaning of Rule 1-02 of
Regulation S-X of the Securities and Exchange Commission (the "SEC") is
referred to herein as a "Material QVC Subsidiary."
SECTION 3.02. Certificate of Incorporation and Bylaws. QVC
has heretofore made available to Buyer a complete and correct copy of the
certificate of incorporation and the bylaws or equivalent organizational
documents, each as amended to the date hereof, of QVC and each Material QVC
Subsidiary. Such certificates of incorporation, bylaws and equivalent
organizational documents are in full force and effect. Neither QVC nor any
Material QVC Subsidiary is in violation of any provision of its certificate of
incorporation, bylaws or equivalent organizational documents, except for such
violations that would not, individually or in the aggregate, have a QVC
Material Adverse Effect.
SECTION 3.03. Capitalization. The authorized capital stock of
QVC consists of 175,000,000 shares of QVC Common Stock and 5,000,000 shares of
QVC Preferred Stock. As of June 30, 1994, (i) (a) 40,226,197 shares of QVC
Common Stock were issued and outstanding, all of which were validly issued,
<PAGE>
fully paid and nonassessable, (b) 5,586,730 shares of QVC Common Stock were
reserved for issuance upon conversion of the QVC Preferred Stock, (c)
8,194,650 shares of QVC Common Stock were reserved for issuance upon the
exercise of outstanding stock options granted pursuant to QVC's employee stock
plans and certain other stock options not issued pursuant to employee stock
plans ("QVC Stock Options"), (d) 1,700,000 shares of QVC Common Stock were
reserved for issuance upon exercise of all outstanding warrants of QVC, (e)
730 shares of QVC Common Stock and no shares of QVC Preferred Stock were held
in the treasury of QVC, (f) no shares of QVC Common Stock or QVC Preferred
Stock were held by QVC Subsidiaries, and (g) 553,713 shares of QVC Common
Stock and 0 shares of QVC Preferred Stock were reserved for future issuance
pursuant to QVC Stock Options to be granted; and (ii) 27,788 shares of QVC
Series B Preferred Stock, 530,757 shares of QVC Series C Preferred Stock, and
128 shares of QVC Series D Preferred Stock were issued and outstanding, all of
which were fully paid and nonassessable and no other shares of QVC Preferred
Stock were issued or outstanding. Except as set forth above, as of June 30,
1994, no shares of capital stock or other voting securities of QVC were
issued, reserved for issuance or outstanding. Except as set forth in this
Section 3.03 or in Section 3.03 of the Disclosure Schedule previously delivered
by QVC to Comcast (the "QVC Disclosure Schedule"), there are no options, stock
appreciation rights, warrants or other rights, agreements, arrangements or
commitments of any character (collectively, "Options") relating to the issued
or unissued capital stock of QVC or any QVC Subsidiary, or obligating QVC or
any QVC Subsidiary to issue, grant or sell any shares of capital stock of, or
other equity interests in, or convertible into equity interests in, QVC or any
QVC Subsidiary. Since June 30, 1994, QVC has not issued any shares of its
capital stock or Options in respect thereof, except upon the conversion of the
securities or the exercise of the options or warrants referred to above. All
shares of QVC Common Stock subject to issuance as aforesaid, upon issuance on
the terms and conditions specified in the instruments pursuant to which they
are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in Section 3.03 of the QVC Disclosure
Schedule, there are no outstanding contractual obligations of QVC or any QVC
Subsidiary to repurchase, redeem or otherwise acquire any shares of QVC Common
Stock or any capital stock of any Material QVC Subsidiary, or make any
material investment (in the form of a loan, capital contribution or otherwise)
in, any QVC Subsidiary or any other person. Except as set forth in Section
3.03 of the QVC Disclosure Schedule, each outstanding share of capital stock
of each Material QVC Subsidiary is duly authorized, validly issued, fully paid
and nonassessable and is owned by QVC or another QVC Subsidiary free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on QVC's or such other QVC Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever.
SECTION 3.04. Authority Relative to This Agreement. QVC has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by QVC and the
consummation by QVC of the Transactions have been duly and validly authorized
by all necessary corporate action and no other corporate proceedings on the
part of QVC are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the approval and
adoption of this Agreement by the holders of a majority of the then
outstanding shares of QVC Common Stock and QVC Preferred Stock, voting
together as a single class, and the filing and recordation of appropriate
merger documents as required by Delaware Law). This Agreement has been duly
and validly executed and delivered by QVC and, assuming the due authorization,
execution and delivery by the other parties hereto, constitutes the legal,
valid and binding obligation of QVC, enforceable against QVC in accordance
with its terms. QVC has taken all appropriate actions so that the
<PAGE>
restrictions on business combinations contained in Section 203 of Delaware Law
will not apply with respect to or as a result of the Transactions or the
transactions contemplated by the Bidding Agreement (as defined in Section
4.08).
SECTION 3.05. No Conflict; Required Filings and Consents. (a)
Except as set forth in Section 3.05 of the QVC Disclosure Schedule, the
execution and delivery of this Agreement by QVC do not, and the performance of
this Agreement and the consummation of the Transactions by QVC will not, (i)
conflict with or violate the certificate of incorporation or by-laws or
equivalent organizational documents of QVC or any Material QVC Subsidiary, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to QVC or any QVC Subsidiary or by which any property or asset of
QVC or any QVC Subsidiary is bound or affected, or (iii) result in any breach
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, result in the loss of a material benefit
under, or give to others any right of termination, amendment, acceleration,
increased payments or cancellation of, or result in the creation of a lien or
other encumbrance on any property or asset of QVC or any QVC Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which QVC or
any QVC Subsidiary is a party or by which QVC or any QVC Subsidiary or any
property or asset of QVC or any QVC subsidiary is bound or affected, except,
in the case of clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which would not prevent or delay
consummation of the Merger in any material respect, or otherwise prevent QVC
from performing its obligations under this Agreement in any material respect,
and would not, individually or in the aggregate, have a QVC Material Adverse
Effect.
(b) The execution and delivery of this Agreement by QVC do
not, and the performance of this Agreement and the consummation of the
Transactions by QVC will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic or foreign (each a "Governmental Entity"), except (i) for
(A) applicable requirements, if any, of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and state takeover laws, (B) the pre-merger
notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder (the "HSR Act"),
and (C) filing and recordation of appropriate merger and similar documents and
the restated certificate of incorporation (the "Restated Certificate of
Incorporation") as required by Delaware Law and (ii) where failure to obtain
such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Merger in any
material respect, or otherwise prevent QVC from performing its obligations
under this Agreement in any material respect, and would not, individually or
in the aggregate, have a QVC Material Adverse Effect.
SECTION 3.06. Compliance. Except as set forth in Section 3.06
of the QVC Disclosure Schedule, neither QVC nor any QVC Subsidiary is in
conflict with, or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree applicable to QVC or any QVC Subsidiary or by which
any property or asset of QVC or any QVC Subsidiary is bound or affected, or
(ii) any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which QVC or any QVC
Subsidiary is a party or by which QVC or any QVC Subsidiary or any property or
asset of QVC or any QVC Subsidiary is bound or affected, except for any such
conflicts, defaults or violations that would not, individually or in the
aggregate, have a QVC Material Adverse Effect.
<PAGE>
SECTION 3.07. SEC Filings; Financial Statements. (a) QVC
has filed all forms, reports and documents required to be filed by it with the
SEC since January 31, 1992, and has heretofore made available to Buyer, in the
form filed with the SEC (excluding any exhibits thereto), (i) its Annual
Reports on Form 10-K for the fiscal years ended January 31, 1992, 1993 and
1994, respectively, (ii) its Quarterly Report on Form 10-Q for the quarter
ended April 30, 1994, (iii) all proxy statements relating to QVC's meetings of
stockholders (whether annual or special) held since February 1, 1992, and (iv)
all other forms, reports and other registration statements (other than
Quarterly Reports on Form 10-Q not referred to in clause (iii) above and
preliminary materials) filed by QVC with the SEC since January 31, 1992 (the
forms, reports and other documents referred to in clauses (i), (ii), (iii) and
(iv) above being referred to herein, collectively, as the "QVC SEC Reports").
