<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934*
QVC, INC.
- ------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
- ------------------------------------------------------------------------------
(Title of Class of Securities)
437351109
- ------------------------------------------------------------------------------
(CUSIP Number)
Stephen M. Brett, Esq.
Senior Vice President
and General Counsel
Tele-Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111
Tel. No. (303) 267-5500
- ------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 4, 1994
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with this statement /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 less than five percent of such class.
See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page should be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which 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 1 of ___ pages
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CUSIP No. 747262 10 3
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons
TELE-COMMUNICATIONS, INC.
84 - 1260157
- ------------------------------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group
(a) /X/
(b) / /
- ------------------------------------------------------------------------------------------------------
(3) SEC Use Only
- ------------------------------------------------------------------------------------------------------
(4) Source of Funds
WC, BK
- ------------------------------------------------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)
/ /
- ------------------------------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
Delaware
- ------------------------------------------------------------------------------------------------------
Number of (7) Sole Voting Power 0 Shares
Shares Bene- ----------------------------------------------------------------------------
ficially (8) Shared Voting Power 19,216,572 Shares
Owned by ----------------------------------------------------------------------------
Each Report- (9) Sole Dispositive Power 0 Shares
ing Person ----------------------------------------------------------------------------
With (10) Shared Dispositive Power 19,216,572 Shares
- ------------------------------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
19,216,572 Shares
- -----------------------------------------------------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares /x/
Excludes shares of Common Stock beneficially owned by the Executive Officers and
Directors of TCI and Comcast. Excludes 294,944 shares which may be deemed
to be beneficially owned by TCI by virtue of its ownership of equity interests
in two entities which are the record owners of Company securities. Does not
include any shares beneficially owned by Barry Diller.
- -----------------------------------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
41.0% See Item 5.
- -----------------------------------------------------------------------------------------------------------
(14) Type of Reporting Person (See Instructions)
CO
</TABLE>
Page 2 of ___ pages
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Statement Of
TELE-COMMUNICATIONS, INC.
Pursuant to Section 13(d) of the
Securities Exchange Act of 1934
in respect of
QVC, INC.
This Report on Schedule 13D relates to the common stock, par
value $.01 per share (the "Common Stock"), of QVC, Inc., a Delaware corporation
formerly known as QVC Network, Inc. (the "Company"). On August 4, 1994,
Tele-Communications, Inc. ("Old TCI") and Liberty Media Corporation
("Liberty") consummated a business combination transaction (the "TCI/Liberty
Merger") whereby each of Liberty and Old TCI became wholly owned subsidiaries
of a newly formed holding company, TCI/Liberty Holding Company, which was
renamed Tele-Communications, Inc. ("TCI" or the "Reporting Person") immediately
following the TCI/Liberty Merger.
This Report contains information with respect to the Company
Securities (as defined below) beneficially owned by Liberty and Old TCI prior
to the consummation of the TCI/Liberty Merger, which Company Securities are
currently beneficially owned by TCI. Prior to the TCI/Liberty Merger, Liberty
beneficially owned greater than five percent of the outstanding Common Stock
and had filed a Report on Schedule 13D with respect to such beneficial
ownership. Such Report on Schedule 13D, as most recently amended by Amendment
No. 26 thereto, dated as of July 21, 1994 (collectively, the "Liberty Schedule
13D"), is hereby incorporated by reference into this Report for all purposes.
As a result of certain mutual agreements as to the voting and
disposition of the Company Securities held by TCI and Comcast Corporation
("Comcast") contained in the Amended Letter Agreement (as defined below) among
TCI, Liberty and Comcast, TCI and Comcast may be deemed to constitute a "group"
(the "TCI-Comcast Group") pursuant to Rule 13d-5 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), with respect to their respective
beneficial ownership of the Company Securities and to share beneficial
ownership of the Company Securities beneficially owned by each of them.
Information contained herein relating to any person other than TCI (including
Liberty and Old TCI) has been provided based upon information received by TCI
from such person, and TCI has no responsibility for the accuracy or
completeness of such information.
The descriptions contained herein of the Amended Letter
Agreement, the Merger Agreement (as defined below), and the related press
release by Liberty, Comcast and the Company are qualified in their entirety by
reference to the complete text of such
Page 3 of ___ pages
<PAGE> 4
documents, copies of which have been filed as Exhibits hereto and are hereby
incorporated by reference herein for all purposes.
