<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _____)*
QVC Network, Inc.
---------------------------------------------------------------
(Name of Issuer)
Common Stock $.01 Par Value Per Share
---------------------------------------------------------------
(Title of Class of Securities)
747262103
----------------------------------
(CUSIP Number)
Andrew A. Merdek, Esq., Cox Enterprises, Inc.
1400 Lake Hearn Drive, Atlanta, Georgia 30319 (404) 843-5564
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 20, 1994
-------------------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the statement [X]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 747262103
-------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cox Enterprises, Inc.
58-1035149
2. CHECK THE APPROPRIATE LINE IF A MEMBER OF A GROUP*
(a) (b) X
---- ----
3. SEC USE ONLY
4. SOURCE OF FUNDS*
Not Applicable
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(D) OR 2(E)
Not Applicable
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7. SOLE VOTING POWER
2,833,333
8. SHARED VOTING POWER
0
9. SOLE DISPOSITIVE POWER
2,833,333
<PAGE>
10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,833,333
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
Not Applicable
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.1%
14. TYPE OF REPORTING PERSON*
CO
<PAGE>
ITEM 1. SECURITY AND ISSUER
The title of the class of equity securities to which this statement relates
is the Common Stock, par value $.01 per share, of QVC Network, Inc., a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 1365 Enterprise Drive, Goshen Corporate Park, West Chester, PA
19380.
ITEM 2. IDENTITY AND BACKGROUND
(a) The person filing this statement is Cox Enterprises, Inc.
(b) Cox Enterprises, Inc. is incorporated in the state of Delaware.
(c) The principal business of Cox Enterprises, Inc. is publishing,
broadcasting, cable television and automobile auctions.
(d) The principal business address of Cox Enterprises, Inc. is 1400 Lake
Hearn Drive, Atlanta, GA 30319.
(e) The principal office address of Cox Enterprises, Inc. is 1400 Lake Hearn
Drive, Atlanta, GA 30319.
(f) During the last five years, Cox Enterprises, Inc. has not been convicted
in a criminal proceeding.
(g) During the last five years, Cox Enterprises, Inc. has not been a party to
any civil proceeding of a judicial or administrative body of competent
jurisdiction as the result of which it was or is subject to any judgment, decree
or final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The transaction giving rise to the filing of this Schedule 13D was the
acquisition by Cox Enterprises, Inc. on April 20, 1994 of an irrevocable option
to purchase 2,833,333 shares of Common Stock for an aggregate exercise price of
$170,000,000. Cox Enterprises, Inc. acquired the option in exchange for its
undertaking to purchase common and preferred stock of the Company in connection
with the Company's proposed acquisition of Paramount Communications, Inc., which
acquisition was subsequently abandoned by the Company. The option may be
exercised until the later of the date that is (i) August 15, 1994, or (ii) ten
days after the stockholders of the Company vote to approve the issuance of the
optioned shares, if such approval is required pursuant to Section 5(i) of Part
III of Schedule D of the By-laws of the National Association of Securities
Dealers, Inc. Cox Enterprises, Inc. has not
<PAGE>
determined the source of any funds it would use to pay the exercise price if it
exercises the option.
ITEM 4. PURPOSE OF TRANSACTION
Cox Enterprises, Inc. has acquired the option to purchase shares of the
Common Stock of the Company for investment purposes.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) Cox Enterprises, Inc. beneficially owns, as a result of the option
described in response to Item 3, 2,833,333 shares of the Common Stock of the
Company, which is the class of securities identified pursuant to Item 1 above.
The Company's Annual Report on Form 10-K, filed with the Securities and Exchange
Commission on April 20, 1994, reports that there are 39,904,097 shares of the
Company's Common Stock issued and outstanding as of March 31, 1994.
Accordingly, Cox Enterprises, Inc. is the beneficial owner of approximately 7.1%
of the Company's Common Stock.
(b) If Cox Enterprises, Inc. were to exercise its option described in
response to Item 3, it would have the sole power to vote and to direct the
disposition of all 2,833,333 shares of the Common Stock of the Company which it
would hold. None of such shares are subject to shared power to vote or power to
direct a vote thereof, nor are any of such shares subject to shared power to
dispose or to direct the disposition thereof.
(c) Except for the transaction described in response to Item 3, Cox
Enterprises, Inc. has not effected any transactions in the Common Stock of the
Company during the past sixty days.
(d) No person other than Cox Enterprises, Inc. has the right to receive or
direct the receipt of dividends from, or the proceeds from the sale of, the
shares of Common Stock of the Company beneficially owned by Cox Enterprises,
Inc.
(e) Item 5(e) is not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The Company, Cox Enterprises, Inc., Advance Publications, Inc. and BellSouth
Corporation entered into a Stock Option Agreement, dated as of February 15, 1994
(and which was executed by all of the parties thereto as of April 20, 1994),
pursuant to which Cox Enterprises, Inc. received an option to purchase 2,833,333
shares of the Common Stock of the Company, as reported herein. Under the terms
of the Stock Option Agreement, if Cox Enterprises, Inc. exercises its option to
purchase shares of Common Stock of the Company, the Company will use reasonable
efforts to provide Cox Enterprises, Inc. with one
<PAGE>
demand registration of such purchased shares, subject to Cox Enterprises, Inc.
entering into a registration rights agreement reasonably acceptable to the
Company.
Cox Enterprises, Inc., Comcast Corporation, BellSouth Corporation, Arrow
Investments, L.P. and Advance Publications, Inc. entered into an Agreement Among
Stockholders, dated as of November 11, 1993, which was then terminated as of
February 15, 1994, except as to paragraph (4), which requires the parties
thereto to vote any equity securities of the Company held by them in favor of
the issuance of any Common Stock to be issued upon the exercise of the option
described in response to Item 3.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Attached hereto are copies of the Stock Option Agreement, the Agreement Among
Stockholders and the Termination of Certain Provisions of the Agreement Among
Stockholders.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
April 29, 1994
_________________________ COX ENTERPRISES, INC.
Date
/s/ Andrew A. Merdek
By:___________________________________
Andrew A. Merdek, Esq.
Vice President-Legal Affairs
<PAGE>
EXECUTION COPY
STOCK OPTION AGREEMENT dated as of February 15, 1994 (this "Stock
Option Agreement"), among QVC NETWORK, INC., a Delaware corporation
(the "Company"), COX ENTERPRISES, INC., a Delaware corporation
("Cox"), ADVANCE PUBLICATIONS, INC., a New York corporation
("Advance"), and BELLSOUTH CORPORATION, a Georgia corporation
("BellSouth", and Cox, Advance and BellSouth each individually a
"Purchaser").
WHEREAS the Company had proposed to acquire (the "Acquisition") Paramount
Communications Inc., a Delaware corporation; and
WHEREAS the Acquisition has been abandoned, and each Purchaser wishes to have
the option to acquire from the Company shares of the Company's Common Stock, par
value $.01 per share (the "Common Stock"), as provided in this Stock Option
Agreement.
NOW, THEREFORE, in consideration of the representations, warranties and
agreements herein contained, the parties hereto agree as follows:
1. Grant of Options. The Company hereby grants to (i) BellSouth an
irrevocable option (the "BellSouth Option") to purchase 8,627,934 shares of
Common Stock (the "BellSouth Optioned Shares") for a purchase price of
$517,676,040 (the "BellSouth Purchase Price"), (ii) Cox an irrevocable option
(the "Cox Option") to purchase 2,833,333 shares of Common Stock (the "Cox
Optioned Shares") for a purchase price of $170,000,000 (the "Cox Purchase
Price") and (iii) Advance an irrevocable option (the "Advance Option") to
purchase 2,833,333 shares of Common Stock (the "Advance Optioned Shares") for a
Purchase Price of $170,000,000 (the "Advance Purchase Price"). The period
during which the BellSouth Option, the Cox Option or the Advance Option may be
exercised (the "Option Period") shall begin on the date hereof and shall end
(the "Option Expiration Date") at 5:00 p.m. on the later of the date that is (i)
August 15, 1994, or (ii) if receipt of the approval of the stockholders of the
Company of the issuance of the BellSouth Optioned Shares, the Cox Optioned
Shares or the Advance Optioned Shares is required pursuant to Section 5(i) of
Part III of Schedule D of the By-laws of the National Association of Securities
Dealers, Inc. (the "Stockholder Approval"), ten Business Days after the
stockholders vote with respect to such matter (whether or not such approval is
received, and provided that consummation of a Closing (as defined in Section
2(a)) shall remain subject to satisfaction of all conditions
<PAGE>
9
contained herein, including, without limitation, the conditions contained in
Sections 8(iv) and 9(v)).
