<PAGE> 1 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)
(Title of Class of Securities)
747262 10 3
(CUSIP Number)
Craig D. Holleman
Sabin, Bermant & Gould
350 Madison Avenue
New York, New York 10017
(212) 692-4400
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
April 25, 1994
(Date of Event which Requires Filing of this Statement)
If a filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
Check the following box if a fee is being paid with this statement [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.)
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- ---------------------
CUSIP NO. 747262 10 3
- ---------------------
- ------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Advance Publications, Inc.
- ------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- ------------------------------------------------------------
3. SEC USE ONLY
- ------------------------------------------------------------
4. SOURCE OF FUNDS
OO
- ------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
- ------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- ------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 2,958,333
EACH ----------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ----------------------------------------
10 SHARED DISPOSITIVE POWER
2,958,333
- ------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
2,958,333
- ------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
- ------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.9%
- ------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- ------------------------------------------------------------
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<PAGE> 3
- ---------------------
CUSIP NO. 747262 10 3
- ---------------------
- ------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Donald E. Newhouse
- ------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- ------------------------------------------------------------
3. SEC USE ONLY
- ------------------------------------------------------------
4. SOURCE OF FUNDS
OO
- ------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
- ------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 2,958,333
EACH ----------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ----------------------------------------
10 SHARED DISPOSITIVE POWER
2,958,333
- ------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
2,958,333
- ------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
- ------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.9%
- ------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- ------------------------------------------------------------
<PAGE>
<PAGE> 4
- ---------------------
CUSIP NO. 747262 10 3
- ---------------------
- ------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
S.I. Newhouse, Jr.
- ------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- ------------------------------------------------------------
3. SEC USE ONLY
- ------------------------------------------------------------
4. SOURCE OF FUNDS
OO
- ------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
- ------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 2,958,333
EACH ----------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ----------------------------------------
10 SHARED DISPOSITIVE POWER
2,958,333
- ------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
2,958,333
- ------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
- ------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.9%
- ------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- ------------------------------------------------------------
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This Statement on Schedule 13D, dated April 25, 1994
(the "Statement"), filed by Advance Publications, Inc., a New
York corporation ("Advance"), Donald E. Newhouse and S. I.
Newhouse, Jr., relates to the common stock ($.01 par value)
("Common Stock"), of QVC Network, Inc., a Delaware corporation
(the "Company") and is filed pursuant to Section 13D of the
Securities Exchange Act of 1934, as amended (the "Act").
Advance, Donald E. Newhouse and S.I. Newhouse, Jr. are
collectively referred to herein as the "Reporting Persons."
The Statement is being jointly filed by the
Reporting Persons pursuant the joint filing agreement filed as
Exhibit 1 hereto. To the extent the Statement summarizes the
terms or conditions of agreements incorporated herein by
reference, such summaries shall be qualified in their entirety
by reference to the actual text of such agreements attached as
exhibits hereto.
Item 1. Security and Issuer.
The Statement relates to shares of Common Stock.
The principal executive offices of the Company are located at
Goshen Corporate Park, West Chester, Pennsylvania 19380.
Item 2. Identity and Background.
The Statement is being jointly filed by the
Reporting Persons. Donald E. Newhouse and S.I. Newhouse, Jr.
are the co-trustees of Advance Voting Trust, a testamentary
trust under the will of S.I. Newhouse, Sr. that owns all of
the equity securities of Advance eligible to vote for
directors of Advance. The name, business address, principal
occupation or employment and, as appropriate, citizenship or
state of organization of each Reporting Person and each person
who is an executive officer or director of a Reporting Person
or a person controlling a Reporting Person are set forth in,
and incorporated by reference to, Schedule I attached hereto.
During the last five years, none of the Reporting Persons and,
to the knowledge of the Reporting Persons, none of the persons
listed on Schedule I attached hereto, has been convicted in a
criminal proceeding (excluding traffic violations or similar
misdemeanors) or was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a
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.
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Item 3. Source and Amount of Funds or Other
Consideration.
The 125,000 shares of Common Stock beneficially
owned by the Reporting Persons immediately prior to April ,
1994 were purchased from the Company by certain indirect
wholly-owned subsidiaries of Advance in connection with
agreements by certain cable operating subsidiaries of Advance
to carry the Company's cable programming. The funds for such
purchaseses came from the working capital of Advance and its
affiliates. It is currently contemplated that if and when
Advance exercises its right to purchase Common Stock pursuant
to the Advance Option (as defined below), Advance will have
sufficient funds available from its working capital and new or
existing bank credit facilities. As of the date of this
filing, Advance has made no specific plans or arrangements
regarding obtaining such funds.