ITEM 1. SECURITY AND ISSUER
The class of equity securities to which this statement relates
is the common stock, par value $.01 per share, of QVC, Inc., a Delaware
corporation formerly known as QVC Network, Inc., which has its principal
executive offices at Goshen Corporate Park, West Chester, Pennsylvania 19380.
Pursuant to Rule 13d-3 promulgated under the Exchange Act, this Report also
relates to the shares of Common Stock issuable upon conversion of shares of the
Company's Series B Preferred Stock, par value $.10 per share ("Series B
Preferred Stock"), the Series C Preferred Stock, par value $.10 per share (the
"Series C Preferred Stock"; the Series C Prefered Stock, the Series B Preferred
Stock and the Series D Preferred Stock, par value $.10 per share, of the
Company referred to collectively herein as the "Preferred Stock"), of the
Company and the shares of Common Stock issuable upon the exercise of the
certain warrants to purchase shares of Common Stock (the "Warrants") previously
issued by the Company. Each Warrant is exercisable for one share of Common
Stock and each share of Preferred Stock is convertible into ten (10) shares of
Common Stock. The Common Stock, Preferred Stock and Warrants are referred to
herein collectively as the "Company Securities."
ITEM 2. IDENTITY AND BACKGROUND
This Statement is being filed by Tele-Communications, Inc.
("TCI"; Commission File No. 033-54263; I.R.S. Identification No. 84-1260157;
name changed from TCI/Liberty Holding Company), a Delaware corporation, whose
principal business address is 5619 DTC Parkway, Englewood, Colorado 80111.
TCI is principally engaged in the acquisition, development and
operation of cable television systems, assets and programming interests, and,
through its subsidiaries and affiliates, operates cable television systems
throughout the continental United States and Hawaii.
As a result of the consummation of the TCI/Liberty Merger, TCI
became the beneficial owner of the Company Securities held by Liberty and Old
TCI. The description contained herein of the TCI/Liberty Merger is qualified in
its entirety by the more complete description thereof contained in the Proxy
Statement of Liberty and Old TCI, dated June 23, 1994 and the related
Registration Statement on Form S-4 (No. 33-54263) filed by the Reporting
Person, which is incorporated by reference herein for all purposes. Prior to
the TCI/Liberty Merger, Liberty beneficially owned greater than five percent of
the outstanding Common Stock and had filed the Liberty Schedule 13D (as most
recently amended as of July 21, 1994) with respect to such beneficial
ownership, which Report has been incorporated by reference herein for all
purposes.
As heretofore publicly disclosed, the TCI/Liberty Merger is to
be treated as a "consolidation" wherein, although the direct or indirect legal
title of certain programming interests and cable television assets of Liberty
and Old TCI remain unchanged, the beneficial ownership thereof now belongs to
TCI. TCI is now a publicly held company subject to the informational
requirements of the Exchange Act and will, commencing herewith, henceforth be a
reporting person in respect of the securities of the Company beneficially owned
by it. Old TCI and Liberty are now no longer publicly held reporting persons
under the Exchange Act, but each is now a wholly owned subsidiary of TCI.
As noted in the ownership summary contained in the cover page
of this Report, statements herein relating to the beneficial ownership of
Company Securities by the TCI-Comcast Group and by TCI individually shall,
unless explicitly provided to the contrary, be deemed to exclude Company
Securities which TCI or the TCI-Comcast Group may be deemed to beneficially own
by virtue of TCI's ownership of certain equity securities of Lenfest
Communications, Inc. and Sioux Falls Cable Television (a general partnership).
TCI
Page 4 of ___ pages
<PAGE> 5
and the TCI-Comcast Group disclaim beneficial ownership of all Company
Securities owned by such entities. See Item 5.
The name, business address and present principal occupation or
employment and the name, address and principal business of any corporation or
other organization in which such employment is conducted, of (i) each of the
executive officers and directors of TCI, (ii) each person controlling TCI, and
(iii) the executive officers and directors of any corporation controlling TCI,
are set forth in Schedule 1 attached hereto and incorporated herein by
reference.
During the last five years, neither TCI nor, to the best of
its knowledge, any of its executive officers, directors or controlling persons
has (i) been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or (ii) been 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 law or finding any violation with respect to
such law.
To the best knowledge of TCI, each of its executive officers
and directors is a citizen of the United States, except as specifically set
forth in Schedule 1 hereto.