2. Exercise of the Options; Termination. (a) BellSouth, Cox or Advance may
exercise the BellSouth Option, Cox Option or Advance Option, as the case may be,
in whole only at any time during the Option Period. In the event that
BellSouth, Cox or Advance wishes to exercise the BellSouth Option, the Cox
Option or the Advance Option, as the case may be, such exercising party shall
give written notice thereof (the date of such notice being the "Notice Date") to
the Company and the closing in connection therewith (a "Closing") shall take
place at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New
York, N.Y. 10019, on a date (subject to the provisions of paragraph (b) below)
not later than the later of ten Business Days following the Notice Date or two
Business Days following the satisfaction or waiver of the Closing conditions
contained in Sections 8 and 9 of this Stock Option Agreement; provided, however,
that (subject to the provisions of paragraph (b) below) if a Closing does not
occur before the tenth Business Day after the Option Expiration Date (the
"Option Termination Date"), the BellSouth Option, the Cox Option or the Advance
Option, as the case may be, shall automatically terminate on such date and the
parties with respect to whom such termination has occurred shall have no further
rights or obligations hereunder.
(b) To the extent that the condition to BellSouth's obligation to purchase
the BellSouth Optioned Shares set forth in Section 8(vii) hereof (the "MFJ
Condition") has not been satisfied, the Closing with respect thereto (but not
the Option Period) may be delayed by BellSouth (if BellSouth has given the
written notice of exercise described above during the Option Period) until the
tenth Business Day after satisfaction of the MFJ Condition, and the consummation
of the exercise of the BellSouth Option may be conditioned upon satisfaction of
the MFJ Condition; provided, however, that if the Company fulfills its
obligations pursuant to Section 6(c) hereof and BellSouth nevertheless is unable
to acquire the BellSouth Optioned Shares as a result of the failure of the MFJ
Condition to be satisfied on or prior to February 15, 1996, then the BellSouth
Option shall automatically be terminated on such date and the Closing with
respect thereto shall not occur (the "MFJ Option Termination Date"). BellSouth
agrees to provide the Company prompt written notice of the receipt of approval,
waiver or other resolution of any MFJ problems, with the date for the Closing
then being the 10th Business Day after the day such notice is given. The term
"Business Day" shall mean any day of the year other than a day on which banks
are required or authorized to be closed in the City of New York.
(c) On the Option Expiration Date, if the BellSouth Option, the Cox
Option, or the Advance Option, as the case may be, has not been exercised on or
before such date, or upon termination of the BellSouth Option, the Cox Option or
the Advance Option, as the case may be, on the Option Termination Date or the
MFJ Option Termination Date, the terms of this Stock Option Agreement shall
thereafter become void and have no effect as to the Company and the Purchaser
with respect to whom such termination or expiration occurs,
<PAGE>
10
and no such party shall have any liability to the other such party hereto or
directors or officers in respect thereof, except for the obligations set forth
in Section 6(f), and except that nothing herein will relieve any party from
liability for any breach of this Stock Option Agreement (except a non-wilful
breach of the representations and warranties in Sections 4 and 5, in which case
termination of this Stock Option Agreement shall be the sole remedy) prior to
such termination.
3. Payment of Purchase Price and Delivery of Certificates for Optioned
Shares. At a Closing of the BellSouth Option, the Cox Option or the Advance
Option, as the case may be, (i) BellSouth will pay the Company the BellSouth
Purchase Price, Cox will pay the Company the Cox Purchase Price and Advance will
pay the Company the Advance Purchase Price, in each case by wire or intrabank
transfer in immediately available funds to an account or accounts designated by
the Company as far in advance of such Closing as is reasonably practicable and
(ii) the Company will deliver to BellSouth, Cox or Advance, as the case may be,
a duly executed certificate or certificates representing the BellSouth Optioned
Shares, Cox Optioned Shares or Advance Optioned Shares, as the case may be,
registered in the name of BellSouth, Cox or Advance, as the case may be, in the
denominations designated by BellSouth, Cox or Advance, as the case may be, in
its notice of exercise.
4. Representations and Warranties of Company. The Company hereby makes the
following representations and warranties to each Purchaser (except the
representation and warranty set forth in paragraph (o), which is for the sole
benefit of BellSouth):
(a) Corporate Existence. The Company and each corporation which is a
"significant subsidiary" as defined in Regulation S-X under the Securities Act
of 1993, as amended (the "Securities Act"), of the Company (a "Significant
Subsidiary") is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has full corporate
power and authority to own and operate its properties and conduct its business
as now conducted by it. Each of the Company and each Significant Subsidiary is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such corporation owns or leases
substantial properties or in which the conduct of its business requires such
qualification and in which failure of such corporation to be so qualified and in
good standing would have a material adverse effect upon the business, financial
condition or results of operations of the Company and its consolidated
subsidiaries considered as a whole.
(b) Authorization; Enforcement. The Company has full corporate power and
authority to execute and deliver this Stock Option Agreement and (subject to
obtaining the Stockholder Approval) to perform its obligations hereunder in
accordance with its terms. The Company has taken all necessary corporate action
to authorize the execution and delivery of this Stock Option Agreement and
(other than obtaining the Stockholder Approval) the consummation of the
transactions contemplated hereby. This Stock Option Agreement is a valid and
legally binding obligation of the Company, enforceable in accordance with its
<PAGE>
11
terms (assuming due authorization, execution and delivery by each Purchaser),
subject to bankruptcy, insolvency, reorganization and other laws affecting
creditors' rights generally and to general equity principles.
(c) Compliance with Law. (i) Neither the Company nor any Significant
Subsidiary has received notice, nor believes that it is in violation of any
statute, regulation or order of, or any restriction imposed by, the United
States of America, any state, municipality or other political subdivision having
jurisdiction over it or any agency thereof, in respect of the conduct of its
business or the ownership of its properties, that is expected to have a material
adverse effect on the business, financial condition or results of operations of
the Company and its consolidated subsidiaries considered as a whole.
(ii) Subject to expiration or early termination of the applicable
waiting period under the HSR Act (as defined in paragraph (e) of this Section
4), the execution and delivery by the Company of this Stock Option Agreement
does not, and the performance by the Company of its obligations hereunder and
the transactions contemplated hereby will not, violate any provision of any
material law or regulation, or any existing writ or decree of any court or
governmental authority applicable to it.
(d) Compliance with Obligations. (i) Neither the Company nor any
Significant Subsidiary is in violation of or in default under any obligation,
agreement, covenant or condition contained in its Certificate of Incorporation
or By-laws, or in any contract, lease or other instrument to which it is a party
(or which is binding on it or its assets), other than for such violations or
defaults the occurrence of which would not have a material adverse effect on the
business, financial condition or results of operations of the Company and its
consolidated subsidiaries considered as a whole.
(ii) The execution and delivery by the Company of this Stock Option
Agreement does not, and the performance by the Company of its obligations
hereunder and the transactions contemplated hereby will not, violate, conflict
with or constitute a breach of, or a default under, its Restated Certificate of
Incorporation or By-laws, or any other material agreement or instrument to which
it is a party (or which is binding on it or its assets) and will not result in
the creation of any lien on, or security interest in, any of its assets.
(e) Consents and Approvals. All consents, approvals, authorizations and
orders (other than (i) under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act") and (ii) Stockholder Approval) required for the
Company to execute and deliver this Stock Option Agreement and to consummate the
transactions contemplated hereby have been obtained.
