____________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
SCHEDULE 14D-1
(Tender Offer Statement Pursuant to
Section 14(d)(1) of the Securities Exchange Act of 1934)
(Amendment No. 32)
PARAMOUNT COMMUNICATIONS INC.
(Name of Subject Company)
QVC NETWORK, INC.
COMCAST CORPORATION
BELLSOUTH CORPORATION
(Bidders)
Common Stock, Par Value $1.00 Per Share
(Including the Associated Common Stock Purchase Rights)
(Title of Class of Securities)
699216 10 7
(CUSIP Number of Class of Securities)
<TABLE>
<S> <C> <C>
Neal S. Grabell Stanley L. Wang Walter H. Alford
QVC Network, Inc. Comcast Corporation BellSouth Corporation
Goshen Corporate Park 1234 Market Street 1155 Peachtree Street, N.E.
West Chester, PA 19380 Philadelphia, PA 19107 Atlanta, GA 30367
(215) 430-1000 (215) 981-7510 (404) 249-2050
</TABLE>
(Names, Addresses and Telephone Numbers of Persons Authorized
to Receive Notices and Communications on Behalf of Bidders)
Copy to:
<TABLE>
<S> <C> <C>
Pamela S. Seymon Dennis S. Hersch Alan Stephenson
Wachtell, Lipton, Rosen & Katz Davis Polk & Wardwell Cravath, Swaine & Moore
51 West 52nd Street 450 Lexington Avenue One Worldwide Plaza
New York, NY 10019 New York, NY 10017 825 Eighth Avenue
(212) 403-1000 (212) 450-4000 New York, NY 10022
(212) 474-1000
</TABLE>
<PAGE>
<PAGE>
This Statement amends and supplements the Tender Of-
fer Statement on Schedule 14D-1 filed with the Securities and
Exchange Commission (the "Commission") on October 27, 1993, as
previously amended and supplemented (the "Schedule 14D-1"), by
QVC Network, Inc., a Delaware corporation ("QVC"), Comcast Cor-
poration, a Pennsylvania corporation, and BellSouth Corpora-
tion, a Georgia corporation, and relates to a tender offer to
purchase 61,607,894 of the outstanding shares of Common Stock,
par value $1.00 per share (the "Shares"), of Paramount Com-
munications Inc., a Delaware corporation ("Paramount"), or such
greater number of Shares as equals 50.1% of the Shares out-
standing plus the Shares issuable upon the exercise of the then
exercisable stock options, as of the expiration of the Offer,
and the associated Rights, at a price of $92.00 per Share (and
associated Right), net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated October 27, 1993 (the "Offer to
Purchase"), as amended and supplemented by the Supplement
thereto, dated November 12, 1993 (the "First Supplement"), the
Second Supplement thereto, dated December 23, 1993 (the "Second
Supplement"), and the related Letters of Transmittal, which
were annexed to and filed with the Schedule 14D-1 as Exhibits
(a)(1), (a)(17), (a)(46), (a)(2), (a)(18) and (a)(47), respec-
tively, and the amendments thereto (which together constitute
the "Offer"). Capitalized terms used and not defined herein
shall have the meanings assigned such terms in the Offer and
the Schedule 14D-1.
Item 3. Past Contacts, Transactions or Negotiations With the
Subject Company.
(b) By letter dated January 24, 1994, Paramount
responded to QVC's letter dated January 24, 1994, and, subject
to a confidentiality agreement, provided QVC with a copy of
Paramount's financial advisor's presentation to the Paramount
Board on January 21, 1994.
By letter to QVC's legal advisor and Viacom's legal
advisor dated January 27, 1994, Paramount's legal advisor
stated that the bidding procedures require best and final bids
no later than 5:00 p.m. on February 1, 1994. The text of the
letter is attached hereto as Exhibit (a)(66), and the foregoing
summary description is qualified in its entirety by reference
to such exhibit.
<PAGE>
<PAGE>
Item 7. Contracts, Arrangements, Understandings or
Relationships With Respect to the Subject Company's
Securities.
In the First Amendment, dated as of January 27, 1994
(the "QVC Exemption Agreement First Amendment"), to the
Exemption Agreement between Paramount and QVC, dated as of
January 21, 1994 (the "QVC Exemption Agreement"), QVC and
Paramount agreed to certain amendments to the QVC Exemption
Agreement. A copy of the QVC Exemption Agreement First
Amendment is attached hereto as Exhibit (c)(29), and the
foregoing summary description is qualified in its entirety by
reference to such exhibit.
On January 27, 1994, QVC and Paramount agreed to
certain conforming amendments to the Proposed QVC Merger
Agreement, which is attached as Exhibit A to the QVC Exemption
Agreement. A copy of the Proposed QVC Merger Agreement is
attached hereto as Exhibit (c)(30), and the foregoing summary
description is qualified in its entirety by reference to such
exhibit.
Item 11. Material to be Filed as Exhibits.
(a)(1) -- Offer to Purchase, dated October 27, 1993.*
(a)(2) -- Letter of Transmittal.*
(a)(3) -- Notice of Guaranteed Delivery.*
(a)(4) -- Form of Letter to Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.*
(a)(5) -- Form of Letter to Clients for Use by Brokers,
Dealers, Commercial Banks, Trust Companies and
Nominees.*
(a)(6) -- Guidelines of the Internal Revenue Service for
Certification of Taxpayer Identification Number
on Substitute Form W-9.*
(a)(7) -- Press release issued by QVC on October 21,
1993.*
(a)(8) -- Form of Summary Advertisement, dated October 27,
1993.*
_____________________
* Previously filed.
-2-
<PAGE>
<PAGE>
(a)(9) -- Text of Letter from QVC to Paramount, dated Oc-
tober 29, 1993.*
(a)(10) -- Press release issued by QVC on October 29,
1993.*
(a)(11) -- Form of Letter to Participants in the Dividend
Reinvestment Plan of Paramount Communications
Inc.*
(a)(12) -- Text of Letter from Paramount to QVC, dated Oc-
tober 29, 1993.*
(a)(13) -- Text of Letter from Paramount to QVC advisor,
dated November 1, 1993.*
(a)(14) -- Text of Letter from QVC advisor to Paramount,
dated November 2, 1993.*
(a)(15) -- Press release issued by QVC on November 5,
1993.*
(a)(16) -- Press release issued by QVC on November 5,
1993.*
(a)(17) -- Supplement to the Offer to Purchase, dated No-
vember 12, 1993.*
(a)(18) -- Revised Letter of Transmittal.*
(a)(19) -- Revised Notice of Guaranteed Delivery.*
(a)(20) -- Revised Form of Letter to Brokers, Dealers, Com-
mercial Banks, Trust Companies and Nominees.*
(a)(21) -- Revised Form of Letter to Clients for use by
Brokers, Dealers, Commercial Banks, Trust Compa-
nies and Nominees.*
(a)(22) -- Press release issued by QVC on November 11,
1993.*
(a)(23) -- Press release issued by QVC on November 12,
1993.*
_____________________
* Previously filed.
-3-
<PAGE>
<PAGE>
(a)(24) -- Revised Form of Letter to Participants in the
Dividend Reinvestment Plan of Paramount Com-
munications, Inc.*
(a)(25) -- Press release issued by QVC on November 16,
1993.*
(a)(26) -- Amended Complaint in Viacom International Inc.
v. Tele-Communications, Inc., et al., dated No-
vember 9, 1993, and filed in the United States
District Court for the Southern District of New
York.*
(a)(27) -- Text of letter from QVC to Paramount, dated
November 19, 1993.*
(a)(28) -- Press release issued by QVC on November 20,
1993.*
(a)(29) -- Press release issued by QVC on November 22,
1993.*
(a)(30) -- Press release issued by QVC on November 23,
1993.*
(a)(31) -- Press release issued by QVC on November 23,
1993.*
(a)(32) -- Press release issued by QVC on November 24,
1993.*
(a)(33) -- Press release issued by QVC on December 1,
1993.*
(a)(34) -- Press release issued by QVC on December 9,
1993.*
(a)(35) -- Press release issued by QVC on December 10,
1993.*
(a)(36) -- Press release issued by QVC on December 14,
1993.*
(a)(37) -- Text of letter from Paramount advisor to QVC,
dated December 14, 1993.*
_____________________
* Previously filed.
-4-
<PAGE>
<PAGE>
(a)(38) -- Text of letter from QVC advisor to Paramount
advisor, dated December 14, 1993.*
(a)(39) -- Press release issued by QVC on December 15,
1993.*
(a)(40) -- Press release issued by QVC on December 16,
1993.*
(a)(41) -- Text of letter from Paramount advisor to QVC
advisor, dated December 17, 1993.*
(a)(42) -- Text of letter from QVC advisor to Viacom advi-
sor, dated December 17, 1993.*
(a)(43) -- Text of letter from QVC to Paramount, dated De-
cember 20, 1993.*
(a)(44) -- Press release issued by QVC on December 20,
1993.*
(a)(45) -- Press release issued by QVC on December 20,
1993.*
(a)(46) -- Second Supplement to the Offer to Purchase,
dated December 23, 1993.*
(a)(47) -- Second Revised Letter of Transmittal.*
(a)(48) -- Second Revised Notice of Guaranteed Delivery.*
(a)(49) -- Second Revised Form of Letter to Brokers, Deal-
ers, Commercial Banks, Trust Companies and Nomi-
nees.*
(a)(50) -- Second Revised Form of Letter to Clients for use
by Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.*
(a)(51) -- Second Revised Form of Letter to Participants in
the Dividend Reinvestment Plan of Paramount Com-
munications Inc.*
(a)(52) -- Press release issued by QVC on December 22,
1993.*
_____________________
* Previously filed.
-5-
<PAGE>
<PAGE>
(a)(53) -- Press release issued by QVC on December 27,
1993.*
(a)(54) -- Press release issued by QVC on January 7, 1994.*
(a)(55) -- Press release issued by QVC on January 10,
1994.*
(a)(56) -- Text of letter from QVC advisor to Paramount,
dated January 11, 1994.*
(a)(57) -- Text of letter from Paramount to QVC advisor,
dated January 13, 1994.*
(a)(58) -- Text of letter from Paramount advisor to QVC
advisor, dated January 13, 1994.*
(a)(59) -- Text of letter from QVC advisor to Paramount
advisor, dated January 14, 1994.*
(a)(60) -- Text of letter from Paramount advisor to QVC
advisor, dated January 18, 1994.*
(a)(61) -- Text of letter from Paramount advisor to QVC
advisor, dated January 18, 1994.*
(a)(62) -- Press release issued by QVC on January 19,
1994.*
(a)(63) -- Text of letter from QVC advisor to Paramount,
dated January 20, 1994.*
(a)(64) -- Text of letter from Paramount to QVC, dated
January 21, 1994.*
(a)(65) -- Text of letter from QVC advisor to Paramount,
dated January 24, 1994.*
(a)(66) -- Text of letter from Paramount advisor to QVC
advisor, dated January 27, 1994.
(b)(1) -- Commitment Letters, dated September 30, 1993, by
and between QVC and certain banks.*
(b)(2) -- Commitment Letters, dated November 19, 1993, by
and between QVC and certain banks.*
(b)(3) -- Bank Credit Agreement, dated as of January 7,
1994, by and between QVC and certain banks.*
_____________________
* Previously filed.
-6-
<PAGE>
<PAGE>
(c)(1) -- Commitment Letter, dated October 15, 1993, by
and among QVC and certain investors named there-
in.*
(c)(2) -- Stockholders Agreement, dated July 16, 1993,
among Liberty Media Corporation, Comcast Cor-
poration, Arrow Investments, L.P. and certain
affiliates and subsidiaries of such parties.*
(c)(3) -- Agreement Among Stockholders, dated October 15,
1993.*
(c)(4) -- Proposed form of merger agreement delivered by
QVC to Paramount.*
(c)(5) -- First Amended and Supplemental Complaint in QVC
Network, Inc. v. Paramount Communications Inc.
filed October 28, 1993 in the Delaware Chancery
Court.*
(c)(6) -- Voting Trust Agreement, dated as of October 28,
1993, between QVC and G. William Miller.*
(c)(7) -- Informational request from QVC to Paramount,
dated November 1, 1993.*
(c)(8) -- Fair bidding procedures delivered by QVC to Par-
amount on November 1, 1993.*
(c)(9) -- Proposed form of merger agreement delivered by
QVC to Paramount on November 1, 1993.*
(c)(10) -- Commitment Letter, dated November 11, 1993, by
and among QVC and certain investors named there-
in.*
(c)(11) -- Memorandum of Understanding, dated November 11,
1993, by and between QVC and BellSouth.*
(c)(12) -- Liberty-QVC Agreement, dated November 11, 1993,
by and between QVC and Liberty.*
(c)(13) -- Agreement Among Stockholders, dated November 11,
1993, among QVC, Advance, Arrow, BellSouth, Com-
cast and Cox.*
_____________________
* Previously filed.
-7-
<PAGE>
<PAGE>
(c)(14) -- Understanding Among Stockholders, dated November
11, 1993, among Arrow, BellSouth, Comcast and
Liberty.*
(c)(15) -- Agreement Containing Consent Order and Interim
Agreement, dated November 12, 1993, among the
FTC, Liberty, and TCI.*
(c)(16) -- BellSouth Commitment Letter, dated November 19,
1993, by and between BellSouth and QVC.*
(c)(17) -- Memorandum Opinion and Preliminary Injunction
Order in QVC Network, Inc. v. Paramount Com-
munications, Inc., C.A. No. 13208, both dated
November 24, 1993, entered by Delaware Chancery
Court.*
(c)(18) -- Revised Memorandum Opinion, dated November 26,
1993, in QVC Network, Inc. v. Paramount Communi-
cations, Inc., C.A. No. 13208, entered by Dela-
ware Chancery Court.*
(c)(19) -- Order, dated December 9, 1993, in Paramount Com-
munications Inc. v. QVC Network, Inc., C.A. No.
13208, entered by Delaware Supreme Court.*
(c)(20) -- Proposed form of merger agreement delivered by
Paramount to QVC on December 14, 1993.*
(c)(21) -- Text of letter from QVC advisor to Paramount
advisor, dated December 10, 1993.*
(c)(22) -- Text of letter from Paramount advisor to QVC
advisor, dated December 14, 1993.*
(c)(23) -- Agreement and Plan of Merger, between Paramount
and QVC, dated as of December 22, 1993.*
(c)(24) -- Exemption Agreement, between Paramount and QVC,
dated December 22, 1993.*
(c)(25) -- Voting Agreement, dated December 22, 1993, among
BellSouth, Comcast, Cox, Advance and Arrow.*
_____________________
* Previously filed.
-8-
<PAGE>
<PAGE>
(c)(26) -- First Amendment, dated as of December 27, 1993,
to Agreement and Plan of Merger, between Para-
mount and QVC.*
(c)(27) -- Letter Agreement, dated as of December 20, 1993,
by and among QVC, Comcast, Cox, Advance and
BellSouth.*
(c)(28) -- Text of Letter, dated January 5, 1994, from
Paramount and agreed to by QVC.*
(c)(29) -- First Amendment, dated as of January 27, 1994,
to QVC Exemption Agreement.
(c)(30) -- Proposed Form of Agreement and Plan of Merger
between QVC and Paramount, delivered by
Paramount on January 27, 1994.
_____________________
* Previously filed.
-9-
<PAGE>
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this state-
ment is true, complete and correct.
QVC NETWORK, INC.
By:/s/ Neal S. Grabell
Neal S. Grabell
Senior Vice President,
General Counsel and
Corporate Secretary
Dated: January 28, 1994
<PAGE>
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this state-
ment is true, complete and correct.
COMCAST CORPORATION
By:/s/ Julian A. Brodsky
Julian A. Brodsky
Vice Chairman
Dated: January 28, 1994
<PAGE>
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this state-
ment is true, complete and correct.
BELLSOUTH CORPORATION
By:/s/ Charles C. Miller, III
Charles C. Miller, III
Vice President-
Strategic Planning and Corporate
Development
Dated: January 28, 1994
<PAGE>
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
(a)(1) -- Offer to Purchase, dated October 27, 1993.*
(a)(2) -- Letter of Transmittal.*
(a)(3) -- Notice of Guaranteed Delivery.*
(a)(4) -- Form of Letter to Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.*
(a)(5) -- Form of Letter to Clients for Use by Brokers,
Dealers, Commercial Banks, Trust Companies and
Nominees.*
(a)(6) -- Guidelines of the Internal Revenue Service for
Certification of Taxpayer Identification Number
on Substitute Form W-9.*
(a)(7) -- Press release issued by QVC on October 21,
1993.*
(a)(8) -- Form of Summary Advertisement, dated October 27,
1993.*
(a)(9) -- Text of Letter from QVC to Paramount, dated Oc-
tober 29, 1993.*
(a)(10) -- Press release issued by QVC on October 29,
1993.*
(a)(11) -- Form of Letter to Participants in the Dividend
Reinvestment Plan of Paramount Communications
Inc.*
(a)(12) -- Text of Letter from Paramount to QVC, dated Oc-
tober 29, 1993.*
(a)(13) -- Text of Letter from Paramount to QVC advisor,
dated November 1, 1993.*
(a)(14) -- Text of Letter from QVC advisor to Paramount,
dated November 2, 1993.*
_____________________
* Previously filed.
<PAGE>
<PAGE>
(a)(15) -- Press release issued by QVC on November 5,
1993.*
(a)(16) -- Press release issued by QVC on November 5,
1993.*
(a)(17) -- Supplement to the Offer to Purchase, dated No-
vember 12, 1993.*
(a)(18) -- Revised Letter of Transmittal.*
(a)(19) -- Revised Notice of Guaranteed Delivery.*
(a)(20) -- Revised Form of Letter to Brokers, Dealers, Com-
mercial Banks, Trust Companies and Nominees.*
(a)(21) -- Revised Form of Letter to Clients for use by
Brokers, Dealers, Commercial Banks, Trust Compa-
nies and Nominees.*
(a)(22) -- Press release issued by QVC on November 11,
1993.*
(a)(23) -- Press release issued by QVC on November 12,
1993.*
(a)(24) -- Revised Form of Letter to Participants in the
Dividend Reinvestment Plan of Paramount Com-
munications, Inc.*
(a)(25) -- Press release issued by QVC on November 16,
1993.*
(a)(26) -- Amended Complaint in Viacom International Inc.
v. Tele-Communications, Inc., et al., dated No-
vember 9, 1993, and filed in the United States
District Court for the Southern District of New
York.*
(a)(27) -- Text of letter from QVC to Paramount, dated
November 19, 1993.*
(a)(28) -- Press release issued by QVC on November 20,
1993.*
(a)(29) -- Press release issued by QVC on November 22,
1993.*
(a)(30) -- Press release issued by QVC on November 23,
1993.*
_____________________
* Previously filed.
<PAGE>
<PAGE>
(a)(31) -- Press release issued by QVC on November 23,
1993.*
(a)(32) -- Press release issued by QVC on November 24,
1993.*
(a)(33) -- Press release issued by QVC on December 1,
1993.*
(a)(34) -- Press release issued by QVC on December 9,
1993.*
(a)(35) -- Press release issued by QVC on December 10,
1993.*
(a)(36) -- Press release issued by QVC on December 14,
1993.*
(a)(37) -- Text of letter from Paramount advisor to QVC,
dated December 14, 1993.*
(a)(38) -- Text of letter from QVC advisor to Paramount
advisor, dated December 14, 1993.*
(a)(39) -- Press release issued by QVC on December 15,
1993.*
(a)(40) -- Press release issued by QVC on December 16,
1993.*
(a)(41) -- Text of letter from Paramount advisor to QVC
advisor, dated December 17, 1993.*
(a)(42) -- Text of letter from QVC advisor to Viacom advi-
sor, dated December 17, 1993.*
(a)(43) -- Text of letter from QVC to Paramount, dated De-
cember 20, 1993.*
(a)(44) -- Press release issued by QVC on December 20,
1993.*
(a)(45) -- Press release issued by QVC on December 20,
1993.*
(a)(46) -- Second Supplement to the Offer to Purchase,
dated December 23, 1993.*
(a)(47) -- Second Revised Letter of Transmittal.*
(a)(48) -- Second Revised Notice of Guaranteed Delivery.*
_____________________
* Previously filed.
<PAGE>
<PAGE>
(a)(49) -- Second Revised Form of Letter to Brokers, Deal-
ers, Commercial Banks, Trust Companies and Nomi-
nees.*
(a)(50) -- Second Revised Form of Letter to Clients for use
by Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.*
(a)(51) -- Second Revised Form of Letter to Participants in
the Dividend Reinvestment Plan of Paramount Com-
munications Inc.*
(a)(52) -- Press release issued by QVC on December 22,
1993.*
(a)(53) -- Press release issued by QVC on December 27,
1993.*
(a)(54) -- Press release issued by QVC on January 7, 1994.*
(a)(55) -- Press release issued by QVC on January 10,
1994.*
(a)(56) -- Text of letter from QVC advisor to Paramount,
dated January 11, 1994.*
(a)(57) -- Text of letter from Paramount to QVC advisor,
dated January 13, 1994.*
(a)(58) -- Text of letter from Paramount advisor to QVC
advisor, dated January 13, 1994.*
(a)(59) -- Text of letter from QVC advisor to Paramount
advisor, dated January 14, 1994.*
(a)(60) -- Text of letter from Paramount advisor to QVC
advisor, dated January 18, 1994.*
(a)(61) -- Text of letter from Paramount advisor to QVC
advisor, dated January 18, 1994.*
(a)(62) -- Press release issued by QVC on January 19,
1994.*
(a)(63) -- Text of letter from QVC advisor to Paramount,
dated January 20, 1994.*
(a)(64) -- Text of letter from Paramount to QVC, dated
January 21, 1994.*
_____________________
* Previously filed.
<PAGE>
<PAGE>
(a)(65) -- Text of letter from QVC advisor to Paramount,
dated January 24, 1994.*
(a)(66) -- Text of letter from Paramount advisor to QVC
advisor, dated January 27, 1994.
(b)(1) -- Commitment Letters, dated September 30, 1993, by
and between QVC and certain banks.*
(b)(2) -- Commitment Letters, dated November 19, 1993, by
and between QVC and certain banks.*
(b)(3) -- Bank Credit Agreement, dated as of January 7,
1994, by and between QVC and certain banks.*
(c)(1) -- Commitment Letter, dated October 15, 1993, by
and among QVC and certain investors named there-
in.*
(c)(2) -- Stockholders Agreement, dated July 16, 1993,
among Liberty Media Corporation, Comcast Cor-
poration, Arrow Investments, L.P. and certain
affiliates and subsidiaries of such parties.*
(c)(3) -- Agreement Among Stockholders, dated October 15,
1993.*
(c)(4) -- Proposed form of merger agreement delivered by
QVC to Paramount.*
(c)(5) -- First Amended and Supplemental Complaint in QVC
Network, Inc. v. Paramount Communications Inc.
filed October 28, 1993 in the Delaware Chancery
Court.*
(c)(6) -- Voting Trust Agreement, dated as of October 28,
1993, between QVC and G. William Miller.*
(c)(7) -- Informational request from QVC to Paramount,
dated November 1, 1993.*
(c)(8) -- Fair bidding procedures delivered by QVC to Par-
amount on November 1, 1993.*
(c)(9) -- Proposed form of merger agreement delivered by
QVC to Paramount on November 1, 1993.*
(c)(10) -- Commitment Letter, dated November 11, 1993, by
and among QVC and certain investors named
therein.*
_____________________
* Previously filed.