Item 4. Purpose of Transaction.
On April 25, 1994, Advance executed the Stock Option
Agreement (the "Option Agreement") among the Company, Cox
Enterprises, Inc. ("Cox"), Advance and BellSouth Corporation
("BellSouth"). The following summary of certain terms and
provisions of the Option Agreement is qualified in its
entirety by the full text of the Option Agreement which is
attached as Exhibit 2 hereto and is incorporated by reference
herein.
Pursuant and subject to the terms and conditions set
forth in the Option Agreement, the Company has granted each of
BellSouth, Cox and Advance an option (collectively the
"Options") to purchase shares of Common Stock. The Options
may be exercised in whole only and not in part. Upon exercise
of the Option granted to Advance (the "Advance Option")
Advance is entitled to purchase 2,833,333 shares of Common
Stock (subject to adjustment upon certain changes in the
Company's capitalization) for $170,000,000 ($60 per share of
Common Stock).
The Options may be exercised during the period
beginning as of the date of the Option Agreement and ending as
of 5:00 p.m. on the later of (i) August 15, 1994 and (ii) if
issuance of the Common Stock pursuant to the Options requires
the approval of the stockholders of the Company pursuant to
Section 5(i) of Part III of Schedule D of the By-laws of the
National Association of Securities Dealers, Inc. ("Stockholder
Approval"), ten Business Days after the stockholders of the
Company vote with respect to such matter. Pursuant to the
Option Agreement, the Company has agreed to use its reasonable
best efforts to obtain the Stockholder Approval. In addition,
pursuant to the Agreement Among Stockholders, dated November
11, 1993,
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certain stockholders of the Company including Liberty Media
Corporation ("Liberty"), Arrow Investments, L.P. ("Arrow") and
Comcast Corporation ("Comcast") have agreed to vote in favor
of a proposal to approve the issuance of Common Stock pursuant
to the Options.
The Common Stock to be issued pursuant to the
Advance Option has not been registered pursuant to the
Securities Act of 1933, as amended, and if not so registered
prior to issuance, may not be sold by Advance unless so
registered or unless an exemption from such registration is
available. Subject to the execution of a registration rights
agreement reasonably acceptable to the Company, the Company
has also agreed to use reasonable efforts to provide each of
Advance and Cox, if such entity purchases shares of Common
Stock pursuant to their respective Option, with one demand
registration right with respect to such shares of Common
Stock. The demand registration rights may only be exercised
during the period beginning after the first anniversary of the
purchase of shares of Common Stock pursuant to such Option and
ending on the third anniversary thereof and are not
transferable.
Upon Advance's exercise of the Advance Option, the
obligations of the Company to issue, and Advance to pay for,
the Common Stock subject to the Advance Option are subject to
the satisfaction of a number of conditions including (i) to
the extent required, Stockholder Approval, (ii) the receipt of
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 such Common Stock and (iii) the expiration of
all applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
Pursuant to the Option Agreement, the Company has
also agreed that, for a period of 18 months from the date of
such agreement, 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, and either (i) the Option Agreement has not been
terminated with respect to Advance, Cox or BellSouth (each, a
"Purchaser"), as the case may be, or (ii) the Purchaser has
acquired Common Stock pursuant to the Option Agreement, then
the Company, to the extent it requires third party financing
in connection with such transaction, will give such Purchaser
(as well as Comcast, and under certain circumstances, Liberty)
a preferential opportunity to participate meaningfully in such
transaction on an arm's-length basis.
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None of the Option Agreement or the rights,
interests or obligations thereunder are assignable by any
party without the prior written consent of the other party,
except that a Purchaser may assign any or all of its rights,
interests and obligations thereunder to any direct or indirect
wholly-owned subsidiary of such Purchaser.
Except as otherwise described in this Item 4, none
of the Reporting Persons or, to the knowledge of the Reporting
Persons, any of the persons listed on Schedule I hereto, has
any present plans or intentions which would result in or
relate to any of the transactions described in subparagraphs
(a) through (j) of the instructions to Item 4 of Schedule 13D
promulgated under the Act. The Reporting Persons intend to
continue to review their investment in the Company and the
financial condition, business, operations and prospects of the
Company on an ongoing basis. Accordingly, subject to the
terms of the Option Agreement, the Reporting Persons reserve
the right to change their plans or intentions with respect to
the Company as circumstances warrant and, as a result thereof,
may determine to exercise or not to exercise the Advance
option or to increase or decrease their current investment in
the Company.