The QVC SEC Reports and any forms, reports and other documents filed by QVC
with the SEC after the date of this Agreement (x) were or will be prepared in
accordance with the requirements of the Securities Act of 1933, as amended
(the "Securities Act") and the Exchange Act, as the case may be, and the rules
and regulations thereunder and (y) did not at the time they were filed, or
will not at the time they are filed, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. No QVC Subsidiary
is required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the QVC SEC Reports was prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated (except as may be indicated
in the notes thereto), and each fairly presented the consolidated financial
position, results of operations and cash flows of QVC and the consolidated QVC
Subsidiaries as at the respective dates thereof and for the respective periods
indicated therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which were not and are not expected,
individually or in the aggregate, to be material in amount). Since January 31,
1994, there has been no change in any of the significant accounting (including
tax accounting) policies, practices or procedures of QVC or any QVC Material
subsidiary.
(c) Except (i) as set forth in Section 3.07 of the QVC
Disclosure Schedule, (ii) as and to the extent set forth in the QVC SEC
Reports filed with the SEC prior to the date of this Agreement, or (iii) since
April 30, 1994, as incurred in the ordinary course of business, and not in
violation of this Agreement (assuming this Agreement was in effect as of April
30, 1994), QVC and the QVC Subsidiaries do not have any liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise)
other than liabilities and obligations which would not, individually or in the
aggregate, have a QVC Material Adverse Effect.
SECTION 3.08. Absence of Certain Changes and Events. Except
as set forth in Section 3.08 of the QVC Disclosure Schedule, contemplated by
this Agreement or disclosed in any QVC SEC Report filed since April 30, 1994
and prior to the date of this Agreement, since April 30, 1994, (i) QVC and the
QVC Subsidiaries have conducted their businesses only in the ordinary course
and have not taken any of the actions set forth in paragraphs (a) through (j)
of Section 5.01 and (ii) there has not been any material adverse change in the
business, financial condition or results of operations of QVC and the QVC
Subsidiaries, taken as a whole.
SECTION 3.09. Employee Benefit Plans. With respect to all the
employee benefit plans, programs and arrangements maintained for the benefit
<PAGE>
of any current or former employee, officer or director of QVC or any QVC
Subsidiary (the "QVC Plans"), except as set forth in Section 3.09 of the QVC
Disclosure Schedule or the QVC SEC Reports filed prior to the date of this
Agreement: (i) none of the QVC Plans is a multi-employer plan within the
meaning of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), (ii) none of the QVC Plans promises or provides retiree medical or
life insurance benefits to any person, (iii) each QVC Plan intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service (the "IRS") that it is
so qualified and nothing has occurred since the date of such letter that could
reasonably be expected to affect the qualified status of such QVC Plan other
than occurrences that would not, individually or in the aggregate, have a QVC
Material Adverse Effect; (iv) each QVC Plan has been operated in all material
respects in accordance with its terms and the requirements of applicable law;
(v) neither QVC nor any QVC Subsidiary has incurred any direct or indirect
liability under, arising out of or by operation of Title IV of ERISA in
connection with the termination of, or withdrawal from, any QVC Plan or other
retirement plan or arrangement, and no fact or event exists that could
reasonably be expected to give rise to any such liability, other than any
liability that would not, individually or in the aggregate, have a QVC
Material Adverse Effect; and (vi) QVC and the QVC Subsidiaries have not
incurred any liability under, and have complied in all material respects with,
the Worker Adjustment Retraining Notification Act, and no fact or event exists
that could give rise to liability under such act, other than any liability
that would not, individually or in the aggregate, have a QVC Material Adverse
Effect. Except as set forth in Section 3.09 of the QVC Disclosure Schedule or
the QVC SEC Reports, the aggregate accumulated benefit obligations of each QVC
Plan subject to Title IV of ERISA (as of the date of the most recent actuarial
valuation prepared for such QVC Plan) do not exceed the fair market value of
the assets of such QVC Plan (as of the date of such valuation).
SECTION 3.10. Opinion of Financial Advisor. QVC's Board of
Directors has received the opinion of Allen & Company Incorporated dated the
date hereof, to the effect that, as of such date, the consideration to be
received by the holders of the Shares (other than Comcast and Liberty)
pursuant to the Offer and the Merger is fair to such holders from a financial
point of view, a copy of which opinion has been delivered to Buyer.
SECTION 3.11. Brokers. No broker, finder or investment banker
(other than Allen & Company Incorporated) is entitled to any brokerage,
finder's or other fee or commission in connection with the proposed
transaction with CBS Inc., the Offer, the Merger or the Transactions based
upon arrangements made by or on behalf of QVC. QVC has heretofore furnished
to Comcast a complete and correct copy of all agreements between QVC and Allen
& Company Incorporated as of the date hereof pursuant to which such firm would
be entitled to any payment relating to the Transactions or the proposed
transaction with CBS Inc.
SECTION 3.12. Taxes. (a) Except as set forth in Section
3.12(a) of the QVC Disclosure Schedule, each of QVC and the QVC Subsidiaries
has filed all tax returns and reports required to be filed by it or requests
for extensions to file such returns or reports have been timely filed, granted
and have not expired, except to the extent that such failures to file or to
have extensions granted that remain in effect individually and in the aggregate
would not have a QVC Material Adverse Effect. All returns filed by QVC and
each of the QVC Subsidiaries are complete and accurate in all material
respects. QVC and each of the QVC Subsidiaries has timely paid (or QVC has
paid on its behalf) all taxes shown as due on such returns, and the most
recent financial statements contained in the QVC SEC Reports reflect an
adequate reserve for all taxes payable by QVC and the QVC Subsidiaries for all
<PAGE>
taxable periods and portions thereof accrued through the date of such financial
statements. Except as set forth in Section 3.12(a) of the QVC Disclosure
Schedule, no deficiencies for any taxes have been proposed, asserted or
assessed against QVC or any QVC Subsidiary that are not adequately reserved
for, except for deficiencies that individually or in the aggregate would not
have a QVC Material Adverse Effect, and no requests for waivers of the time to
assess any such taxes have been granted or are pending. QVC is not nor has it
been within 5 years of the date hereof a "United States real property holding
corporation" as defined in Section 897 of the Code.
(b) As used in this Section 3.12, "taxes" shall include all
Federal, state, local and foreign income, franchise, alternative or add-on
minimum tax, gross receipts, transfer, withholding on amounts paid to or by QVC
or any QVC Subsidiary, payroll, employment, license, property, sales, use,
excise and other taxes, tariffs or governmental charges of any nature
whatsoever, together with any interest, penalty or addition to tax
attributable to such taxes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMCAST, LIBERTY
AND BUYER
Comcast hereby makes to QVC the representations and warranties
set forth below in Sections 4.01 through 4.06:
SECTION 4.01. Organization and Qualification. Comcast is a
corporation duly incorporated, validly existing and in good standing under the
laws of Pennsylvania and has the requisite power and authority and all
necessary governmental approvals to own, lease and operate its properties and
to carry on its business as it is now being conducted, except where the
failure to be so incorporated, existing or in good standing or to have such
power, authority and governmental approvals would not, individually or in the
aggregate, have a material adverse effect on the business, results of
operations or financial condition of Comcast and its subsidiaries, taken as a
whole (a "Comcast Material Adverse Effect"). Neither Comcast nor any of its
subsidiaries is in violation of any provision of its certificate of
incorporation, bylaws or equivalent organizational documents, except for such
violations that would not, individually or in the aggregate, have a Comcast
Material Adverse Effect.
SECTION 4.02. Authority Relative to This Agreement. Comcast
has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Comcast and the
consummation by Comcast of the Transactions have been duly and validly
authorized by all necessary corporate action and no other corporate
proceedings on the part of Comcast are necessary to authorize this Agreement
or to consummate the Transactions (other than the filing and recordation of
appropriate merger documents as required by Delaware Law). This Agreement has
been duly and validly executed and delivered by Comcast and, assuming the due
authorization, execution and delivery by QVC and Liberty, constitutes the
legal, valid and binding obligation of Comcast, enforceable against Comcast in
accordance with its terms.
SECTION 4.03. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by Comcast do not, and the
performance of the Transactions by Comcast will not, (i) conflict with or
violate the certificate of incorporation or by-laws or equivalent
<PAGE>
organizational documents of Comcast, (ii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to Comcast or by which
any property or asset of Comcast is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, result in the loss of a material
benefit under or give to others any right of termination, amendment,
acceleration, increased payments or cancellation of, or result in the creation
of a lien or other encumbrance on any property or asset of Comcast pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or any other instrument or obligation to which Comcast is a
party or by which Comcast or any property or asset of Comcast is bound or
affected, except in the case of clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences which would not
prevent or delay consummation of the Merger in any material respect, or
otherwise prevent Comcast from performing its obligations under this Agreement
in any material respect, and would not, individually or in the aggregate, have
a Comcast Material Adverse Effect.