(f) Exchange Act Reports. Each of the Company's (i) Annual Reports on
Form 10-K, for the fiscal years ended after January 31, 1990, (ii) Quarterly
Reports on Form 10-Q for the current fiscal year and (iii) proxy statement for
the most recently called annual
<PAGE>
12
meeting (collectively, the "SEC Documents"), has been duly and timely filed, and
when filed was in substantial compliance with the requirements of the Securities
Exchange Act of 1934 and the applicable rules and regulations of the Securities
and Exchange Commission thereunder (the "Exchange Act"). Each of the SEC
Documents was complete and correct in all material respects as of its date and,
as of its date, did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(g) Financial Condition. The consolidated balance sheets of the Company
and its consolidated subsidiaries as of (i) January 31, 1990, 1991 and 1992, and
(ii) October 31, 1993, together with consolidated statements of operations,
shareholders' equity and cash flows for the fiscal year then ended in the case
of (i) above, or the three months and nine months then ended, in the case of
(ii) above, contained in the SEC Documents and, in the case of (i) above,
certified by KPMB Peat Marwick, fairly present the financial condition of the
Company and its consolidated subsidiaries and the results of their operations
and changes in financial position as of the dates and for the periods referred
to and have been prepared in accordance with generally accepted accounting
principles in the United States consistently applied (except, in the case of
(ii) above, that the consolidated financial statements have been prepared in
accordance with Exchange Act Form 10-Q and do not necessarily reflect all normal
audit adjustments throughout the periods involved).
(h) Litigation. Except as disclosed in the SEC Documents or as otherwise
disclosed in writing to each Purchaser and identified as an exception to this
representation, there is no legal action, suit, investigation or proceeding
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its subsidiaries or the assets of any of them which is
expected by the Company to materially and adversely affect the business,
financial condition or results of operations of the Company and its consolidated
subsidiaries considered as a whole, or its ability to perform or observe any
obligation or condition under this Stock Option Agreement.
(i) Material Adverse Change. Except as disclosed in the SEC Documents or
as otherwise disclosed in writing to each Purchaser prior to the exercise of the
BellSouth Option, Cox Option or Advance Option, as the case may be, there has
been no material adverse change in the business, financial condition, results of
operations or prospects, of the Company and its consolidated subsidiaries since
October 31, 1993, it being understood that the incurrence and payment of fees
and expenses related to the Acquisition shall not give rise to or result in a
breach of this representation.
(j) Governmental Investigations. To the knowledge of the Company, except
as disclosed to each Purchaser in writing and identified as an exception to this
representation, there are no pending or threatened governmental investigations
or proceedings against the Company or any of its controlled affiliates or
against any officers, directors or employees of
<PAGE>
13
the Company or any of its controlled affiliates, related to possible violations
of any material Federal, state or local law.
(k) Outstanding Capital Stock. As of the date hereof, the authorized
capital stock of the Company consists of 175,000,000 shares of Common Stock and
5,000,000 shares of Preferred Stock, par value $.10 per share. As of February
28, 1994, 27,788 shares of Series B Preferred Stock, 530,757 shares of Series C
Preferred Stock, 938 shares of Series D Preferred Stock and 39,902,822 shares of
Common Stock were validly issued and outstanding, fully paid and nonassessable.
The Company is the sole beneficial owner of all of the outstanding capital stock
of each Significant Subsidiary and has good and valid title to all shares of
such outstanding capital stock, free and clear of all liens and encumbrances,
and all shares of such outstanding capital stock are duly authorized and validly
issued and outstanding, fully paid and nonassessable. Except for the rights set
forth in the Stockholders Agreement (as defined in Section 6(e)) and the
Understanding Among Stockholders (as defined in Section 8(viii)), there are no
preemptive or similar rights in respect of the capital stock of the Company or
any Significant Subsidiary. The Company has previously delivered to each
Purchaser true, complete and correct copies of the Restated Certificate of
Incorporation and By-laws of the Company, which are in full force and effect on
the date hereof. Except as provided in this Stock Option Agreement and the
Liberty-QVC Agreement dated as of November 11, 1993 (the "Repurchase
Agreement"), between the Company and Liberty Media Corporation ("Liberty"), as
disclosed in the SEC Documents, or as disclosed to each Purchaser in writing and
identified as an exception to this representation, there are no outstanding
options, warrants, agreements, convertible or exchangeable securities or other
commitments pursuant to which the Company or any Significant Subsidiary is
obligated to issue, sell, purchase, repurchase, return or redeem any shares of
capital stock or other securities of the Company or any Significant Subsidiary
and there are not any securities of the Company or any Significant Subsidiary
reserved for such purpose.
(l) Common Stock. The BellSouth Optioned Shares, the Cox Optioned Shares
and the Advance Optioned Shares to be issued in accordance with the terms of
this Stock Option Agreement have been duly authorized; upon issuance to the
Purchasers as provided hereunder, such shares will be validly issued, fully paid
and nonassessable; and such shares are not subject to any preemptive or similar
rights.
(m) Nasdaq National Market. The outstanding Common Stock has been
included for quotation in the Nasdaq National Market. The Company's agreement
with the NASD with respect thereto is in full force and effect and no action has
been taken or threatened by the NASD with respect to the suspension from trading
of the Common Stock.
(n) Securities Act Registration. Assuming the accuracy of the
representation contained in paragraph (g) of Section 5 with respect to the
applicable Purchaser, the issuance and sale of the BellSouth Optioned shares,
the Cox Optioned Shares and the Advance
<PAGE>
14
Optioned Shares, as the case may be, will be exempt from the registration and
prospectus delivery requirements of the Securities Act.
(o) MFJ Activities. Set forth on Exhibit 1 is a complete list, as of the
date hereof, of (i) all interLATA transmission facilities and services
(including, without limitation, satellite uplink facilities, satellite
transponders, receive-only earth stations and 800 numbers) and (ii) any
activities which constitute the manufacture or distribution of
telecommunications equipment or the manufacture of customer premises equipment
(but not the distribution of customer premises equipment) (collectively, "MFJ
Activities"), owned or provided by the Company or any of its subsidiaries.
Neither the Company nor any of its subsidiaries directly or indirectly, engages
or participates, alone or with any individual or entity, whether as a principal,
agent, reseller, representative, consultant or independent contractor, in any
MFJ Activity, other than activities listed on Exhibit 1. For purposes of this
Stock Option Agreement, "interLATA" means telecommunications between a point or
points located in one LATA, or within one service area of an independent
telephone company associated with that LATA, and a point or points located in
one or more LATAs or points outside a LATA, in each case as LATAs and associated
telephone company areas have been approved in the Modification of Final Judgment
entered August 24, 1982, by the U.S. District Court of the District of Columbia
(the "MFJ"). BellSouth acknowledges that the Company has no expertise in MFJ
matters and that the Company's knowledge with respect to MFJ matters consists
solely of BellSouth's descriptions of such matters.
5. Representations and Warranties of Each Purchaser. Each Purchaser hereby
severally with respect to itself only, and not jointly, makes the following
representations and warranties to the Company (except that the representation
and warranty contained in paragraph (i) is made solely by BellSouth):
(a) Corporate Existence. Such Purchaser is a corporation, duly organized,
validly existing and in good standing under the laws of its state of
incorporation.
(b) Authorization; Enforcement. Such Purchaser has full power and
authority to execute and deliver this Stock Option Agreement, and to perform its
obligations under and as contemplated by this Stock Option Agreement in
accordance with its terms. Such Purchaser has taken all necessary action to
authorize the execution and delivery of this Stock Option Agreement and the
transactions contemplated hereby. This Stock Option Agreement is a valid and
legally binding obligation of such Purchaser, enforceable in accordance with its
terms (assuming due authorization, execution and delivery by the Company),
subject to bankruptcy, insolvency, reorganization and other laws affecting
creditors' rights generally and to general equity principles.
(c) Compliance with Law. (i) Such Purchaser has not received notice, and
does not believe, that it is in violation of any statute, regulation or order
of, or any restriction imposed by, the United States of America, any state,
municipality or political subdivision
<PAGE>
15
having jurisdiction over it or any agency thereof, in respect of the conduct of
its business or the ownership of its properties, that it expects to materially
and adversely affect the ability of the Purchaser to consummate the transactions
contemplated by this Stock Option Agreement.