Item 5. Interest in Securities of the Issuer.
The shares of Common Stock deemed beneficially owned
by the Reporting Persons consist of (i) 125,000 shares of
Common Stock previously acquired by Advance, (ii) 2,833,333
shares of Common Stock issuable upon the exercise of the
Advance Option.
Based on the information set forth above and
information contained in the most recent publicly available
filings of the Company with the Securities and Exchange
Commission (as supplemented by representations by the Company
in the Option Agreement regarding the number of outstanding
shares of Common Stock), each of the Reporting Persons may be
deemed to beneficially own the number and percentage of
outstanding shares of Common Stock listed in its responses to
Items 11 and 13, respectively, of the cover page filed
herewith relating to such Reporting Person. In addition, the
number of shares of Common Stock which may be deemed
beneficially owned by each Reporting Person with respect to
which such Reporting Person (i) has sole voting power, (ii)
shares voting power, (iii) has sole dispositive power and (iv)
shares dispositive power are listed in the responses to Items
7, 8, 9 and 10, respectively, of the cover page filed herewith
relating to such Reporting Person.
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Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
Except as set forth in Item 4 above, the Reporting
Persons have not entered into any contracts, arrangements,
understandings or relationships with respect to any securities
of the Company.
Item 7. Material to be Filed As Exhibits.
Exhibit Description
99.1 Joint Filing Agreement, dated
April 25, 1994, among Advance,
Donald E. Newhouse and S.I. Newhouse,
Jr.
99.2 Option Agreement, dated as of
February 15, 1994, among the Company,
Cox, Advance and BellSouth.
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SIGNATURES
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.
Dated: April 25, 1994
ADVANCE PUBLICATIONS, INC.
By: /s/ Donald E. Newhouse
Name: Donald E. Newhouse
Title: President
/s/ Donald E. Newhouse
Donald E. Newhouse
/s/ S.I. Newhouse, Jr.
S. I. Newhouse, Jr.
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SCHEDULE I
Name: Advance Publications, Inc.
Business Address: 950 Fingerboard Road
Staten Island, NY 10305
Principal Business: Publishing
State of Organization: New York
Name: Donald E. Newhouse
Business Address: Star-Ledger Plaza
Newark, NJ 07101
Principal Occupation: Member of the Board of
Directors, President and
Treasurer of Advance
Publications, Inc.
Employer: Various affiliates of
Advance Publications, Inc.
Employer's Address: 950 Fingerboard Road
Staten Island, NY 10305
Principal Business of Employer: Publishing
Citizenship: U.S.A.
Name: S.I. Newhouse, Jr.
Business Address: 350 Madison Avenue
New York, NY 10017
Principal Occupation: Chairman of the Board of
Directors and Vice
President of Advance
Publications, Inc.
Employer: Various affiliates of
Advance Publications, Inc.
Employer's Address: 950 Fingerboard Road
Staten Island, NY 10305
Principal Business of Employer: Publishing
Citizenship: U.S.A.
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Name: Samual I. Newhouse, III
Business Address: Evening Journal Association
30 Journal Square
Jersey City, NJ 07306
Principal Occupation: Member of the Board of
Directors of Advance
Publications, Inc.
Employer: Various affiliates of
Advance Publications, Inc.
Employer's Address: 950 Fingerboard Road
Staten Island, NY 10305
Principal Business of Employer: Publishing
Citizenship: U.S.A.
Name: Richard E. Diamond
Business Address: Staten Island Advance
950 Fingerboard Road
Staten Island, NY 10305
Principal Occupation: Vice President and
Secretary of Advance
Publications, Inc.
Employer: Advance Publications, Inc.
Employer's Address: 950 Fingerboard Road
Staten Island, NY 10305
Principal Business of Employer: Publishing
Citizenship: U.S.A.
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INDEX TO EXHIBITS
Exhibit No. Exhibit Page
99.1 Joint Filing Agreement, dated
April 25, 1994, among Advance,
Donald E. Newhouse and
S.I. Newhouse, Jr.
99.2 Option Agreement, dated as of
February 15, 1994, among the
Company, Cox, Advance and
BellSouth.