(b) The execution and delivery of this Agreement by Comcast
do not, and the performance of this Agreement and the consummation of the
Transactions by Comcast will not, require any consent, approval, authorization
or permit of, or filing with or notification to, any Governmental Entity,
except (i) for (A) applicable requirements, if any, of the Exchange Act and
state takeover laws, (B) the pre-merger notification requirements of the HSR
Act, and (C) filing and recordation of appropriate merger and similar
documents as required by Delaware Law and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Merger in any
material respect, or otherwise prevent Comcast from performing its obligations
under this Agreement in any material respect, and would not, individually or
in the aggregate, have a Comcast Material Adverse Effect.
SECTION 4.04. SEC Filings, Financial Statements. (a) Comcast
has filed all forms, reports and documents required to be filed by it with the
SEC since December 31, 1991, and has heretofore made available to QVC, in the
form filed with the SEC (excluding any exhibits thereto), (i) its Annual
Reports on Form 10-K for the fiscal years ended December 31, 1991, 1992 and
1993, respectively, (ii) its Quarterly Report on Form 10-Q for the quarter
ended March 31, 1994, (iii) all proxy statements relating to Comcast's
meetings of stockholders (whether annual or special) held since January 1,
1992, and (iv) all other forms, reports and other registration statements
(other than Quarterly Reports on Form 10-Q not referred to in clause (ii)
above and preliminary materials) filed by Comcast with the SEC since December
31, 1991 (the forms, reports and other documents referred to in clauses (i),
(ii), (iii), and (iv) above being referred to herein, collectively, as the
"Comcast SEC Reports"). The Comcast SEC Reports and any other forms, reports
and other documents filed by Comcast with the SEC after the date of this
Agreement (x) were or will be prepared in accordance with the requirements of
the Securities Act and the Exchange Act, as the case may be, and the rules and
regulations thereunder and (y) did not at the time they were filed, or will
not at the time they are filed, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the Comcast SEC Reports was
prepared in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each fairly presented the consolidated
<PAGE>
financial position, results of operations and cash flows of Comcast and the
consolidated Comcast subsidiaries as at the respective dates thereof and for
the respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which were not and
are not expected, individually or in the aggregate, to be material in amount).
Since December 31, 1993, there has been no change in any of the significant
accounting (including tax accounting) policies, practices or procedures of
Comcast.
SECTION 4.05. Brokers. No broker, finder or investment banker
(other than Lazard Freres & Co.) is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger and the Transactions
based upon arrangements made by or on behalf of Comcast.
Liberty hereby makes to QVC the representations and warranties
set forth below in Sections 4.06 through 4.10:
SECTION 4.06. Organization and Qualification. Liberty is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry
on its business as it is now being conducted, except where the failure to be
so incorporated, existing or in good standing or to have such power, authority
and governmental approvals would not, individually or in the aggregate, have
a material adverse effect on the business, results of operations or financial
condition of Liberty and its subsidiaries, taken as a whole (a "Liberty
Material Adverse Effect"). Neither Liberty nor any of its subsidiaries is in
violation of any provision of its certificate of incorporation, bylaws or
equivalent organizational documents, except for such violations that would not,
individually or in the aggregate, have a Liberty Material Adverse Effect.
SECTION 4.07. Authority Relative to This Agreement. Liberty
has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Liberty and the
consummation by Liberty of the Transactions have been duly and validly
authorized by all necessary corporate action and no other corporate
proceedings on the part of Liberty are necessary to authorize this Agreement
or to consummate the Transactions (other than the filing and recordation of
appropriate merger documents as required by Delaware Law). This Agreement has
been duly and validly executed and delivered by Liberty and, assuming the due
authorization, execution and delivery by QVC and Comcast, constitutes the
legal, valid and binding obligation of Liberty, enforceable against Liberty in
accordance with its terms.
SECTION 4.08. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by Liberty do not, and the
performance of the Transactions by Liberty will not, (i) conflict with or
violate the certificate of incorporation or by-laws or equivalent
organizational documents of Liberty, (ii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to Liberty or by which
any property or asset of Liberty is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, result in the loss of a material
benefit under or give to others any right of termination, amendment,
acceleration, increased payments or cancellation of, or result in the creation
of a lien or other encumbrance on any property or asset of Liberty pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or any other instrument or obligation to which Liberty is a
party or by which Liberty or any property or asset of Liberty is bound or
<PAGE>
affected, except in the case of clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences which would not
prevent or delay consummation of the Merger in any material respect, or
otherwise prevent Liberty from performing its obligations under this Agreement
in any material respect, and would not, individually or in the aggregate, have
a Liberty Material Adverse Effect.
(b) The execution and delivery of this Agreement by Liberty
do not, and the performance of this Agreement and the consummation of the
Transactions by Liberty will not, require any consent, approval, authorization
or permit of, or filing with or notification to, any Governmental Entity,
except (i) for (A) applicable requirements, if any, of the Exchange Act and
state takeover laws, (B) the pre-merger notification requirements of the HSR
Act applicable to the transactions contemplated by the letter agreement dated
August 4, 1994 among Comcast, Liberty and TCI (the "Bidding Agreement") and
(C) filing and recordation of appropriate merger and similar documents as
required by Delaware Law and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Merger in any
material respect, or otherwise prevent Liberty from performing its obligations
under this Agreement in any material respect, and would not, individually or in
the aggregate, have a Liberty Material Adverse Effect.
SECTION 4.09. SEC Filings, Financial Statements. (a) Liberty
has filed all forms, reports and documents required to be filed by it with the
SEC since December 31, 1991, and has heretofore made available to QVC, in the
form filed with the SEC (excluding any exhibits thereto), (i) its Annual
Reports on Form 10-K for the fiscal years ended December 31, 1991, 1992 and
1993, respectively, (ii) its Quarterly Report on Form 10-Q for the quarter
ended March 31, 1994, (iii) all proxy statements relating to Liberty's
meetings of stockholders (whether annual or special) held since January 1,
1992, and (iv) all other forms, reports and other registration statements
(other than Quarterly Reports on Form 10-Q not referred to in clause (ii)
above and preliminary materials) filed by Liberty with the SEC since December
31, 1991 (the forms, reports and other documents referred to in clauses (i),
(ii), (iii), and (iv) above being referred to herein, collectively, as the
"Liberty SEC Reports"). The Liberty SEC Reports and any other forms, reports
and other documents filed by Liberty with the SEC after the date of this
Agreement (x) were or will be prepared in accordance with the requirements of
the Securities Act and the Exchange Act, as the case may be, and the rules and
regulations thereunder and (y) did not at the time they were filed, or will
not at the time they are filed, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the Liberty SEC Reports was
prepared in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each fairly presented the consolidated
financial position, results of operations and cash flows of Liberty and the
consolidated Liberty subsidiaries as at the respective dates thereof and for
the respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which were not and
are not expected, individually or in the aggregate, to be material in amount).
Since December 31, 1993, there has been no change in any of the significant
accounting (including tax accounting) policies, practices or procedures of
Liberty, except in connection with the business combination transaction between
Liberty and Tele-Communications, Inc.
<PAGE>
SECTION 4.10. Brokers. No broker, finder or investment banker
(other than Lazard Freres & Co.) is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger and the Transactions
based upon arrangements made by or on behalf of Liberty.
Buyer, Comcast and Liberty each hereby makes to QVC the
representations and warranties in respect of Buyer set forth below in Sections
4.11 through 4.15:
SECTION 4.11. Organization and Qualification. Buyer is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry
on its business as it is now being conducted, except where the failure to be
so incorporated, existing or in good standing or to have such power, authority
and governmental approvals would not, individually or in the aggregate, have
a material adverse effect on the business, results of operations or financial
condition of Buyer and its subsidiaries, taken as a whole (a "Buyer Material
Adverse Effect"). Since the date of its incorporation, Buyer has not engaged
in any activities other than in connection with or as contemplated by this
Agreement or in connection with arranging any financing required to consummate
Transactions. Buyer does not have any operating subsidiaries.
SECTION 4.12. Certificate of Incorporation and Bylaws. Buyer
has heretofore made available to QVC a complete and correct copy of its
certificate of incorporation and bylaws, each as amended to the date hereof.
Such certificates of incorporation and bylaws are in full force and effect.