(ii) Subject to the consents and approvals listed in paragraph (e) of
this Section 5, the execution and delivery by such Purchaser of this Stock
Option Agreement does not, and the performance by such Purchaser of its
obligations and the transactions contemplated hereby will not, violate any
provision of any material law or regulation, or any existing writ or decree of
any court or governmental authority applicable to it.
(d) Compliance with Obligations. (i) Such Purchaser is not in violation
of or in default under any obligation, agreement, covenant or condition
contained in its organizational documents or by-laws, or in any contract, lease
or other instrument to which it is a party (or which is binding on its assets),
other than such violations or defaults the occurrence of which would not
materially and adversely affect such Purchaser's ability to consummate the
transactions contemplated by this Stock Option Agreement.
(ii) The execution and delivery by such Purchaser of this Stock Option
Agreement does not, and the performance by such Purchaser of its obligations
hereunder and the transactions contemplated hereby will not, violate, conflict
with or constitute a breach of, or a default under, any charter or similar
instrument, or any other material agreement or instrument to which it is a party
or which is binding on it or its assets.
(e) Consents and Approvals. All consents, approvals, authorizations and
orders (other than (i) under the HSR Act, (ii) with respect to BellSouth,
matters related to the MFJ and (iii) the Stockholder Approval) of governmental
or other third parties required for such Purchaser to execute and deliver this
Stock Option Agreement, and to consummate the transactions contemplated hereby
have been obtained.
(f) Litigation. There is no legal action, suit, investigation or
proceeding pending or, to the knowledge of such Purchaser, threatened against or
affecting such Purchaser or any of its subsidiaries or the assets of any of them
which is expected by such Purchaser materially and adversely to affect its
ability to perform or observe any obligation or condition under, or consummate
the transactions contemplated by, this Stock Option Agreement.
(g) Status and Investment Intent. Such Purchaser is an "accredited
investor" within the meaning of Regulation D under the Securities Act, and it is
purchasing the securities hereunder for its own account and (subject to its
property being at all times within its control) not with a view to any resale,
distribution or other disposition thereof.
(h) Governmental Investigation. To the knowledge of such Purchaser there
are no pending or threatened governmental investigations or proceedings against
it or any of its controlled affiliates or against any officers, directors or
employees of such Purchaser or any
<PAGE>
16
of its controlled affiliates which are expected by such Purchaser to materially
and adversely affect its ability to perform or observe any obligation or
condition under this Stock Option Agreement.
(i) MFJ Activity. BellSouth represents that, to its knowledge, neither
the Company nor any of its subsidiaries, directly or indirectly engages or
participates, alone or with any individual or entity, as a principal, agent,
reseller, representative, consultant or independent contractor, in any MFJ
Activity, other than activities listed on Exhibit 1. BellSouth further
represents that, to its knowledge, the Company's implementation of its Q-2
programming will not result in the Company engaging or participating, alone or
with any individual or entity, as a principal, agent, reseller, representative,
consultant or independent contractor, in any MFJ Activity. The parties
acknowledge that BellSouth's representations hereunder are made in reliance upon
the truthfulness and completeness of the responses to the questions BellSouth
has asked the Company.
6. Covenants of the Parties. Each of the Company and each Purchaser makes
the following covenants applicable to it (provided, however, that paragraphs
(c), (d), (e), (i) and (m) are made only between and for the benefit of the
Company and BellSouth, and that paragraph (k) is made only between and for the
benefit of the Company and each of Cox or Advance, as the case may be):
(a) Stockholder Approval. As promptly as practicable (which may be as
late as the Company's next annual stockholders meeting), the Company shall call
a stockholders meeting to obtain Stockholder Approval for the issuance of the
BellSouth Optioned Shares, the Cox Optioned Shares and the Advance Optioned
Shares and shall use its reasonable best efforts to obtain the Stockholder
Approval.
(b) Reservation of Common Stock. The Company shall reserve and keep
available out of its authorized but unissued shares of Common Stock the full
number of the BellSouth Optioned Shares, the Cox Optioned Shares and the Advance
Optioned Shares.
(c) Satisfaction of MFJ Condition. Exhibit 2 sets forth the steps that
the Company is required to take to permit BellSouth to purchase the BellSouth
Optioned Shares pursuant to this Stock Option Agreement in compliance with the
MFJ (the "MFJ Transactions"). As promptly as practicable, the Company and
BellSouth shall use their reasonable best efforts to permit BellSouth to make
the investments contemplated hereby (including acquiring the BellSouth Optioned
Shares pursuant to the terms of this Stock Option Agreement or participating in
certain acquisitions and joint ventures as contemplated by Section 6(g)) without
violation of the MFJ. Without limiting the foregoing, the Company agrees to
effectuate the MFJ Transactions promptly, and in any event within one year of
the date hereof.
<PAGE>
17
(d) Other MFJ Related Activities. So long as (i) the Option Period has
not expired, (ii) BellSouth has exercised the BellSouth Option to acquire the
BellSouth Optioned Shares and is attempting in good faith to cause the
satisfaction of all conditions to Closing with respect to such exercise,
including the MFJ Condition, or (iii) BellSouth continues to own at least
2,588,380 shares of Common stock (as adjusted consistently with the provisions
of Section 7), the Company will avoid engaging in new activities in a manner
that would, in BellSouth's good faith judgment, based upon the written advice of
counsel (which may be internal corporate counsel), advance written notice of
which has been provided to the Company, result in a potential violation of the
MFJ, as applicable to BellSouth, subject to BellSouth's obligation to make all
reasonable efforts to permit the Company to undertake an activity it wishes to
pursue without any such violation. In connection with the Company's obligation
to avoid conducting new activities in a manner that would result in a violation
of the MFJ, such activities may be conducted in a separate entity in which
BellSouth owns no interest (or otherwise structured to BellSouth's reasonable
satisfaction) so long as (i) BellSouth shall have been given a reasonable
opportunity (including obtaining the Company's reasonable cooperation) to take
steps to conduct such potentially violative activities (or a portion thereof, to
the extent reasonable) in the Company in a manner or to the extent permitted by
the MFJ and (ii) the Company will have the right to reacquire such activities
from such other entity if such potentially violative activities are no longer
prohibited by the MFJ; provided, however, that the reservation of such
reacquisition right does not result in a material economic detriment to the
Company.
(e) Open Market Purchases. After BellSouth becomes a party to the
Stockholders Agreement dated as of July 16, 1993, among Comcast Corporation
("Comcast"), Arrow Investments, L.P. ("Arrow"), Liberty and Barry Diller (the
"Stockholders Agreement") and so long as Comcast, Liberty, Arrow or BellSouth,
as the case may be, remains an Eligible Stockholder thereunder, the Company will
not take any action to (i) block or prevent open market purchases by such
Eligible Stockholder (or Liberty, if it has become a party to the Stockholders
Agreement pursuant to Section 5 of the Repurchase Agreement) of shares of Common
Stock so long as such entity's total fully diluted voting power of the Company
does not exceed 35% of the fully diluted outstanding voting power of the Company
or (ii) discriminate against such Eligible Stockholder (or Liberty, if it has
become a party to the Stockholders Agreement pursuant to Section 5 of the
Repurchase Agreement) as a stockholder or deprive BellSouth, Comcast or Arrow
(or Liberty, if it has become a party to the Stockholders Agreement pursuant to
Section 5 of the Repurchase Agreement) of full rights as a stockholder of the
Company.
(f) Additional Information and Confidentiality. Prior to the termination
of this Stock Option Agreement with respect to a Purchaser, the Company agrees
to provide such Purchaser with all information which such Purchaser may
reasonably request concerning the Company's business, financial condition and
prospects. Such Purchaser agrees to keep all such information (and other
confidential information previously supplied to such Purchaser) confidential and
not to use such information other than in connection with its investment
<PAGE>
18
hereunder or to disclose any such information to any third party unless (i) it
receives the express written consent of the Company, (ii) such information
otherwise is or becomes publicly available (except where such Purchaser knows
that such information became publicly available as a result of a breach of any
confidentiality arrangement) or (iii) in its reasonable judgment it is required
by applicable law to do so, and then only to the extent it is so required, in
each case, to the extent practicable, only after notice to and consultation with
the Company. In the event that this Stock Option Agreement is terminated, such
Purchaser shall forthwith return to the Company or destroy all information
(including all copies of any documents) obtained by such Purchaser and required
to be kept confidential pursuant to this paragraph.