<PAGE>
<PAGE>
(c)(11) -- Memorandum of Understanding, dated November 11,
1993, by and between QVC and BellSouth.*
(c)(12) -- Liberty-QVC Agreement, dated November 11, 1993,
by and between QVC and Liberty.*
(c)(13) -- Agreement Among Stockholders, dated November 11,
1993, among QVC, Advance, Arrow, BellSouth, Com-
cast and Cox.*
(c)(14) -- Understanding Among Stockholders, dated November
11, 1993, among Arrow, BellSouth, Comcast and
Liberty.*
(c)(15) -- Agreement Containing Consent Order and Interim
Agreement, dated November 12, 1993, among the
FTC, Liberty, and TCI.*
(c)(16) -- BellSouth Commitment Letter, dated November 19,
1993, by and between BellSouth and QVC.*
(c)(17) -- Memorandum Opinion and Preliminary Injunction
Order in QVC Network, Inc. v. Paramount Com-
munications, Inc., C.A. No. 13208, both dated
November 24, 1993, entered by Delaware Chancery
Court.*
(c)(18) -- Revised Memorandum Opinion, dated November 26,
1993, in QVC Network, Inc. v. Paramount Communi-
cations, Inc., C.A. No. 13208, entered by Dela-
ware Chancery Court.*
(c)(19) -- Order, dated December 9, 1993, in Paramount Com-
munications Inc. v. QVC Network, Inc., C.A. No.
13208, entered by Delaware Supreme Court.*
(c)(20) -- Proposed form of merger agreement delivered by
Paramount to QVC on December 14, 1993.*
(c)(21) -- Text of letter from QVC advisor to Paramount
advisor, dated December 10, 1993.*
(c)(22) -- Text of letter from Paramount advisor to QVC
advisor, dated December 14, 1993.*
(c)(23) -- Agreement and Plan of Merger, between Paramount
and QVC, dated as of December 22, 1993.*
(c)(24) -- Exemption Agreement, between Paramount and QVC,
dated December 22, 1993.*
_____________________
* Previously filed.
<PAGE>
<PAGE>
(c)(25) -- Voting Agreement, dated December 22, 1993, among
BellSouth, Comcast, Cox, Advance and Arrow.*
(c)(26) -- First Amendment, dated as of December 27, 1993,
to Agreement and Plan of Merger, between Para-
mount and QVC.*
(c)(27) -- Letter Agreement, dated as of December 20, 1993,
by and among QVC, Comcast, Cox, Advance and
BellSouth.*
(c)(28) -- Text of Letter, dated January 5, 1994, from
Paramount and agreed to by QVC.*
(c)(29) -- First Amendment, dated as of January 27, 1994,
to QVC Exemption Agreement.
(c)(30) -- Proposed Form of Agreement and Plan of Merger
between QVC and Paramount, delivered by
Paramount on January 27, 1994.
_____________________
* Previously filed.
<PAGE>
Exhibit (a)(66)
[LETTERHEAD OF SIMPSON THACHER & BARLETT]
January 27, 1994
VIA FACSIMILE
Stephen R. Volk, Esq.
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Martin Lipton, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Gentlemen:
As you are aware, the bidding procedures to which you
each have committed require best and final bids no later than
5:00 p.m. on February 1, 1994. We want to confirm to you that
Paramount fully intends to hold to that schedule. We believe
both bidders have had more than a reasonable time to structure
and propose a bid which will supply the highest value for the
Paramount shareholders. Moreover, having provided that oppor-
tunity, it is in the best interests of Paramount and its share-
holders to now conclude the bidding process and the sale of
Paramount in a timely manner. Any amendment to either the
offer or back end consideration after February 1 would be in
violation of the bidding procedures to which you have agreed.
<PAGE>
<PAGE>
Stephen R. Volk, Esq.
Martin Lipton, Esq. -2- January 27, 1994
Lazard will be available to discuss with you any questions you
may have before you submit your final bid.
Very truly yours,
/s/ Richard I. Beattie
Richard I. Beattie
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Exhibit (c)(29)
FIRST AMENDMENT
FIRST AMENDMENT (this "Amendment"), dated as of
January 27, 1994, to the Exemption Agreement, dated as of
January 21, 1994 (the "Exemption Agreement"), between QVC Net-
work, Inc., a Delaware corporation ("QVC"), and Paramount Com-
munications Inc., a Delaware corporation ("Paramount").
W I T N E S S E T H:
WHEREAS, QVC and Paramount have agreed to amend
certain provisions of the Exemption Agreement in the manner
provided below;
NOW, THEREFORE, in consideration of the premises and
of the mutual agreements herein contained, the parties hereto
agree as follows:
SECTION 1. Defined Terms. As used in this Amend-
ment, terms defined in the Exemption Agreement are used herein
as therein defined, unless otherwise defined herein. Unless
otherwise indicated, all Section and subsection references are
to the Exemption Agreement.
SECTION 2. Amendments to Section 2.01(a). Clause
(v) of Section 2.01(a) is hereby amended by deleting the words
"other than a change in the terms of the Offer" and by substi-
tuting, in their place, the phrase "outside the control of the
Offeror (those events not deemed to be outside the control of
the Offeror shall include, without limitation, any change in
the terms of the Offer or the proposed terms of the Merger (as
defined in the form of Merger Agreement attached as Exhibit A
hereto))." Section 2.01(a) is also amended by (i) inserting
after the words "consideration of the Offer or" in the last
sentence thereof the phrase "the Merger or" and (ii) inserting
after the words "otherwise amend the Offer" in the last sen-
tence thereof the phrase "or the proposed terms of the Merger."
Section 2.01(a) is further amended by adding at the end thereof
the following sentences:
"Any amendment to the Offer or any change in the con-
sideration offered to the Paramount stockholders in the Merger
that results in an extension of the Expiration Date shall be
publicly announced by 5:00 p.m. on the date of such amendment
or change. The Offeror hereby agrees that it shall not (a)
seek to amend or waive any provision of the Bidding Procedures
or (b) publicly announce an intention to take an action which
is not otherwise permitted, or refrain from taking an action
which is required, under the terms of this Agreement."
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SECTION 3. Miscellaneous. Except as expressly
amended herein, the Exemption Agreement shall continue to be,
and shall remain, in full force and effect in accordance with
its terms. This Amendment may be executed by the parties
hereto in any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one
and the same instrument.
SECTION 4. Governing Law. This Amendment shall be
governed by, and construed in accordance with, the laws of the
State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law, except
to the extent that any provisions are governed by the federal
securities laws.
IN WITNESS WHEREOF, QVC and Paramount have caused
this Amendment to be executed as of the date first written
above by their respective officers thereunto duly authorized.
ATTEST: QVC NETWORK, INC.
By: /s/ Rowland C. Gersen By: /s/ Neal S. Grabell
Rowland C. Gersen Neal S. Grabell
Senior Vice President Senior Vice President
and Controller and General Counsel
ATTEST: PARAMOUNT COMMUNICATIONS INC.
By: By:
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Exhibit (c)(30)
AGREEMENT AND PLAN OF MERGER
between
QVC NETWORK, INC.
and
PARAMOUNT COMMUNICATIONS INC.
Dated as of , 1994
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TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
1.1. The Merger......................................... 3
1.2. Closing............................................ 3
1.3. Effective Time..................................... 4
1.4. Effect of the Merger............................... 4
1.5. Certificate of Incorporation; By-Laws.............. 4
1.6. Conversion of Securities........................... 5
1.7. Exchange of Certificates and Cash.................. 11
1.8. Stock Transfer Books............................... 14
1.9. Stock Options; Payment Rights...................... 14
1.10. Dissenting Shares.................................. 15
ARTICLE II
THE OFFER
2.1. The Offer.......................................... 16
2.2. Action by Paramount................................ 19
2.3. Receipt of Common Stock............................ 21
2.4. Completion Certificate............................. 21
2.5. Termination of the Offer........................... 21
2.6. Board of Directors; Section 14(f).................. 21
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARAMOUNT
3.1. Organization and Qualification; Subsidiaries....... 22
3.2. Certificate of Incorporation and By-Laws........... 23
3.3. Capitalization..................................... 23
3.4. Authority Relative to This Agreement............... 25
3.5. No Conflict; Required Filings and Consents......... 25
3.6. Compliance......................................... 26
3.7. SEC Filings; Financial Statements.................. 27
3.8. Absence of Certain Changes or Events............... 28
3.9. Absence of Litigation.............................. 29
3.10. Employee Benefit Plans............................. 29
3.11. Trademarks, Patents and Copyrights................. 30
3.12. Taxes.............................................. 30
3.13. Amendment to Rights Agreement...................... 31
3.14. Opinion of Financial Advisor....................... 32
3.15. Vote Required...................................... 32
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Page
3.16. Brokers............................................ 32
3.17. Purchases of Securities............................ 33
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF QVC
4.1. Organization and Qualification; Subsidiaries....... 33
4.2. Certificate of Incorporation and By-Laws........... 34
4.3. Capitalization..................................... 34
4.4. Authority Relative to This Agreement............... 35
4.5. No Conflict; Required Filings and Consents......... 36
4.6. Compliance......................................... 37
4.7. SEC Filings; Financial Statements.................. 38
4.8. Absence of Certain Changes or Events............... 39
4.9. Absence of Litigation.............................. 39
4.10. Employee Benefit Plans............................. 40
4.11. Trademarks, Patents and Copyrights................. 40
4.12. Taxes.............................................. 41
4.13. Opinion of Financial Advisor....................... 42
4.14. Vote Required...................................... 42
4.15. Ownership of Paramount Common Stock................ 42
4.16. Brokers............................................ 42
4.17. Financing.......................................... 43
4.18. Purchases of Securities............................ 43
ARTICLE V
CONDUCT OF BUSINESSES PENDING THE MERGER
5.1. Conduct of Respective Businesses by Paramount
and QVC Pending the Merger......................... 43
ARTICLE VI
ADDITIONAL COVENANTS
6.1. Access to Information; Confidentiality............. 46
6.2. Directors' and Officers' Indemnification and
Insurance.......................................... 46
6.3. Notification of Certain Matters.................... 48
6.4. Tax Treatment...................................... 48
6.5. Registration Statement; Joint Proxy Statement;
Offer Documents and Schedule 14D-9................. 49
6.6. Stockholders' Meetings............................. 51
6.7. Letters of Accountants............................. 51
6.8. Employee Benefits.................................. 52
6.9. Further Action; Reasonable Best Efforts............ 52
6.10. Debt Instruments................................... 53
6.11. Public Announcements............................... 53
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Page
6.12. Listing of QVC Shares.............................. 53
6.13. Affiliates of Paramount............................ 54
6.14. Conveyance Taxes................................... 54
6.15. Rights Agreement................................... 54
6.16. Assumption of Debt and Leases...................... 54
6.17. Gains Tax.......................................... 55
6.18. Reverse Merger..................................... 55
6.19. Post-Offer Agreements.............................. 55
ARTICLE VII
CLOSING CONDITIONS
7.1. Conditions to Obligations of Each Party to
Effect the Merger.................................. 56
7.2. Additional Conditions to Obligations of QVC........ 57
7.3. Additional Conditions to Obligations of Paramount.. 58
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1. Termination........................................ 59
8.2. Effect of Termination.............................. 62
8.3. Amendment.......................................... 62
8.4. Intentionally Omitted.............................. 62
8.5. Fees and Expenses.................................. 62
ARTICLE IX
GENERAL PROVISIONS
9.1. Effectiveness of Representations, Warranties and
Agreements......................................... 62
9.2. Notices............................................ 63
9.3. Certain Definitions................................ 64
9.4. Time Period........................................ 65
9.5. Headings........................................... 65
9.6. Severability....................................... 65
9.7. Entire Agreement................................... 65
9.8. Assignment......................................... 66
9.9. Parties in Interest................................ 66
9.10. Specific Performance............................... 66
9.11. Governing Law...................................... 66
9.12. Counterparts....................................... 66
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Page
ANNEX A Conditions to the Offer
ANNEX B Terms of QVC Merger Preferred Stock
ANNEX C Terms of Warrants
EXHIBIT 6.13 Form of Affiliate Letter
Exhibit A Amended and Restated Agreement and Plan
of Merger between Viacom and Paramount,
dated as of October 24, 1993.
Exhibit B Form of Exemption Agreement
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Index of Defined Terms
Section
Affiliate SECTION 9.3
Agreement PREAMBLE
AMEX SECTION 1.7
Beneficial owner SECTION 9.3
Blue Sky Laws SECTION 3.5
Business Combination SECTION 8.5
business day SECTION 9.3
Cash Election SECTION 1.6
Cash Election Number SECTION 1.6
Cash Election Shares SECTION 1.6
Cash Fraction SECTION 1.6
Certificate of Merger SECTION 1.3
Certificates SECTION 1.7
Claim SECTION 6.2
Code RECITALS
Common Stock Exchange Ratio SECTION 1.6
Communications Act SECTION 3.5
Competing Transaction SECTION 8.1
Confidentiality Agreements SECTION 6.1
Control SECTION
Controlled SECTION 9.3
Controlled by SECTION 9.3
Debentures SECTION 4.3
Delaware Law RECITALS
Dissenting Shares SECTION 1.10
ERISA SECTION 3.10
Effective Time SECTION 1.3
Exchange Act SECTION 2.2
Exchange Agent SECTION 1.7
Exchange Cash Consideration SECTION 1.7
Exchange Fund SECTION 1.7
Exchange Ratios SECTION 1.6
Expenses SECTION 8.5
Expiration Date SECTION 2.1
FCC SECTION 6.9
Financing SECTION 4.17
Form of Election SECTION 1.6
Forward Merger RECITALS
Gains Tax SECTION 6.17
Governmental Entity SECTION 3.5
HSR Act SECTION 4.5
Incentive Stock Option SECTION 1.9
Indemnified Parties SECTION 6.2
Indenture SECTION 4.3
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Index of Defined Terms (cont'd)
Section
IRS SECTION 3.10
Material Paramount Subsidiary SECTION 3.1
Material QVC Subsidiary SECTION 4.1
Merger RECITALS
Merger Consideration SECTION 1.7
Merger Subsidiary RECITALS
Minimum Condition SECTION 2.1
National RECITALS
Non-Election SECTION 1.6
Non-Election Fraction SECTION 1.6
Non-Election Shares SECTION 1.6
Offer RECITALS
Offer Documents SECTION 2.1
Offer to Purchase SECTION 2.1
Original Merger Agreement PREAMBLE
Original QVC Merger Agreement RECITALS
Paramount PREAMBLE
Paramount 1992 Balance Sheet SECTION 3.12
Paramount Common Stock RECITALS
Paramount Disclosure Schedule SECTION 3.3
Paramount Indentures SECTION 6.16
Paramount Material Adverse Effect SECTION 3.1
Paramount Plans SECTION 3.10
Paramount Preferred Stock SECTION 3.3
Paramount SEC Reports SECTION 3.7
Paramount Subsidiary SECTION 3.1
Paramount Triggering Event SECTION 6.8
Per Share Amount RECITALS
Per Share Cash Amount SECTION 1.6
Preferred Stock Exchange Ratio SECTION 1.6
Proxy Statement SECTION 6.6
QVC 1992 Balance Sheet SECTION 4.12
QVC Certificate Amendments SECTION 4.4
QVC Common Stock SECTION 1.6
QVC Disclosure Schedule SECTION 4.3
QVC Material Adverse Effect SECTION 4.1
QVC Merger Preferred Stock SECTION 1.6
QVC Plans SECTION 4.10
QVC Preferred Stock SECTION 4.3
QVC SEC Reports SECTION 4.7
QVC Subsidiary SECTION 4.1
QVC Triggering Event SECTION 6.8
QVC Vote Matter SECTION 4.4
Registration Statement SECTION 6.6
Representatives SECTION 1.6
Respective Representatives SECTION 6.1
Reverse Merger RECITALS
Revised Viacom Merger Agreement RECITALS
Rights SECTION 3.13
Rights Agreement SECTION 3.13
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Index of Defined Terms (cont'd)
Section
Rights Condition SECTION 2.1
Schedule 14D-1 SECTION 2.1
Schedule 14D-9 SECTION 2.2
SEC SECTION 2.1
Securities Act SECTION 3.5
Stock Election SECTION 1.6
Stock Election Number SECTION 1.6
Stock Election Shares SECTION 1.6
Stock Fraction SECTION 1.6
Stock Option SECTION 3.3
Stockholders' Meetings SECTION 6.7
Subsidiaries SECTION 9.3
Subsidiary SECTION 9.3
Surviving Corporation SECTION 1.1
Transactions SECTION 3.4
Transfer Taxes SECTION 6.17
Trustee SECTION 4.3
under common control with SECTION 9.3
Viacom PREAMBLE
Voting Agreement RECITALS
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AGREEMENT AND PLAN OF MERGER, dated as of
, 1994 (this "Agreement"), between QVC NETWORK, INC., a Dela-
ware corporation ("QVC"), and PARAMOUNT COMMUNICATIONS INC., a
Delaware corporation ("Paramount").
W I T N E S S E T H:
WHEREAS, on September 12, 1993, Viacom Inc.
("Viacom") and Paramount entered into an Agreement and Plan of
Merger (the "Original Merger Agreement"), pursuant to which
Viacom and Paramount agreed to enter into a business combina-
tion transaction pursuant to which Paramount would merge with
and into Viacom;
WHEREAS, on October 21, 1993, QVC announced its in-
tention to commence, and on October 27, 1993 QVC commenced, a
cash tender offer, as amended, to acquire shares of Paramount
Common Stock;
WHEREAS, on October 24, 1993, Paramount and Viacom
entered into an Amended and Restated Agreement and Plan of
Merger (the "Viacom Merger Agreement") and, on October 25,
1993, Viacom commenced a cash tender offer to acquire shares of
Paramount Common Stock;
WHEREAS, on December 9, 1993, the Delaware Supreme
Court issued an order affirming the Court of Chancery's order
preliminarily enjoining the Stock Option Agreement entered into
between Viacom and Paramount on September 12, 1993 (the "Stock
Option Agreement");
WHEREAS, on December 22, 1993, Paramount terminated
the Viacom Merger Agreement and entered into an agreement and
plan of merger with QVC (the "Original QVC Merger Agreement");
WHEREAS, on January 21, 1994, Paramount terminated
the Original QVC Merger Agreement and entered into an agreement
and plan of merger with Viacom (the "Revised Viacom Merger
Agreement");
WHEREAS, on , 1994, Paramount terminated
the Revised Viacom Merger Agreement;
WHEREAS, QVC and Paramount conducted negotiations
relating to the acquisition by QVC of Paramount, and QVC and
Paramount have determined that it is in the best interest of
their respective shareholders to enter into this Agreement to
facilitate the business combination of the two companies
through a first-step cash tender offer and a second-step
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merger, while preserving the ability to proceed with a single-
step merger in appropriate circumstances;
WHEREAS, QVC and Paramount wish to provide that, 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"), Paramount and QVC will enter into a
business combination transaction pursuant to which Paramount
will merge with and into QVC or a subsidiary of QVC (the "For-
ward Merger") or alternatively, a subsidiary of QVC ("Merger
Subsidiary") will merge with and into Paramount (the "Reverse
Merger" and, together with the Forward Merger, the "Merger");
WHEREAS, in furtherance of the Merger, QVC shall
amend and supplement its outstanding tender offer (as amended
and supplemented in accordance with this Agreement, the
"Offer") to acquire 61,607,894 shares of common stock, par
value $1.00 per share, of Paramount ("Paramount Common Stock")
or such greater number of shares representing 50.1% of the out-
standing shares of Paramount Common Stock on a fully diluted
basis (as herein defined), upon the terms and subject to the
conditions of this Agreement;
WHEREAS, the Board of Directors of Paramount has
determined that the Merger and the Offer are fair to, and in
the best interests of, Paramount and the holders of Paramount
Common Stock and has approved and adopted this Agreement and
has approved the Merger and the other transactions contemplated
hereby (including, without limitation, the Offer) and recom-
mended approval and adoption of this Agreement and approval of
the Merger by the stockholders of Paramount and agreed to rec-
ommend that stockholders of Paramount tender their shares of
Paramount Common Stock pursuant to the Offer;
WHEREAS, the Board of Directors of QVC has determined
that the Merger and the Offer are consistent with and in fur-
therance of the long-term business strategy of QVC and are fair
to, and in the best interests of, QVC and its stockholders and
has approved and adopted this Agreement and has approved the
Merger and the other transactions contemplated hereby (includ-
ing, without limitation, the amendment of the Offer) and recom-
mended approval and adoption of this Agreement and approval of
the Merger by the holders of the Common Stock, par value $.01
per share, of QVC (the "QVC Common Stock") and the Preferred
Stock, par value $.10 per share, of QVC (the "QVC Preferred
Stock");
WHEREAS, for federal income tax purposes, it is in-
tended that the Forward Merger qualify as a reorganization
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under the provisions of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, concurrently with the execution of this
Agreement and as an inducement to Paramount to enter into this
Agreement, each of Comcast Corporation ("Comcast"), Advance
Publications Inc. ("Advance"), Cox Enterprises Inc. ("Cox"),
Arrow Investments, L.P. ("Arrow") and, if it owns any QVC vot-
ing Stock, BellSouth Corporation ("BellSouth") (Comcast, Ad-
vance, Cox, Arrow and BellSouth are referred to herein as the
"QVC Stockholder Group") and Paramount agreed (the "Voting
Agreement") that the QVC Stockholder Group shall, among other
things, vote its shares of QVC Common Stock and QVC Preferred
Stock in favor of the Merger and the other transactions contem-
plated by this Agreement that require the approval of the QVC
stockholders;
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
THE MERGER
SECTION 1.1. The Merger. Upon the terms and subject
to the conditions set forth in this Agreement, and in accor-
dance with Delaware Law, at the Effective Time (as defined in
Section 1.3), Paramount shall be merged with and into QVC or a
subsidiary thereof; provided, however, that if, after consult-
ing with Paramount and its professional advisors in good faith,
Wachtell, Lipton, Rosen & Katz, special counsel to QVC, is un-
able to deliver an opinion in form and substance reasonably
satisfactory to QVC (such opinion to be based on customary as-
sumptions and representations) that the Forward Merger will
qualify as a reorganization under Section 368(a) of the Code,
QVC may elect to cause a subsidiary of QVC to merge with and
into Paramount. As a result of the Forward Merger, the sepa-
rate corporate existence of Paramount (or, in the case of the
Reverse Merger, Merger Subsidiary) shall cease and QVC or a
subsidiary thereof, as the case may be (or, in the case of the
Reverse Merger, Paramount), shall continue as the surviving
corporation of the Merger (the "Surviving Corporation") and, in
the case of the Forward Merger, shall continue under the name
"Paramount QVC Inc."