<PAGE> 1
EXHIBIT 99.1
JOINT FILING AGREEMENT
Pursuant to Rule 13d-1(f) promulgated under the
Securities Exchange Act of 1934, the undersigned hereby agree
to the joint filing of this Statement on Schedule 13D
including any amendments thereto.
This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but
all of which shall constitute one and the same instrument.
Dated: April 25, 1994
ADVANCE PUBLICATIONS, INC.
By: /s/ Donald E. Newhouse
Name: Donald E. Newhouse
Title: President
/s/ Donald E. Newhouse
Donald E. Newhouse
/s/ S. I. Newhouse, Jr.
S. I. Newhouse, Jr.
<PAGE> 1
EXHIBIT 99.2
STOCK OPTION AGREEMENT dated as of
February 15, 1994 (this "Stock Option Agree-
ment"), among QVC NETWORK, INC., a Delaware
corporation (the "Company"), COX ENTERPRISES,
INC., a Delaware corporation ("Cox"), ADVANCE
PUBLICATIONS, INC., a New York corporation
("Advance"), and BELLSOUTH CORPORATION, a
Georgia corporation ("BellSouth", and Cox,
Advance and BellSouth each individually a
"Purchaser").
WHEREAS the Company had proposed to acquire (the
"Acquisition") Paramount Communications Inc., a Delaware
corporation; and
WHEREAS the Acquisition has been abandoned, and each
Purchaser wishes to have the option to acquire from the
Company shares of the Company's Common Stock, par value
$.01 per share (the "Common Stock"), as provided in this Stock
Option Agreement.
NOW, THEREFORE, in consideration of the
representations, warranties and agreements herein contained,
the parties hereto agree as follows:
1. Grant of Options. The Company hereby grants to
(i) BellSouth an irrevocable option (the "BellSouth Option")
to purchase 8,627,934 shares of Common Stock (the "BellSouth
Optioned Shares") for a purchase price of $517,676,040 (the
"BellSouth Purchase Price"), (ii) Cox an irrevocable option
(the "Cox Option") to purchase 2,833,333 shares of Common
Stock (the "Cox Optioned Shares") for a purchase price of
$170,000,000 (the "Cox Purchase Price") and (iii) Advance an
irrevocable option (the "Advance Option") to purchase
2,833,333 shares of Common Stock (the "Advance Optioned
Shares") for a Purchase Price of $170,000,000 (the "Advance
Purchase Price"). The period during which the BellSouth
Option, the Cox Option or the Advance Option may be exercised
(the "Option Period") shall begin on the date hereof and shall
end (the "Option Expiration Date") at 5:00 p.m. on the later
of the date that is (i) August 15, 1994, or (ii) if receipt of
the approval of the stockholders of the Company of the
issuance of the BellSouth Optioned Shares, the Cox Optioned
Shares or the Advance Optioned Shares is required pursuant to
Section 5(i) of Part III of Schedule D of the By-laws of the
National Association of Securities Dealers, Inc. (the
"Stockholder Approval"), ten Business Days after the
stockholders vote with respect to such matter (whether or not
such approval is received, and provided that consummation of a
Closing (as defined in Section 2(a)) shall remain subject to
satisfaction of all conditions contained herein, including,
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without limitation, the conditions contained in Sections 8(iv)
and 9(v)).
2. Exercise of the Options; Termination. (a) Bell-
South, 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 Expira-
tion Date (the "Option Termination Date"), the BellSouth
Option, the Cox Option or the Advance Option, as the case may
be, shall automatically terminate on such date and the parties
with respect to whom such termination has occurred shall have
no further rights or obligations hereunder.
(b) To the extent that the condition to 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
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<PAGE> 3
terms of this Stock Option Agreement shall thereafter become
void and have no effect as to the Company and the Purchaser
with respect to whom such termination or expiration occurs,
and no such party shall have any liability to the other such
party hereto or directors or officers in respect thereof,
except for the obligations set forth in Section 6(f), and
except that nothing herein will relieve any party from lia-
bility for any breach of this Stock Option Agreement (except a
non-wilful breach of the representations and warranties in
Sections 4 and 5, in which case termination of this Stock
Option Agreement shall be the sole remedy) prior to such
termination.