(g) Certain Acquisitions and Ventures. For a period of 18 months from the
date hereof, if the Company proposes to invest in, acquire or form all or part
of an originator, owner or other producer of programming or content (including,
without limitation, a film studio, network, film library or television
programming producer) in a transaction valued at greater than $250 million, if
this Stock Option Agreement has not terminated with respect to a Purchaser or
such Purchaser has acquired shares of Common Stock pursuant to this Stock Option
Agreement, the Company will give such Purchaser along with Comcast (and Liberty,
if it has become a party to the Stockholder's Agreement pursuant to Section 5 of
the Repurchase Agreement), to the extent the Company requires third party
financing in connection with such transaction, a preferential opportunity to
participate meaningfully in any such transaction on an arm's-length basis and
will negotiate in good faith concerning any such party's participation therein.
In connection with the foregoing but subject to the obligations of BellSouth and
the Company set forth in Section 6(c) hereof, none of Comcast, Cox, Advance,
Liberty or BellSouth shall be entitled to any such preferential opportunity, to
the extent it is not legally permitted to participate in the relevant
transaction.
(h) Certain Consents and Approvals. Each of the Company and such
Purchaser shall use its reasonable efforts to obtain, or to assist the other in
obtaining, as soon as practicable (i) expiration or early termination of the
applicable waiting period under the HSR Act and (ii) all other governmental
approvals required in connection with the transactions contemplated by this
Stock Option Agreement.
(i) Operations in Ordinary Course. From the date hereof until the Closing
hereunder with respect to BellSouth or termination of this Stock Option
Agreement with respect to BellSouth, except for those actions consented to by
BellSouth in advance in writing, the Company shall conduct its business in the
ordinary course and substantially in accordance with past practice. For
purposes of this covenant, any actions that under the Company's practices
existing on the date hereof are taken or authorized to be taken by the executive
officers of the Company without approval of the Board of Directors shall
constitute ordinary course. In addition, any action taken by the Company with
the approval of the Eligible Stockholders (as defined in the Stockholders
Agreement) or its Board of Directors shall be deemed to be in the ordinary
course and substantially in accordance with past
<PAGE>
19
practice if the Eligible Stockholders or the directors designated by the
Eligible Stockholders voted in favor of such action pursuant to and in
compliance with Paragraph 3(a) of the Understanding Among Stockholders (as
defined in Section 8(viii)).
(j) Transfers; Restrictive Legend. Each Purchaser acknowledges that the
shares of Common Stock to be issued pursuant to this Stock Option Agreement have
not been registered under the Securities Act and may be sold or disposed of in
the absence of such registration only pursuant to an exemption from such
registration. The certificates evidencing shares of Common Stock to be issued
pursuant to this Stock Option Agreement shall bear the following legend until
such time as such Purchaser or any transferee thereof delivers an opinion of
counsel reasonably acceptable to the Company to the effect that such legend is
no longer required:
THESE SECURITIES WERE SOLD IN A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED OR SOLD ONLY IF
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR IF AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
In addition, certificates evidencing the BellSouth Optioned Shares shall bear
the following additional legend:
THESE SECURITIES MAY BE SUBJECT TO THE RESTRICTIONS CONTAINED IN THE
STOCKHOLDERS AGREEMENT DATED AS OF JULY 16, 1993, AMONG THE SIGNATORIES
THERETO, AS MAY BE AMENDED FROM TIME TO TIME, COPIES OF WHICH MAY BE OBTAINED
WITHOUT CHARGE FROM THE SECRETARY OF QVC NETWORK, INC.
(k) Obtaining Consents. At any time from the date hereof, if any legally
imposed condition exists to the issuance of Common Stock pursuant to the Cox
Option or the Advance Option, Cox or Advance may notify the Company that it
intends to exercise the Cox Option or the Advance Option, as applicable, upon
the satisfaction of any such legally imposed condition and request that the
Company use its reasonable efforts to assist Cox or Advance in satisfying such
condition (including cooperating with the preparation of, or participating in,
any governmental filing or application required to be made by Cox or Advance);
provided, however, that (i) any such request by Cox or Advance shall not
obligate Cox or Advance to exercise the Cox Option or the Advance Option, as
applicable, and (ii) if Cox or Advance elects not to exercise the Cox Option or
the Advance Option, as the case may be, such Purchaser shall indemnify the
Company for the costs and expenses incurred by the Company in taking any action
requested by such Purchaser pursuant to this paragraph that would not have been
otherwise required under this Stock Option Agreement. Any such condition shall
not extend the Option Termination Date.
<PAGE>
20
(l) Cooperation. The parties shall cooperate with one another in
determining whether any action by or in respect of, or filing with, any
governmental body, agency, official or authority is required, or any actions,
consents, approvals or waivers are required to be obtained from parties to any
material contracts, in connection with the consummation of the transactions
contemplated by this Stock Option Agreement. Subject to the terms and
conditions of this Stock Option Agreement, the Company and each Purchaser agree
to use their reasonable best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and implement, as soon as
reasonably practicable, the transactions contemplated by this Stock Option
Agreement.
(m) Stockholders Agreement. At the Closing of the BellSouth Option,
BellSouth agrees to become a party to the Stockholders Agreement in accordance
with the terms of the Understanding Among Stockholders.
(n) Registration Rights. The Company will use reasonable efforts to
provide each of Advance and Cox, if such entity purchases shares of Common Stock
pursuant to its option hereunder, with one demand registration of such shares
purchased hereunder (or a portion thereof, but not less than 25% of the shares
so purchased), subject to such selling entity entering into a registration
rights agreement reasonably acceptable to the Company. Such registration rights
shall not be transferable and may be exercised at any time after the first
anniversary of the purchase of shares hereunder and not after the third
anniversary thereof. The entity requesting registration shall bear all of the
Company's expenses in connection with the registration and sale of such entity's
shares.
7. Adjustments Upon Changes in Capitalization. If on or after the date of
this Stock Option Agreement there shall occur any stock dividend, stock split,
recapitalization, combination or exchange of shares, merger, consolidation,
reorganization or other change or transaction of or by the Company as a result
of which (i) shares of any class of stock, other securities, cash or other
property would have been issued in respect of the BellSouth Optioned Shares, the
Cox Optioned Shares or the Advance Optioned Shares had such shares been
outstanding at such time (the "Additional Property") or (ii) the Common Stock
issuable as the BellSouth Optioned Shares, the Cox Optioned Shares or the
Advance Optioned Shares shall be changed into the same or a different number of
shares of the same or another class of stock or other securities (the "New
Optioned Securities"), then, upon the Closing of the acquisition of the
BellSouth Optioned Shares, the Cox Optioned Shares or the Advance Optioned
Shares, BellSouth, Cox or Advance, as the case may be, shall receive for the
BellSouth Purchase Price, Cox Purchase Price or the Advance Purchase Price
payable upon such Closing (x) in the case of clause (i) above, the BellSouth
Optioned Shares, the Cox Optioned Shares or the Advance Optioned Shares plus the
Additional Property and (y) in the case of clause (ii) above, the New Optioned
Securities.
<PAGE>
21
8. Conditions to Obligations of each Purchaser.
The obligations of each Purchaser to consummate a Closing after the exercise of
the BellSouth Option, the Cox Option or the Advance Option, as the case may be,
are, at the option of such Purchaser, subject to the satisfaction of the
following conditions precedent (except the conditions precedent contained in
paragraphs (vii) and (viii) are for the sole benefit of BellSouth):
(i) Representations and Warranties. The representations and warranties
made by the Company in this Stock Option Agreement shall have been true
and correct when made and, except for the representations set forth in
paragraphs (c), (d), (f), (g), (h), (i), (j), (m) and (o) of Section 4
(the "Exercise Representations"), shall be true and correct on the date of
Closing as though such representations and warranties were made on and as
of such date, and the Exercise Representations (except, with respect to
Cox and Advance, paragraph (o) of Section 4) shall have been true and
correct on the date the BellSouth Option, Cox Option or Advance Option, as
the case may be, was exercised (except that, in each case, representations
and warranties that are made as of a specific date need be true and
correct only as of such date).