SECTION 1.2. Closing. Unless this Agreement shall
have been terminated and the transactions herein contemplated
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shall have been abandoned pursuant to Section 8.1 and subject
to the satisfaction or waiver of the conditions set forth in
Article VII, the consummation of the Merger will take place as
promptly as practicable (and in any event within two business
days) after satisfaction or waiver of the conditions set forth
in Article VII, at the offices of Wachtell, Lipton, Rosen &
Katz, New York, New York, unless another date, time or place is
agreed to in writing by the parties hereto.
SECTION 1.3. Effective Time. As promptly as practi-
cable after the satisfaction or, if permissible, waiver of the
conditions set forth in Article VII, the parties hereto shall
cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") with the Secretary of
State of the State of Delaware in such form as required by, and
executed in accordance with the relevant provisions of, Dela-
ware Law (the date and time of such filing, or such later date
or time as set forth therein, being the "Effective Time").
SECTION 1.4. Effect of the Merger. At the Effective
Time, the effect of the Merger shall be as provided in the ap-
plicable provisions of Delaware Law. Without limiting the gen-
erality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise provided herein, all the property,
rights, privileges, powers and franchises of QVC (or, in the
case of the Reverse Merger, Merger Subsidiary) and Paramount
shall vest in the Surviving Corporation, and all debts, liabil-
ities and duties of QVC or a subsidiary thereof, as the case
may be (or, in the case of the Reverse Merger, Merger Subsid-
iary), and Paramount shall become the debts, liabilities and
duties of the Surviving Corporation.
SECTION 1.5. Certificate of Incorporation; By-Laws.
(a) At the Effective Time of the Forward Merger, the Certifi-
cate of Incorporation and the By-Laws of QVC, or a subsidiary
thereof, as the case may be, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation
and the By-Laws of the Surviving Corporation; provided, how-
ever, that at the Effective Time of the Forward Merger, Article
I of the Certificate of Incorporation of the Surviving Corpora-
tion shall be amended to read in its entirety as follows:
"The name of this Corporation is Paramount QVC Inc."
(b) Alternatively, at the Effective Time of the Re-
verse Merger, the Certificate of Incorporation and By-Laws,
respectively, of the Surviving Corporation shall be amended and
restated in their entirety to read as the Certificate of Incor-
poration and By-Laws of Merger Subsidiary.
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SECTION 1.6. Conversion of Securities. At the Ef-
fective Time, by virtue of the Merger and without any action on
the part of QVC, Paramount or the holders of any of the follow-
ing securities:
(a) In the event that the Offer has been consummated
prior to the Effective Time, each share of Paramount Com-
mon Stock issued and outstanding immediately prior to the
Effective Time (other than any shares of Paramount Common
Stock to be canceled pursuant to Section 1.6(c)) shall be
converted into the right to receive 1.43 shares of QVC
Common Stock, .32 shares of a new series of cumulative
nonconvertible exchangeable preferred stock, par value
$.10 per share ("QVC Merger Preferred Stock"), of QVC hav-
ing the principal terms described in Annex B and .32 War-
rants ("Warrants") of QVC having the principal terms de-
scribed in Annex C; provided, however, that, in any event,
if between the date of this Agreement and the Effective
Time the outstanding shares of QVC Common Stock, QVC Merg-
er Preferred Stock and Warrants or Paramount Common Stock
shall have been changed into a different number of shares
or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the amounts of QVC Com-
mon Stock and QVC Merger Preferred Stock (and, if appro-
priate, the Warrants) specified above shall be correspond-
ingly adjusted to reflect such stock dividend, subdivi-
sion, reclassification, recapitalization, split, combina-
tion or exchange of shares. All such shares of Paramount
Common 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 1.7 certificates evidencing such
number of whole shares of QVC Common Stock and QVC Merger
Preferred Stock and such number of whole Warrants into
which such Paramount Common Stock was converted in accor-
dance herewith. The holders of such certificates previ-
ously evidencing such shares of Paramount Common Stock
outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such shares of
Paramount Common Stock except as otherwise provided herein
or by law. No fractional share of QVC Common Stock, QVC
Merger Preferred Stock or fractional Warrants shall be
issued and, in lieu thereof, a cash payment shall be made
pursuant to Section 1.7(d).
(b) In the event that the Offer has not been consum-
mated prior to the Effective Time:
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(i) subject to the further provisions of
this Section 1.6, each share of Paramount Common
Stock issued and outstanding immediately prior to the
Effective Time (other than any shares of Paramount
Common Stock to be canceled pursuant to Section
1.6(c) and any Dissenting Shares (as defined in Sec-
tion 1.10)), shall be converted, subject to Section
1.7(d), into the right to receive (A) 1.43 shares of
QVC Common Stock (the "Common Stock Exchange Ratio"),
.32 shares of QVC Merger Preferred Stock (the "Pre-
ferred Stock Exchange Ratio") and .32 Warrants (the
"Warrant Exchange Ratio" and, together with the Com-
mon Stock Exchange Ratio and the Preferred Stock Ex-
change Ratio, the "Exchange Ratios"), (B) $92 in cash
(the "Per Share Cash Amount"), or (C) a combination
of shares of QVC Common Stock and QVC Merger Pre-
ferred Stock, Warrants and cash determined in accor-
dance with Sections 1.6(b)(iv),(v) and (vi); pro-
vided, however, that, in any event, if between the
date of this Agreement and the Effective Time the
outstanding shares of QVC Common Stock, QVC Merger
Preferred Stock or Paramount Common Stock shall have
been changed into a different number of shares or a
different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization,
split, combination or exchange of shares, the Ex-
change Ratios and Per Share Cash Amount shall be cor-
respondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization,
split, combination or exchange of shares. All such
shares of Paramount Common Stock shall no longer be
outstanding and shall automatically be canceled and
retired and shall cease to exist, and each certifi-
cate 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 1.7 and in accordance with the
allocation procedures set forth in this Section 1.6,
(i) certificates evidencing such number of whole
shares of QVC Common Stock and QVC Merger Preferred
Stock and such number of whole Warrants into which
such Paramount Common Stock was converted in accor-
dance with the Exchange Ratios, (ii) the Per Share
Cash Amount multiplied by the number of shares of
Paramount Common Stock previously evidenced by the
canceled certificate, or (iii) a combination thereof
as provided in this Section 1.6. The holders of such
certificates previously evidencing such shares of
Paramount Common Stock outstanding immediately prior
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to the Effective Time shall cease to have any rights
with respect to such shares of Paramount Common Stock
except as otherwise provided herein or by law. No
fractional share of QVC Common Stock, QVC Merger Pre-
ferred Stock or fractional Warrants shall be issued
and, in lieu thereof, a cash payment shall be made
pursuant to Section 1.7(d).
(ii) Subject to the election and allocation
procedures set forth in this Section 1.6, each holder
of record of shares of Paramount Common Stock as of
the record date for the meeting of stockholders of
Paramount referred to in Section 6.6 will be entitled
to (A) elect to receive certificates evidencing such
number of shares of QVC Common Stock and QVC Merger
Preferred Stock and such number of Warrants into
which such number of shares of Paramount Common Stock
would be converted in accordance with the Exchange
Ratios (a "Stock Election"), (B) elect to receive the
Per Share Cash Amount multiplied by such number of
shares of Paramount Common Stock (a "Cash Election"),
or (C) indicate that such holder has no preference as
to the receipt of cash or shares of QVC Common Stock
and QVC Merger Preferred Stock and Warrants in ex-
change for such shares of Paramount Common Stock (a
"Non-Election"). All such elections shall be made on
a form designed for that purpose and mutually accept-
able to QVC and Paramount (a "Form of Election") and
mailed to holders of record of shares of Paramount
Common Stock as of the record date for the meeting of
stockholders of Paramount referred to in Section 6.6.
Holders of record of shares of Paramount Common Stock
who hold such shares as nominees, trustees or in
other representative capacities ("Representatives")
may submit multiple Forms of Election, provided that
such Representative certifies that each such Form of
Election covers all the shares of Paramount Common
Stock held by such Representative for a particular
beneficial owner entitled to so elect pursuant to the
first sentence of this Section 1.6(b)(ii). Elections
shall be made by holders of Paramount Common Stock by
mailing to the Exchange Agent (as defined in Section
1.7) properly completed and signed Forms of Election.
In order to be effective, a Form of Election must be
received by the Exchange Agent no later than the
close of business on the last business day prior to
the Effective Time. All elections may be revoked
until the last business day prior to the Effective
Time. QVC shall have the discretion, which it may
delegate in whole or in part to the Exchange Agent,
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to determine whether Forms of Election have been
properly completed and signed and properly and timely
submitted or revoked and to disregard immaterial
defects in Forms of Election, and any good faith
decision of QVC or the Exchange Agent in such matters
shall be binding and conclusive. Neither QVC nor the
Exchange Agent shall be under any obligation to noti-
fy any person of any defect in a Form of Election.
Any holder of shares of Paramount Common Stock who
fails to make an election and any holder who fails to
submit to the Exchange Agent a properly completed and
signed and properly and timely submitted Form of
Election shall be deemed to have made a Non-Election.
(iii) The aggregate number of shares of
Paramount Common Stock to be converted into the right
to receive cash in the Merger (the "Cash Election
Number") shall be equal to 51% of the number of
shares of Paramount Common Stock outstanding immedi-
ately prior to the Effective Time, and the aggregate
number of shares of Paramount Common Stock to be con-
verted into the right to receive shares of QVC Common
Stock and QVC Merger Preferred Stock and Warrants in
the Merger (the "Stock Election Number") shall be
equal to 49% of the number of shares of Paramount
Common Stock outstanding immediately prior to the
Effective Time.
(iv) If the aggregate number of shares of
Paramount Common Stock with respect to which Cash
Elections have been made plus Dissenting Shares (as
defined in Section 1.10) (the "Cash Election Shares")
exceeds the Cash Election Number, all shares of Para-
mount Common Stock with respect to which Stock Elec-
tions have been made (the "Stock Election Shares")
and all shares of Paramount Common Stock with respect
to which Non-Elections have been made (the "Non-
Election Shares") shall be converted into the right
to receive QVC Common Stock, QVC Merger Preferred
Stock and Warrants, and the Cash Election Shares
(other than Dissenting Shares) shall be converted
into the right to receive QVC Common Stock, QVC
Merger Preferred Stock, Warrants and cash in the fol-
lowing manner:
each Cash Election Share (other than Dissenting
Shares) shall be converted into the right to
receive (i) an amount in cash, without interest,
equal to the product of (x) the Per Share Cash
Amount and (y) a fraction (the "Cash Fraction"),
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the numerator of which shall be the Cash Elec-
tion Number and the denominator of which shall
be the total number of Cash Election Shares,
(ii) a number of shares of QVC Common Stock
equal to the product of (x) the Common Stock
Exchange Ratio and (y) a fraction equal to one
minus the Cash Fraction, (iii) a number of
shares of QVC Merger Preferred Stock equal to
the product of (x) the Preferred Stock Exchange
Ratio and (y) a fraction equal to one minus the
Cash Fraction, and (iv) a number of Warrants
equal to the product of (x) the Warrant Exchange
Ratio and (y) a fraction equal to one minus the
Cash Fraction.
(v) If the aggregate number of Stock Elec-
tion Shares exceeds the Stock Election Number, all
Cash Election Shares (other than Dissenting Shares)
and all Non-Election Shares shall be converted into
the right to receive cash, and all Stock Election
Shares shall be converted into the right to receive
QVC Common Stock, QVC Merger Preferred Stock, War-
rants and cash in the following manner:
each Stock Election Share shall be converted
into the right to receive (i) a number of shares
of QVC Common Stock equal to the product of (x)
the Common Stock Exchange Ratio and (y) a frac-
tion (the "Stock Fraction"), the numerator of
which shall be the Stock Election Number and the
denominator of which shall be the total number
of Stock Election Shares, (ii) a number of
shares of QVC Merger Preferred Stock equal to
the product of (x) the Preferred Stock Exchange
Ratio and (y) the Stock Fraction, (iii) a number
of Warrants equal to the product of (x) the War-
rant Exchange Ratio and (y) the Stock Fraction,
and (iv) an amount in cash, without interest,
equal to the product of (x) the Per Share Cash
Amount and (y) a fraction equal to one minus the
Stock Fraction.
(vi) In the event that neither Section
1.6(b)(iv) nor Section 1.6(b)(v) above is applicable,
all Cash Election Shares shall be converted into the
right to receive cash, all Stock Election Shares
shall be converted into the right to receive QVC Com-
mon Stock, QVC Merger Preferred Stock and Warrants,
and the Non-Election Shares, if any, shall be con-
verted into the right to receive QVC Common Stock,
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QVC Merger Preferred Stock, Warrants and cash in the
following manner:
each Non-Election Share shall be converted into
the right to receive (i) an amount in cash,
without interest, equal to the product of (x)
the Per Share Cash Amount and (y) a fraction
(the "Non-Election Fraction"), the numerator of
which shall be the excess of the Cash Election
Number over the total number of Cash Election
Shares and the denominator of which shall be the
excess of (A) the number of shares of Paramount
Common Stock outstanding immediately prior to
the Effective Time over (B) the sum of the total
number of Cash Election Shares and the total
number of Stock Election Shares, (ii) a number
of shares of QVC Common Stock equal to the prod-
uct of (x) the Common Stock Exchange Ratio and
(y) a fraction equal to one minus the Non-
Election Fraction, (iii) a number of shares of
QVC Merger Preferred Stock equal to the product
of (x) the Preferred Stock Exchange Ratio and
(y) a fraction equal to one minus the Non-
Election Fraction, and (iv) a number of Warrants
equal to the product of (x) the Warrant Exchange
Ratio and (y) a fraction equal to one minus the
Non-Election Fraction.
(vii) The Exchange Agent shall make all com-
putations contemplated by this Section 1.6 and all
such computations shall be binding and conclusive on
the holders of Paramount Common Stock.
(c) Each share of Paramount Common Stock held
in the treasury of Paramount and each share of Paramount
Common Stock owned by QVC or any direct or indirect wholly
owned subsidiary of QVC or of Paramount 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.
(d) In the Reverse Merger, each share of common
stock of Merger Subsidiary issued and outstanding immedi-
ately prior to the Effective Time shall be converted into
and exchanged for one validly issued, fully paid and non-
assessable share of common stock of the Surviving Corpora-
tion.
(e) If the Forward Merger is consummated
through a subsidiary of QVC, each share of common stock of
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such subsidiary issued and outstanding immediately prior
to the Effective Time shall be converted into and ex-
changed for one validly issued, fully paid and nonassess-
able share of common stock of the surviving corporation.
SECTION 1.7. Exchange of Certificates and Cash. (a)
Exchange Agent. As of the Effective Time (in the case of a
Merger to which Section 1.6(a) applies) or promptly after com-
pletion of the allocation procedures set forth in Section 1.6
(in the case of a Merger to which Section 1.6(b) applies), QVC
shall deposit, or shall cause to be deposited, with or for the
account of a bank or trust company designated by QVC, which
shall be reasonably satisfactory to Paramount (the "Exchange
Agent"), for the benefit of the holders of shares of Paramount
Common Stock (other than Dissenting Shares), for exchange in
accordance with this Article I, through the Exchange Agent, (i)
certificates evidencing the shares of QVC Common Stock and QVC
Merger Preferred Stock and Warrants issuable pursuant to Sec-
tion 1.6 in exchange for outstanding shares of Paramount Common
Stock and (ii) cash, if any, in the aggregate amount required
to be exchanged for shares of Paramount Common Stock pursuant
to Section 1.6 (the "Exchange Cash Consideration") (such cer-
tificates for shares of QVC Common Stock and QVC Merger Pre-
ferred Stock and Warrants, together with any dividends or dis-
tributions with respect thereto, and the Exchange Cash Consid-
eration, if any, being hereafter collectively referred to as
the "Exchange Fund"). The Exchange Agent shall, pursuant to
irrevocable instructions, deliver the QVC Common Stock, QVC
Merger Preferred Stock, Warrants and cash, if any, contemplated
to be issued pursuant to Section 1.6 out of the Exchange Fund
to holders of shares of Paramount Common Stock. Except as con-
templated by Section 1.7(d) hereof, the Exchange Fund shall not
be used for any other purpose. Any interest, dividends or
other income earned on the investment of cash or other property
held in the Exchange Fund shall be for the account of QVC.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, QVC will instruct the
Exchange Agent to mail to each holder of record of a certifi-
cate or certificates which immediately prior to the Effective
Time evidenced outstanding shares of Paramount Common Stock
(other than Dissenting Shares) (the "Certificates"), (i) a let-
ter 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 Ex-
change Agent and shall be in such form and have such other pro-
visions as QVC may reasonably specify) and (ii) instructions to
effect the surrender of the Certificates in exchange for the
certificates evidencing shares of QVC Common Stock and QVC
Merger Preferred Stock, Warrants and cash. Upon surrender of a
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Certificate for cancellation to the Exchange Agent together
with such letter of transmittal, duly executed, and such other
customary documents as may be required pursuant to such in-
structions, the holder of such Certificate shall be entitled to
receive in exchange therefor (A) certificates evidencing that
number of whole shares of QVC Common Stock and QVC Merger Pre-
ferred Stock and that number of whole Warrants which such hold-
er has the right to receive in accordance with Section 1.6 in
respect of the shares of Paramount Common Stock formerly evi-
denced by such Certificate, (B) cash, if any, which such holder
has the right to receive in accordance with Section 1.6, (C)
any dividends or other distributions to which such holder is
entitled pursuant to Section 1.7(c), and (D) cash in lieu of
fractional shares of QVC Common Stock, QVC Merger Preferred
Stock and Warrants to which such holder is entitled pursuant to
Section 1.7(d) (the shares of QVC Common Stock, QVC Merger Pre-
ferred Stock, Warrants, dividends, distributions and cash de-
scribed in clauses (A), (B), (C) and (D) being, collectively,
the "Merger Consideration"), and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of
ownership of shares of Paramount Common Stock which is not reg-
istered in the transfer records of Paramount, shares of QVC
Common Stock and QVC Merger Preferred Stock, Warrants and cash
may be issued and paid in accordance with this Article I to a
transferee if the Certificate evidencing such shares of Para-
mount Common Stock is presented to the Exchange Agent, accompa-
nied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer
taxes have been paid. Until surrendered as contemplated by
this Section 1.7, 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.
(c) Distributions With Respect to Unexchanged Shares
of QVC Common Stock and QVC Merger Preferred Stock and War-
rants. No dividends or other distributions declared or made
after the Effective Time with respect to QVC Common Stock, QVC
Merger Preferred Stock or Warrants with a record date after the
Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of QVC Common Stock or
QVC Merger Preferred Stock they are entitled to receive until
the holder of such Certificate shall surrender such Certifi-
cate.
(d) Fractional Shares and Warrants. No fraction of
a share of QVC Common Stock or QVC Merger Preferred Stock or
fraction of a Warrant shall be issued in the Merger. In lieu
of any such fractional shares or fractional Warrants, each
holder of Paramount Common Stock entitled to receive shares of
QVC Common Stock and QVC Merger Preferred Stock and Warrants in
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the Merger, upon surrender of a Certificate for exchange pursu-
ant to this Section 1.7, shall be paid (1) an amount in cash
(without interest), rounded to the nearest cent, determined by
multiplying (i) the reported last sale price per share on the
National Association of Securities Dealers Automated Quotation
System/National Market System ("NASDAQ") of QVC Common Stock on
the date of the Effective Time (or, if shares of QVC Common
Stock do not trade on the NASDAQ on such date, the first date
of trading of such QVC Common Stock on the NASDAQ after the
Effective Time) by (ii) the fractional interest in QVC Common
Stock to which such holder would otherwise be entitled (after
taking into account all shares of Paramount Common Stock then
held of record by such holder) plus (2) an amount in cash
(without interest), rounded to the nearest cent, determined by
multiplying (i) $50.00 by (ii) the fractional interest in QVC
Merger Preferred Stock to which such holder would otherwise be
entitled (after taking into account all shares of Paramount
Common Stock then held of record by such holder) plus (3) an
amount in cash (without interest), rounded to the nearest cent,
determined by multiplying (i) the fair market value of one War-
rant, as determined by reference to a five-day average trading
price, if available, or if not available, in the reasonable
judgment of the QVC Board of Directors by (ii) the fractional
interest in a Warrant to which such holder would otherwise be
entitled (after taking into account all shares of Paramount
Common Stock then held of record by such holder).
(e) Termination of Exchange Fund. Any portion of
the Exchange Fund which remains undistributed to the holders of
Paramount Common Stock for six months after the Effective Time
shall be delivered to QVC, upon demand, and any holders of
Paramount Common Stock who have not theretofore complied with
this Article I shall thereafter look only to QVC for the Merger
Consideration to which they are entitled pursuant to this Arti-
cle I.
(f) No Liability. Neither QVC nor Paramount shall
be liable to any holder of shares of Paramount Common Stock for
any such shares of QVC Common Stock or QVC Merger Preferred
Stock (or dividends or distributions with respect thereto) or
Warrants or cash from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat
or similar law.
(g) Withholding Rights. QVC 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 Paramount Common Stock such amounts as QVC or the
Exchange Agent is required to deduct and withhold with respect
to the making of such payment under the Code, or any provision
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of state, local or foreign tax law. To the extent that amounts
are so withheld by QVC 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 Paramount Com-
mon Stock in respect of which such deduction and withholding
was made by QVC or the Exchange Agent.
SECTION 1.8. Stock Transfer Books. At the Effective
Time, the stock transfer books of Paramount shall be closed,
and there shall be no further registration of transfers of
shares of Paramount Common Stock thereafter on the records of
Paramount. On or after the Effective Time, any Certificates
presented to the Exchange Agent or QVC for any reason shall be
converted into the Merger Consideration.