On July 12, 1994, Comcast announced an offer to acquire all of
the outstanding Common Stock of the Company not owned by Comcast in a business
combination in which holders of Common Stock other than Comcast would receive
cash and Comcast securities having a combined value of $44 per share of Common
Stock. On July 21, 1994, Liberty and Comcast issued a press release announcing
that they had entered into a letter agreement, dated July 21, 1994 (the "Letter
Agreement"), pursuant to which Liberty had agreed to participate with Comcast
in Comcast's original offer which was amended to provide that Comcast and
Liberty would be joint bidders in such offer and to change the consideration to
be paid to holders of Common Stock other than Comcast or Liberty to $44 per
share in cash in a merger or other similar transaction between one or more
entities owned by Liberty and/or Comcast and the Company.
On August 5, 1994, Liberty, Comcast and the Company announced
that they had entered into a definitive merger agreement pursuant to which
Comcast and Liberty would acquire all of the outstanding Common Stock and
Preferred Stock of the Company not owned by Liberty or Comcast for $46 per
share and $460 per share, respectively. Such transaction would be effected
initially by a cash tender offer (the "Tender Offer") for all shares of Common
Stock at $46 per share and all shares of Preferred Stock at $460 per share
commencing on or prior to August 11, 1994, followed by a merger (the "Merger")
in which a corporation controlled by Comcast and Liberty would merge with the
Company and any remaining shares of Common Stock or Preferred Stock would be
converted into the right to receive the same amount of cash as offered in the
Tender Offer. In connection with the execution of the Merger Agreement,
Liberty, Comcast and TCI entered into a letter agreement, dated August 4, 1994
( the "Amended Letter Agreement"), superseding the Letter Agreement and
providing that Liberty and Comcast will cooperate in causing the Tender Offer
and the Merger to be consummated as promptly as practicable.
Page 5 of ___ pages
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The descriptions contained herein of the Merger Agreement, the
Amended Letter Agreement and the related press release by Liberty, Comcast and
the Company are qualified in their entirety by reference to the complete text
of such documents, which have been filed as Exhibits hereto and have been
incorporated by reference herein for all purposes.
As a result of certain mutual agreements contained in the
Amended Letter Agreement as to the voting and disposition of the Company
Securities held by TCI (including those shares held by Old TCI and Liberty
prior to the TCI/Liberty Merger) and Comcast and Liberty and Comcast's agreement
to act together with respect to the proposed Tender Offer and Merger, TCI and
Comcast may be deemed to share beneficial ownership of the Company Securities
beneficially owned by each of them and to constitute a "group" for purposes of
Rule 13d-5 under the Exchange Act with respect to their respective beneficial
ownership of the Company Securities. See Items 4 and 6 below.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
It is presently anticipated that the amount of funds required
to acquire the approximately 28.6 million shares of Common Stock presently
outstanding and not owned by Liberty or Comcast pursuant to the Tender Offer
and the Merger and to pay other related costs and expenses (including the
payment to the holders of outstanding options to purchase Common Stock of the
cash value of such options pursuant to the Merger Agreement) is approximately
$1.4 billion. Pursuant to the Amended Letter Agreement, Liberty has agreed to
contribute to a newly formed holding company ("QVC Holdings") 6,527,207 shares
of Common Stock and 372,866 shares of Preferred Stock (or the equivalent of
10,255,867 shares of Common Stock in the aggregate) plus $20 million in cash in
connection with the consummation of the Tender Offer. TCI presently expects
that the funds required for Liberty to make such cash contribution will come
from a combination of working capital and general corporate funds and
existing credit facilities of TCI. The proposed means of financing the
purchase of shares in the Tender Offer and the Merger is described in Section 1
of the Amended Letter Agreement, which has been incorporated by reference into
this Report.
ITEM 4. PURPOSE OF TRANSACTION
The purpose of the Tender Offer and the Merger is to acquire
all of the outstanding Common Stock of the Company not held by Liberty or
Comcast, with the result that, following the Tender Offer and the Merger,
Liberty and Comcast collectively will hold all of the outstanding equity
securities of the Company.
Pursuant to the Amended Letter Agreement, Liberty and Comcast
have agreed to proceed with the Tender Offer and the Merger jointly. The
Amended Letter Agreement provides that, among other things, until the Merger
all material decisions relating to the Tender Offer and the Merger shall be
unanimous and that Liberty and Comcast will use their reasonable best efforts
to resolve, on a mutually acceptable basis, any disagreements with respect to
such material decisions.