3. Payment of Purchase Price and Delivery of
Certificates for Optioned Shares. At a Closing of the Bell-
South Option, the Cox Option or the Advance Option, as the
case may be, (i) BellSouth will pay the Company the 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 incor-
poration 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
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<PAGE> 4
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 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
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<PAGE> 5
amended (the "HSR Act") and (ii) Stockholder Approval)
required for the Company to execute and deliver this Stock
Option Agreement and to consummate the transactions contem-
plated hereby have been obtained.
(f) Exchange Act Reports. Each of the Company's
(i) Annual Reports on Form 10-K, for the fiscal years ended
after January 31, 1990, (ii) Quarterly Reports on Form 10-Q
for the current fiscal year and (iii) proxy statement for the
most recently called annual meeting (collectively, the "SEC
Documents"), has been duly and timely filed, and when filed
was in substantial compliance with the requirements of the
Securities Exchange Act of 1934 and the applicable rules and
regulations of the Securities and Exchange Commission
thereunder (the "Exchange Act"). Each of the SEC Documents
was complete and correct in all material respects as of its
date and, as of its date, did not contain any untrue 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 Pur-
chaser 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,
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<PAGE> 6
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
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
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<PAGE> 7
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 Optioned Shares, as the case
may be, will be exempt from the registration and prospectus
delivery requirements of the Securities Act.
(o) MFJ Activities. Set forth on Exhibit 1 is a
complete list, as of the date hereof, of (i) all interLATA
transmission facilities and services (including, without
limitation, satellite uplink facilities, satellite trans-
ponders, receive-only earth stations and 800 numbers) and (ii)
any activities which constitute the manufacture or
distribution of telecommunications equipment or the manu-
facture of customer premises equipment (but not the
distribution of customer premises equipment) (collectively,
"MFJ Activities"), owned or provided by the Company or any of
its subsidiaries. Neither the Company nor any of its
subsidiaries directly or indirectly, engages or 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 Pur-
chaser. Each Purchaser hereby severally with respect to
itself only, and not jointly, makes the following repre-
sentations and warranties to the Company (except that the
representation and warranty contained in paragraph (i) is made
solely by BellSouth):
(a) Corporate Existence. Such Purchaser is a
corporation, duly organized, validly existing and in good
standing under the laws of its state of incorporation.
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<PAGE> 8
(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 having juris-
diction over it or any agency thereof, in respect of the
conduct of its business or the ownership of its properties,
that it expects to materially and adversely affect the ability
of the Purchaser to consummate the transactions contemplated
by this Stock Option Agreement.
(ii) Subject to the consents and approvals listed in
paragraph (e) of this Section 5, the execution and delivery by
such Purchaser of this Stock Option Agreement does not, and
the performance by such Purchaser of its obligations and the
transactions contemplated hereby will not, violate any
provision of any material law or 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
<PAGE>
<PAGE> 9
Agreement, and to consummate the transactions contemplated
hereby have been obtained.
(f) Litigation. There is no legal action, suit,
investigation or proceeding pending or, to the knowledge of
such Purchaser, threatened against or affecting such Purchaser
or any of its subsidiaries or the assets of any of them which
is expected by such Purchaser materially and adversely to
affect its ability to perform or observe any obligation or
condition under, or consummate the transactions contemplated
by, this Stock Option Agreement.
(g) Status and Investment Intent. Such Purchaser
is an "accredited investor" within the meaning of Regulation D
under the Securities Act, and it is purchasing the securities
hereunder for its own account and (subject to its property
being at all times within its control) not with a view to any
resale, distribution or other disposition thereof.
(h) Governmental Investigation. To the knowledge
of such Purchaser there are no pending or threatened
governmental investigations or proceedings against it or any
of its controlled affiliates or against any officers,
directors or employees of such Purchaser or any of its
controlled affiliates which are expected by such Purchaser to
materially and adversely affect its ability to perform or
observe any obligation or condition under this Stock Option
Agreement.
(i) MFJ Activity. BellSouth represents that, to
its knowledge, neither the Company nor any of its subsidiar-
ies, directly or indirectly engages or participates, alone or
with any individual or entity, as a principal, agent,
reseller, representative, consultant or independent con-
tractor, in any MFJ Activity, other than activities listed on
Exhibit 1. BellSouth further represents that, to its
knowledge, the Company's implementation of its Q-2 programming
will not result in the Company engaging or participating,
alone or with any individual or entity, as a principal, agent,
reseller, representative, consultant or independent
contractor, in any MFJ Activity. The parties acknowledge that
BellSouth's representations hereunder are made in reliance
upon the truthfulness and completeness of the responses to the
questions BellSouth has asked the Company.