SECTION 1.9. Stock Options; Payment Rights. (a) At
the Effective Time, Paramount's obligations with respect to
each outstanding Stock Option (as defined in Section 3.3) to
purchase shares of Paramount Common Stock, as amended in the
manner described in the following sentence, shall be assumed by
QVC. The Stock Options so assumed by QVC shall continue to
have, and be subject to, the same terms and conditions as set
forth in the stock option plans and agreements pursuant to
which such Stock Options were issued as in effect immediately
prior to the Effective Time, except that each such Stock Option
shall be exercisable for (i) that number of whole shares of QVC
Common Stock equal to the product of the number of shares of
Paramount Common Stock covered by such Stock Option immediately
prior to the Effective Time multiplied by the Common Stock Ex-
change Ratio and rounded up to the nearest whole number of
shares of QVC Common Stock, (ii) that number of whole shares of
QVC Merger Preferred Stock equal to the product of the number
of shares of Paramount Common Stock covered by such Stock Op-
tion immediately prior to the Effective Time multiplied by the
Preferred Stock Exchange Ratio and rounded up to the nearest
whole number of shares of QVC Merger Preferred Stock, and (iii)
that number of whole Warrants equal to the product of the num-
ber of shares of Paramount Common Stock covered by such Stock
Option immediately prior to the Effective Time multiplied by
the Warrant Exchange Ratio and rounded up to the nearest whole
number of Warrants; provided that there shall be no such round-
ing up with respect to Incentive Stock Options (as defined
below). QVC shall (i) reserve for issuance the number of
shares of QVC Common Stock, QVC Merger Preferred Stock and War-
rants that will become issuable upon the exercise of such Stock
Options pursuant to this Section 1.9 and (ii) promptly after
the Effective Time issue to each holder of an outstanding Stock
Option a document evidencing the assumption by QVC of Para-
mount's obligations with respect thereto under this Section
1.9. Nothing in this Section 1.9 shall affect the schedule of
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vesting with respect to the Stock Options to be assumed by QVC
as provided in this Section 1.9. In the case of any Stock Op-
tion to which Section 421 of the Code applies by reason of its
qualification under Section 422 of the Code (an "Incentive
Stock Option"), the option price, the number of shares purchas-
able pursuant to such Incentive Stock Option and the terms and
conditions of exercise of such Incentive Stock Option shall be
determined immediately after the Effective Time in such manner
as to comply with Section 424(a) of the Code. To preserve the
qualification of all Incentive Stock Options under Section 422
of the Code, in lieu of all Warrants or QVC Merger Preferred
Stock for which an Incentive Stock Option would otherwise be-
come exercisable pursuant to the foregoing provisions of this
Section 1.9, such Incentive Stock Option shall become exercis-
able for that number of shares of QVC Common Stock equal to the
fair market value of such Warrants or QVC Merger Preferred
Stock (determined, at the time of the Merger, by reference to a
five-day average trading price of such securities, if avail-
able, or, if not available, in the reasonable judgment of the
Board of Directors of QVC).
SECTION 1.10. Dissenting Shares. (a) Notwithstand-
ing any other provision of this Agreement to the contrary, if
the Offer has not been consummated prior to the Effective Time,
shares of Paramount Common Stock that are outstanding immedi-
ately prior to the Effective Time and which are held by stock-
holders who shall have not voted in favor of the Merger or con-
sented thereto in writing and who 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 de-
mand or otherwise have forfeited appraisal rights (collective-
ly, 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 ap-
praised value of such shares of Paramount Common Stock held by
them in accordance with the provisions of such Section 262,
except that all Dissenting Shares held by stockholders who
shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such shares of
Paramount Common Stock under such Section 262 shall thereupon
be deemed to have been converted into and to have become ex-
changeable, as of the Effective Time, for the right to receive,
without any interest thereon, the Merger Consideration (as if
such shares were Non-Election Shares in the case of a Merger to
which Section 1.6(b) applies), upon surrender, in the manner
provided in Section 1.7, of the certificate or certificates
that formerly evidenced such shares of Paramount Common Stock.
(b) Paramount shall give QVC (i) prompt notice of
any demands for appraisal received by Paramount, withdrawals of
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such demands, and any other instruments served pursuant to
Delaware Law and received by Paramount and (ii) the opportunity
to direct all negotiations and proceedings with respect to
demands for appraisal under Delaware Law. Paramount shall not,
except with the prior written consent of QVC, make any payment
with respect to any demands for appraisal, or offer to settle,
or settle, any such demands.
ARTICLE II
THE OFFER
SECTION 2.1. The Offer. (a) QVC has amended and
supplemented the Offer to (a) increase the purchase price of-
fered for shares pursuant to the Offer to the Per Share Cash
Amount, (b) provide that the obligation of QVC to accept for
payment and pay for Shares tendered pursuant to the Offer shall
be subject to the condition (such condition as it may be amend-
ed from time to time in accordance with the terms hereof, the
"Minimum Condition") that at least 61,607,894 shares of Para-
mount Common Stock (or such greater number of shares represent-
ing 50.1% of the outstanding number of shares of Paramount Com-
mon Stock on a fully diluted basis) shall have been validly
tendered and not withdrawn prior to the expiration of the
Offer, that the Board of Directors of Paramount, in accordance
with Section 3.13 of this Agreement, shall have amended the
Rights Agreement to make the Rights (such terms being used as
defined in Section 3.13) inapplicable to the Offer and the
Merger as contemplated by Section 3.13 or the Rights shall be
otherwise inapplicable to the Offer and the Merger (the "Rights
Condition"), and also shall be subject to the satisfaction of
the other conditions set forth in Annex A hereto, and (c) ex-
tend the expiration date of the Offer until Midnight on the
tenth business day following the date of the amendment to the
Offer referred to above. QVC expressly reserves the right to
waive any such condition (other than the Minimum Condition), to
increase the aggregate cash consideration to be paid pursuant
to the Offer by not less than $60 million, and to increase the
number of shares of Paramount Common Stock sought in the Offer
by not less than 2% of the outstanding shares of Paramount Com-
mon Stock; provided, however, that no change may be made with-
out the prior written consent of Paramount which decreases the
number of shares of Paramount Common Stock sought in the Offer
to a number representing less than 50.1% of the then-outstand-
ing shares of Paramount Common Stock on a fully diluted basis;
provided, however, that the number of shares of Paramount Com-
mon Stock sought in the Offer can be decreased to not less than
50.1% of the then-outstanding shares of Paramount Common Stock
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on a fully diluted basis; so long as the aggregate cash consid-
eration payable in the Offer is not decreased, which decreases
the aggregate cash consideration payable in the Offer or
changes the form of consideration payable in the Offer (except
in each case referred to in this proviso to the extent the
Other Offeror (as defined below) has made such changes with the
consent of Paramount) or makes any other change in the terms of
the Offer which is reasonably deemed by Paramount to be adverse
to Paramount stockholders or which imposes conditions to the
Offer in addition to those set forth in Annex A hereto. The
Per Share Amount shall, subject to applicable withholding of
taxes, be net to the seller in cash, upon the terms and subject
to the conditions of the Offer. Subject to the terms and con-
ditions of the Offer (including, without limitation, the Mini-
mum Condition) and the terms of this Agreement, QVC shall pay,
as promptly as practicable after expiration of the Offer, for
all shares of Paramount Common Stock validly tendered and not
withdrawn at the earliest such time following expiration of the
Offer that all conditions to the Offer shall have been waived
or satisfied by QVC.
(b) QVC has filed with the Securities and Exchange
Commission (the "SEC") an amendment to its Tender Offer State-
ment on Schedule 14D-1 (together with all amendments and sup-
plements thereto, the "Schedule 14D-1") with respect to the
Offer. The Schedule 14D-1 contains or incorporates by refer-
ence an amendment and supplement to the offer to purchase (the
"Offer to Purchase") and forms of the related letter of trans-
mittal and any related summary advertisement (the Schedule
14D-1, the Offer to Purchase and such other documents, together
with all supplements and amendments thereto, being referred to
herein collectively as the "Offer Documents"). QVC and Para-
mount agree to correct promptly any information provided by any
of them for use in the Offer Documents which shall have become
false or misleading, and QVC further agrees to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be
filed with the SEC and the other Offer Documents as so cor-
rected to be disseminated to holders of shares of Paramount
Common Stock, in each case as and to the extent required by
applicable federal securities laws.
(c) Notwithstanding the amendment of the Offer, QVC
shall be free to terminate the Offer at any time subject to its
continuing obligations to consummate the Merger, including
without limitation pursuant to Sections 6.5 and 6.9, provided
that prior to such termination of the Offer, QVC shall have
determined in good faith that either (i) terminating the Offer
will facilitate the earlier consummation of the Merger in ac-
cordance with the terms of this Merger Agreement or (ii) the
conditions to the Offer (other than the Minimum Condition and
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the Rights Condition) are unlikely to be satisfied. Notwith-
standing the foregoing, QVC hereby agrees that, without the
written consent of Paramount, it may not terminate the Offer
unless required to terminate pursuant to Section 2.5 hereof, or
extend the Expiration Date except for failure to satisfy a con-
dition at the Expiration Date, at any time that all of the con-
ditions to the Offer have been satisfied or that there exists
no material risk that the conditions will not be satisfied by
such Expiration Date provided, QVC may extend the Expiration
Date pursuant to this Section 2.1(c) and Sections 2.1(a),
2.1(d) and 2.3 hereof or any such extension required by federal
securities law.
No extension of the expiration date (such expiration
date as extended from time to time shall be defined herein to
mean the "Expiration Date") permitted pursuant to this Agree-
ment shall be for a period of less than three business days and
the Expiration Date shall not be extended for any reason beyond
12:00 midnight on February 14, 1994, or such later date in
accordance with the last parenthetical in Section 2.1(d)(ii),
Section 2.3, or as required by the federal securities law to
the extent that the extension arises due to an event outside
the control of QVC (those events not deemed to be outside the
control of the Offeror shall include, without limitation, any
change in the terms of the Offer or the Merger) (the "Final
Expiration Date"). QVC agrees that it will not increase the
price per share of Paramount Common Stock payable in the Offer
or the Merger or otherwise amend the Offer or the terms of the
Merger primarily to extend the expiration date of the tender
offer by Viacom (the "Other Offeror") to purchase the outstand-
ing shares of Paramount Common Stock (the "Other Offer"). Any
amendment to the Offer or any change in the consideration of-
fered to the Paramount stockholders in the Merger that results
in an extension of the Expiration Date shall be publicly an-
nounced by 5:00 p.m on the date of such amendment or change.
QVC hereby agrees that it shall not (a) seek to amend or waive
any provision of this Agreement that is substantially identical
to the provisions relating to the bidding procedures contained
in the Other Exemption Agreement (the "Bidding Procedures") or
(b) publicly announce an intention to take an action which is
not otherwise permitted, or refrain from taking an action which
is required, under the terms of this Agreement relating to the
Bidding Procedures.
(d) In order to cause the Offer and the Other Offer
to remain on the same time schedule, QVC hereby agrees that (i)
if the Other Offeror remains subject to an agreement (the
"Other Exemption Agreement"), containing terms for the benefit
of Paramount substantially similar to the form of exemption
agreement attached hereto (the "Exemption Agreement"), and
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extends the expiration date of the Other Offer (such expiration
date, as extended from time to time, the "Other Expiration
Date") in accordance with the Other Exemption Agreement, then
the Expiration Date shall be extended (as soon as practicable,
but not later than one business day following the announcement
of the extension of the Other Expiration Date) by QVC to the
Other Expiration Date, or (ii) if upon notification to Para-
mount by the Offeror and the Other Offeror of the results of
their respective offers (which notification shall be required
to be delivered by the Offeror and the Other Offeror no later
than promptly following the expiration of their respective
offers), Paramount has notified the Offeror and the Other
Offeror (which notification shall be required to be delivered
by Paramount promptly) that a number of shares of Paramount
Common Stock that would satisfy the Minimum Condition or the
minimum condition (the "Other Minimum Condition") as defined in
the Other Offer (which will be deemed not satisfied if such
Other Offer seeks a number of shares consisting of less than
50.1% of the outstanding shares of Paramount Common Stock on a
fully diluted basis) shall not have been validly tendered (and
not withdrawn) pursuant to either the Offer or the Other Offer,
respectively, at the Expiration Date (or a number of shares of
Paramount Common Stock that would satisfy the Minimum Condition
and the Other Minimum Condition shall have been validly ten-
dered and not withdrawn pursuant to the Offer and the Other
Offer at the Expiration Date), then QVC shall extend the Expi-
ration Date of the Offer for a period of 10 business days.
(e) QVC shall be subject to the obligations of Sec-
tions 2.1(d) and 2.5 for so long as the Other Offeror remains
subject to the obligations set forth in the Other Exemption
Agreement; provided, however, that QVC shall not be subject to
Sections 2.1(d) and 2.5 in the event that the Other Offeror has
not performed or complied in all material respects with the
Other Exemption Agreement.
SECTION 2.2. Action by Paramount. (a) Paramount
hereby approves of and consents to the making of the Offer and
represents that (i) the Board of Directors of Paramount, at a
meeting duly called and held on , 1994, has unani-
mously (A) determined that the Offer and the Merger, taken
together, are fair to and in the best interests of the holders
of shares of Paramount Common Stock, (B) approved and adopted
this Agreement and the transactions contemplated hereby, and
(C) recommended that the stockholders of Paramount approve and
adopt this Agreement and the transactions contemplated hereby
and accept the Offer, and (ii) Lazard Freres & Co. has deliv-
ered to the Board an opinion, to the effect that, as of such
date, the consideration to be received by the holders of shares
of Paramount Common Stock pursuant to the Offer and the Merger,
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taken together, is fair to the holders of shares of Paramount
Common Stock from a financial point of view. Subject to the
fiduciary duties of the Board of Directors of Paramount under
applicable law as advised by independent legal counsel (who may
be such party's regularly engaged legal counsel), Paramount
hereby consents to the inclusion in the Offer Documents pre-
pared in connection with the Offer of the recommendation of the
Board of Directors of Paramount described in the immediately
preceding sentence.
(b) As soon as reasonably practicable after the date
hereof, Paramount shall file with the SEC an amendment to its
Solicitation/Recommendation Statement on Schedule 14D-9 (to-
gether with all amendments and supplements thereto, the "Sched-
ule 14D-9") containing, subject to the fiduciary duties of the
Board of Directors of Paramount under applicable law as advised
by independent legal counsel (who may be such party's regularly
engaged legal counsel), the recommendation of the Board of
Directors of Paramount described in Section 2.2(a) and shall
disseminate the Schedule 14D-9 to the extent required by Rule
14e-2 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and any other applicable federal
securities laws. Paramount and QVC agree to correct promptly
any information provided by any of them for use in the Schedule
14D-9 which shall have become false or misleading, and Para-
mount further agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to holders of shares of Paramount Common Stock, in
each case as and to the extent required by applicable federal
securities laws.
(c) Paramount shall promptly furnish QVC with mail-
ing labels containing the names and addresses of all record
holders of shares of Paramount Common Stock and with security
position listings of shares of Paramount Common Stock held in
stock depositories, each as of a recent date, together with all
other available listings and computer files containing names,
addresses and security position listings of record holders and
beneficial owners of shares of Paramount Common Stock. Para-
mount shall furnish QVC with such additional information, in-
cluding, without limitation, updated listings and computer
files of stockholders, mailing labels and security position
listings, and such other assistance as QVC or its agents may
reasonably request. Subject to the requirements of applicable
law, and except for such steps as are necessary to disseminate
the Offer Documents and any other documents necessary to con-
summate the Merger or the Offer, QVC shall hold in confidence
the information contained in such labels, listings and files,
shall use such information only in connection with the Merger
and the Offer, and, if this Agreement shall be terminated in
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accordance with Section 8.1, shall deliver to Paramount all
copies of such information then in its possession.
SECTION 2.3. Receipt of Common Stock. Unless the
event referred to in the last parenthetical of Section
2.1(d)(ii) occurs, in the event that a number of shares of
Paramount Common Stock that would satisfy the Minimum Condition
shall have been validly tendered and not withdrawn in the Offer
at the Expiration Date and, as of such Expiration Date, QVC has
waived all conditions to the Offer (other than the Minimum Con-
dition and the conditions relating to the Rights Agreement,
Article XI of the Paramount Certificate of Incorporation, Sec-
tion 203 of Delaware Law and judicial or governmental injunc-
tion, each as set forth therein), then QVC shall extend the
Expiration Date to a date 10 business days from the then-
scheduled Expiration Date; provided, that such extension shall
be for a period of 5 business days in the event that the Other
Offer has been terminated prior to the foregoing Expiration
Date.
SECTION 2.4. Completion Certificate. At such time
as QVC has fulfilled the terms of Section 2.3 above, QVC shall
deliver to the Board of Directors of Paramount (a) a certifi-
cate (the "Completion Certificate"), executed by an authorized
officer of QVC, certifying that all the terms of Section 2.3
have been fulfilled.
SECTION 2.5. Termination of the Offer. Unless the
event referred to in the last parenthetical of the last sen-
tence of Section 2.1(d)(ii) occurs, QVC hereby agrees to termi-
nate the Offer at such time as QVC has been notified pursuant
to a certificate executed by an authorized officer of Paramount
that (i) a number of shares representing not less than the
Other Minimum Condition shall have been validly tendered to the
Other Offer and not withdrawn at the Other Expiration Date of
the Other Offer, (ii) all conditions to the Other Offer, except
the Other Minimum Condition and the conditions relating to the
Rights Agreement, Article XI of the Paramount Certificate of
Incorporation, Section 203 of Delaware Law and judicial or gov-
ernmental injunction each as set forth therein, shall have been
waived, and (iii) a completion certificate from the Other Of-
feror has been delivered to Paramount; provided, however, that
QVC shall not be required to terminate the Offer in the event
that the Other Offeror has not performed or complied in all
material respects with the Other Exemption Agreement.
SECTION 2.6. Board of Directors; Section 14(f). (a)
If requested by QVC, Paramount shall, promptly following the
acceptance for payment of the shares of Paramount Common Stock
to be purchased pursuant to the Offer, and from time to time
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thereafter, take all actions necessary to cause a majority of
directors (and of members of each committee of the Board of
Directors) of Paramount and of each subsidiary of Paramount
designated by QVC (whether, at the request of QVC, by means of
increasing the size of the Board of Directors of Paramount or
seeking the resignation of directors and causing QVC's desig-
nees to elected); provided that prior to receipt by QVC of
long-form approval by the Federal Communications Commission
(the "FCC") permitting QVC to control Paramount, Paramount
shall take all actions necessary to elect the QVC voting
trustee approved by the FCC to the Paramount Board of Directors
and to otherwise act in a manner consistent with the voting
trust agreement approved by the FCC.
(b) Paramount's obligations to cause designees of
QVC to be elected or appointed to the Board of Directors of
Paramount shall be subject to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder. Paramount shall prompt-
ly 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 with
respect to QVC and its officers and directors as is required
under Section 14(f) and Rule 14f-1. QVC will supply to Para-
mount any information with respect to it and its nominees,
officers, directors and affiliates required by Section 14(f)
and Rule 14f-1.
(c) Following the election or appointment of QVC's
designees pursuant to this Section and prior to the Effective
Time, any amendment or termination of this Agreement, extension
for the performance or waiver of the obligations or other acts
of QVC or waiver of Paramount's rights hereunder, will require
the concurrence of a majority of directors of Paramount then in
office who are directors on the date hereof or are designated
by a majority of the directors of Paramount who are directors
on the date hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARAMOUNT
Paramount hereby represents and warrants to QVC that:
SECTION 3.1. Organization and Qualification; Subsid-
iaries. (a) Each of Paramount and each Material Paramount
Subsidiary (as defined below) is a corporation, partnership or
other legal entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorpora-
tion or organization and has the requisite power and authority
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and all necessary governmental approvals to own, lease and op-
erate 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 Paramount Material Adverse Effect (as defined
below). Paramount and each Material Paramount Subsidiary is
duly qualified or licensed as a foreign corporation to do busi-
ness, 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 licens-
ing 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 Paramount Material Adverse Effect.
The term "Paramount Material Adverse Effect" means any change
or effect that is or is reasonably likely to be materially
adverse to the business, results of operations or financial
condition of Paramount and the Paramount Subsidiaries, taken as
a whole; provided, however, where such term qualifies a repre-
sentation or warranty contained in this Article III during the
period beginning after the date hereof and until the Effective
Time, then such term shall mean any change or effect that is or
is reasonably likely to be materially adverse to the business
or financial condition of Paramount and the Paramount Subsid-
iaries, taken as a whole.
(b) Each subsidiary of Paramount (a "Paramount Sub-
sidiary") that constitutes a Significant Subsidiary of Para-
mount within the meaning of Rule 1-02 of Regulation S-X of the
SEC is referred to herein as a "Material Paramount Subsidiary".
SECTION 3.2. Certificate of Incorporation and By-
Laws. Paramount has heretofore made available to QVC a com-
plete and correct copy of the Certificate of Incorporation and
the By-Laws or equivalent organizational documents, each as
amended to date, of Paramount and each Material Paramount Sub-
sidiary. Such Certificates of Incorporation, By-Laws and
equivalent organizational documents are in full force and
effect. Neither Paramount nor any Material Paramount Subsid-
iary is in violation of any provision of its Certificate of
Incorporation, By-Laws or equivalent organizational documents,
except for such violations that would not, individually or in
the aggregate, have a Paramount Material Adverse Effect.
SECTION 3.3. Capitalization. The authorized capital
stock of Paramount consists of 600,000,000 shares of Paramount
Common Stock and 75,000,000 shares of Preferred Stock, par
value $.01 per share ("Paramount Preferred Stock"). As of Jan-
uary 19, 1994, 121,865,001 shares of Paramount Common Stock
were issued and outstanding, all of which were validly issued,
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fully paid and nonassessable. As of January 20, 1994,
25,990,047 shares were held in the treasury of Paramount. As
of December 31, 1993, 9,377,108 shares were reserved for future
issuance pursuant to employee stock options granted pursuant to
Paramount's 1992 Stock Option Plan, 1989 Stock Option Plan and
1984 Stock Option Plan (any employee stock option issued under
any such plan being a "Stock Option") and reserved for future
issuance under the Long-Term Incentive Plan. Between August
31, 1993 and the date of this Agreement, awards have been made
under the Long-Term Performance Plan as indicated in Schedule
3.3 of the Paramount Disclosure Schedule (as defined below).
As of January 19, 1994, options to acquire 2,581,763 shares of
Paramount Common Stock were outstanding. As of the date here-
of, no shares of Paramount Preferred Stock are issued and out-
standing. Except as set forth in Section 3.3 of the Disclosure
Schedule previously delivered by Paramount to QVC (the "Para-
mount Disclosure Schedule"), or except as set forth in this
Section 3.3, and except pursuant to the Rights Agreement (as
defined in Section 3.13) there are no options, warrants or
other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of
Paramount or any Material Paramount Subsidiary or obligating
Paramount or any Material Paramount Subsidiary to issue or sell
any shares of capital stock of, or other equity interests in,
Paramount or any Material Paramount Subsidiary. All shares of
Paramount Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instru-
ments pursuant to which they are issuable, will be duly autho-
rized, validly issued, fully paid and nonassessable. Except as
set forth in Section 3.3 of the Paramount Disclosure Schedule,
there are no material outstanding contractual obligations of
Paramount or any Paramount Subsidiary to repurchase, redeem or
otherwise acquire any shares of Paramount Common Stock or any
capital stock of any Material Paramount Subsidiary, or make any
material investment (in the form of a loan, capital contribu-
tion or otherwise) in, any Paramount Subsidiary or any other
person. Each outstanding share of capital stock of each Mate-
rial Paramount Subsidiary is duly authorized, validly issued,
fully paid and nonassessable and each such share owned by Para-
mount or another Paramount Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on Paramount's or such
other Paramount Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever. Set forth in Section
3.3 of the Disclosure Schedule is Paramount's percentage inter-
est in the outstanding capital stock or partnership interests
of USA Networks, United Cinemas International Multiplex B.V.,
United International Pictures and Cinamerica Theatres, L.P.