(ii) Compliance with Agreements and Conditions. The Company shall have
performed and complied in all material respects with all agreements,
obligations and conditions required by this Stock Option Agreement to be
performed or complied with by the Company at or before the date of Closing
(unless such agreement, obligation or condition was not for the benefit of
the relevant Purchaser).
(iii) Litigation. There shall not then be in effect any order enjoining
or restraining the acquisition of the BellSouth Optioned Shares, the Cox
Optioned Shares or the Advance Optioned Shares, as the case may be, or the
other transactions contemplated by this Stock Option Agreement, and there
shall not then be threatened or instituted any action or proceeding by any
governmental body or agency with respect to the acquisition of the BellSouth
Optioned Shares, the Cox Optioned Shares or the Advance Optioned Shares or
the other transactions contemplated by this Stock Option Agreement.
(iv) Stockholder Approval. To the extent required in connection with the
purchase of the BellSouth Optioned Shares, the Cox Optioned Shares or the
Advance Optioned Shares pursuant to the terms of this Stock Option Agreement,
the Company shall have received the Stockholder Approval.
(v) Certificate. Such Purchaser shall have received a certificate
executed on behalf of the Company by an executive officer acceptable to the
Purchaser and dated the
<PAGE>
22
date of Closing, to the effect that the conditions set forth in clauses (i),
(ii) and (iv) above have been satisfied.
(vi) Requisite Approvals. The Company and such Purchaser shall have
obtained all requisite consents or approvals from each Federal, state and any
other governmental agency, authority or regulatory body necessary in order to
permit the acquisition and sale and issuance of the BellSouth Optioned
Shares, the Cox Optioned Shares or the Advance Optioned Shares, as the case
may be, and the consummation of the other transactions contemplated under
this Stock Option Agreement, and all HSR Act and other governmental waiting
periods applicable to such transactions shall have expired.
(vii) MFJ Condition. The Company shall have effected the MFJ Transactions
and BellSouth shall have concluded, in its good faith judgment based upon the
written advice of counsel (which may be internal corporate counsel) that
BellSouth's acquisition of the BellSouth Optioned Shares as contemplated by
this Stock Option Agreement would not result in a potential violation of the
MFJ.
(viii) Performance of Understanding Among Stockholders. Liberty Media
Corporation, Comcast and Arrow Investments, L.P. shall have performed all
their obligations pursuant to the Understanding Among Stockholders dated as
of November 11, 1993, among BellSouth and such parties (the "Understanding
Among Stockholders"); BellSouth shall, concurrently with the Closing of the
BellSouth Option, become a party to the Stockholders Agreement as
contemplated by the Understanding Among Stockholders; and the Stockholders
Agreement shall, concurrently with the Closing of the BellSouth Option, be
amended as contemplated by the Understanding Among Stockholders in connection
with a purchase of BellSouth Optioned Shares pursuant to this Stock Option
Agreement.
9. Conditions to Obligations of the Company. The obligations of the Company
to consummate a Closing after the exercise by a Purchaser of the BellSouth
Option, the Cox Option or the Advance Option, as the case may be, are, at the
option of the Company, subject to the satisfaction of the following conditions
precedent:
(i) Representations and Warranties. The representations and warranties
made by such Purchaser in this Stock Option Agreement shall have been true
and correct when made, and shall be true and correct on the date of Closing
as though such representations and warranties were made on and as of such
date (except that representations and warranties that are made as of a
specific date need be true and correct only as of such date).
(ii) Compliance with Agreements and Conditions. Such Purchaser shall have
performed and complied in all material respects with all agreements,
obligations and
<PAGE>
23
conditions required by this Stock Option Agreement to be performed or
complied with by such Purchaser at or before the date of Closing.
(iii) Litigation. There shall not then be in effect any order enjoining
or restraining the sale and issuance of the BellSouth Optioned Shares, the
Cox Optioned Shares or the Advance Optioned Shares, as the case may be, or
the other transactions contemplated by this Stock Option Agreement, and there
shall not then be threatened or instituted any action or proceeding by any
governmental body or agency with respect to the sale and issuance of the
BellSouth Optioned Shares, the Cox Optioned Shares or the Advance Optioned
Shares, as the case may be, or the other transactions contemplated by this
Stock Option Agreement.
(iv) Certificate. The Company shall have received a certificate executed
on behalf of such Purchaser by an executive officer acceptable to the Company
to the effect that the conditions set forth in clauses (i) and (ii) above
have been satisfied.
(v) Stockholder Approval. To the extent required in connection with the
sale and issuance of the BellSouth Optioned Shares, the Cox Optioned Shares
or the Advance Optioned Shares, as the case may be, pursuant to the terms of
this Stock Option Agreement, the Company shall have received the Stockholder
Approval.
(vi) Requisite Approvals. The Company and such Purchaser shall have
obtained all requisite consents or approvals from each Federal, state and any
other governmental agency, authority or regulatory body necessary in order to
permit the acquisition and sale and issuance of the BellSouth Optioned
Shares, the Cox Optioned Shares or the Advance Optioned Shares, as the case
may be, and the consummation of the other transactions contemplated by this
Stock Option Agreement, and all HSR Act and other governmental waiting
periods applicable to such transactions shall have expired.
10. Further Assurances. If a Purchaser shall exercise the BellSouth Option,
the Cox Option or the Advance Option, as the case may be, in accordance with the
terms of this Stock Option Agreement, from time to time and without additional
consideration the Company will execute and deliver, or cause to be executed and
delivered, such additional or further transfers, assignments, endorsements, and
other instruments as such Purchaser may reasonably request for the purpose of
effectively transferring ownership of the BellSouth Optioned Shares, the Cox
Optioned Shares or the Advance Optioned Shares, as the case may be, to such
Purchaser as contemplated by this Stock Option Agreement.
11. Assignment. Neither this Stock Option Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party without the
prior written consent of the other party, except that a Purchaser may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to any direct or indirect wholly-owned subsidiary of such Purchaser;
provided, however, that at all times such entity remains a direct or
<PAGE>
24
indirect wholly-owned subsidiary of such Purchaser. Subject to the preceding
sentence, this Stock Option Agreement will be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns.
12. General Provisions. (a) Specific Performance. The parties hereto
acknowledge that damages would be an inadequate remedy for any breach of the
provisions of this Stock Option Agreement and agree that the obligations of the
parties hereunder shall be specifically enforceable.
(b) Expenses. Whether or not the BellSouth Option, the Cox Option or the
Advance Option is exercised, all costs and expenses incurred in connection with
this Stock Option Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expense.
(c) Amendments. This Stock Option Agreement may not be amended except by
an instrument in writing signed by each of the parties hereto.
(d) Notices. All notices and other communications hereunder shall be
validly given or served, as the case may be, if in writing and delivered
personally or mailed by registered or certified mail (return receipt requested)
or sent by facsimile to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) if to the Company, to:
QVC Network, Inc.
1365 Enterprise Drive
Goshen Corporate Park
West Chester, PA 19380
Attention: Neal S. Grabell, Esq.
Senior Vice President and General Counsel
Fax: (610) 430-2380
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Pamela S. Seymon, Esq.
Fax: (212) 403-2000
<PAGE>
25
(ii) if to BellSouth, to:
BellSouth Corporation
1155 Peachtree Street, N.E.
Atlanta, GA 30367-6000
Attention: Walter H. Alford, Esq.
Fax: (404) 249-5908
With a copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
Worldwide Plaza
New York, New York 10019
Attention: Philip A. Gelston, Esq.
Fax: (212) 474-3700
(iii) if to Cox, to:
Cox Enterprises, Inc.
1400 Lake Hearn Drive
Atlanta, GA 30319
Attention: John R. Dillon
Fax: (404) 843-5104
With a copy to:
Dow, Lohnes & Albertson
1255 Twenty-Third Street
Washington, DC 20037
Attention: Stuart Sheldon, Esq.
Fax: (202) 857-2900
<PAGE>
26
(iv) if to Advance:
Advance Publications, Inc.
c/o Newark Morning Ledger Co.