Buyer is not in violation of its certificate of incorporation or bylaws.
SECTION 4.13. Authority Relative to This Agreement. Buyer has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Buyer and the
consummation by Buyer of the Transactions have been duly and validly
authorized by all necessary corporate action and no other corporate
proceedings on the part of Buyer are necessary to authorize this Agreement or
to consummate the Transactions (other than the filing and recordation of
appropriate merger documents as required by Delaware Law). This Agreement has
been duly and validly executed and delivered by Buyer and, assuming the due
authorization, execution and delivery by QVC, constitutes the legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms.
SECTION 4.14. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by Buyer do not, and the
performance of the Transactions by Buyer will not, (i) conflict with or
violate the certificate of incorporation or by-laws or equivalent
organizational documents of Buyer, (ii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to Buyer or by which
any property or asset of Buyer is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, result in the loss of a material
benefit under or give to others any right of termination, amendment,
acceleration, increased payments or cancellation of, or result in the creation
of a lien or other encumbrance on any property or asset of Buyer pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or any other instrument or obligation to which Buyer is a
party or by which Buyer or any property or asset of Buyer is bound or
affected, except in the case of clauses (ii) and (iii), for any such
<PAGE>
conflicts, violations, breaches, defaults or other occurrences which would not
prevent or delay consummation of the Merger in any material respect, or
otherwise prevent Buyer from performing its obligations under this Agreement
in any material respect, and would not, individually or in the aggregate, have
a Buyer Material Adverse Effect.
(b) The execution and delivery of this Agreement by Buyer do
not, and the performance of this Agreement and the consummation of the
Transactions by Buyer will not, require any consent, approval, authorization
or permit of, or filing with or notification to, any Governmental Entity,
except (i) for (A) applicable requirements, if any, of the Exchange Act and
state takeover laws, (B) the pre-merger notification requirements of the HSR
Act and (C) filing and recordation of appropriate merger and similar documents
as required by Delaware Law and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Merger in any
material respect, or otherwise prevent Buyer from performing its obligations
under this Agreement in any material respect, and would not, individually or
in the aggregate, have a Buyer Material Adverse Effect.
SECTION 4.15. Brokers. No broker, finder or investment banker
(other than Lazard Freres & Co.) is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger and the Transactions
based upon arrangements made by or on behalf of Buyer.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by QVC Pending the Merger.
QVC covenants and agrees that, between the date of this Agreement and the
Effective Time, unless Buyer shall have consented in writing (such consent not
to be unreasonably withheld), QVC and its respective subsidiaries shall not,
except as set forth on Schedule 5.01 to the QVC Disclosure Schedule:
(a) conduct its business in any manner other than in the
ordinary course of business consistent with past practice;
(b) amend or otherwise change the certificate of
incorporation or by-laws of QVC;
(c) issue, grant, sell, pledge, redeem or acquire for value
(i) any of its or their securities, including options
thereon (other than the issuance of equity securities upon the
conversion of outstanding convertible securities or in connection
with any dividend reinvestment plan or by any QVC Plan with
an employee stock fund or employee stock ownership plan feature,
consistent with applicable securities laws, or the exercise of
options or warrants outstanding as of the date of this Agreement and
in accordance with the terms of such options or warrants in effect on
the date of this Agreement) or (ii) any material assets,
except for sales of assets in the ordinary course of business;
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except dividends declared and
paid by a subsidiary of QVC only to QVC, or subdivide, re-classify,
recapitalize, split, combine or exchange any of its shares
of capital stock (other than in connection with the exercise of
<PAGE>
currently outstanding options or warrants);
(e) incur any material amount of indebtedness for borrowed
money or make any loans or advances, except borrowings under existing
bank lines of credit in the ordinary course of business;
(f) increase the compensation payable or to become payable to
its executive officers or employees, except for increases in the
ordinary course of business in accordance with past practices, or
grant any severance or termination pay to, or enter into any
employment or severance agreement with any director or executive
officer of it or any of its subsidiaries, or establish, adopt, enter
into or amend in any material respect or take action to accelerate
any rights or benefits under any collective bargaining agreement or
any employee benefit plan, agreement or policy;
(g) take any action, other than reasonable and usual actions
in the ordinary course of business and consistent with past practice,
with respect to accounting policies or procedures (including
tax accounting policies and procedures);
(h) acquire by merger or consolidation, or by purchase of
assets, or by any other manner, any material business;
(i) mortgage or otherwise encumber or subject to any lien any
of its properties or assets that are material to it and its
subsidiaries taken as a whole, except for liens in connection with
indebtedness incurred in connection with the Merger as permitted by
clause (e) above; or
(j) authorize any of, or commit or agree to take any of, the
foregoing actions.
ARTICLE VI
ADDITIONAL COVENANTS
SECTION 6.01. Access to Information; Confidentiality. (a)
From the date hereof to the Effective Time, QVC shall (and shall cause its
subsidiaries and officers, directors, employees, auditors and agents to)
afford the officers, employees and agents of Comcast and Liberty (the
"Respective Representatives") reasonable access at all reasonable times to its
officers, employees, agents, properties, offices, plants and other facilities,
books and records, and shall furnish such Respective Representatives with all
financial, operating and other data and information as may be reasonably
requested. All information obtained will be subject to the Confidentiality
Agreement, dated as of July 13, 1994, between Comcast and QVC, and the
Confidentiality Agreement, dated as of July 21, 1994, between Liberty and QVC
(collectively, the "Confidentiality Agreements").
(b) No investigation pursuant to this Section 6.01 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto.
SECTION 6.02. No Solicitation. QVC shall not, nor shall it
permit any of its subsidiaries, or its or its subsidiaries' officers,
directors, employees, agents or representatives (including, without
limitation, any investment banker, attorney or accountant retained by it) to,
initiate, solicit or encourage, directly or indirectly, any inquiries or the
<PAGE>
making of any proposal with respect to an Alternative Transaction (as defined
below), engage in any discussions or negotiations concerning, or provide to any
other person any information or data relating to it or its subsidiaries for
the purposes of, or otherwise cooperate in any way with or assist or
participate in, facilitate or encourage, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to, a
proposal to seek or effect an Alternative Transaction, or agree to or endorse
any Alternative Transaction; provided, however, that nothing contained in this
Section 6.02 shall prohibit QVC, or its Board of Directors from (i) taking and
disclosing to its stockholders a position contemplated by Exchange Act Rule
14e-2 or (ii) making any disclosure to its stockholders that, in the judgment
of its Board of Directors in accordance with, and based upon the advice of,
outside counsel, is required under applicable law; and, provided, further,
that (x) the QVC Board of Directors on behalf of QVC may upon the unsolicited
request of a third party furnish information or data (including, without
limitation, confidential information or data) relating to QVC for the purposes
of an Alternative Transaction and participate in negotiations with a person
making an unsolicited proposal regarding an Alternative Transaction and (y)
following receipt of a proposal for an Alternative Transaction, the QVC Board
of Directors may withdraw or modify its recommendation relating to the Offer
or the Merger to the extent that it determines in good faith in accordance
with, and based upon the advice of, outside counsel that such action is
necessary or appropriate in order for the QVC Board of Directors to act in a
manner that is consistent with its fiduciary obligations under applicable law.
QVC shall promptly advise Buyer of, and communicate the terms of, any proposal
it may receive, or any inquiries it receives which may reasonably be expected
to lead to a proposal, and the identity of the person making it; prior to
taking any such action, if QVC intends to participate in any such discussion
or negotiation or provide any such information to any such third party, it
shall give reasonable notice to Buyer and shall consult, and thereafter shall
continue to consult, with Buyer. If QVC is required by this Section 6.02 to
give notice of a request, Alternative Transaction proposal or inquiry, it
shall keep Buyer reasonably informed of the status and details of any such
request, Alternative Transaction, inquiry or proposal (or any amendment to any
proposal). Nothing in this Section 6.02 shall (x) permit QVC to enter into
any agreement with respect to an Alternative Transaction during the term of
this Agreement (it being agreed that during the term of this Agreement QVC
shall not enter into any agreement with any person that provides for, or in
any way facilitates, an Alternative Transaction, other than a confidentiality
agreement in customary form) or (y) affect any other obligation of QVC under
this Agreement. "Alternative Transaction" means a transaction or series of
related transactions (other than the Transactions) resulting in (a) any change
of control of QVC, (b) any merger or consolidation of QVC in which another
person acquires 25% or more of the aggregate voting power of all voting
securities of it or the surviving corporation, as the case may be, (c) any
tender offer or exchange offer for, or any acquisitions of, any securities of
QVC which, if consummated, would result in another person owning 25% or more
of the aggregate voting power of all voting securities of it or (d) any sale
or other disposition of assets of QVC or any of its subsidiaries if the Fair
Market Value of such assets exceeds 25% of the aggregate Fair Market Value of
the assets of QVC and its subsidiaries taken as a whole before giving effect
to such sale or other disposition. "Fair Market Value" of any assets or
securities means the fair market value of such assets or securities, as
determined by the Board of Directors of QVC in good faith.