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SECTION 3.4. Authority Relative to This Agreement.
Paramount has all necessary power and authority to execute and
deliver this Agreement, to perform its obligations hereunder
and to consummate the transactions (including, without limita-
tion, the Offer) contemplated hereby (the "Transactions"). The
execution and delivery of this Agreement by Paramount and the
consummation by Paramount of the transactions contemplated
hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part
of Paramount are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby (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 Paramount Common Stock, and the filing and recorda-
tion of appropriate merger documents as required by Delaware
Law). This Agreement has been duly and validly executed and
delivered by Paramount and, assuming the due authorization,
execution and delivery by QVC, constitutes legal, valid and
binding obligations of Paramount, enforceable against Paramount
in accordance with its terms. Paramount has taken all appro-
priate actions so that the restrictions on business combina-
tions contained in Section 203 of Delaware Law and Article XI
of Paramount's Certificate of Incorporation will not apply with
respect to or as a result of the Transactions. Paramount has
terminated the Viacom Merger Agreement and Paramount has not
made any payment to Viacom in connection with such agreement
(except pursuant to the proviso contained in Section 8.05(a) of
such agreement) or the Stock Option Agreement and will not make
any such payment (except pursuant to the proviso contained in
Section 8.05(a) described above) unless so ordered by the Dela-
ware Chancery Court or Delaware Supreme Court pursuant to a
final nonappealable order.
SECTION 3.5. No Conflict; Required Filings and Con-
sents. (a) Except as set forth in Section 3.5 of the Para-
mount Disclosure Schedule, the execution and delivery of this
Agreement by Paramount does not, and the performance by Para-
mount of its obligations under this Agreement will not, (i)
conflict with or violate the Certificate of Incorporation or
By-Laws or equivalent organizational documents of Paramount or
any Material Paramount Subsidiary, (ii) conflict with or vio-
late any law, rule, regulation, order, judgment or decree
applicable to Paramount or any Paramount Subsidiary or by which
any property or asset of Paramount or any Paramount Subsidiary
is bound or affected, or (iii) result in any breach of or con-
stitute 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 or cancellation of, or
result in the creation of a lien or other encumbrance on any
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property or asset of Paramount or any Paramount Subsidiary pur-
suant to, any note, bond, mortgage, indenture, contract, agree-
ment, lease, license, permit, franchise or other instrument or
obligation to which Paramount or any Paramount Subsidiary is a
party or by which Paramount or any Paramount Subsidiary or any
property or asset of Paramount or any Paramount 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 consumma-
tion of the Merger or the Offer in any material respect, or
otherwise prevent Paramount from performing its obligations
under this Agreement in any material respect, and would not,
individually or in the aggregate, have a Paramount Material
Adverse Effect.
(b) The execution and delivery of this Agreement by
Paramount does not, and the performance of this Agreement by
Paramount will not, require any consent, approval, authoriza-
tion or permit of, or filing with or notification to, any gov-
ernmental or regulatory authority, domestic or foreign (each a
"Governmental Entity"), except (i) for (A) applicable require-
ments, if any, of the Exchange Act, the Securities Act of 1933,
as amended (the "Securities Act"), state securities or "blue
sky" laws ("Blue Sky Laws") and state takeover laws, (B) ap-
plicable requirements of the Communications Act of 1934, as
amended (the "Communications Act"), and of state and local gov-
ernmental authorities, including state and local authorities
granting franchises to operate cable systems, (C) applicable
requirements of the Investment Canada Act of 1985 and the Com-
petition Act (Canada), (D) filing and recordation of appropri-
ate merger documents as required by Delaware Law, and (E) any
non-United States competition, antitrust and investment laws
and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifica-
tions, would not prevent or delay consummation of the Merger or
the Offer in any material respect, or otherwise prevent Para-
mount from performing its obligations under this Agreement in
any material respect, and would not, individually or in the
aggregate, have a Paramount Material Adverse Effect.
SECTION 3.6. Compliance. Except as set forth in
Section 3.6 of the Paramount Disclosure Schedule, neither Para-
mount nor any Paramount Subsidiary is in conflict with, or in
default or violation of, (i) any law, rule, regulation, order,
judgment or decree applicable to Paramount or any Paramount
Subsidiary or by which any property or asset of Paramount or
any Paramount 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 Paramount or any Paramount Subsidiary is a party or by
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which Paramount or any Paramount Subsidiary or any property or
asset of Paramount or any Paramount Subsidiary is bound or af-
fected, except for any such conflicts, defaults or violations
that would not, individually or in the aggregate, have a Para-
mount Material Adverse Effect.
SECTION 3.7. SEC Filings; Financial Statements. Ex-
cept as set forth in Section 3.7 of the Paramount Disclosure
Schedule, (a) Paramount has filed all forms, reports and docu-
ments required to be filed by it with the SEC since October 31,
1990, 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 October
31, 1990, 1991 and 1992, respectively, (ii) its Transition Re-
port on Form 10-K for the six months ended April 30, 1993, as
amended prior to the date hereof, (iii) its Quarterly Reports
on Form 10-Q for the periods ended July 31, 1993 and October
31, 1993, (iv) all proxy statements relating to Paramount's
meetings of stockholders (whether annual or special) held since
October 31, 1990, and (v) 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 Paramount with the SEC since October 31,
1990 (the forms, reports and other documents referred to in
clauses (i), (ii), (iii), (iv) and (v) above being referred to
herein, collectively, as the "Paramount SEC Reports"). The
Paramount SEC Reports and any forms, reports and other docu-
ments filed by Paramount 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. No Paramount 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
Paramount 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 financial
position, results of operations and cash flows of Paramount and
the consolidated Paramount Subsidiaries as at the respective
dates thereof and for the respective periods indicated therein
(subject, in the case of unaudited statements, to normal and
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recurring year-end adjustments which were not and are not ex-
pected, individually or in the aggregate, to be material in
amount).
(c) Except as set forth in Section 3.7 of the Para-
mount Disclosure Schedule or except as and to the extent set
forth in the Paramount SEC Reports filed with the SEC prior to
the date of this Agreement, Paramount and the Paramount Subsid-
iaries 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 Paramount Material Adverse Effect.
SECTION 3.8. Absence of Certain Changes or Events.
Since April 30, 1993, except as set forth in Section 3.8 of the
Paramount Disclosure Schedule, contemplated by this Agreement
or disclosed in any Paramount SEC Report filed since April 30,
1993 and prior to the date of this Agreement, Paramount and the
Paramount Subsidiaries have conducted their businesses only in
the ordinary course and in a manner consistent with past prac-
tice and, since April 30, 1993, there has not been (i) as of
the date hereof, any change, occurrence or circumstance in the
business, results of operations or financial condition of Para-
mount or any Paramount Subsidiary having, individually or in
the aggregate, a Paramount Material Adverse Effect, (ii) any
damage, destruction or loss (whether or not covered by insur-
ance) with respect to any property or asset of Paramount or any
Paramount Subsidiary and having, individually or in the aggre-
gate, a Paramount Material Adverse Effect, (iii) any change by
Paramount in its accounting methods, principles or practices,
(iv) any declaration, setting aside or payment of any dividend
or distribution in respect of any capital stock of Paramount or
any Paramount Subsidiary or any redemption, purchase or other
acquisition of any of their respective securities other than
regular quarterly dividends on the shares of Paramount Common
Stock not in excess of $.20 per share and dividends by a Para-
mount Subsidiary to Paramount and other than to fund preestab-
lished Paramount Plans and dividend reinvestment plans, or (v)
other than as set forth in Section 3.3 and pursuant to the
plans, programs or arrangements referred to in Section 3.10 and
other than in the ordinary course of business consistent with
past practice, any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retire-
ment, profit sharing, stock option (including, without limita-
tion, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase
or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any officers or
key employees of Paramount or any Paramount Subsidiary.
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SECTION 3.9. Absence of Litigation. Except as set
forth in Section 3.9 of the Paramount Disclosure Schedule or
except as disclosed in the Paramount SEC Reports filed with the
SEC prior to the date of this Agreement, there is no claim,
action, proceeding or investigation pending or, to the best
knowledge of Paramount, threatened against Paramount or any
Paramount Subsidiary, or any property or asset of Paramount or
any Paramount Subsidiary, before any court, arbitrator or ad-
ministrative, governmental or regulatory authority or body,
domestic or foreign, which, individually or in the aggregate,
is reasonably likely to have a Paramount Material Adverse Ef-
fect. Except as disclosed in the Paramount SEC Reports filed
with the SEC prior to the date of this Agreement, neither Para-
mount nor any Paramount Subsidiary nor any property or asset of
Paramount or any Paramount Subsidiary is subject to any order,
writ, judgment, injunction, decree, determination or award hav-
ing or reasonably likely to have, individually or in the aggre-
gate, a Paramount Material Adverse Effect.
SECTION 3.10. Employee Benefit Plans. With respect
to all the employee benefit plans, programs and arrangements
maintained for the benefit of any current or former employee,
officer or director of Paramount or any Paramount Subsidiary
(the "Paramount Plans"), except as set forth in Section 3.10 of
the Paramount Disclosure Schedule or the Paramount SEC Reports
and except as would not, individually or in the aggregate, have
a Paramount Material Adverse Effect: (i) each Paramount 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 reason-
ably be expected to affect the qualified status of such Para-
mount Plan; (ii) each Paramount Plan has been operated in all
respects in accordance with its terms and the requirements of
applicable law; (iii) neither Paramount nor any Paramount Sub-
sidiary has incurred any direct or indirect liability under,
arising out of or by operation of Title IV of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
in connection with the termination of, or withdrawal from, any
Paramount 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; and (iv) Paramount and the Para-
mount Subsidiaries have not incurred any liability under, and
have complied in all material respects with, the Worker Adjust-
ment Retraining Notification Act, and no fact or event exists
that could give rise to liability under such act. Except as
set forth in Section 3.10 of the Paramount Disclosure Schedule
or the Paramount SEC Reports, the aggregate accumulated benefit
obligations of each Paramount Plan subject to Title IV of ERISA
(as of the date of the most recent actuarial valuation prepared
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for such Paramount Plan) do not exceed the fair market value of
the assets of such Paramount Plan (as of the date of such valu-
ation).
SECTION 3.11. Trademarks, Patents and Copyrights.
Paramount and the Paramount Subsidiaries own or possess ade-
quate licenses or other valid rights to use all material pat-
ents, patent rights, trademarks, trademark rights, trade names,
trade name rights, copyrights, service marks, trade secrets,
applications for trademarks and for service marks, know-how and
other proprietary rights and information used or held for use
in connection with the business of Paramount and the Paramount
Subsidiaries as currently conducted or as contemplated to be
conducted, and Paramount is unaware of any assertion or claim
challenging the validity of any of the foregoing which, indi-
vidually or in the aggregate, would have a Paramount Material
Adverse Effect. The conduct of the business of Paramount and
the Paramount Subsidiaries as currently conducted does not con-
flict in any way with any patent, patent right, license, trade-
mark, trademark right, trade name, trade name right, service
mark or copyright of any third party that, individually or in
the aggregate, would have a Paramount Material Adverse Effect.
To the best knowledge of Paramount, there are no infringements
of any proprietary rights owned by or licensed by or to Para-
mount or any Paramount Subsidiary which, individually or in the
aggregate, would have a Paramount Material Adverse Effect.
SECTION 3.12. Taxes. Paramount and the Paramount
Subsidiaries have timely filed all federal, state, local and
foreign tax returns and reports required to be filed by them
through the date hereof and shall timely file all returns and
reports required on or before the Effective Time, except for
such returns and reports the failure of which to file timely
would not, individually or in the aggregate, have a Paramount
Material Adverse Effect. Such reports and returns are and will
be true, correct and complete, except for such failure to be
true, correct and complete as would not, individually or in the
aggregate, have a Paramount Material Adverse Effect. Paramount
and the Paramount Subsidiaries have paid and discharged all
federal, state, local and foreign taxes due from them, other
than such taxes that are being contested in good faith by ap-
propriate proceedings and are adequately reserved as shown in
the audited consolidated balance sheet of Paramount dated Octo-
ber 31, 1992 (the "Paramount 1992 Balance Sheet") and its most
recent quarterly financial statements, except for such failures
to so pay and discharge which would not, individually or in the
aggregate, have a Paramount Material Adverse Effect. Neither
the IRS nor any other taxing authority or agency, domestic or
foreign, is now asserting or, to the best knowledge of Para-
mount, threatening to assert against Paramount or any Paramount
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Subsidiary any deficiency or material claim for additional
taxes or interest thereon or penalties in connection therewith
which, if such deficiencies or claims were finally resolved
against Paramount and the Paramount Subsidiaries would, indi-
vidually or in the aggregate, have a Paramount Material Adverse
Effect. The accruals and reserves for taxes (including inter-
est and penalties, if any, thereon) reflected in the Paramount
1992 Balance Sheet and the most recent quarterly financial
statements are adequate in accordance with generally accepted
accounting principles, except where the failure to be adequate
would not have a Paramount Material Adverse Effect. Paramount
and the Paramount Subsidiaries have withheld or collected and
paid over to the appropriate governmental authorities or are
properly holding for such payment all taxes required by law to
be withheld or collected, except for such failures to have so
withheld or collected and paid over or to be so holding for
payment which would not, individually or in the aggregate, have
a Paramount Material Adverse Effect. There are no material
liens for taxes upon the assets of Paramount or the Paramount
Subsidiaries, other than liens for current taxes not yet due
and payable and liens for taxes that are being contested in
good faith by appropriate proceedings. Neither Paramount nor
any Paramount Subsidiary has agreed to or is required to make
any adjustment under Section 481(a) of the Code. Neither Para-
mount nor any Paramount Subsidiary has made an election under
Section 341(f) of the Code. For purposes of this Section 3.12,
where a determination of whether a failure by Paramount or a
Paramount Subsidiary to comply with the representations herein
has a Paramount Material Adverse Effect is necessary, such
determination shall be made on an aggregate basis with all
other failures within this Section 3.12.
SECTION 3.13. Amendment to Rights Agreement. (a)
The Board of Directors of Paramount has taken all necessary
action to amend the Rights Agreement, dated as of September 7,
1988, as amended, between Paramount and Manufacturers Hanover
Trust Company, as Rights Agent (the "Rights Agreement"), so
that (i) none of the execution or delivery of this Agreement,
the exchange of the shares of Paramount Common Stock for the
shares of QVC Common Stock and QVC Merger Preferred Stock, War-
rants and cash in accordance with Article II, the Merger or the
making of the Offer will cause (A) the rights (the "Rights")
issued pursuant to the Rights Agreement to become exercisable
under the Rights Agreement, (B) QVC or any of the QVC Subsid-
iaries (as defined in Section 4.1) to be deemed an "Acquiring
Person" (as defined in the Rights Agreement), or (C) the "Stock
Acquisition Date" (as defined in the Rights Agreement) to occur
upon any such event and (ii) the "Expiration Date" (as defined
in the Rights Agreement) of the Rights shall occur immediately
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prior to the Effective Time. Paramount agrees to take all nec-
essary action to amend the Rights Agreement so that the consum-
mation of the Offer, on the terms permitted hereunder, will not
cause any of the effects referred to in Section 3.13(a)(i)(A),
(B) or (C) to occur; provided, however, that Paramount shall
not be required to make such amendments to the Rights Agreement
if (i) QVC has not performed or complied in all material re-
spects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to
the consummation of the Offer or (ii) Paramount obtains and
there is in force from the Delaware Court of Chancery an order
permanently, preliminarily or temporarily declaring that the
making of such amendments to the Rights Agreement would be con-
trary to the fiduciary duties of the Board of Directors of
Paramount. Notwithstanding anything else contained herein, in
no event shall the Board of Directors of Paramount make an
amendment of the Rights Agreement in favor of the Other Offeror
or any other person without making such amendments in favor of
QVC; provided that Paramount will not be obligated to make such
amendments for QVC if QVC has become obligated to terminate its
Offer pursuant to Section 2.5 of this Agreement.
(b) The "Distribution Date" (as defined in the
Rights Agreement) has not occurred.
SECTION 3.14. Opinion of Financial Advisor. Para-
mount has received the opinion of Lazard Freres & Co., to the
effect that the consideration to be received by the stockhold-
ers of Paramount pursuant to the Offer and the Merger, taken
together, is fair to such stockholders from a financial point
of view, a copy of which opinion will be delivered to QVC
promptly upon receipt.
SECTION 3.15. Vote Required. The affirmative vote
of the holders of a majority of the outstanding shares of Para-
mount Common Stock is the only vote of the holders of any class
or series of Paramount capital stock necessary to approve the
Merger.
SECTION 3.16. Brokers. No broker, finder or invest-
ment banker (other than Lazard Freres & Co.) is entitled to any
brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on
behalf of Paramount. Paramount has heretofore furnished to QVC
a complete and correct copy of all agreements between Paramount
and Lazard Freres & Co. pursuant to which such firm would be
entitled to any payment relating to the Transactions.
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SECTION 3.17. Purchases of Securities. Since Sep-
tember 12, 1993, neither Paramount nor its affiliates have pur-
chased or sold shares of QVC Common Stock, class A common stock
of Viacom, par value $0.01 ("Viacom Class A Common Stock"), or
class B common stock of Viacom, par value $0.01 ("Viacom Class
B Common Stock"), and neither Paramount nor its affiliates have
any knowledge of any such trading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF QVC
QVC hereby represents and warrants to Paramount that:
SECTION 4.1. Organization and Qualification; Subsid-
iaries. (a) Each of QVC and each Material QVC Subsidiary (as
defined below) is a corporation, partnership or other legal
entity duly 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 con-
ducted, except where the failure to be so organized, existing
or in good standing or to have such power, authority and gov-
ernmental approvals would not, individually or in the aggre-
gate, 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 do 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 QVC Material Adverse Effect. The term "QVC Material
Adverse Effect" means any change or effect that is or is rea-
sonably likely to be materially adverse to the business, re-
sults of operations or financial condition of QVC and the QVC
Subsidiaries, taken as a whole; provided, however, where such
term qualifies a representation or warranty contained in this
Article IV during the period beginning after the date hereof
and until the Effective Time, then such term shall mean any
change or effect that is or is reasonably likely to be materi-
ally adverse to the business or financial condition of QVC and
the QVC Subsidiaries, taken as a whole.
(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 SEC is referred to herein
as a "Material QVC Subsidiary".
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SECTION 4.2. Certificate of Incorporation and By-
Laws. QVC has heretofore made available to Paramount a com-
plete and correct copy of the Certificate of Incorporation and
the By-Laws or equivalent organizational documents, each as
amended to date, of QVC and each Material QVC Subsidiary. Such
Certificates of Incorporation, By-Laws and equivalent organiza-
tional 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, By-Laws or equivalent organi-
zational documents, except for such violations that would not,
individually or in the aggregate, have a QVC Material Adverse
Effect.
SECTION 4.3. 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 November
30, 1993, 39,861,417 shares of QVC Common Stock were issued and
outstanding, all of which were validly issued, fully paid and
nonassessable, 5,622,090 shares of QVC Common Stock were re-
served for issuance upon conversion of the QVC Preferred Stock,
7,882,925 shares of QVC Common Stock were reserved for issuance
upon the exercise of outstanding stock options granted pursuant
to QVC's 1986 Non-Qualified Stock Option Plan, 1986 Incentive
Stock Option Plan, 1987 Incentive Stock Option Plan, 1988 In-
centive Stock Option Plan, 1990 Non-Qualified Incentive Stock
Option Plan and 1992 Qualified Incentive Stock Option Plan and
certain other stock options not issued pursuant to stock option
plans and 2,010,000 shares of QVC Common Stock were reserved
for issuance upon exercise of all outstanding warrants of QVC.
As of December 10, 1993, 30,514 shares of QVC Series B Pre-
ferred Stock, 530,757 shares of QVC Series C Preferred Stock,
and 938 shares of QVC Series D Preferred Stock were issued and
outstanding. Except as set forth in this Agreement or in this
Section 4.3 or in Section 4.3 of the Disclosure Schedule previ-
ously delivered by QVC to Paramount (the "QVC Disclosure Sched-
ule"), there are no options, warrants or other rights, agree-
ments, arrangements or commitments of any character relating to
the issued or unissued capital stock of QVC or any Material QVC
Subsidiary or obligating QVC or any Material QVC Subsidiary to
issue or sell any shares of capital stock of, or other equity
interests in, QVC or any Material QVC Subsidiary, except for
(i) options granted since November 22, 1993 in the ordinary
course consistent with past practice and (ii) the Equity Com-
mitment Letter, dated November 11, 1993, between QVC and each
of Comcast, Advance and Cox, the BellSouth Commitment Letter,
dated November 19, 1993, by and between BellSouth and QVC, and
the other related agreements referred to therein or contem-
plated thereby, including without limitation, the QVC-Liberty
Agreement dated November 11, 1993, (collectively, the "Equity
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Investors Agreements"). All shares of QVC Common Stock subject
to issuance as aforesaid, upon issuance on the terms and condi-
tions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid
and nonassessable. Except as contemplated by this Agreement or
as set forth in Section 4.3 of the QVC Disclosure Schedule or
in the Equity Investors Agreements, there are no material out-
standing 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 Subsid-
iary, or make any material investment (in the form of a loan,
capital contribution or otherwise) in, any QVC Subsidiary or
any other person. Each outstanding share of capital stock of
each Material QVC Subsidiary is duly authorized, validly is-
sued, fully paid and nonassessable and each such share owned by
QVC or another QVC Subsidiary is 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. The shares of QVC Merger Preferred
Stock to be issued pursuant to the Merger will be duly and val-
idly authorized by QVC and, when issued and delivered pursuant
to the terms of this Agreement will be duly and validly issued,
fully paid and nonassessable, and free of preemptive rights.
If and when the Warrants are exercised for QVC Common Stock in
accordance with the terms of the Warrants, such shares of QVC
Common Stock issued upon such exercise will be duly authorized,
validly issued, fully paid and nonassessable, and the holders
of outstanding shares of capital stock of QVC are not entitled
to any preemptive or other rights with respect to the Warrants
or the QVC Common Stock issued upon such exercise. When QVC's
6% Junior Subordinated Debentures due 2014 (the "Debentures"),
initially issuable upon exchange of the QVC Merger Preferred
Stock for such Debentures, have been duly authorized, executed,
authenticated, issued and delivered in exchange for the QVC
Merger Preferred Stock in accordance with the terms of the QVC
Merger Preferred Stock and the Indenture pursuant to which they
are issued (the "Indenture") between QVC and the trustee there-
under (the "Trustee"), such Debentures will then constitute
valid and legal binding obligations of the Company entitled to
the benefits provided by the Indenture. By the date of issu-
ance of the QVC Merger Preferred Stock, the Indenture will have
been duly authorized by QVC, duly qualified under the Trust
Indenture Act of 1939, and, when duly executed and delivered by
QVC and the Trustee, will constitute a valid and binding in-
strument of QVC enforceable in accordance with its terms.