Star-Ledger Plaza
Newark, NJ 07101
Attention: Donald E. Newhouse
Fax: (201) 621-2604
With a copy to:
Sabin, Bermant & Gould
350 Madison Avenue
New York, NY 10017
Attention: Craig D. Holleman, Esq.
Fax: (212) 692-4406
(e) Interpretation. When a reference is made in this Stock Option
Agreement to Sections or Exhibits, such reference shall be to a Section or
Exhibit to this Stock Option Agreement unless otherwise indicated. The headings
contained in this Stock Option Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Stock Option
Agreement.
(f) Counterparts. This Stock Option Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been signed
by each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
(g) Entire Agreement; Third-Party Beneficiaries. This Stock Option
Agreement (including the documents and instruments referred to herein and
Exhibits 3, 4 and 5 and the agreements referred to therein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings
(including, without limitation, the Memorandum of Understanding dated November
11, 1993, between BellSouth and the Company, the Commitment Letter dated
November 19, 1993, between BellSouth and the Company and the Equity Commitment
Letter dated November 11, 1993, among Comcast, the Company, Cox and Advance,
each as heretofore amended), both written and oral, among the parties with
respect to the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto any rights or obligations hereunder, except
with respect to (x) paragraphs (e) and (g) of Section 6, which are for the
explicit benefit of the persons
<PAGE>
27
mentioned therein and (y) paragraph (m) of Section 6, which is for the benefit
of the Eligible Stockholders, and such paragraphs may not be amended, waived or
altered to the detriment of any person benefitting therefrom without the written
consent of such person.
(h) SUBMISSION TO JURISDICTION; CONSENT TO SERVICE OF PROCESS. WITH
RESPECT TO ANY CLAIM ARISING OUT OF, OR RELATED TO THE TRANSACTIONS CONTEMPLATED
BY THIS STOCK OPTION AGREEMENT, (A) THE COMPANY AND EACH PURCHASER EACH
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF
MANHATTAN IN NEW YORK CITY, AND (B) THE COMPANY AND EACH PURCHASER EACH
IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF
VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF, OR RELATING TO THE
TRANSACTIONS CONTEMPLATED BY, THIS STOCK OPTION AGREEMENT, BROUGHT IN ANY SUCH
COURT, IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER
IRREVOCABLY WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION
OVER SUCH PARTY. THE COMPANY AND EACH PURCHASER EACH AGREES THAT SERVICE OF
PROCESS UPON IT IN ANY SUCH SUIT, ACTION OR PROCEEDING SHALL BE DEEMED IN EVERY
RESPECT EFFECTIVE SERVICE OF PROCESS UPON IT IF GIVEN IN THE MANNER SET FORTH IN
SECTION 12(d); PROVIDED, HOWEVER, THAT SUCH SERVICE SHALL NOT BE EFFECTIVE IF
MADE ONLY BY FACSIMILE.
(i) GOVERNING-LAW. THIS STOCK OPTION AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES
OF CONFLICTS OF LAWS THEREOF.
[page intentionally short]
<PAGE>
28
IN WITNESS WHEREOF, the Company and each Purchaser have caused this Stock
Option Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
QVC NETWORK, INC.,
by /s/Neal S. Grabell
--------------------------
Neal S. Grabell
Senior Vice President and General Counsel
BELLSOUTH CORPORATION,
by /s/Charles C. Miller II
----------------------------
Charles C. Miller III
Vice President, Strategic Planning
and Corporate Development
COX ENTERPRISES, INC.,
by /s/John R. Dillon
-----------------------------
John R. Dillon
Senior Vice President
ADVANCE PUBLICATIONS, INC.,
by /s/Donald E. Newhouse
----------------------------
Donald E. Newhouse
President
<PAGE>
STOCK OPTION AGREEMENT
EXHIBIT 1
MFJ Activities
--------------
1. In connection with its electronic retailing business, the Company directly or
indirectly (i) provides a tollfree 800 number available to the public and
(ii) distributes its programming to affiliates in multiple LATA's through
uplink facilities owned, directly or indirectly, by the Company and satellite
transponders leased, directly or indirectly, by the Company. It is
BellSouth's current view that the foregoing activities are not violations of
the MFJ, assuming the Company has title at the time of sale (which may be
deemed to occur as late as the time of shipping) to all goods promoted and
sold through its electronic retailing programs.
<PAGE>
STOCK OPTION AGREEMENT
EXHIBIT 2
MFJ Transactions
----------------
1. To the extent that the Company may currently be engaged in manufacturing
telecommunications equipment, the Company shall cease such activities.
2. The Company shall operate in a fashion such that within 15 Business Days
after the exercise of the BellSouth Option, the Company shall be able to
operate, and shall operate, in a fashion such that it has title at the time
of sale (which may be deemed to occur as late as the time of shipping) to all
goods promoted and sold through its electronic retailing programs.
<PAGE>
STOCK OPTION AGREEMENT
EXHIBIT 3
February 15, 1994
TERMINATION OF CERTAIN PROVISIONS
OF THE AGREEMENT AMONG STOCKHOLDERS
In connection with QVC Network, Inc.'s ("QVC") termination of its proposed
acquisition of Paramount Communications Inc., the parties hereto agree and
acknowledge that the Agreement Among Stockholders, dated as of November 11,
1993, shall be terminated and that the parties thereto shall have no rights or
obligations thereunder except that (i) Comcast Corporation, Liberty Media
Corporation and Arrow Investments, L.P. shall be bound by the provisions of
paragraph 4 thereof with respect to shares of QVC Common Stock to be issued
pursuant to the Stock Option Agreement, dated as of February 15, 1994, among
QVC, Cox Enterprises, Inc., Advance Publications, Inc. and BellSouth Corporation
and (ii) Comcast Corporation, Liberty Media Corporation, Arrow Investments,
L.P., and BellSouth Corporation shall be bound by the provisions of paragraph 8
thereof.
COMCAST CORPORATION ARROW INVESTMENT, L.P.
By: Arrow Investments, Inc.
General Partner
By:__________________________ By:____________________________
BELLSOUTH CORPORATION COX ENTERPRISES, INC.
By:__________________________ By:____________________________
ADVANCE PUBLICATIONS, INC. LIBERTY MEDIA CORPORATION
By:__________________________ By:____________________________
<PAGE>
STOCK OPTION AGREEMENT
EXHIBIT 4
February 15, 1994
Re: Stock Option Agreement dated as of February 15, 1994,among QVC Network,
-----------------------------------------------------------------------
Inc. ("QVC"), Cox Enterprises, Inc.,
------------------------------------
Advance Publications, Inc. and BellSouth Corporation
----------------------------------------------------
("BellSouth")
-------------
In connection with the execution of the above-referenced Stock Option
Agreement by the parties thereto, the undersigned entities acknowledge and agree
to the terms of paragraph 6(g) thereof, and further agree that such paragraph
shall modify and replace the provisions contained in paragraph 6 of the
Memorandum of Understanding, dated November 11, 1993, between BellSouth and QVC,
as in effect on the date hereof.
COMCAST CORPORATION
By:_____________________________
LIBERTY MEDIA CORPORATION
By:_____________________________
<PAGE>
STOCK OPTION AGREEMENT
EXHIBIT 5
February 15, 1994
FINAL DOCUMENTATION RELATING TO
UNDERSTANDING AMONG STOCKHOLDERS
In connection with QVC Network, Inc.'s termination of its proposed
acquisition of Paramount Communications Inc., the parties hereto agree that this
agreement, together with the Stock Option Agreement dated as of February 15,
1994 (the "Option Agreement") among QVC Network, Inc., Cox Enterprises, Inc.,
Advance Publications, Inc. and BellSouth Corporation, constitute the definitive
agreement referred to in Paragraph 1 of the Understanding Among Stockholders,
dated as of November 11, 1993 (the "UAS"), and the terms of such agreement shall
survive as though incorporated herein in their entirety, except that in the
event of any conflicts between terms in the UAS and in the Option Agreement, the
Option Agreement shall control.
BELLSOUTH CORPORATION
By:_____________________________
LIBERTY MEDIA CORPORATION
By:_____________________________
COMCAST CORPORATION
By:_____________________________
ARROW INVESTMENTS, L.P.