6. Covenants of the Parties. Each of the Company
and each Purchaser makes the following covenants applicable to
it (provided, however, that paragraphs (c), (d), (e), (i) and
(m) are made only between and for the benefit of the Company
and BellSouth, and that paragraphs (k) and (n) are made only
between and for the benefit of the Company and each of Cox or
Advance, as the case may be):
(a) Stockholder Approval. As promptly as
practicable (which may be as late as the Company's next annual
stockholders meeting), the Company shall call a stockholders
meeting to obtain Stockholder Approval for the issuance of the
BellSouth Optioned Shares, the Cox Optioned
<PAGE>
<PAGE> 10
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.
(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.
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<PAGE> 11
(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 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
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<PAGE> 12
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 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.
<PAGE>
<PAGE> 13
In addition, certificates evidencing the BellSouth
Optioned Shares shall bear the following additional legend:
THESE SECURITIES MAY BE SUBJECT TO THE RESTRICTIONS
CONTAINED IN THE STOCKHOLDERS AGREEMENT DATED AS OF JULY
16, 1993, AMONG THE SIGNATORIES THERETO, AS MAY BE
AMENDED FROM TIME TO TIME, COPIES OF WHICH MAY BE
OBTAINED WITHOUT CHARGE FROM THE SECRETARY OF QVC
NETWORK, INC.
(k) Obtaining Consents. At any time from the date
hereof, if any legally imposed condition exists to the
issuance of Common Stock pursuant to the Cox Option or the
Advance Option, Cox or Advance may notify the Company that it
intends to exercise the Cox Option or the Advance Option, as
applicable, upon the satisfaction of any such legally imposed
condition and request that the Company use its reasonable
efforts to assist Cox or Advance in satisfying such condition
(including cooperating with the preparation of, or
participating in, any governmental filing or application
required to be made by Cox or Advance); provided, however,
that (i) any such request by Cox or Advance shall not obligate
Cox or Advance to exercise the Cox Option or the Advance
Option, as applicable, and (ii) if Cox or Advance elects not
to exercise the Cox Option or the Advance Option, as the case
may be, such Purchaser shall indemnify the Company for the
costs and expenses incurred by the Company in taking any
action requested by such Purchaser pursuant to this paragraph
that would not have been otherwise required under this Stock
Option Agreement. Any such condition shall not extend the
Option Termination Date.
(l) Cooperation. The parties shall cooperate with
one another in determining whether any action by or in respect
of, or filing with, any governmental body, agency, official or
authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any
material contracts, in connection with the consummation of the
transactions contemplated by this Stock Option Agreement.
Subject to the terms and conditions of this Stock Option
Agreement, the Company and each Purchaser agree to use their
reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to
consummate and implement, as soon as 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.
<PAGE>
<PAGE> 14
(n) Registration Rights. The Company will use
reasonable efforts to provide each of Advance and Cox, if such
entity purchases shares of Common Stock pursuant to its option
hereunder, with one demand registration of such shares
purchased hereunder (or a portion thereof, but not less than
25% of the shares so purchased), subject to such selling
entity entering into a registration rights agreement
reasonably acceptable to the Company. Such registration
rights shall not be transferable and may be exercised at any
time after the first anniversary of the purchase of shares
hereunder and not after the third anniversary thereof. The
entity requesting registration shall bear all of the Company's
expenses in connection with the registration and sale of such
entity's shares.
7. Adjustments Upon Changes in Capitalization. If
on or after the date of this Stock Option Agreement there
shall occur any stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation,
reorganization or other change or transaction of or by the
Company as a result of which (i) shares of any class of stock,
other securities, cash or other property would have been
issued in respect of the BellSouth Optioned Shares, the Cox
Optioned Shares or the Advance Optioned Shares had such shares
been outstanding at such time (the "Additional Property") or
(ii) the Common Stock issuable as the BellSouth Optioned
Shares, the Cox Optioned Shares or the Advance Optioned Shares
shall be changed into the same or a different number of shares
of the same or another class of stock or other securities (the
"New Optioned Securities"), then, upon the Closing of the
acquisition of the BellSouth Optioned Shares, the Cox Optioned
Shares or the Advance Optioned Shares, BellSouth, Cox or
Advance, as the case may be, shall receive for the BellSouth
Purchase Price, Cox Purchase Price or the Advance Purchase
Price payable upon such Closing (x) in the case of clause (i)
above, the BellSouth Optioned Shares, the Cox Optioned Shares
or the Advance Optioned Shares plus the Additional Property
and (y) in the case of clause (ii) above, the New Optioned
Securities.