SECTION 4.4. Authority Relative to This Agreement.
QVC has all necessary power and authority to execute and de-
liver this Agreement, to perform its obligations hereunder and
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to consummate the transactions contemplated hereby. The execu-
tion and delivery of this Agreement by QVC and the consummation
by QVC of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action and
the Voting Agreement has been approved by the QVC Board of
Directors for purposes of Section 203 of Delaware Law and no
other corporate proceedings on the part of QVC are necessary to
authorize this Agreement or to consummate the transactions con-
templated hereby (other than, (i) with respect to the Merger
(including the issuance of the QVC Common Stock, the QVC Merger
Preferred Stock and the Warrants pursuant thereto), the approv-
al 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, of (x) this Agreement and the Merger and (y)
the amendment to QVC's Certificate of Incorporation necessary
to increase the shares of authorized QVC Common Stock to a num-
ber not less than the number sufficient to consummate the issu-
ance of shares of QVC Common Stock contemplated under this
Agreement (including such shares issuable pursuant to exercise
of the Warrants) and (z) in the event that the Merger is a Re-
verse Merger or a Forward Merger with a subsidiary of QVC, an
amendment to QVC's Certificate of Incorporation to change its
name to "Paramount QVC Inc." and (ii) with respect to the issu-
ance of voting stock to Comcast, Cox, Advance and BellSouth and
to shareholders of Paramount upon consummation of the Merger,
the approval by the holders of a majority of the QVC Common
Stock and QVC Preferred Stock, voting together as a single
class, voting at the QVC stockholder meeting (collectively, the
"QVC Vote Matter"; and the amendments to QVC's certificate of
incorporation described in clause (i) and this clause (ii)
being, collectively, the "QVC Certificate Amendments"), and the
filing and recordation of the foregoing amendment to QVC's cer-
tificate of incorporation and 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 Paramount, constitutes
legal, valid and binding obligations of QVC, enforceable
against QVC in accordance with its terms.
SECTION 4.5. No Conflict; Required Filings and Con-
sents. (a) The execution and delivery of this Agreement by
QVC does not, and the performance of the transactions contem-
plated hereby by QVC will not, (i) conflict with or violate the
Certificate of Incorporation or By-Laws or equivalent organiza-
tional 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 consti-
tute a default (or an event which with notice or lapse of time
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or both would become a default) under, result in the loss of a
material benefit under or give to others any right of termina-
tion, amendment, acceleration 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, per-
mit, 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 Subsid-
iary is bound or affected, except in the case of clauses (ii)
and (iii) of this Section 4.5, for any such conflicts, viola-
tions, 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 obliga-
tions under this Agreement in any material respect, and would
not, individually or in the aggregate, have a QVC Material Ad-
verse Effect.
(b) The execution and delivery of this Agreement by
QVC does not, and the performance of this Agreement by QVC 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 Ex-
change Act, Securities Act, state securities or Blue Sky Laws
and state takeover laws, (B) the pre-merger notification re-
quirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act"), (C) applicable requirements of the Communica-
tions Act, and of state and local governmental authorities,
including state and local authorities granting franchises to
operate cable systems, (D) applicable requirements of the In-
vestment Canada Act of 1985 and the Competition Act (Canada),
(E) filing and recordation of appropriate merger documents and
the QVC Certificate Amendments as required by Delaware Law and
(F) any non-United States competition, antitrust and investment
laws and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifica-
tions, 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 4.6. Compliance. 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 ap-
plicable 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,
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lease, license, permit, franchise or other instrument or obli-
gation 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.
SECTION 4.7. 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, 1991, and has here-
tofore made available to Paramount, 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, 1991, 1992,
and 1993, respectively, (ii) its Quarterly Reports on Form 10-Q
for the periods ended April 30, 1993, July 31, 1993 and Octo-
ber 31, 1993, (iii) all proxy statements relating to QVC's
meetings of stockholders (whether annual or special) held since
January 1, 1991 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 mate-
rials) filed by QVC with the SEC since January 31, 1991 (the
forms, reports and other documents referred to in clauses (i),
(ii), (iii), and (iv) above being referred to herein, collec-
tively, as the "QVC SEC Reports"). The QVC SEC Reports and any
other forms, reports and other documents filed by QVC with the
SEC after the date of this Agreement (x) were or will be pre-
pared 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 un-
true 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 circum-
stances under which they were made, not misleading. No QVC
Subsidiary is required to file any form, report or other docu-
ment 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 ex-
pected, individually or in the aggregate, to be material in
amount).
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(c) Except as and to the extent set forth in the QVC
SEC Reports filed with the SEC prior to the date of this Agree-
ment, 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 Mate-
rial Adverse Effect.
SECTION 4.8. Absence of Certain Changes or Events.
Since January 31, 1993, except as contemplated by this Agree-
ment, as set forth in Section 4.8 of the QVC Disclosure Sched-
ule or disclosed in any QVC SEC Report filed since January 31,
1993 and prior to the date of this Agreement, QVC and the QVC
Subsidiaries have conducted their businesses only in the ordi-
nary course and in a manner consistent with past practice and,
since January 31, 1993 there has not been (i) as of the date
hereof, any change, occurrence or circumstance in the business,
results of operations or financial condition of QVC or any QVC
Subsidiary having, individually or in the aggregate, a QVC
Material Adverse Effect, (ii) any damage, destruction or loss
(whether or not covered by insurance) with respect to any prop-
erty or asset of QVC or any QVC Subsidiary and having, individ-
ually or in the aggregate, a QVC Material Adverse Effect, (iii)
any change by QVC in its accounting methods, principles or
practices, (iv) any declaration, setting aside or payment of
any dividend or distribution in respect of any capital stock of
QVC or any QVC Subsidiary or any redemption, purchase or other
acquisition of any of their respective securities other than
dividends by a QVC Subsidiary to QVC or (v) other than as set
forth in Section 4.3 and pursuant to the plans, programs or
arrangements referred to in Section 4.10 other than in the
ordinary course of business consistent with past practice, any
increase in or establishment of any bonus, insurance, sever-
ance, deferred compensation, pension, retirement, profit shar-
ing, stock option (including, without limitation, the granting
of stock options, stock appreciation rights, performance
awards, or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in the compensa-
tion payable or to become payable to any officers or key em-
ployees of QVC or any QVC Subsidiary.
SECTION 4.9. Absence of Litigation. Except as dis-
closed in Section 4.9 of the QVC Disclosure Schedule or in the
QVC SEC Reports filed with the SEC prior to the date of this
Agreement, there is no claim, action, proceeding or investiga-
tion pending or, to the best knowledge of QVC, threatened
against QVC or any QVC Subsidiary, or any property or asset of
QVC or any QVC Subsidiary, before any court, arbitrator or
administrative, governmental or regulatory authority or body,
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domestic or foreign, which individually or in the aggregate, is
reasonably likely to have a QVC Material Adverse Effect. Ex-
cept as disclosed in the QVC SEC Reports filed with the SEC
prior to the date of this Agreement, neither QVC nor any QVC
Subsidiary nor any property or asset of QVC or any QVC Subsid-
iary is subject to any order, writ, judgment, injunction,
decree, determination or award having or reasonably likely to
have, individually or in the aggregate, a QVC Material Adverse
Effect.
SECTION 4.10. Employee Benefit Plans. With respect
to all the employee benefit plans, programs and arrangements
maintained for the benefit of any current or former employee,
officer or director of QVC or any QVC Subsidiary (the "QVC
Plans"), except as set forth in the QVC SEC Reports and except
as would not, individually or in the aggregate, have a QVC
Material Adverse Effect: (i) none of the QVC Plans is a multi-
employer plan within the meaning of 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 IRS that it is so qual-
ified and nothing has occurred since the date of such letter
that could reasonably be expected to affect the qualified
status of such QVC Plan; (iv) each QVC Plan has been operated
in all respects in accordance with its terms and the require-
ments 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; and (vi) QVC and the QVC Subsidiaries have not in-
curred any liability under, and have complied in all respects
with, the Worker Adjustment Retraining Notification Act, and no
fact or event exists that could give rise to liability under
such act. Except as set forth in the QVC SEC Reports, the ag-
gregate accumulated benefit obligations of each QVC Plan sub-
ject 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). Neither the Merger nor any action
related thereto (including, but not limited to, stockholder
approval of the Merger) will have the effect of providing addi-
tional benefits, rights or payments to any person under any QVC
Plan or any employment contract with any QVC employee.
SECTION 4.11. Trademarks, Patents and Copyrights.
QVC and the QVC Subsidiaries own or possess adequate licenses
or other valid rights to use all material patents, patent
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rights, trademarks, trademark rights, trade names, trade name
rights, copyrights, service marks, trade secrets, applications
for trademarks and for service marks, know-how and other pro-
prietary rights and information used or held for use in connec-
tion with the business of QVC and the QVC Subsidiaries as cur-
rently conducted or as contemplated to be conducted, and QVC is
unaware of any assertion or claim challenging the validity of
any of the foregoing which, individually or in the aggregate,
would have a QVC Material Adverse Effect. The conduct of the
business of QVC and the QVC Subsidiaries as currently conducted
does not conflict in any way with any patent, patent right,
license, trademark, trademark right, trade name, trade name
right, service mark or copyright of any third party that, indi-
vidually or in the aggregate, would have a QVC Material Adverse
Effect.
SECTION 4.12. Taxes. Except as set forth in Section
4.12 of the QVC Disclosure Schedule, QVC and the QVC Subsidiar-
ies have timely filed all federal, state, local and foreign tax
returns and reports required to be filed by them through the
date hereof and shall timely file all returns and reports re-
quired on or before the Effective Time, except for such returns
and reports the failure of which to file timely would not, in-
dividually or in the aggregate, have a QVC Material Adverse
Effect. Such reports and returns are and will be true, correct
and complete, except for such failures to be true, correct and
complete as would not, individually or in the aggregate, have a
QVC Material Adverse Effect. Except as set forth in Section
4.12 of the QVC Disclosure Schedule, QVC and the QVC Subsidiar-
ies have paid and discharged all federal, state, local and for-
eign taxes due from them, other than such taxes that are being
contested in good faith by appropriate proceedings and are
adequately reserved as shown in the audited consolidated bal-
ance sheet of QVC dated January 31, 1993 (the "QVC 1993 Balance
Sheet") and its most recent quarterly financial statements,
except for such failures to so pay and discharge which would
not, individually or in the aggregate, have a QVC Material Ad-
verse Effect. Neither the IRS nor any other taxing authority
or agency, domestic or foreign, is now asserting or, to the
best knowledge of QVC, threatening to assert against QVC or any
QVC Subsidiary any deficiency or material claim for additional
taxes or interest thereon or penalties in connection therewith
which, if such deficiencies or claims were finally resolved
against QVC and the QVC Subsidiaries would, individually or in
the aggregate, have a QVC Material Adverse Effect. The accru-
als and reserves for taxes (including interest and penalties,
if any, thereon) reflected in the QVC 1993 Balance Sheet and
the most recent quarterly financial statements are adequate in
accordance with generally accepted accounting principles, ex-
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cept where the failure to be adequate would not have a QVC Ma-
terial Adverse Effect. QVC and the QVC Subsidiaries have with-
held or collected and paid over to the appropriate governmental
authorities or are properly holding for such payment all taxes
required by law to be withheld or collected, except for such
failures to have so withheld or collected and paid over or to
be so holding for payment which would not, individually or in
the aggregate, have a QVC Material Adverse Effect. There are
no material liens for taxes upon the assets of QVC or the QVC
Subsidiaries, other than liens for current taxes not yet due
and payable and liens for taxes that are being contested in
good faith by appropriate proceedings. Neither QVC nor any QVC
Subsidiary has agreed to or is required to make any adjustment
under Section 481(a) of the Code. Neither QVC nor any QVC Sub-
sidiary has made an election under Section 341(f) of the Code.
For purposes of this Section 4.12, where a determination of
whether a failure by QVC or a QVC Subsidiary to comply with the
representations herein has a QVC Material Adverse Effect is
necessary, such determination shall be made on an aggregate
basis with all other failures within this Section 4.12.
SECTION 4.13. Opinion of Financial Advisor. QVC has
received the opinion of Allen & Company Incorporated to the
effect that the financial terms of the proposed acquisition by
QVC of Paramount are fair from a financial point of view to QVC
and its stockholders. A copy of such opinion will be delivered
to Paramount promptly.
SECTION 4.14. Vote Required. The affirmative vote
of the holders of (a) a majority of the outstanding shares of
QVC Common Stock and QVC Preferred Stock entitled to vote
thereon, voting together as a single class, is the only vote of
the holders of any class or series of QVC capital stock neces-
sary to approve clause (i) of the QVC Vote Matter and (b) a
majority of the voting shares of QVC Common Stock and QVC Pre-
ferred Stock entitled to vote thereon, voting together as a
single class, is the only vote of the holders of any class or
series of QVC capital stock necessary to approve clause (ii) of
the QVC Vote Matter.
SECTION 4.15. Ownership of Paramount Common Stock.
As of the date of this Agreement and based on the number of
issued and outstanding shares of Paramount Common Stock as of
September 3, 1993 set forth in Section 3.3, QVC and its affili-
ates beneficially own, in the aggregate, less than five percent
of the issued and outstanding shares of Paramount Common Stock.
SECTION 4.16. Brokers. No broker, finder or invest-
ment banker (other than Allen & Company Incorporated) is en-
titled to any brokerage, finder's or other fee or commission in
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connection with the Transactions based upon arrangements made
by or on behalf of QVC. QVC will make available to Paramount a
complete and correct copy of all agreements between QVC and
Allen & Company Incorporated pursuant to which such firm would
be entitled to any payment relating to the Transactions.
SECTION 4.17. Financing. QVC has delivered to Para-
mount binding commitments or agreements to obtain the financing
in contemplation of the Transactions (the "Financing") in an
amount sufficient, together with the QVC Common Stock and the
QVC Merger Preferred Stock, to acquire all the shares of Para-
mount Common Stock in the Offer and the Merger and to pay all
related contemplated fees and expenses. QVC knows of no fact
or circumstance (including the obligations of QVC under this
Agreement) that is reasonably likely to result in the inability
of QVC to receive the proceeds from such Financing.
SECTION 4.18. Purchases of Securities. Except as
contemplated by the Equity Investors Agreements, since Septem-
ber 12, 1993, neither QVC nor, to QVC's knowledge, its affili-
ates have purchased or sold shares of QVC Common Stock, Viacom
Class A Common Stock or Viacom Class B Common Stock and neither
QVC nor its affiliates have any knowledge of any such trading.
ARTICLE V
CONDUCT OF BUSINESSES PENDING THE MERGER
SECTION 5.1. Conduct of Respective Businesses by
Paramount and QVC Pending the Merger. Each of Paramount and
QVC covenants and agrees that, between the date of this Agree-
ment and the Effective Time, unless the other party shall have
consented in writing (such consent not to be unreasonably with-
held), the businesses of each of Paramount and QVC and their
respective subsidiaries shall, in all material respects, be
conducted in, and each of Paramount and QVC and their respec-
tive subsidiaries shall not take any material action except in,
the ordinary course of business, consistent with past practice;
and each of Paramount and QVC shall use its reasonable best
efforts to preserve substantially intact its business organiza-
tion, to keep available the services of its and its subsidiar-
ies' current officers, employees and consultants and to pre-
serve its and its subsidiaries' relationships with customers,
suppliers and other persons with which it or any of its subsid-
iaries has significant business relations. By way of amplifi-
cation and not limitation, except as contemplated by this
Agreement (including, without limitation, the making of the
Offer and Section 6.15) or as set forth on Section 5.1 of the
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Paramount Disclosure Schedule or Section 5.1 of the QVC Disclo-
sure Schedule or pursuant to the terms of the Equity Investors
Agreements, neither QVC nor Paramount nor any of their respec-
tive subsidiaries shall, between the date of this Agreement and
the Effective Time, directly or indirectly do, or propose or
agree to do, any of the following without the prior written
consent of the other (provided, that the following restrictions
shall not apply to any subsidiaries which Paramount or QVC, as
the case may be, do not control):
(a) amend or otherwise change the Certificate of
Incorporation or By-Laws of QVC or Paramount (except, with
respect to QVC, the QVC Certificate Amendments and the
Certificate of Designations to be filed with the Secretary
of State of the State of Delaware in respect of the QVC
Preferred Stock to be issued in connection with the Equity
Investors Agreement and in respect of the QVC Merger Pre-
ferred Stock to be issued in connection with this Agree-
ment);
(b) issue, sell, pledge, dispose of, grant, encum-
ber, or authorize the issuance, sale, pledge, disposition,
grant or encumbrance of, (i) any shares of capital stock
of any class of it or any of its subsidiaries, or any op-
tions (other than the grant of options in the ordinary
course of business consistent with past practice to em-
ployees who are not executive officers of Paramount or
QVC), warrants, convertible securities or other rights of
any kind to acquire any shares of such capital stock, or
any other ownership interest (including, without limita-
tion, any phantom interest), of it or any of its subsid-
iaries (other than the issuance of shares of capital stock
(i) with respect to QVC, in connection with employment or
consulting arrangements or in exchange for carriage or
(ii) in connection with any dividend reinvestment plan or
by any Paramount Plan with an employee stock fund or em-
ployee stock ownership plan feature, consistent with ap-
plicable securities laws or the exercise of options, war-
rants or other similar rights, or conversion of convert-
ible preferred stock, outstanding as of the date of this
Agreement and in accordance with the terms of such op-
tions, warrants or rights in effect on the date of this
Agreement or otherwise permitted to be granted pursuant to
this Agreement) or (ii) any assets of it or any of its
subsidiaries, except for sales in the ordinary course of
business or which, individually do not exceed $10,000,000
or which, in the aggregate, do not exceed $25,000,000;
(c) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or
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otherwise, with respect to any of its capital stock ex-
cept, (i) in the case of QVC, with respect to the QVC Pre-
ferred Stock in accordance with its terms and in the case
of Paramount, regular quarterly dividends in amounts not
in excess of $.20 per quarter and payable consistent with
past practice; provided that, prior to the declaration of
any such dividend, Paramount shall consult with QVC as to
the timing and advisability of declaring any such dividend
and (ii) dividends declared and paid by a subsidiary of
either Paramount or QVC, each such dividend to be declared
and paid in the ordinary course of business consistent
with past practice;
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any
of its capital stock other than (i) with respect to QVC,
repurchase of certain shares with respect to existing re-
purchase rights or obligations and (ii) acquisitions by a
dividend reinvestment plan or by any Paramount Plan with
an employee stock fund or employee stock ownership plan
feature, consistent with applicable securities laws;
(e) (i) acquire (including, without limitation, by
merger, consolidation, or acquisition of stock or assets)
any corporation, partnership, other business organization
or any division thereof or any assets, except for such
acquisitions which, individually do not exceed $10,000,000
or which, in the aggregate, do not exceed $25,000,000;
(ii) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the
obligations of any person, or make any loans or advances,
except (A) for any such indebtedness incurred by QVC in
connection with the Merger or the Offer, (B) the refinanc-
ing of existing indebtedness, (C) borrowings under commer-
cial paper programs in the ordinary course of business,
(D) borrowings under existing bank lines of credit in the
ordinary course of business, or (E) which, in the aggre-
gate, do not exceed $25,000,000; or (iii) enter into or
amend any contract, agreement, commitment or arrangement
with respect to any matter set forth in this Section
5.1(e);
(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 agree-
ment with any director or executive officer of it or any
of its subsidiaries, or establish, adopt, enter into or
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amend in any material respect or take action to accelerate
any rights or benefits under any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensa-
tion, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the ben-
efit of any director, executive officer or employee; or
(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.
ARTICLE VI
ADDITIONAL COVENANTS
SECTION 6.1. Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time, each of Para-
mount and QVC shall (and shall cause its subsidiaries and of-
ficers, directors, employees, auditors and agents to) afford
the officers, employees and agents of the other party (the
"Respective Representatives") reasonable access at all reason-
able times to its officers, employees, agents, properties,
offices, plants and other facilities, books and records, and
shall furnish such Respective Representatives with all finan-
cial, operating and other data and information as may be rea-
sonably requested.
(b) All information obtained by Paramount or QVC
pursuant to this Section 6.1 shall be kept confidential in
accordance with the confidentiality agreements (the "Confiden-
tiality Agreements"), between Paramount and QVC.
(c) No investigation pursuant to this Section 6.1
shall affect any representation or warranty in this Agreement
of any party hereto or any condition to the obligations of the
parties hereto.
SECTION 6.2. Directors' and Officers' Indemnifica-
tion and Insurance. (a) The Certificate of Incorporation and
By-Laws of the Surviving Corporation shall contain the provi-
sions with respect to indemnification set forth in the Certifi-
cate of Incorporation and By-Laws of QVC on the date of this
Agreement, which provisions shall not be amended, repealed or
otherwise modified for a period of six years after the Effec-
tive Time in any manner that would adversely affect the rights
thereunder of individuals who at any time prior to the Effec-
tive Time were directors or officers of Paramount in respect of
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actions or omissions occurring at or prior to the Effective
Time (including, without limitation, the transactions contem-
plated by this Agreement), unless such modification is required
by law.
(b) From and after the Effective Time, the Surviving
Corporation shall indemnify, defend and hold harmless the pres-
ent and former officers and directors of Paramount (collective-
ly, the "Indemnified Parties") against all losses, expenses,
claims, damages, liabilities or amounts that are paid in set-
tlement of, with the approval of the Surviving Corporation
(which approval shall not unreasonably be withheld), or other-
wise 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 Para-
mount 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
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 the undertaking to repay
such advances contemplated by Section 145(e) of Delaware Law).
(c) Without limiting the foregoing, in the event any
Claim is brought against any Indemnified Party (whether arising
before or after the Effective Time) after the Effective Time
(i) the Indemnified Parties may retain Paramount's regularly
engaged independent legal counsel or other independent legal
counsel satisfactory to them, provided that such other counsel
shall be reasonably acceptable to the Surviving Corporation,
(ii) the Surviving Corporation shall pay all reasonable fees
and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received and (iii) the Sur-
viving Corporation will use its reasonable best efforts to
assist in the vigorous defense of any such matter, provided
that the Surviving Corporation shall not be liable for any set-
tlement of any Claim effected without its written consent,
which consent shall not be unreasonably withheld. Any Indemni-
fied Party wishing to claim indemnification under this Section
6.2 upon learning of any such Claim, shall notify the Surviving
Corporation (although the failure so to notify the Surviving
Corporation shall not relieve the Surviving Corporation from
any liability which the Surviving Corporation may have under
this Section 6.2, except to the extent such failure prejudices
the Surviving Corporation), and shall deliver to the Surviving
Corporation the undertaking contemplated by Section 145(e) of
Delaware Law. The Indemnified Parties as a group may retain no
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more than one law firm (in addition to local counsel) to repre-
sent them with respect to each such matter unless there is,
under applicable standards of professional conduct (as deter-
mined by counsel to the Indemnified Parties), a conflict on any
significant issue between the positions of any two or more In-
demnified Parties, in which event such additional counsel as
may be required may be retained by the Indemnified Parties.