SECTION 6.03. Directors' and Officers' Indemnification and
Insurance. (a) From and after the Effective Time, the Surviving Corporation
shall indemnify, defend and hold harmless the present and former officers and
directors of QVC (collectively, the "Indemnified Parties") against all losses,
expenses, claims, damages, liabilities or amounts that are paid in settlement
<PAGE>
of, with the approval of the Surviving Corporation (which approval shall not
unreasonably be withheld), or otherwise in connection with any claim, action,
suit, proceeding or investigation (a "Claim"), based in whole or in part on
the fact that such person is or was a director or officer of QVC and arising
out of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), in each case to the full extent permitted under Delaware Law (and
shall pay any expenses in advance of the final disposition of any such action
or proceeding to each Indemnified Party to the fullest extent permitted under
Delaware Law, upon receipt from the Indemnified Party to whom expenses are
advanced of any undertaking to repay such advances required under Delaware
Law).
(b) For a period of three years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by QVC
(provided that the Surviving Corporation may substitute therefor policies of
at least the same coverage and amounts containing terms and conditions which
are no less advantageous to such officers and directors) with respect to
claims arising from facts or events which occurred before the Effective Time;
provided, however, that in no event shall the Surviving Corporation be
required to expend pursuant to this Section 6.03(b) more than an amount equal
to 200% of the current annual premiums paid by QVC for such insurance (which
premiums QVC represents and warrants to be approximately $700,000 in the
aggregate on an annualized basis in addition to the remaining premium to be
paid during the next twelve months in connection with a prior acquisition by
QVC).
(c) This Section 6.03 is intended to be for the benefit of,
and shall be enforceable by, the Indemnified Parties, their heirs and personal
representatives and shall be binding on the Surviving Corporation and its
respective successors and assigns.
SECTION 6.04. Notification of Certain Matters. QVC shall give
prompt notice to Buyer, and Buyer shall give prompt notice to QVC, of (a) the
occurrence, or non-occurrence, of any event the occurrence, or non-occurrence,
of which would be likely to cause (i) any representation or warranty contained
in this Agreement to be untrue or inaccurate or (ii) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied and
(b) any failure of QVC or Buyer (or Comcast or Liberty), as the case may be,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 6.04 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
SECTION 6.05. Further Action; Best Efforts. (a) Upon the
terms and subject to the conditions hereof, each of the parties hereto shall
(i) make promptly its respective filings, and thereafter make any other
required submissions, under the HSR Act with respect to the Transactions, and
(ii) use its best efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations or otherwise to consummate and
make effective the Transactions, including, without limitation, using its best
efforts to obtain all financing necessary to consummate the Transactions as
well as all licenses, permits, waivers, orders, consents, approvals,
authorizations, qualifications and orders of Governmental Entities and parties
to contracts with QVC and its subsidiaries as are necessary for the
consummation of the Transactions. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
<PAGE>
shall use their best efforts to take all such action.
(b) Each party shall use its best efforts not to take any
action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or
result in a breach of any covenant made by it in this Agreement.
SECTION 6.06. Public Announcements. Buyer, Comcast, Liberty
and QVC shall consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement or any
Transaction and shall not issue any such press release or make any such public
statement without the prior consent of the other parties, which consent shall
not be unreasonably withheld; provided, however, that a party may, without the
prior consent of the other parties, issue such press release or make such
public statement as may be required by law or any listing agreement or
arrangement to which Buyer, Comcast, Liberty or QVC is a party with a national
securities exchange or the National Association of Securities Dealers, Inc.
Automated Quotation System if it has used all reasonable efforts to consult
with the other parties and to obtain such parties' consent but has been unable
to do so in a timely manner.
SECTION 6.07. Conveyance Taxes. Buyer and QVC shall cooperate
in the preparation, execution and filing of all returns, questionnaires,
applications, or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any
transfer, recording, registration and other fees, and any similar taxes which
become payable in connection with the Transactions that are required or
permitted to be filed on or before the Effective Time.
SECTION 6.08. Gains Tax. Buyer shall pay any New York State
Tax on Gains Derived from Certain Real Property Transfers (the "Gains Tax"),
New York State Real Estate Transfer Tax and New York City Real Property
Transfer Tax (the "Transfer Taxes") and any similar taxes in any other
jurisdiction (and any penalties and interest with respect to such taxes),
which become payable in connection with the Offer and the Merger, on behalf of
the stockholders of QVC. Buyer and QVC shall cooperate in the preparation,
execution and filing of any required returns with respect to such taxes
(including returns on behalf of the stockholders of QVC) and in the
determination of the portion of the consideration allocable to the real
property of QVC and the QVC Subsidiaries in New York State and City (or in any
other jurisdiction, if applicable). The terms of the Offer and Proxy
Statement shall provide that the stockholders of QVC shall be deemed to have
agreed to be bound by the allocation established pursuant to this Section 6.08
in the preparation of any return with respect to the Gains Tax and the Transfer
Taxes and any similar taxes, if applicable.
SECTION 6.09. Obligations of Buyer. Comcast and Liberty each
agree to take all action necessary to cause Buyer and the Surviving
Corporation to perform their respective obligations under this Agreement and to
consummate, and cause MergerCo to consummate, the Offer and the Merger on the
terms and conditions set forth in this Agreement. Comcast and Liberty shall
be jointly and severally liable for any breach of any representation,
warranty, covenant or agreement of Buyer and for any breach of this covenant.
SECTION 6.10. Severance Policy; Employee Benefits. (a)
Comcast, Liberty and Buyer will cause the Surviving Corporation to maintain
for a period ending on the second anniversary of the Effective Time, without
interruption, employee compensation and benefit plans, programs and policies
and fringe benefits (including postemployment welfare benefits) that, in the
aggregate, are no less favorable than those provided to such employees of QVC
<PAGE>
and its subsidiaries, as applicable, as in effect on the date hereof.
Notwithstanding the foregoing, for a period ending on the second anniversary
of the Effective Time, Comcast, Liberty and Buyer will cause the Surviving
Corporation to provide to all employees of QVC and its subsidiaries severance
pay and benefits which are no less favorable than under the applicable
severance plans, programs and policies of QVC and its subsidiaries, as
applicable, as in effect on the date hereof.
(b) Immediately prior to consummation of the Offer, Buyer
shall establish with a trustee satisfactory to QVC and Buyer, a "Rabbi" trust,
in a form reasonably acceptable to QVC, and shall deposit in such trust cash in
an amount sufficient to satisfy all obligations under QVC Stock Options. The
terms of such trust shall provide that payments shall be made to the holders
of QVC Stock Options following the Effective Time, in accordance with the
provisions of Section 2.04, upon delivery to the trustee by or on behalf of
the option holder of a copy of the option agreement evidencing such QVC Stock
Options (or other appropriate documentation) and certification by the option
holder that such option holder is entitled to such payment under the terms of
such option agreement and Section 2.04.
SECTION 6.11. FCC Approvals. If not already withdrawn, within
five business days after the date hereof QVC will withdraw any applications
pending with the Federal Communications Commission (the "FCC") relating to the
transfer of control of any licenses or other permits issued by the FCC to QVC
or any QVC Subsidiary. QVC will not make any applications to the FCC in
respect of the Transactions without Buyer's prior approval.
SECTION 6.12. Tax Certification. At any time during the
period beginning on the date hereof and ending on the Effective Time, QVC
shall provide to Buyer, within two business days of a request by Buyer, a
certificate signed by QVC to the effect that QVC is not, nor has it been
within 5 years of the date thereof, a "United States real property holding
corporation" as defined in Section 897 of the Code.
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.01. Conditions to Obligations of Each Party to
Effect the Merger. The respective obligations of each party to effect the
Merger and the Transactions shall be subject to the satisfaction at or prior
to the Effective Time of the following conditions, any or all of which may be
waived, in whole or in part, to the extent permitted by applicable law:
(a) Stockholder Approval. If required by Delaware Law, this
Agreement and the Merger shall have been approved and adopted by the
requisite vote of the stockholders of QVC.