8. Conditions to Obligations of each Purchaser.
The obligations of each Purchaser to consummate a Closing
after the exercise of the BellSouth Option, the Cox Option or
the Advance Option, as the case may be, are, at the option of
such Purchaser, subject to the satisfaction of the following
conditions precedent (except the conditions precedent
contained in paragraphs (vii) and (viii) are for the sole
benefit of BellSouth):
(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
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<PAGE> 15
Exercise Representations (except, with respect to Cox and
Advance, paragraph (o) of Section 4) shall have been true
and correct on the date the BellSouth Option, Cox Option
or Advance Option, as the case may be, was exercised
(except that, in each case, representations and
warranties that are made as of a specific date need be
true and correct only as of such date).
(ii) Compliance with Agreements and Conditions. The
Company shall have performed and complied in all material
respects with all agreements, obligations and conditions
required by this Stock Option Agreement to be performed
or complied with by the Company at or before the date of
Closing (unless such agreement, obligation or condition
was not for the benefit of the relevant Purchaser).
(iii) Litigation. There shall not then be in effect
any order enjoining or restraining the acquisition of the
BellSouth Optioned Shares, the Cox Optioned Shares or the
Advance Optioned Shares, as the case may be, or the other
transactions contemplated by this Stock Option Agreement,
and there shall not then be threatened or instituted any
action or proceeding by any governmental body or agency
with respect to the acquisition of the BellSouth Optioned
Shares, the Cox Optioned Shares or the Advance Optioned
Shares or the other transactions contemplated by this
Stock Option Agreement.
(iv) Stockholder Approval. To the extent required
in connection with the purchase of the BellSouth Optioned
Shares, the Cox Optioned Shares or the Advance Optioned
Shares pursuant to the terms of this Stock Option
Agreement, the Company shall have received the
Stockholder Approval.
(v) Certificate. Such Purchaser shall have
received a certificate executed on behalf of the Company
by an executive officer acceptable to the Purchaser and
dated the date of Closing, to the effect 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
<PAGE>
<PAGE> 16
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
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.
<PAGE>
<PAGE> 17
(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 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.
<PAGE>
<PAGE> 18
(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
(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
<PAGE>
<PAGE> 19
(iii) if to Cox, to:
Cox Enterprises, Inc.
1400 Lake Hearn Drive
Atlanta, GA 30319
Attention: John R. Dillon
Fax: (404) 843-5104
With a copy to:
Dow, Lohnes & Albertson
1255 Twenty-Third Street
Washington, DC 20037
Attention: Stuart Sheldon, Esq.
Fax: (202) 857-2900
(iv) if to Advance:
Advance Publications, Inc.
c/o Newark Morning Ledger Co.
Star-Ledger Plaza
Newark, NJ 07101
Attention: Donald E. Newhouse
Fax: (201) 621-2604
With a copy to:
Sabin, Bermant & Gould
350 Madison Avenue
New York, NY 10017
Attention: Craig D. Holleman, Esq.
Fax: (212) 692-4406
(e) Interpretation. When a reference is made in
this Stock Option Agreement to Sections or Exhibits, such
reference shall be to a Section or Exhibit to this Stock
Option Agreement unless otherwise indicated. The headings
contained in this Stock Option Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Stock Option Agreement.
(f) Counterparts. This Stock Option Agreement may
be executed in one or more counterparts, all of which shall be
considered one and the same agreement, and shall become
effective when one or more of the counterparts have been
signed by each of the parties and delivered to the 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
<PAGE>
<PAGE> 20
BellSouth and the Company, the Commitment Letter dated
November 19, 1993, between BellSouth and the Company and the
Equity Commitment Letter dated November 11, 1993, among
Comcast, the Company, Cox and Advance, each as heretofore
amended), both written and oral, among the parties with
respect to the subject matter hereof and (ii) is not intended
to confer upon any person other than the parties hereto any
rights or obligations hereunder, except with respect to (x)
paragraphs (e) and (g) of Section 6, which are for the
explicit benefit of the persons mentioned therein and (y)
paragraph (m) of Section 6, which is for the benefit of the
Eligible Stockholders, and such paragraphs may not be amended,
waived or altered to the detriment of any person benefitting
therefrom without the written consent of such person.