By: Arrow Investments, Inc.
General Partner
By:_____________________________
<PAGE>
Schedule 4(j)
Governmental Investigations
---------------------------
1. More than two years ago, the United States Federal Trade Commission and
the Office of the Attorney General of Oregon conducted separate informal
investigations into the comparative pricing practices of QVC. QVC provided the
information requested and has not received any further information regarding
either investigation, and no action has been taken by either office.
2. Whether the Company must collect sales tax in certain states has not been
conclusively resolved. To the best of the Company's knowledge, there are no
pending investigations or other proceedings in any state related to this issue.
QVC collects sales tax in five states (Pennsylvania, Minnesota, Virginia, Texas
and Colorado). QVC has agreements with taxing authorities in several other
states to provide for prospective collection and, subject to such collection,
the agreements release QVC from its obligation, if any, based on sales predating
such agreement. In approximately four states, there is no sales or use tax. In
the remaining states, QVC has received no assessments, has no agreements with
such states, and has had no contact with such states in over a year.
<PAGE>
Schedule 4(k)
Outstanding Capital Stock
-------------------------
Warrants: As of February 28, 1994, there are outstanding warrants to
purchase approximately 2,010,000 shares of Common Stock, at prices ranging from
approximately $10.00 to approximately $17.00 per share. The Warrants expire
between April 1994 and October 1996.
Options: As of November 22, 1993, the Company has granted options to
purchase approximately 8,019,925 shares of Common Stock, at prices ranging from
approximately $5 to approximately $70. Some of the options are currently
exercisable, and the exercise periods end as late as December, 2002. These
options have been granted pursuant to the Company's employee stock option plans,
as well as independently of such plans.
Convertible Preferred Stock: Each share of the Company's Series B Preferred
Stock, Series C Preferred Stock, and Series D Preferred Stock is convertible
into ten shares of Common Stock. As of February 28, 1994, there were 27,788
outstanding shares of Series C Preferred Stock and 938 outstanding shares of
Series D Preferred Stock.
Stock Redemption Rights: Pursuant to certain Equity Participation
Agreements, the Company has the right to redeem the shares of Common Stock
granted to the participating affiliates in connection with their Affiliation
Agreements, in the event such affiliates fail to meet certain obligations.
Future Issuance: It is anticipated that from time to time the Company may
issue in the ordinary course additional equity securities or options to
purchase equity securities to employees and consultants, as well as for
carriage.
<PAGE>
Exhibit (c)(13)
AGREEMENT AMONG STOCKHOLDERS
In connection with the equity commitment letter, dated as of the date hereof
(the "Commitment Letter") among QVC Network, Inc. ("QVC") and certain of the
undersigned parties, and the Memorandum of Understanding (the "Memorandum of
Understanding"), dated as of the date hereof, between QVC and BellSouth
Corporation ("BellSouth"), each of Comcast Corporation ("Comcast"), BellSouth,
Arrow Investments, L.P. ("Arrow", and together with Comcast and BellSouth, the
"13-D Investors"), Cox Enterprises, Inc. ("Cox") and Advance Publications, Inc.
("Advance", and together with Cox, the "Other Purchasers") agree that the final
documentation relating to the sale of such equity will contain an agreement
among the parties hereto as follows:
(1) So long as the Other Purchasers are entitled to board representation
under the terms of the term sheet attached to the Commitment Letter as Exhibit A
thereto, the 13-D Investors will vote for one director designated by each of the
Other Purchasers. The Other Purchasers will vote for all directors designated
by each of the 13-D Investors to the extent such 13-D Investors are entitled to
designate directors under the Stockholders Agreement. The agreement made
pursuant to this clause (1) shall be renewed every eight years.
(2) The Other Purchasers shall be entitled to participate pro rata in the
sale of QVC equity securities by the 13-D Investors other than sales (a) in a
registered public offering, (b) to other 13-D Investors, (c) pursuant to Rule
144, (d) to affiliates of such 13-D Investors, (e) made as an accommodation to
the QVC board of directors or (f) required by law or by action or threatened
action of a governmental entity.
(3) Intentionally Deleted
(4) Each of the parties hereto agrees to vote all of its QVC equity
securities (to the extent such securities are entitled to vote with respect
thereto) in favor of issuing all of the equity securities QVC has agreed to
issue under the Commitment Letter and the Memorandum of Understanding and in
favor of any merger with Paramount in connection with the Acquisition.
(5) All rights and obligations of BellSouth hereunder shall terminate if
BellSouth does not purchase QVC equity securities as contemplated by the
Memorandum of Understanding.
(6) This agreement supersedes the Agreement Among Stockholders (the "Prior
Agreement") dated October 15, 1993 among Comcast, Liberty Media Corporation
("Liberty"), Barry Diller, Cox and Advance, which Prior Agreement shall
terminate as to each of the parties hereto effective upon its execution of this
agreement.
<PAGE>
2
(7) The effectiveness of this agreement is subject to the condition
subsequent that the Federal Trade Commission (the "FTC") shall have accepted for
public comment the Agreement Containing Consent Order between Liberty and the
FTC with respect to, among other things, Liberty's equity interest in QVC, in
the form previously provided to the parties hereto, without any material
changes.
(8) In connection with the foregoing, each of the parties hereto hereby
acknowledges the Liberty-QVC Agreement dated as of the date hereof between
Liberty and QVC.
(9) Prior to the purchase of any QVC equity securities under the Commitment
Letter (including any purchases under the third paragraph thereof) or the
Memorandum of Understanding, each purchaser thereunder shall irrevocably agree
to be bound by the terms of this agreement pursuant to an agreement in form and
substance reasonably satisfactory to the parties hereto.
By executing this agreement, each party hereto agrees to the terms hereof as
of November 11, 1993.
COMCAST CORPORATION ARROW INVESTMENT, L.P.
By: Arrow Investments, Inc.
General Partner
By: /s/Brian L. Roberts By: /s/Barry Diller
--------------------------- --------------------------
Brian L. Roberts Barry Diller
BELLSOUTH CORPORATION COX ENTERPRISES, INC.
By: /s/Charles C. Miller III By: /s/ James C. Kennedy
---------------------------- -------------------------
Charles C. Miller III James C. Kennedy
ADVANCE PUBLICATIONS, INC.
By: /s/Donald E. Newhouse
--------------------------
Donald E. Newhouse
<PAGE>
3
Liberty Media Corporation, by executing a copy of this agreement below, hereby
agrees to terminate the Prior Agreement and to comply with the provisions of
paragraph 4 above as if a party hereto.
LIBERTY MEDIA CORPORATION
By: /s/Peter Barton
-------------------------------
Peter Barton
<PAGE>
February 15, 1994
TERMINATION OF CERTAIN PROVISIONS
OF THE AGREEMENT AMONG STOCKHOLDERS
In connection with QVC Network, Inc.'s ("QVC") termination of its proposed
acquisition of Paramount Communications Inc., the parties hereto agree and
acknowledge that the Agreement Among Stockholders, dated as of November 11,
1993, shall be terminated and that the parties thereto shall have no rights or
obligations thereunder except that (i) Comcast Corporation, Liberty Media
Corporation and Arrow Investments, L.P. shall be bound by the provisions of
paragraph 4 thereof with respect to shares of QVC Common Stock to be issued
pursuant to the Stock Option Agreement, dated as of February 15, 1994, among
QVC, Cox Enterprises, Inc., Advance Publications, Inc. and BellSouth Corporation
and (ii) Comcast Corporation, Liberty Media Corporation, Arrow Investments,
L.P., and BellSouth Corporation shall be bound by the provisions of paragraph 8
thereof.
COMCAST CORPORATION ARROW INVESTMENT, L.P.
By: Arrow Investments, Inc.
General Partner
By: /s/Arthur R. Block By: /s/ Barry Diller
-------------------------- -----------------------
BELLSOUTH CORPORATION COX ENTERPRISES, INC.
By: /s/Charles C. Miller III By: /s/John R. Dillon
--------------------------- ------------------------
ADVANCE PUBLICATIONS, INC. LIBERTY MEDIA CORPORATION
By: /s/Donald E. Newhouse By: /s/ Peter Barton
------------------------- ----------------------------