(b) No Order. No Governmental Entity or federal or state
court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which
materially restricts, prevents or prohibits consummation of the
Merger or any Transaction contemplated by this Agreement; provided,
however, that the parties shall use their reasonable efforts to cause
any such decree, judgment, injunction or other order to be
vacated or lifted.
(c) Other Approvals. Other than the filing of merger
<PAGE>
documents in accordance with Delaware Law, all authorizations,
consents, waivers, orders or approvals required to be obtained, and
all filings, notices or declarations required to be made, by Comcast,
Liberty or Buyer and QVC prior to the consummation of the
Merger and the Transactions shall have been obtained from, and made
with, all required Governmental Entities, except for such
authorizations, consents, waivers, orders, approvals, filings,
notices or declarations the failure to obtain or make which
would not have a material adverse effect, at or after the Effective
Time, on the business, results of operations or financial condition
(as existing immediately prior to the consummation of the Merger) of
QVC and the QVC Subsidiaries, taken as a whole.
(d) The Offer. Buyer shall have purchased shares pursuant to
the Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated
at any time prior to the Effective Time, whether before or after approval of
this Agreement and the Merger by the stockholders of QVC:
(a) by mutual consent of QVC and Buyer;
(b) prior to the purchase of Shares pursuant to the Offer, (x)
by Buyer or QVC upon termination of the Offer by Buyer pursuant to
Annex I, (y) by Buyer upon a breach of any covenant or agreement on
the part of QVC set forth in this Agreement which has not been cured,
or if any representation or warranty of QVC shall have
become untrue, in either case such that such breach or untruth is
incapable of being cured by February 28, 1995 or (z) by QVC in the
event of a breach of any representation, warranty, agreement or
covenant (other than the covenant contained in Section 6.10(b)) of
Comcast, Liberty or Buyer set forth in this Agreement,
provided that such breach has not been cured (and cannot reasonably
be expected to be cured before February 28, 1995) and will prevent or
delay consummation of the Merger by or beyond February 28,
1995;
(c) by either Buyer or QVC, if any permanent injunction or
action by any Governmental Entity preventing the consummation of the
Merger shall have become final and nonappealable;
(d) by either Buyer or QVC, if the Offer shall not have been
consummated before February 28, 1995, unless, in the case of
termination by Buyer, Buyer shall not have purchased Shares pursuant
to the Offer by reason of any failure by Buyer, Comcast or Liberty
to fulfill its obligations hereunder; or
(e) by Buyer or QVC if (i) the Board of Directors of QVC shall
withdraw, modify or change its recommendation so that it is not in
favor of this Agreement, the Offer or the Merger or shall
have resolved to do any of the foregoing or (ii) the Board of
Directors of QVC shall have recommended or resolved to recommend to
its stockholders an Alternative Transaction, provided that, in the
case of any such termination by QVC, simultaneously with
such termination it complies with Section 8.05(b) of this Agreement.
<PAGE>
The right of any party hereto to terminate this Agreement pursuant to this
Section 8.01 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
SECTION 8.02. Effect of Termination. Except as provided in
Section 8.05 or Section 9.01, in the event of the termination of this
Agreement pursuant to Section 8.01, this Agreement shall forthwith become
void, there shall be no liability on the part of any party hereto, or any of
their respective officers or directors, to the other and all rights and
obligations of any party hereto shall cease; provided, however, that nothing
herein shall relieve any party from liability for the wilful breach of any of
its representations, warranties, covenants or agreements set forth in this
Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after approval of this Agreement and the Merger by the stockholders of QVC, no
amendment, which under applicable law may not be made without the approval of
the stockholders of QVC, may be made without such approval. This Agreement
may not be amended except by an instrument in writing signed by the parties
hereto.
SECTION 8.04. Waiver. At any time prior to the Effective
Time, either party hereto may (a) extend the time for the performance of any
of the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
by the other party with any of the agreements or conditions contained herein.
Any such extension or waiver shall be valid only if set forth in an instrument
in writing signed by the party or parties to be bound thereby.
SECTION 8.05. Fees, Expenses and Other Payments. (a) All
costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred by the parties hereto
shall be borne solely and entirely by the party which has incurred such costs
and expenses (with respect to such party, its "Expenses"); provided, however,
that all costs and expenses related to printing and mailing the Proxy
Statement shall be borne equally by QVC and Buyer.
(b) Except to the extent earlier payment is required pursuant
to Section 8.01(e), QVC agrees that if this Agreement shall be terminated by
Buyer or QVC pursuant to Section 8.01(e), then QVC will pay to Buyer an amount
equal to $55,000,000, which amount is inclusive of all expenses of Buyer,
Comcast and Liberty. Any payment required to be made pursuant to this
paragraph (b) shall be made as promptly as practicable but not later than two
business days after termination of this Agreement and, in any such case, shall
be made by wire transfer of immediately available funds to an account
designated by Buyer.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Effectiveness of Representations, Warranties and
Agreements. (a) Except as set forth in Section 9.01(b), the representations,
warranties and agreements of each party hereto shall remain operative and in
<PAGE>
full force and effect, regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party or any of their
respective officers or directors, whether prior to or after the execution of
this Agreement.
(b) The representations, warranties and agreements in this
Agreement shall terminate at the Effective Time or upon the termination of
this Agreement pursuant to Article VIII, except that the agreements set forth
in Articles I, II and IX, and Sections 6.03, 6.09, 6.10 and 6.11 shall survive
the Effective Time and those set forth in the last sentence of Section 6.01(a)
and Sections 8.02 and 8.05 and Article IX shall survive termination.
SECTION 9.02. Notices. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made as of the date delivered or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like changes of address) or sent by electronic transmission to
the telecopier number specified below:
(a) If to Comcast or Buyer:
Comcast Corporation
1500 Market Street
Philadelphia, Pennsylvania 19102-4735
Attention: General Counsel
Telecopier No.: (215) 981-7794
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Attention: Dennis S. Hersch
Telecopier No.: (212) 450-4800
(b) If to Liberty or Buyer:
Liberty Media Corporation
8101 East Prentice Avenue
Suite 500
Englewood, CO 80111
Attention: President
Telecopier No.: (303) 721-5415
with a copy to:
Baker & Botts
885 Third Avenue
New York, NY 10022
Attention: Jerome H. Kern
<PAGE>
Telecopier No.: (212) 705-5125
(c) If to QVC:
QVC, Inc.
1365 Enterprise Drive
Goshen Corporate Park
West Chester, PA 19380
Attention: Corporate Secretary
Telecopier No.: (610) 430-2380
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Pamela S. Seymon
Telecopier No.: (212) 403-2000
SECTION 9.03. Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliate" means a person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is
under common control with, the first mentioned person;
(b) "business day" means any day other than a day on which (i)
banks in the State of New York are authorized or obligated to be
closed or (ii) the SEC or NYSE is closed;
(c) "control" (including the terms "controlled," "controlled
by" and "under common control with") means the possession, directly
or indirectly or as trustee or executor, of the power to direct or
cause the direction of the management or polices of a person, whether
through the ownership of stock or as trustee or executor, by
contract or credit arrangement or otherwise; and
(d) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of
which such person (either alone or through or together with any other
subsidiary) owns, directly or indirectly, 50% or more of the stock or
other equity interests, the holders of which are generally
entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
SECTION 9.04. Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 9.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
<PAGE>
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.06. Entire Agreement. This Agreement (together
with the Exhibits, the QVC Disclosure Schedule, the Confidentiality Agreements
and the other documents delivered in connection herewith), constitutes the
entire agreement of the parties and supersedes all prior agreements and
undertakings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof.
SECTION 9.07. Assignment. This Agreement shall not be
assigned by operation of law or otherwise and any purported assignment shall
be null and void, provided that any of Comcast, Liberty or Buyer may assign
its rights, but not its obligations, under this Agreement to any affiliate of
Comcast, Liberty or Buyer.
SECTION 9.08. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied (other than the provisions of Section
6.03 and 6.10, which provisions are intended to benefit and may be enforced by
the beneficiaries thereof), is intended to or shall confer upon any person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
SECTION 9.09. Governing Law. Except to the extent that
Delaware Law may be applicable to the Merger and the rights of the
stockholders of QVC, this Agreement shall be governed by, and construed 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 law.