(d) 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' liabil-
ity insurance maintained by Paramount (provided that the Sur-
viving Corporation may substitute therefor policies of at least
the same coverage and amounts containing terms and conditions
which are no less advantageous) with respect to claims arising
from facts or events which occurred before the Effective Time;
provided, however, that in no event shall the Surviving Corpo-
ration be required to expend pursuant to this Section 6.2(d)
more than an amount equal to 200% of current annual premiums
paid by Paramount for such insurance (which premiums Paramount
represents and warrants to be $850,000 in the aggregate).
(e) This Section 6.2 is intended to be for the bene-
fit 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 6.3. Notification of Certain Matters. Para-
mount shall give prompt notice to QVC, and QVC shall give
prompt notice to Paramount, of (i) the occurrence, or non-
occurrence, of any event the occurrence, or non-occurrence, of
which would be likely to cause (x) any representation or war-
ranty contained in this Agreement to be untrue or inaccurate or
(y) any covenant, condition or agreement contained in this
Agreement not to be complied with or satisfied and (ii) any
failure of Paramount or QVC, 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 6.3 shall not
limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
SECTION 6.4. Tax Treatment. Each of Paramount and
QVC will use its reasonable best efforts to cause the Forward
Merger to qualify as a reorganization under the provisions of
Section 368(a) of the Code and to deliver, in connection with
the legal opinion referred to in Section 1.1, letters of repre-
sentation reasonable under the circumstances as to their pres-
ent intentions and present knowledge.
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SECTION 6.5. Registration Statement; Joint Proxy
Statement; Offer Documents and Schedule 14D-9. (a) As prompt-
ly as practicable after the execution of this Agreement, QVC
and Paramount shall prepare and file with the SEC a joint proxy
statement relating to the meetings of Paramount's stockholders
and holders of QVC Common Stock and QVC Preferred Stock to be
held in connection with the Merger (together with any amend-
ments thereof or supplements thereto, the "Proxy Statement")
and, as promptly as practicable following consummation of the
offer (or expiration or termination of the Offer without any
purchase of shares thereunder), QVC shall prepare and file with
the SEC a registration statement on Form S-4 (together with any
amendments thereto, the "Registration Statement") in which the
Proxy Statement shall be included as a prospectus, in connec-
tion with the registration under the Securities Act of the
shares of QVC Common Stock, QVC Merger Preferred Stock and War-
rants to be issued to the stockholders of Paramount pursuant to
the Merger, the QVC Common Stock issuable upon exercise of the
Warrants and the Debentures for which such QVC Merger Preferred
Stock is exchangeable. Each of Paramount and QVC shall use all
reasonable efforts to have or cause the Registration Statement
to become effective as promptly as practicable, and shall take
all or any action required under any applicable federal or
state securities laws in connection with the issuance of shares
of QVC Common Stock and QVC Merger Preferred Stock and Warrants
pursuant to the Merger. Paramount shall furnish all informa-
tion concerning Paramount as QVC may reasonably request in con-
nection with such actions and the preparation of the Registra-
tion Statement and Proxy Statement. As promptly as practicable
after the Registration Statement shall have become effective,
each of QVC and Paramount shall mail the Proxy Statement to its
respective stockholders; provided that no such mailing shall be
required while the Offer remains outstanding. The Proxy State-
ment shall include the recommendation of the Board of Directors
of each of QVC and Paramount in favor of the Merger, unless
otherwise necessary due to the applicable fiduciary duties of
the respective directors of QVC and Paramount, as determined by
such directors in good faith after consultation with and based
upon the advice of independent legal counsel (who may be such
party's regularly engaged independent legal counsel).
(b) The information supplied by QVC for inclusion in
the Registration Statement and the Proxy Statement shall not,
at (i) the time the Registration Statement is declared effec-
tive, (ii) the time the Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed to the stock-
holders of QVC and Paramount, (iii) the time of each of the
Stockholders' Meetings (as defined in Section 6.6), and (iv)
the Effective Time, contain any untrue statement of a material
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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 QVC or any of the QVC Subsid-
iaries, or their respective officers or directors, should be
discovered by QVC which should be set forth in an amendment or
a supplement to the Registration Statement or Proxy Statement,
QVC shall promptly inform Paramount.
(c) The information supplied by Paramount for inclu-
sion in the Registration Statement and the Proxy Statement
shall not, at (i) the time the Registration Statement is de-
clared effective, (ii) the time the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to the
stockholders of Paramount and QVC, (iii) the time of each of
the Stockholders' Meetings, and (iv) the Effective Time, con-
tain 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 re-
lating to Paramount or any of the Paramount Subsidiaries, or
their respective officers or directors, should be discovered by
Paramount which should be set forth in an amendment or a sup-
plement to the Registration Statement or Proxy Statement, Para-
mount shall promptly inform QVC.
(d) QVC represents and warrants to Paramount that
the Offer Documents will not, at the time the Offer Documents
are filed with the SEC or are first published, sent or given to
stockholders of Paramount, as the case may be, contain any un-
true 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 made therein, in the light of the circum-
stances under which they are made, not misleading. The Offer
Documents shall comply in all material respects as to form with
the requirements of the Exchange Act and the rules and regula-
tions thereunder.
(e) Paramount represents and warrants to QVC that
neither the Schedule 14D-9 nor any information supplied by
Paramount for inclusion in the Offer Documents shall, at the
respective times the Schedule 14D-9, the Offer Documents or any
amendments or supplements thereto are filed with the SEC or are
first published, sent or given to stockholders of Paramount, as
the case may be, 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 made
therein, in the light of the circumstances under which they are
made, not misleading. The Schedule 14D-9 shall comply in all
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material respects as to form with the requirements of the Ex-
change Act and the rules and regulations thereunder.
SECTION 6.6. Stockholders' Meetings. Paramount
shall call and hold a meeting of its stockholders and QVC shall
call and hold a meeting of the holders of the QVC Common Stock
and QVC Preferred Stock (collectively, the "Stockholders' Meet-
ings") as promptly as practicable for the purpose of voting
upon the approval, in the case of Paramount, of the Merger and,
in the case of QVC, of the QVC Vote Matter, and QVC and Para-
mount shall use their reasonable best efforts to hold the
Stockholders' Meetings on the same day and as soon as practica-
ble after the date on which the Registration Statement becomes
effective; provided that neither Paramount nor QVC shall be
required to call or hold a stockholders meeting while the Offer
remains outstanding. Paramount shall use its reasonable best
efforts to solicit from its stockholders proxies in favor of
the approval of the Merger, and QVC shall use its reasonable
best efforts to solicit from its stockholders proxies in favor
of the QVC Vote Matter and each of Paramount and QVC shall take
all other action necessary or advisable to secure the vote or
consent of stockholders required by Delaware Law to obtain such
approvals, unless otherwise necessary under the applicable
fiduciary duties of the respective directors of Paramount and
QVC, as determined by such directors in good faith after con-
sultation with and based upon the advice of independent legal
counsel (who may be such party's regularly engaged independent
legal counsel).
SECTION 6.7. Letters of Accountants. (a) Paramount
shall use its reasonable best efforts to cause to be delivered
to QVC "comfort" letters of Ernst & Young, Paramount's indepen-
dent public accountants, dated and delivered the date on which
the Registration Statement shall become effective and as of the
Effective Time, and addressed to QVC, in form and substance
reasonably satisfactory to QVC and reasonably customary in
scope and substance for letters delivered by independent public
accountants in connection with transactions such as those con-
templated by this Agreement.
(b) QVC shall use its reasonable best efforts to
cause to be delivered to Paramount "comfort" letters of KPMG
Peat Marwick, QVC's independent public accountants, dated the
date on which the Registration Statement shall become effective
and as of the Effective Time, and addressed to Paramount, in
form and substance reasonably satisfactory to Paramount and
reasonably customary in scope and substance for letters deliv-
ered by independent public accountants in connection with
transactions such as those contemplated by this Agreement.
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SECTION 6.8. Employee Benefits. The "Continuing
Directors" (as such term is defined in certain Paramount Plans,
including, without limitation, Paramount's Corporate Annual
Performance Plan, Corporate Long-Term Performance Plan, Supple-
mental Executive Retirement Plan, Non-Qualified Retirement
Plan, Retirement Plan for Non-Employee Directors, Deferred Com-
pensation Plan for Directors and employment agreements with
Messrs. Doppelt, Greenberg, Hertlein, Levinson, Meyers and
Sherman) prior to the Effective Time shall approve the transac-
tions contemplated by this Agreement, and prior to the Effec-
tive Time Paramount and its officers and directors shall take
such other actions, or shall forbear from taking any action, as
may be necessary to insure that such transactions shall not
constitute a "Change in Control" (or other similar event accel-
erating or triggering changes to benefits or the terms of any
Paramount Plan (a "Paramount Triggering Event")) for purposes
of any Paramount Plan under which a Change in Control (or other
Paramount Triggering Event) may be avoided by action or inac-
tion, as the case may be, by Paramount or any of its officers
or directors. Paramount shall not terminate either Paramount's
Corporate Annual Performance Plan or Paramount's Long-Term Per-
formance Plan prior to the Effective Time, and shall (a) delay
the establishment and announcement of targets for awards under
Paramount's Corporate Annual Performance Plan with respect to
Paramount's 1994 fiscal year until after the Effective Time,
and (b) delay the implementation of a new performance cycle
under Paramount's Corporate Long-Term Performance Plan, in each
case, until Paramount and QVC shall review the terms of such
Plans after the Effective Time and make such changes as they
deem appropriate taking into consideration the effects of the
Merger. QVC shall take or forbear from taking such action as
may be necessary to insure that the transactions contemplated
by this Agreement shall not constitute a change in ownership or
control (or other similar event accelerating or triggering
changes to benefits or the terms of any QVC Plan (a "QVC Trig-
gering Event")) for purposes of any QVC Plan under which any
such change in ownership or control (or other QVC Triggering
Event) may be avoided by action or inaction, as the case may
be, by QVC or any of its officers or directors.
SECTION 6.9. Further Action; Reasonable Best
Efforts. (a) Upon the terms and subject to the conditions
hereof, each of the parties hereto shall (i) make promptly any
filings with or applications to the Federal Communications Com-
mission (the "FCC") with respect to the Transactions and (ii)
use its reasonable 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 to consummate and make effective the Transactions
and for BellSouth to consummate its proposed equity investment
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in QVC as described in the Offer Documents in a manner consis-
tent with the Modification of Final Judgment, including, with-
out limitation, using its reasonable best efforts to obtain all
licenses, permits, consents, approvals, authorizations, quali-
fications and orders of Governmental Entities and parties to
contracts with QVC and Paramount and their respective subsid-
iaries as are necessary for the consummation of the Transac-
tions and for BellSouth to consummate its proposed equity
investment in QVC as described in the Offer Documents in a man-
ner consistent with the Modification of Final Judgment. In
case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agree-
ment, the proper officers and directors of each party to this
Agreement shall use their reasonable best efforts to take all
such action.
(b) Each party shall use its best efforts to not
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 cove-
nant made by it in this Agreement.
SECTION 6.10. Debt Instruments. Prior to or at the
Effective Time, Paramount and each Paramount Subsidiary shall
use its reasonable best efforts to prevent the occurrence, as a
result of the Merger, the Offer and the other transactions con-
templated by this Agreement, of a change in control or any
event which constitutes a default (or an event which with
notice or lapse of time or both would become a default) under
any debt instrument of Paramount or any Paramount Subsidiary,
including, without limitation, debt securities registered under
the Securities Act.
SECTION 6.11. Public Announcements. QVC and Para-
mount 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 party, which shall not be unrea-
sonably withheld; provided, however, that a party may, without
the prior consent of the other party, issue such press release
or make such public statement as may be required by law or any
listing agreement with a national securities exchange to which
QVC or Paramount is a party if it has used all reasonable ef-
forts to consult with the other party and to obtain such par-
ty's consent but has been unable to do so in a timely manner.
SECTION 6.12. Listing of QVC Shares. QVC shall use
its reasonable best efforts to cause the shares of QVC Common
Stock and QVC Merger Preferred Stock to be issued in the Merger
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to be approved for inclusion on the NASDAQ prior to the Effec-
tive Time.
SECTION 6.13. Affiliates of Paramount. Paramount
represents and warrants to QVC that Paramount will promptly
deliver to QVC a letter identifying all persons who may be
deemed affiliates of Paramount under Rule 145 of the Securities
Act, including, without limitation, all directors and executive
officers of Paramount, and Paramount represents and warrants to
QVC that Paramount has advised the persons identified in such
letter of the resale restrictions imposed by applicable securi-
ties laws. Paramount shall use its reasonable best efforts to
obtain from each person identified in such letter a written
agreement, substantially in the form of Exhibit 6.13. Para-
mount shall use its reasonable best efforts to obtain as soon
as practicable from any person who may be deemed to have become
an affiliate of Paramount after Paramount's delivery of the
letter referred to above and prior to the Effective Time, a
written agreement substantially in the form of Exhibit 6.13.
SECTION 6.14. Conveyance Taxes. QVC and Paramount
shall cooperate in the preparation, execution and filing of all
returns, questionnaires, applications, or other documents re-
garding any real property transfer or gains, sales, use, trans-
fer, 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 con-
templated hereby that are required or permitted to be filed on
or before the Effective Time.
SECTION 6.15. Rights Agreement. Except as contem-
plated by this Agreement, the Board of Directors of Paramount
shall not amend or modify the Rights Agreement or redeem the
Rights prior to the Effective Time except pursuant to the Other
Exemption Agreement.
SECTION 6.16. Assumption of Debt and Leases. With
respect to debt issued by Paramount under indentures qualified
under the Trust Indenture Act of 1939 ("Paramount Indentures"),
QVC shall execute and deliver to the trustees under the respec-
tive Paramount Indentures, Supplemental Indentures, in form
satisfactory to the respective trustees, expressly assuming the
obligations of Paramount with respect to the due and punctual
payment of the principal of (and premium, if any) and interest,
if any, on all debt securities issued by Paramount under the
respective Indentures and the due and punctual performance of
all the terms, covenants and conditions of the respective Para-
mount Indentures to be kept or performed by Paramount and shall
deliver such Supplemental Indentures to the respective trustees
under the Paramount Indentures. QVC shall similarly deliver
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instruments of assumption to the holders of any debt obliga-
tions of, and the lessors of any real property to, Paramount,
which debt obligations or leases expressly require such assump-
tion in order for the Merger to comply with the debt instrument
or lease.
SECTION 6.17. Gains Tax. Except as provided in Sec-
tion 1.7(b), QVC 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
Paramount. QVC and Paramount shall cooperate in the prepara-
tion, execution and filing of any required returns with respect
to such taxes (including returns on behalf of the stockholders
of Paramount) and in the determination of the portion of the
consideration allocable to the real property of Paramount and
the Paramount Subsidiaries in New York State and City (or in
any other jurisdiction, if applicable). The terms of the Offer
to Purchase and of the Proxy Statement shall provide that the
stockholders of Paramount shall be deemed to have agreed to be
bound by the allocation established pursuant to this Section
6.17 in the preparation of any return with respect to the Gains
Tax and the Transfer Taxes and any similar taxes, if applica-
ble.
SECTION 6.18. Reverse Merger. In the event that a
decision is made to structure the Merger as a Reverse Merger or
a Forward Merger with a subsidiary of QVC pursuant to Section
1.1, QVC agrees to form a Merger Subsidiary as promptly as
practicable following such decision and to cause a merger
agreement conforming to Section 251 of the Delaware Law and
effecting the terms hereof to be adopted by such Merger Subsid-
iary. Paramount agrees in such case to enter into such merger
agreement.
SECTION 6.19. Post-Offer Agreements. In the event
that the offer is consummated and subject to any applicable
requirements of the FCC: (a) the affirmative vote of a major-
ity of the directors of Paramount who are directors on the date
hereof and continue as directors on the date of the actions
described below will be required to amend, modify or waive any
provisions of this Agreement, or to approve any other action by
Paramount with respect to the transactions contemplated hereby
which adversely affect the interests of the stockholders of
Paramount; (b) QVC shall not directly or indirectly cause Para-
mount to breach its obligations hereunder; and (c) at the Para-
mount Stockholders' Meeting, QVC shall cause all shares of
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Paramount Common Stock then owned by it or its subsidiaries to
be voted in favor of the approval and adoption of this Agree-
ment and the transactions contemplated hereby.
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.1. Conditions to Obligations of Each Party
to Effect the Merger. The respective obligations of each party
to effect the Merger and the other transactions contemplated
herein 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) Effectiveness of the Registration Statement.
The Registration Statement shall have been declared effec-
tive by the SEC under the Securities Act. No stop order
suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for
that purpose shall have been initiated or, to the knowl-
edge of QVC or Paramount, threatened by the SEC.
(b) Stockholder Approval. This Agreement and the
Merger shall have been approved and adopted by the requi-
site vote of the stockholders of Paramount and the QVC
Vote Matter shall have been approved and adopted by the
requisite vote of the stockholders of QVC.
(c) 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, pre-
vents or prohibits consummation of the Merger or any
transaction contemplated by this Agreement; provided, how-
ever, that the parties shall use their reasonable best
efforts to cause any such decree, judgment, injunction or
other order to be vacated or lifted.
(d) NASDAQ Listing. The shares of QVC Common Stock
and QVC Merger Preferred Stock issuable to stockholders of
Paramount in accordance with Article II shall have been
included for listing on the NASDAQ upon official notice of
issuance.
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(e) FCC Approvals. All authorizations, consents,
waivers, orders or approvals required to be obtained, and
all filings, notices of declarations required to be made,
by QVC and Paramount prior to the consummation of the
Merger shall have been obtained from, and made with, the
FCC 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 Paramount and the Paramount Subsidiaries, and
QVC and the QVC Subsidiaries, on a combined basis.
SECTION 7.2. Additional Conditions to Obligations of
QVC. The obligations of QVC to effect the Merger and the
transactions contemplated herein are also subject to the fol-
lowing conditions:
(a) Representations and Warranties. Each of the
representations and warranties of Paramount contained in
this Agreement (including, without limitation, Section
6.5), without giving effect to any notification to QVC
delivered pursuant to Section 6.3, shall be true and cor-
rect as of the Effective Time as though made on and as of
the Effective Time, except (i) for changes specifically
permitted by this Agreement and (ii) that those represen-
tations and warranties which address matters only as of a
particular date shall remain true and correct as of such
date, except in any case for such failures to be true and
correct which would not, individually or in the aggregate,
have a Paramount Material Adverse Effect. QVC shall have
received a certificate of the Chief Executive Officer and
Chief Financial Officer of Paramount to such effect.
(b) Agreement and Covenants. Paramount shall have
performed or complied in all material respects with all
agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effec-
tive Time. QVC shall have received a certificate of the
Chief Executive Officer and Chief Financial Officer of
Paramount to that effect.
(c) Material Adverse Change. Since the date of this
Agreement, there shall have been no change, occurrence or
circumstance in the business, results of operations or
financial condition of Paramount or any Paramount Subsid-
iary having or reasonably likely to have, individually or
in the aggregate, a material adverse effect on the busi-
ness, results of operations or financial condition of
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Paramount and the Paramount Subsidiaries, taken as a
whole. QVC shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of Paramount
to such effect.
Notwithstanding the foregoing, the obligations of QVC to effect
the Merger and the other transactions contemplated herein fol-
lowing prior consummation of the Offer shall not be subject to
the conditions set forth in Sections 7.2(a), (b) and (c).
SECTION 7.3. Additional Conditions to Obligations of
Paramount. The obligation of Paramount to effect the Merger
and the other transactions contemplated in this Agreement are
also subject to the following conditions:
(a) Representations and Warranties. Each of the
representations warranties of QVC contained in this
Agreement (including, without limitation, Section 6.5),
without giving effect to any notification made by QVC to
Paramount pursuant to Section 6.3, shall be true and cor-
rect as of the Effective Time, as though made on and as of
the Effective Time, except (i) for changes specifically
permitted by this Agreement and (ii) that those represen-
tations and warranties which address matters only as of a
particular date shall remain true and correct as of such
date, except in any case for such failures to be true and
correct which would not, individually or in the aggregate,
have a QVC Material Adverse Effect. Paramount shall have
received a certificate of the Chief Executive Officer and
Chief Financial Officer of QVC to such effect.
(b) Agreements and Covenants. QVC shall have per-
formed or complied in all material respects with all
agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effec-
tive Time. Paramount shall have received a certificate of
the Chief Executive Officer and Chief Financial Officer of
QVC to that effect.
(c) No Material Adverse Change. Since the date of
this Agreement, there shall have been no change, occur-
rence or circumstance in the business, results of opera-
tions or financial condition of QVC or any QVC Subsidiary
having or reasonably likely to have, individually or in
the aggregate, a material adverse effect on the business,
results of operations or financial condition of QVC and
the QVC Subsidiaries, taken as a whole. Paramount shall
have received a certificate of the Chief Executive Officer
and Chief Financial Officer of QVC to such effect.