(h) SUBMISSION TO JURISDICTION; CONSENT TO SERVICE
OF PROCESS. WITH RESPECT TO ANY CLAIM ARISING OUT OF, OR
RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS STOCK OPTION
AGREEMENT, (A) THE COMPANY AND EACH PURCHASER EACH IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED
IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND (B) THE
COMPANY AND EACH PURCHASER EACH IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE
OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF, OR RELATING
TO THE TRANSACTIONS CONTEMPLATED BY, THIS STOCK OPTION
AGREEMENT, BROUGHT IN ANY SUCH COURT, IRREVOCABLY WAIVES ANY
CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND
FURTHER IRREVOCABLY WAIVES THE RIGHT TO OBJECT, WITH RESPECT
TO SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT,
THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY.
THE COMPANY AND EACH PURCHASER EACH AGREES THAT SERVICE OF
PROCESS UPON IT IN ANY SUCH SUIT, ACTION OR PROCEEDING SHALL
BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON
IT IF GIVEN IN THE MANNER SET FORTH IN SECTION 12(d); PROVIDED,
HOWEVER, THAT SUCH SERVICE SHALL NOT BE EFFECTIVE IF MADE ONLY
BY FACSIMILE.
(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>
<PAGE> 21
IN WITNESS WHEREOF, the Company and each Purchaser
have caused this Stock Option Agreement to be signed by their
respective officers thereunto duly authorized, all as of the
date first written above.
QVC NETWORK, INC.,
by /s/ Neal S. Grabell
Name: Neal S. Grabell
Title: Senior Vice President
and General Counsel
BELLSOUTH CORPORATION,
by
/s/ Charles C. Miller, III
Name: Charles C. Miller, III
Title: Vice President -
Strategic Planning &
Corporate Developement
COX ENTERPRISES, INC.,
by
/s/ John R. Dillon
Name: John R. Dillon
Title: Senior Vice President
ADVANCE PUBLICATIONS, INC.,
by
/s/ Donald E. Newhouse
Name: Donald E. Newhouse
Title: President
<PAGE>
<PAGE>
STOCK OPTION AGREEMENT
EXHIBIT 1
MFJ Activities
1. In connection with its electronic retailing business, the
Company directly or indirectly (i) provides a toll-free
800 number available to the public and (ii) distributes
its programming to affiliates in multiple LATA's through
uplink facilities owned, directly or indirectly, by the
Company and satellite transponders leased, directly or
indirectly, by the Company. It is BellSouth's current
view that the foregoing activities are not violations of
the MFJ, assuming the Company has title at the time of
sale (which may be deemed to occur as late as the time of
shipping) to all goods promoted and sold through its
electronic retailing programs.
<PAGE>
<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>
<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: /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
<PAGE>
<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: /s/ Arthur R. Block
LIBERTY MEDIA CORPORATION
By: /s/ Peter Barton
<PAGE>
<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: /s/ Charles C. Miller, III
LIBERTY MEDIA CORPORATION
By: /s/ Peter Barton
COMCAST CORPORATION
By: /s/ Arthur R. Block
ARROW INVESTMENTS, L.P.
By: Arrow Investments, Inc.
General Partner
By: /s/ Barry Diller
<PAGE>
<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 states related to this issue. QVC
collects sales tax in five state (Pennsylvania, Minnesota,
Virginia, Texas and Colorado). QVC has agreements with taxing
authorities in several other states to provide for prospective
collection and, subject to such collection, the agreements
release QVC from its obligation, if any, based on sales
predating such agreement. In approximately four states, there
is no sales or use tax. In the remaining states, QVC has
received no assessments, has no agreements with such states,
and has had no contact with such states in over a year.
<PAGE>
<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 B Preferred Stock, 530,757 outstanding shares
of Series C preferred stock and 938 outstanding shares of
Series D Preferred Stock.
Stock Redemption Rights: Pursuant to certain Equity
Participation Agreements, the Company has the right to redeem
the shares of Common Stock granted to the participating
affiliates in connection with their Affiliation Agreements, in
the event such affiliates fail to meet certain obligations.
Future Issuance: It is anticipated that from time to
time the Company may issue in the ordinary course additional
equity securities or options to purchase equity securities to
employees and consultants, as well as for carriage.