SECTION 9.10. Enforcement of the Agreement. The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions hereof,
this being in addition to any other remedy to which they are entitled at law
or in equity.
SECTION 9.11. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, Comcast, Liberty, Buyer and QVC have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
COMCAST CORPORATION
By /s/ Brian L. Roberts
-----------------------
Name: Brian L. Roberts
Title: President
<PAGE>
LIBERTY MEDIA CORPORATION
By /s/ Peter Barton
----------------------------
Name: Peter Barton
Title: President
COMCAST QMERGER, INC.
By /s/ Brian S. Roberts
----------------------------
Name: Brian S. Roberts
Title: President
QVC, INC.
By /s/ Neal S. Grabell
----------------------------
Name: Neal S. Grabell
Title: General Counsel,
Senior Vice President
and Secretary
ANNEX I
Notwithstanding any other provision of the Offer, Buyer shall
not be required to accept for payment or pay for any Shares, and may terminate
the Offer, if (i) the Shares tendered pursuant to the Offer by the expiration
of the Offer and not withdrawn, together with the Shares agreed to be
contributed by Comcast and Liberty to Buyer pursuant to the Bidding Agreement
(as in effect on the date hereof), represent, on a fully diluted basis less
than a majority of the outstanding Common Shares, in each case calculated on a
fully diluted basis (the "Minimum Condition"), (ii) Buyer has not obtained
sufficient financing on terms satisfactory to it to purchase all of the
outstanding Shares pursuant to the Offer, consummate the Merger and pay
related fees and expenses, (iii) the waiting periods under the HSR Act
applicable to the proposed Transactions and the transactions contemplated by
the Bidding Agreement shall not have expired or been terminated, provided that
prior to December 31, 1994, Buyer shall not terminate the Offer by reason of
nonsatisfaction of the condition in this clause (iii) and will extend the
offer in such event (it being understood that this provision shall not
prohibit Buyer from terminating the Offer or failing to extend the Offer by
reason of the nonsatisfaction of any other condition of the Offer), (iv) Buyer
shall not be satisfied that it has received all consents as are required from
the FCC for consent to the transfer of control of the FCC licenses listed in
the QVC Disclosure Schedule or (v) at any time prior to the acceptance for
payment of Shares, any of the following conditions exist:
(a) there shall be instituted or pending any action or
<PAGE>
proceeding by any government or governmental authority or agency,
domestic or foreign, or by any other person, domestic or foreign,
before any court or governmental authority or agency, domestic or
foreign, (i) challenging or seeking to make illegal, to
delay materially or otherwise directly or indirectly to restrain or
prohibit the making of the Offer, the acceptance for payment of or
payment for some of or all the Shares by Buyer or the consummation by
Buyer of the Merger, seeking to obtain material damages or imposing
any material adverse conditions in connection therewith or
otherwise directly or indirectly relating to the transactions
contemplated by the Offer or the Merger, (ii) seeking to restrain or
prohibit the exercise of full rights of ownership or operation by
Buyer or its affiliates of all or any portion of the
business or assets of QVC and its subsidiaries, taken as a whole, or
of Buyer or any of its affiliates, or to compel Buyer or any of its
affiliates to dispose of or hold separate all or any material portion
of the business or assets of QVC and its subsidiaries, taken as a
whole, or of Buyer or any of its affiliates, (iii) seeking
to impose limitations on the ability of Buyer or any of its
affiliates effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote any Shares
acquired or owned by Buyer or any of its affiliates on all matters
properly presented to QVC's stockholders or (iv) seeking to
require divestiture by Buyer or any of its affiliates of any Shares;
or
(b) there shall be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Offer, the acceptance
for payment of or payment for any Shares or the Merger, by
any court, government or governmental authority or agency, domestic,
foreign or supranational, other than the application of the waiting
period provisions of the HSR Act to the Offer or the Merger, that, in
the reasonable judgment of Buyer, might, directly or
indirectly, result in any of the consequences referred to in clauses
(i) through (iv) of paragraph (a) above; or
(c) QVC shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Merger
Agreement which has not been cured, or any of the representations and
warranties of QVC set forth in the Merger Agreement shall
not be true in any material respect when made or at any time prior to
consummation of the Offer as if made at and as of such time, in each
case and shall continue to be untrue; or
(d) the Merger Agreement shall have been terminated in
accordance with its terms;
which, in the reasonable judgment of Buyer in any such case, and regardless of
the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.
Exhibit 99.50
AGREEMENT
---------
August 4, 1994
Mr. Barry Diller
Arrow Investments, L.P.
1940 Coldwater Canyon
Beverly Hills, California 90210
Dear Mr. Diller:
Reference is made to (i) the Merger Agreement (the "Merger
Agreement"), dated the date hereof, among QVC, Inc. ("QVC"), Comcast
Corporation ("Comcast"), Liberty Media Corporation ("Liberty") and Comcast
Qmerger, Inc., (ii) the Stockholders Agreement, dated as of July 16, 1993, as
amended to date (the "Stockholders Agreement"), among Comcast, Barry Diller
("Diller"), Arrow Investments, L.P. ("Arrow") and certain of their affiliates
and (iii) the Equity Compensation Agreement dated as of December 9, 1992 by
and among QVC, Diller and Arrow (the "Equity Agreement"). Capitalized terms
used but not defined herein have the meanings set forth in the Merger
Agreement.
We agree as follows:
1. The Arrow Group (as defined below) represents and
warrants that as of the date hereof (a) it has good and marketable title to
1,000,000 shares (the "Shares," which term shall include any shares of Common
Stock (as defined below) issued to the Arrow Group after the date hereof upon
the exercise of any Options (as defined below) of common stock, par value $.01
per share, of QVC (the "Common Stock"), (b) all of such Shares are registered
in the name of Diller, entities controlled by Diller or Arrow (collectively,
the "Arrow Group"), (c) the Arrow Group is the holder of presently exercisable
options to purchase 3,000,000 shares of Common Stock and options to purchase an
additional 3,000,000 shares of Common Stock which are not presently
exercisable (collectively the "Options"), and (d) each of Diller and Arrow has
the legal power, right and authority to enter into and perform this Agreement,
<PAGE>
and this Agreement has been duly executed and delivered by each of Diller and
Arrow and constitutes a legal, valid and binding agreement of each of them.
The Shares and Options are sometimes collectively referred to as the "QVC
Securities."
2. Subject to the absence or waiver of any inconsistent
agreements, each of Comcast, Diller and Arrow agrees (for himself or itself
and his or its respective affiliates) that the Stockholders Agreement shall
terminate immediately without any further obligation thereunder, and each of
Comcast, Diller and Arrow further agrees (for himself or itself and his or its
respective affiliates) to release each other from any claim of whatever nature
arising out of or under the Stockholders Agreement; provided, however, that if
the Merger Agreement is terminated, such Stockholders Agreement (including all
rights and obligations thereunder) and such claims will be restored effective
as of the date hereof and this paragraph will be of no effect effective as of
the date hereof.
3. Diller agrees to vote (as a director of QVC) in favor of
the Merger Agreement and the Transactions, provided that there is not then a
bona fide transaction proposed to QVC or its stockholders which would result in
consideration to the QVC stockholders greater than $46 per share (or such
higher price then offered by Comcast and Liberty if they increase the $46
price provided in the Merger Agreement) and further subject to Diller's
fiduciary obligations as a member of the Board of Directors of QVC.
4. From the date hereof until the earlier of consummation of
the Merger or termination of the Merger Agreement:
(a) The Arrow Group will not (i) sell, transfer, pledge,
assign or otherwise dispose of, or agree to sell, transfer, pledge,
assign or otherwise dispose of, any of the QVC Securities except that
the Arrow Group shall be free to tender Shares pursuant to the Offer
(provided that the Arrow Group shall be permitted to dispose
of Shares to QVC in order to effect cashless exercises of Options),
(ii) deposit any QVC Securities owned by it into a voting trust or
grant a proxy or enter into a voting agreement with respect to such
QVC Securities, (iii) agree with any third-party to exercise
any voting rights with respect to such QVC Securities, except
pursuant to paragraph 4(b), or (iv) seek or solicit any of the
foregoing, other than as
<PAGE>
permitted (as a director of the Company) under the Merger Agreement.
(b) The Arrow Group agrees to tender, upon the request of
Comcast, pursuant to and in accordance with the terms of the Offer,
all shares of Common Stock owned by it. Upon the request of Comcast,
Diller will exercise all of the then exercisable Options provided
that arrangements satisfactory to Diller for the financing of the
exercise and the purchase of the Shares by Comcast have been made.