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(d) Amendments to QVC's Certificate of Incorpora-
tion. QVC shall have filed with the Secretary of State of
the State of Delaware a certificate of amendment to QVC's
Certificate of Incorporation pursuant to which the QVC
Certificate Amendments shall have become effective.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. 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 Paramount or the approval by the stockhold-
ers of QVC of the QVC Vote Matter in accordance with Article
II:
(a) by mutual consent of Paramount and QVC;
(b) by QVC, at any time prior to the time that QVC
has consummated the Offer, upon a breach of any represen-
tation, warranty, covenant or agreement on the part of
Paramount set forth in this Agreement, or if any represen-
tation or warranty of Paramount shall have become untrue,
in either case such that the conditions set forth in Sec-
tion 7.2(a) or Section 7.2(b), as the case may be, would
be incapable of being satisfied by July 31, 1994 (or as
otherwise extended); provided, that in any case, a wilful
breach shall be deemed to cause such conditions to be in-
capable of being satisfied for purposes of this Section
8.1(b);
(c) by Paramount, upon a breach of any representa-
tion, warranty, covenant or agreement on the part of QVC
set forth in this Agreement, or if any representation or
warranty of QVC shall have become untrue, in either case
such that the conditions set forth in Section 7.3(a) or
Section 7.3(b), as the case may be, would be incapable of
being satisfied by July 31, 1994 (or as otherwise ex-
tended); provided, that in any case, a wilful breach shall
be deemed to cause such conditions to be incapable of
being satisfied for purposes of this Section 8.1(c);
(d) by either QVC or Paramount, if any permanent
injunction or action by any Governmental Entity preventing
the consummation of the Merger shall have become final and
nonappealable;
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(e) by either QVC or Paramount at any time prior to
the time that QVC has consummated the Offer, if the Merger
shall not have been consummated before July 31, 1994; pro-
vided, however, that this Agreement may be extended by
written notice of either QVC or Paramount to a date not
later than September 30, 1994, if the Merger shall not
have been consummated as a direct result of QVC or Para-
mount having failed by July 31, 1994, to receive all re-
quired regulatory approvals or consents with respect to
the Merger;
(f) by either QVC or Paramount, if this Agreement
and the Merger, or the matters set forth in clause (i) of
the QVC Vote Matter, as the case may be, shall fail to
receive the requisite vote for approval and adoption by
the stockholders of Paramount or QVC at the Stockholders'
Meetings;
(g) by QVC, if (i) the Board of Directors of Para-
mount shall withdraw, modify or change its recommendation
of this Agreement, the Merger or the Offer in a manner
adverse to QVC or shall have resolved to do any of the
foregoing; provided, that a statement by the Board of
Directors of Paramount that it is neutral or unable to
take a position with respect to the Offer after the com-
mencement or amendment of a tender offer by a third party
shall not be deemed to constitute a withdrawal, modifica-
tion or change of its recommendation of this Agreement if
the Solicitation/Recommendation Statement on Schedule
14D-9 relating to such third party tender offer recommends
rejection of such tender and the Board of Directors of
Paramount reconfirms its recommendation of the Offer on
the date of the filing thereof; (ii) the Board of Direc-
tors of Paramount shall have recommended to the stockhold-
ers of Paramount a Competing Transaction (as defined be-
low); (iii) QVC has not consummated the Offer and a tender
offer or exchange offer for 30% or more of the outstanding
shares of capital stock of Paramount is commenced, and the
Board of Directors of Paramount recommends that the stock-
holders of Paramount tender their shares in such tender or
exchange offer; or (iv) QVC has not consummated the Offer
and any person shall have acquired beneficial ownership or
the right to acquire beneficial ownership of or any
"group" (as such term is defined under Section 13(d) of
the Exchange Act and the rules and regulations promulgated
thereunder) shall have been formed which beneficially
owns, or has the right to acquire "beneficial ownership"
(as defined in the Rights Plan) of, more than 30% of the
then outstanding shares of capital stock of Paramount;
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(h) by Paramount, if the Board of Directors of Para-
mount (x) fails to make or withdraws or modifies its rec-
ommendation referred to in Section 2.2(a) or Section
6.5(a) if there exists at such time a tender offer or ex-
change offer or a proposal by a third party to acquire
Paramount pursuant to a merger, consolidation, share ex-
change, business combination, tender or exchange offer or
other similar transaction or (y) recommends to Paramount's
stockholders approval or acceptance of any of the fore-
going, in each case only if the Board of Directors of
Paramount, after consultation with and based upon the
advice of independent legal counsel (who may be such
party's regularly engaged independent legal counsel),
determines in good faith that such action is necessary for
the Board of Directors of Paramount to comply with its
fiduciary duties to stockholders under applicable law; and
(i) by Paramount, if due to the occurrence or cir-
cumstance that would result in a failure to satisfy any of
the conditions set forth in Annex A or otherwise, (A) the
Offer shall have expired without the purchase of shares of
Paramount Common Stock thereunder or QVC shall be obli-
gated to terminate the Offer pursuant to Section 2.5 or
(B) QVC shall have failed to accept for payment shares of
Paramount Common Stock pursuant to the Offer prior to 9:00
a.m. on the first business day following the Final Expira-
tion Date, unless such failure to accept for payment
shares of Paramount Common Stock shall have been caused by
or resulted from the failure of Paramount to perform in
any material respect its material covenants and agreements
contained in this Agreement or resulted from the termina-
tion of the Offer pursuant to Section 2.01(c).
The right of any party hereto to terminate this Agreement pur-
suant to this Section 8.1 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. For pur-
poses of this Agreement, "Competing Transaction" shall mean any
of the following involving Paramount or any Paramount Subsid-
iaries: (i) any merger, consolidation, share exchange, busi-
ness combination, or other similar transaction; (ii) any dispo-
sition of 30% or more of the assets of Paramount and the Para-
mount Subsidiaries, taken as a whole in a single transaction or
series of transactions; (iii) any tender offer or exchange
offer for 30% or more of the outstanding shares of capital
stock of Paramount or the filing of a registration statement
under the Securities Act in connection therewith; (iv) any per-
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son having acquired beneficial ownership or the right to ac-
quire beneficial ownership of, or any "group" (as such term is
defined under Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder) having been formed
which beneficially owns or has the right to acquire beneficial
ownership of, 30% or more of the then outstanding shares of
capital stock of Paramount; or (v) any public announcement of a
proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
SECTION 8.2. Effect of Termination. Except as pro-
vided in Section 9.1, in the event of the termination of this
Agreement pursuant to Section 8.1, this Agreement shall forth-
with become void, there shall be no liability on the part of
Paramount or QVC or any of their respective officers or direc-
tors to the other and all rights and obligations of any party
hereto shall cease; provided, however, that (i) 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 and (ii) if QVC or Paramount shall
terminate this Agreement in accordance with the provisions of
Section 8.1, then if QVC shall continue the Offer, the exemp-
tion agreement attached hereto as Exhibit B shall become effec-
tive.
SECTION 8.3. 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, further, that, after approval of
the Merger by the stockholders of Paramount or QVC, no amend-
ment, which under applicable law may not be made without the
approval of the stockholders of Paramount or QVC, may be made
without such approval. This Agreement may not be amended ex-
cept by an instrument in writing signed by the parties hereto.
SECTION 8.4. Intentionally Omitted.
SECTION 8.5. Fees and Expenses. All costs and ex-
penses, 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.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Effectiveness of Representations, War-
ranties and Agreements. (a) Except as set forth in Section
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9.1(b), the representations, warranties and agreements of each
party hereto shall remain operative and in full force and ef-
fect, regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party
or any of their 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 Section 6.2 shall survive the Effective Time and those set
forth in Sections 2.2(c), 2.3, 6.1(b), 8.2 and Article IX here-
of shall survive termination.
SECTION 9.2. Notices. All notices and other commu-
nications 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, mailed or transmitted, and shall be effective upon
receipt, if delivered personally, mailed by registered or cer-
tified 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 QVC:
QVC Network, Inc.
Goshen Corporate Park
West Chester, PA 19380
Attention: Corporate Secretary
Telecopier No: (215) 430-2380
with a copy to:
Wachtell, Lipton, Rosen & Katz
299 Park Avenue
New York, NY 10171
Attention: Pamela S. Seymon
Telecopier No: (212) 371-1658
(b) If to Paramount:
Paramount Communications Inc.
15 Columbus Circle
New York, NY 10023
Attention: Executive Vice President and
General Counsel
Telecopier No: (212) 373-8184
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with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: Joel S. Hoffman
Telecopier No: (212) 455-2502
SECTION 9.3. 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) "beneficial owner" with respect to any shares of
Paramount Common Stock means, unless otherwise defined
herein, a person who shall be deemed to be the beneficial
owner of such shares (i) which such person or any of its
affiliates or associates (as such term is defined in Rule
12b-2 promulgated under the Exchange Act) beneficially
owns, directly or indirectly, (ii) which such person or
any of its affiliates or associates has, directly or indi-
rectly, (A) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or under-
standing or upon the exercise of consideration rights,
exchange rights, warrants or options, or otherwise or (B)
the right to vote pursuant to any agreement, arrangement
or understanding or (iii) which are beneficially owned,
directly or indirectly, by any other persons with whom
such person or any of its affiliates or associates, or any
person with whom such person or any of its affiliates or
associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing
of any shares;
(c) "business day" shall have the meaning set forth
in Rule 14d-1(c)(6) as promulgated under the Exchange Act;
(d) "control" (including the terms "controlled",
"controlled by" and "under common control with") means the
possession, directly or indirectly or as trustee or execu-
tor, of the power to direct or cause the direction of the
management or policies of a person, whether through the
ownership of stock or as trustee or executor, by contrac-
tor credit arrangement or otherwise;
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(e) The parties agree that the term "Merger", as
used herein, may refer to, consistent with the context of
such usage, each of the single step merger, the second
step merger following the Offer, or both. The parties
hereto agree to promptly amend this Agreement subsequent
to the execution and delivery thereof to provide for more
precise defined terms and usage thereof; and
(f) "subsidiary" or "subsidiaries" of Paramount,
QVC, the Surviving Corporation or any other person means
any corporation, partnership, joint venture or other legal
entity of which Paramount, QVC, the Surviving Corporation
or such other person, as the case may be (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 en-
titled to vote for the election of the board of directors
or other governing body of such corporation or other legal
entity.
SECTION 9.4. Time Period. In computing any time
period hereunder, the computation shall be governed by Rule
14d-1(c)(6) as promulgated under the Exchange Act.
SECTION 9.5. 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 Agree-
ment.
SECTION 9.6. 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 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 possi-
ble 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 9.7. Entire Agreement. This Agreement
(together with the Exhibits, the Paramount Disclosure Schedule,
the QVC Disclosure Schedule and the other documents delivered
pursuant hereto) and the Confidentiality Agreements constitute
the entire agreement of the parties and supersede all prior
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agreements and undertakings, both written and oral, between the
parties, or any of them, with respect to the subject matter
hereof.
SECTION 9.8. Assignment. This Agreement shall not
be assigned by operation of law or otherwise.
SECTION 9.9. 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 6.2), 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,
including to confer third party beneficiary rights; provided,
however, nothing in the foregoing shall be deemed to derogate
from any rights of the Other Offeror (other than as a third
party beneficiary) as against Paramount or its Board with re-
spect to any amendment of this Agreement or failure to enforce
the Agreement.
SECTION 9.10. Specific Performance. The parties
hereto agree that irreparable damage would occur in the event
any provision of this Agreement was not performed in accordance
with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
SECTION 9.11. Governing Law. Except to the extent
that Delaware Law is mandatorily applicable to the Merger and
the rights of the stockholders of Paramount and 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 con-
flicts of law.
SECTION 9.12. Counterparts. This Agreement may be
executed in one or more counterparts, and by the different par-
ties hereto in separate counterparts, each of which when exe-
cuted shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
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<PAGE>
IN WITNESS WHEREOF, QVC and Paramount have caused
this Agreement to be executed as of the date first written
above by their respective officers thereunto duly authorized.
ATTEST: QVC NETWORK, INC.
By By
ATTEST: PARAMOUNT COMMUNICATIONS INC.
By By
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ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, QVC
shall not be required to accept for payment or pay for any
shares of Paramount Common Stock tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone
the acceptance for payment of and payment for shares of Para-
mount Common Stock tendered, if (i) the Minimum Condition shall
not have been satisfied, (ii) the Rights Condition shall not
have been satisfied, or (iii) at any time on or after the date
of this Agreement, and prior to the acceptance for payment of
shares of Paramount Common Stock, any of the following condi-
tions shall not exist:
(a) No Governmental Entity or federal or state court
of competent jurisdiction shall have enacted, issued, pro-
mulgated, enforced or entered any statute, rule, regula-
tion, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in
effect and which materially restricts, prevents or prohib-
its consummation of the Offer, the Merger or any transac-
tion contemplated by the Agreement; provided that QVC
shall have used its reasonable best efforts to cause any
such decree, judgment, injunction or other order to be
vacated or lifted;
(b) Each of the representations and warranties of
Paramount contained in the Agreement (including, without
limitation, Section 6.5), without giving effect to any
notification to QVC delivered pursuant to Section 6.3,
shall be true and correct as of the date of consummation
of the Offer as though made on and as of such date, except
(i) for changes specifically permitted by the Agreement
and except that the truth and correctness of representa-
tions contained in the Agreement which relate to any
Transaction agreements (other than the Agreement) between
the parties to the Agreement which by the terms of the
Agreement terminate upon consummation of the Merger shall
not be a condition to the consummation of the Offer and
(ii) that those representations and warranties which ad-
dress matters only as of a particular date shall remain
true and correct as of such date, except in any case for
such failures to be true and correct which would not,
individually or in the aggregate, have a Paramount Mate-
rial Adverse Effect;
(c) Paramount shall have performed or complied in
all material respects with all agreements and covenants
required by the Agreement to be performed or complied with
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<PAGE>
by it on or prior to the date of consummation of the Of-
fer;
(d) Since the date of the Agreement, there shall
have been no change, occurrence or circumstance in the
business, results of operations or financial condition of
Paramount or any Paramount Subsidiary having or reasonably
likely to have, individually or in the aggregate, a mate-
rial adverse effect on the business, results of operations
or financial condition of Paramount and the Paramount Sub-
sidiaries, taken as a whole;
(e) The Agreement shall not have been terminated in
accordance with its terms;
(f) QVC shall not have terminated the Offer under
Sections 2.1(c) or 2.5 of the Agreement;
(g) QVC and Paramount shall not have agreed that QVC
shall terminate the Offer or postpone the acceptance for
payment of or payment for shares of Paramount Common Stock
thereunder;
and, in the reasonable judgment of QVC in any such case, and
regardless of the circumstances (including any action or inac-
tion by QVC or any of its affiliates) giving rise to any such
condition, it is inadvisable to proceed with such acceptance
for payment or payments.
The foregoing conditions are for the sole benefit of
QVC and may be asserted by QVC regardless of the circumstances
giving rise to any such condition or may be waived by QVC in
whole or in part at any time and from time to time in its sole
discretion, subject to the terms of this Agreement. The fail-
ure by QVC at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right; the waiver of
any such right with respect to particular facts and other cir-
cumstances shall not be deemed a waiver with respect to any
other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and
from time to time.
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<PAGE>
ANNEX B
Description of QVC Merger Preferred Stock
Dividends Cumulative from the Effective Time
at the annual rate of $3.00 per
share of QVC Merger Preferred Stock,
payable quarterly.
Conversion Rights None
Liquidation Preference $50.00 per share of QVC Merger Pre-
ferred Stock, plus accrued and un-
paid dividends.
Redemption at the Option
of QVC The QVC Merger Preferred Stock may
not be redeemed prior to the fifth
anniversary of the Effective Time.
On and after such date, the QVC
Merger Preferred Stock may be re-
deemed in whole or in part, at the
option of QVC, initially at a per
share redemption price of $52.50 and
thereafter at prices declining to
$50.00 on and after the tenth anni-
versary of the Effective Time, plus,
in each case, all accrued and unpaid
dividends.
Mandatory Redemption None
Exchange for Debentures The QVC Merger Preferred Stock will
be exchangeable in whole, or in
part, at the option of QVC on any
dividend payment date beginning on
and after the third anniversary of
the Effective Time, for QVC's 6%
Junior Subordinated Debentures (the
"Exchange Debentures") at the rate
of $50.00 principal amount of Ex-
change Debentures for each share of
QVC Merger Preferred Stock. QVC may
effect each exchange only if all
accrued and unpaid dividends on the
QVC Merger Preferred Stock have been
paid.
Voting Rights The QVC Merger Preferred Stock will
have no voting rights except (i) as
otherwise required by law and (ii)
for the right to elect two addition-
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<PAGE>
al directors to QVC's Board of
Directors in the event that QVC has
failed to pay dividends payable on
the shares of QVC Merger Preferred
Stock for such number of dividend
periods which shall in the aggregate
contain not less than 360 days. In
any such election, the holders of
shares of QVC Merger Preferred Stock
will vote separately as a class with
the holders of shares of any one or
more other shares of preferred stock
ranking on a parity with the QVC
Merger Preferred Stock. Such right
to elect two directors will continue
until such dividend arrearages have
been paid.
General The QVC Merger Preferred Stock will
contain other customary terms.
Exchange Debentures
Interest 6% per annum, payable semiannually.
Aggregate Principal
Amount Equal to aggregate liquidation pref-
erence of QVC Merger Preferred Stock
exchanged.
Maturity 20 years from the Effective Time.
Optional Redemption Not redeemable prior to the fifth
anniversary of the Effective Time.
On and after that date, redeemable,
in whole or in part, at the option
of QVC, at a redemption price of
105% of the principal amount thereof
and thereafter at prices declining
to 100% of the principal amount
thereof on and after the tenth anni-
versary of the Effective Time, plus,
in each case, all accrued and unpaid
interest.
Mandatory Redemption None
Conversion None
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<PAGE>
Subordination The Exchange Debentures will be sub-
ordinated in right of payment to all
Senior Indebtedness of QVC when due.
Senior Indebtedness of QVC will be
defined as all indebtedness or obli-
gations (including fees and expenses
with respect thereto) incurred,
assumed, guaranteed or otherwise
created, unless the terms of the
instrument or instruments by which
QVC incurred, assumed, guaranteed or
otherwise created any such indebted-
ness or obligation expressly provide
that such indebtedness or obligation
is subordinate to all other indebt-
edness of QVC or that such indebted-
ness or obligation is not superior
in right of payment to the Exchange
Debentures with respect to any of
the following: (i) any indebtedness
incurred by QVC, or assumed or guar-
anteed, directly or indirectly, by
QVC (a) for money borrowed, (b) in
connection with the acquisition of
any business, property or other
assets (other than trade payables
incurred in the ordinary course of
business), or (c) for advances or
progress payments in connection with
the construction or acquisition of
any building, motion picture, tele-
vision production or other enter-
tainment of any kind; (ii) any obli-
gation of QVC (or of a Subsidiary
which is guaranteed by QVC) as
lessee under a lease of real or per-
sonal property; (iii) any obligation
of QVC to purchase property at a
future date in connection with a
financing by QVC or a subsidiary;
(iv) letters of credit; (v) currency
swaps and interests rate hedges; and
(vi) any deferral, renewal, exten-
sion or refunding of any of the
foregoing. No payment on account of
principal or interest on the Ex-
change Debentures may be made if at
the time of such payment there ex-
ists a payment default with respect
to any Senior Indebtedness. Upon
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<PAGE>
any distribution of the assets of
QVC upon any dissolution, total or
partial liquidation or reorganiza-
tion of or similar proceeding relat-
ing to QVC, the holders of its
Senior Indebtedness will be entitled
to receive payment in full before
the Exchange Debenture holders are
entitled to receive any payment.
Events of Default The term "Event of Default" when
used in the indenture for the Ex-
change Indebtedness will mean any of
the following: (i) failure of QVC
to pay (whether or not prohibited by
the subordination provisions) inter-
est for sixty days on Exchange
Debentures, (ii) failure to pay
principal for five days subsequent
to maturity on the Exchange Deben-
tures (iii) failure to perform any
other covenant contained in the
Indenture for ninety days after
notice to QVC by the trustee (or to
QVC and the trustee by the holders
of at least 25% in aggregate princi-
pal amount of Exchange Debentures
then outstanding) and (iv) certain
events of bankruptcy, insolvency or
reorganization.
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<PAGE>
ANNEX C
WARRANTS
Each Warrant will entitle the holder thereof to purchase
one share of QVC Common Stock per whole Warrant at a price of
$70.34 per share exercisable at the option of the holder at any
time prior to the tenth anniversary of the Merger. The War-
rants will be exercisable with cash or using an equivalent
amount of liquidation preference of QVC Merger Preferred Stock
or principal amount of Exchange Debentures. The Warrants will
be callable at $15 per Warrant on and after the fifth anniver-
sary of the second step merger. The Warrants will contain cus-
tomary anti-dilution and other provisions.
<PAGE>
<PAGE>
EXHIBIT 6.13
FORM OF AFFILIATE LETTER
QVC Network, Inc.
Goshen Corporate Park
West Chester, PA 19380
Gentlemen:
I have been advised that as of the date of this let-
ter I may be deemed to be an "affiliate" of Paramount Communi-
cations Inc., a Delaware corporation (the "Company"), as the
term "affiliate" is defined for purposes of paragraphs (c) and
(d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the
"Act"). Pursuant to the terms of the Agreement and Plan of
Merger dated as of , 1994, (the "Agreement"), be-
tween QVC Network, Inc., a Delaware corporation ("QVC"), and
the Company, the Company will be merged with and into QVC (the
"Merger").
As a result of the Merger, I may receive shares of
(i) common stock, par value $.01 per share, of QVC and (ii) a
new series of convertible exchangeable preferred stock, par
value $.10 per share, of QVC (collectively, the "QVC Securi-
ties"). I would receive such shares in exchange for, respec-
tively, shares (or options for shares) owned by me of common
stock, par value $10 per share, of the Company (the "Company
Securities").
I represent, warrant and covenant to QVC that in the
event I receive any QVC Securities as a result of the Merger:
A. I shall not make any sale, transfer or other dis-
position of the QVC Securities in violation of the Act or
the Rules and Regulations.
B. I have carefully read this letter and the Agree-
ment and discussed the requirements of such documents and
other applicable limitations upon my ability to sell,
transfer or otherwise dispose of QVC Securities to the
extent I felt necessary, with my counsel or counsel for
the Company.
C. I have been advised that the issuance Of QVC
Securities to me pursuant to the Merger has been regis-
tered with the Commission under the Act on a Registration
Statement Form S-4. However, I have also been advised
that, because at the time the Merger is submitted for a
vote of the stockholders of the Company, (a) I may be
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<PAGE>
deemed to be an affiliate of the Company and (b) the dis-
tribution by me of the QVC Securities has not been regis-
tered under the Act, I may not sell, transfer or otherwise
dispose of QVC Securities issued to me in the Merger un-
less (i) such sale, transfer or other disposition is made
in conformity with the volume and other limitations of
Rule 145 promulgated by the Commission under the Act, (ii)
such sale, transfer or other disposition has been regis-
tered under the Act or (iii) in the opinion of counsel
reasonably acceptable to QVC, such sale, transfer or other
disposition is otherwise exempt from registration under
the Act.
D. I understand that QVC is under no obligation to
register the sale, transfer or other disposition of the
QVC Securities by me or on my behalf under the Act or to
take any other action necessary in order to make compli-
ance with an exemption from such registration available
solely as a result of the Merger.
E. I also understand that there will be placed on
the certificates for the QVC Securities issued to me, or
any substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE IS-
SUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANS-
FERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT
DATED ________ BETWEEN THE REGISTERED HOLDER HEREOF
AND QVC NETWORK, INC., A COPY OF WHICH AGREEMENT IS
ON FILE AT THE PRINCIPAL OFFICES OF QVC NETWORK,
INC."
F. I also understand that unless a sale or transfer
is made in conformity with the provisions of Rule 145, or
pursuant to a registration statement, QVC reserves the
right to put the following legend on the certificates is-
sued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES
IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE
BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR
FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION
THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF
1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANS-
FERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM
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<PAGE>
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
OF 1933."
It is understood and agreed that the legends set
forth in paragraphs E and F above shall be removed by delivery
of substitute certificates without such legend if the under-
signed shall have delivered to QVC a copy of a letter from the
staff of the Commission, or an opinion of counsel reasonably
satisfactory to QVC in form and substance reasonably satisfac-
tory to QVC, to the effect that such legend is not required for
purposes of the Act.
Execution of this letter should not be considered an
admission on my part that I am an "affiliate" of the Company as
described in the first paragraph of this letter, or as a waiver
of any rights I may have to object to any claim that I am such
an affiliate on or after the date of this letter.
Very truly yours,
Name:
Accepted this ___ day of
_____________, 1994, by
QVC NETWORK, INC.
By
Name:
Title:
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