(c) Unless each Share has been tendered pursuant to the
Offer, the Arrow Group will cause each Share that it then owns or
has power to vote to be voted (i) at the Company stockholder
meeting to approve the Merger, for the approval and adoption of
the Merger Agreement and the Merger and (ii) against any
recapitalization, merger, business combination, or similar
transaction involving QVC unless Comcast or Liberty consents.
The foregoing notwithstanding, this paragraph 4 shall not apply (i) upon the
first to occur of (A) the last day on which to tender into a tender or
exchange offer which would result in consideration to the QVC stockholders
greater than $46 per share (or such higher price then offered by Comcast and
Liberty if they increase the $46 price provided in the Merger Agreement) (a
"Superior Offer") (subject to the subsequent condition that such Superior
Offer is consummated) and (B) the fifth business day after any person or
entity has made a Superior Offer which has not been matched by Comcast and
Liberty (subject to the subsequent condition that such Superior Offer is
consummated) or (ii) to the extent it could result in any violation of or
liability under the federal securities laws.
5. From the date hereof until the earlier of consummation of
the Merger or termination of the Merger Agreement, neither Diller nor Arrow
will, directly or indirectly, initiate, solicit or encourage any Person
concerning the making of any proposal with respect to an Alternative
Transaction, other than as permitted (as a director of the Company) under the
Merger Agreement.
6. Comcast and Liberty agree to cause QVC and the Surviving
Corporation to fulfill and completely discharge all obligations under the
options. Each of Comcast and Liberty agree that, upon consummation of the
Offer, unless otherwise
<PAGE>
agreed to by Diller, Diller's employment under the Equity Compensation
Agreement shall continue until at least December 12, 1994 (it being agreed
that Diller may perform his services to QVC as provided by the Equity
Compensation Agreement on a non-exclusive basis and without minimum time
requirements but will be reasonably available to facilitate the
transaction), and QVC shall continue to pay all expenses incurred by Diller
at least through December 12, 1994 on a basis consistent with past
practice. In addition, each of Comcast, Liberty and Diller agree that,
upon termination of Diller's employment, Comcast and Liberty shall cause
QVC to execute for the benefit of Diller and the entities included in the
Arrow Group, and, provided Diller shall have been paid all amounts due in
respect of the Options and his employment (including payment of Diller's
expenses), Diller shall execute for the benefit of QVC, general releases in
a form mutually agreed to by the parties. This paragraph 6 shall survive
termination of this agreement, if Liberty and/or Comcast (or their
affiliates) acquire control of a majority of the outstanding voting stock
or a majority of the board of directors of QVC.
7. This Agreement shall terminate automatically and
simultaneously with the Merger Agreement in accordance with its terms.
<PAGE>
If the foregoing reflects your understanding of our agreement,
please execute this letter agreement in the space provided below. This letter
agreement will be governed by and construed in accordance with the substantive
law of the State of New York.
LIBERTY MEDIA CORPORATION COMCAST CORPORATION
By: /s/ Peter Barton By: /s/ Brian L. Roberts
-------------------- -----------------------
Name: Peter Barton Name: Brian L. Roberts
Title: President Title: President
Accepted and Agreed:
/s/ Barry Diller
_______________________
Barry Diller
ARROW INVESTMENTS, L.P.
By: Arrow Investments, Inc.,
its general partner
By: /s/ Barry Diller
____________________
Name: Barry Diller
Title: President
EXHIBIT 99.51
COMCAST AND LIBERTY MEDIA
SIGN MERGER AGREEMENT WITH QVC
____________________________________
PRICE INCREASED TO $46 PER SHARE
____________________________________
Philadelphia, Pennsylvania, Englewood, Colorado and West Chester, Pennsylvania
- -- August 5, 1994: Comcast Corporation, Liberty Media Corporation and QVC,
Inc. jointly announced today that Comcast, Liberty and QVC have entered into a
definitive merger agreement pursuant to which Comcast and Liberty will acquire
QVC. QVC stockholders will receive $46 in cash per share of QVC Common Stock
and $460 in cash per share of QVC Preferred Stock.
QVC's Board of Directors has received the opinion of Allen &
Company Incorporated that the consideration to be received by QVC's
shareholders (other than Comcast, Liberty and their affiliates) pursuant to
the transaction is fair to such shareholders from a financial point of view.
In accordance with the merger agreement, Comcast and Liberty
expect to commence on or prior to Thursday, August 11, 1994, a tender offer
for all shares of stock of QVC at a net cash price of $46 per share of QVC
Common Stock and a net cash price of $460 per share of QVC Preferred Stock.
Lazard Freres & Co. will act as dealer manager for the tender offer.
Following expiration of the tender offer, a corporation
controlled by both Comcast and Liberty will merge with QVC and any remaining
shares of QVC will be converted into cash at the same price as offered in the
tender offer.
The total cost of the acquisition of the remainder of QVC stock
not currently owned by Comcast or Liberty will be approximately $1.42 billion.
Comcast and Liberty have agreed to fund approximately $267 million and $20
million respectively, of the acquisition with the balance to be provided
through debt financing, which, after the merger, will be an obligation of QVC.
Following the acquisition, Comcast and Liberty will own approximately 57% and
43%, respectively, of QVC and QVC will be managed by Comcast.
The transaction is conditioned upon Comcast and Liberty
obtaining the requisite financing on satisfactory terms to purchase all of the
outstanding shares of QVC, receipt of certain governmental approvals and other
customary conditions.
Comcast, Liberty and Tele-Communications, Inc., who
collectively currently own approximately 35% of QVC's outstanding voting
shares on a fully diluted basis, have agreed to vote their shares of QVC in
favor of the transaction. Barry Diller has also agreed, among other things,
to vote his QVC shares in favor of the transaction to the extent such shares
are not tendered in the offer.
QVC has agreed that if the merger agreement is terminated in
certain circumstances prior to consummation of the merger, QVC will pay an
aggregate of $55 million to Comcast and Liberty.
Comcast Corporation is principally engaged in the development,
management and operation of cable communications networks. Comcast's
consolidated and affiliated operations served approximately 3.0 million cable
subscribers at March 31, 1994. After completion of the acquisition of Maclean
Hunter's United States cable properties, Comcast's consolidated and pro-rated
affiliated operations will serve approximately 3.5 million cable subscribers,
making it the third largest cable operator in the country. Comcast provides
cellular telephone services in the Northeast United States to markets
encompassing a population in excess of 7.4 million. Comcast also has
investments in cable programming, telecommunications systems, and
international cable and telephony franchises.
Comcast's Class A and Class A Special Common Stock are traded
on The Nasdaq Stock Market under the symbols CMCSA and CMCSK, respectively.
Liberty, its affiliates and companies in which it holds
investments operate cable television systems serving an aggregate of
approximately 3.2 million subscribers in 30 states. Liberty's programming
interests include BET, The Family Channel, Encore, Starz!, Home Shopping Club,
QVC, Court TV, X*PRESS and regional and national sports networks.
On August 4, 1994, TCI and Liberty consummated a business
combination transaction resulting in TCI and Liberty becoming wholly-owned
subsidiaries of a newly formed holding company, which has been renamed
Tele-Communications, Inc. Beginning August 5, 1994, the new TCI's Class A
Common Stock, Class B Common Stock and Class E Preferred Stock will trade on
the NASDAQ National Market System under the symbols TCOMA, TCOMB and TCOMP,
respectively. Liberty's Class A Common Stock, Class B Common Stock and Class
E 6% Cumulative Redeemable Exchangeable Junior Preferred Stock discontinued
trading on such market at the close of business on August 4, 1994.
QVC, Inc. is the world's largest electronic retailer, reaching
more than 50 million homes across the United States and an additional 17
million households through joint ventures in the United Kingdom and Mexico.
FOR FURTHER INFORMATION CONTACT:
Comcast Corporation
William E. Dordelman
Assistant Treasurer
(215) 981-7392
Kathleen B. Jacoby
Director of Investor Relations
(215) 981-7392
Liberty Media Corporation
Vivian Carr
Vice President - Investor Relations
(303) 721-5406
QVC, Inc.
Investors: William F. Costello
Executive Vice President - Chief Financial Officer
(610) 430-8938
Media: Donald A. Van de Mark
Dir., Corporate Communications
(610) 429-5666