The Amended Letter Agreement provides that following the
Tender Offer and the Merger, Liberty would own approximately 43% and Comcast
would own approximately 57% of QVC Holdings, which would own all of the
outstanding equity securities of the Company. The Amended Letter Agreement
also contains a number of provisions relating to the governance of QVC Holdings
and the Company following the Merger, which provisions generally provide that
Comcast will be entitled to manage the business and affairs of the QVC
Page 6 of ___ pages
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Holdings and Company, except that Liberty's consent will be required for the
taking of certain actions by the QVC Holdings and Company. In addition, the
Amended Letter Agreement provides that Liberty will have certain rights to
require Comcast to purchase its interest in QVC Holdings after the fifth
anniversary of the Merger and that, if Comcast fails to agree to purchase such
interest or, if it has agreed to purchase such interest it subsequently
defaults on such obligation, Liberty would have the right to buy Comcast's
interest and to take over management of QVC Holdings and the Company. If
Liberty declines to purchase Comcast's interest or defaults on an obligation to
purchase, the Amended Letter Agreement provides that Liberty and Comcast would
cooperate in a sale of QVC Holdings.
TCI has considered, but has not made any decision, concerning
its course of action in the event that the Tender Offer and/or the Merger are
not consummated, including, but not limited to, as a result of the withdrawal
or modification by the Board of Directors of the Company of its recommendation
that holders of shares of Common Stock tender their shares in the Tender Offer
and approve the Merger (whether as a result of the making of a proposal to the
Company regarding an Alternative Transaction (as defined in the Merger
Agreement) by a third party or otherwise or because of a failure to be satisfied
of one or more of the conditions to the consumation of the Tender Offer or the
Merger). In such event, TCI could decide (either alone or with Comcast) to seek
to consummate the acquisition of the remaining equity securities of the Company
through one or more means or to abandon its efforts to effect such an
acquisition, to dispose of all or a portion of the shares of Common Stock
beneficially owned by it, to continue to hold such shares as a passive
investment, to continue to hold such shares and actively seek either alone or in
conjunction with one or more stockholders of the Company (including Comcast) or
other persons and through one or more means, to obtain or influence control of
the Company, or to take any other available course of action. In this regard, in
the event the Merger Agreement is terminated as a result of an Alternative
Transaction, TCI may not be entitled to join with any person (other than
Comcast) in the making of an offer at a higher price per share.
In reaching any decision as to its course of action (as well
as to the specific elements thereof), TCI expects that it would take into
consideration a variety of factors, including but not limited to, the Company's
business and prospects, other developments concerning the Company and the cable
television and entertainment programming industries generally, other business
opportunities available to TCI and other developments with respect to the
business of TCI, general economic conditions and money and stock market
conditions, including the market price of the Common Stock. Regardless, TCI
specifically reserves the right to change its intention with respect to any of
the foregoing matters and to take any other available course of action, which
could involve one or more of the types of transactions or have one or more of
the results described in Item 4 of Schedule 13D.
It is presently expected that upon consummation of the Merger,
the registration of the Common Stock under the Exchange Act would be terminated
and the Common Stock would cease to be traded on the Nasdaq National Market, or
any securities exchange or inter-dealer quotation system.
Page 7 of ___ pages
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As of the date hereof, TCI's beneficial ownership
of equity securities of the Company, the total amounts thereof now outstanding
and the percentage of said ownership are set forth below. Except as noted
below, such information: (i) includes all of the Company's securities as to
which TCI has sole voting power and sole investment power and all such
securities as to which TCI shares voting power and shares investment power;
(ii) assumes that there is no exercise by the Company of its right to require
either of TCI or Comcast to sell certain of the Company Securities held by them
to the Company in the event that certain carriage requirements related to the
Company's programming are not met (the "Company Repurchase Rights"); and (iii)
assumes the exercise of all Warrants and the conversion of all shares of
Preferred Stock (all of which are presently exercisable or convertible)
beneficially owned by each of TCI and Comcast (individually), and the
adjustment of the number of shares of the Company's Common Stock that would be
outstanding subsequent to such exercise or conversion.
As of April 30, 1994 the number of shares of the Common Stock
which were issued and outstanding, as reported by the Company in its Quarterly
Report on Form 10-Q for the quarter ended April 30, 1994, was 40,214,097.
TCI currently beneficially owns 10,588,638 shares of Common
Stock, which amount consists of 332,771 shares held by Old TCI and 10,255,867
shares held by Liberty. Such aggregate amount constitutes approximately 24.0%
of the outstanding Common Stock (calculated in accordance with Rule 13d-3 under
the Exchange Act).
The foregoing amount includes 3,728,660 shares of Common Stock
issuable upon the conversion of 372,866 shares of Series C Preferred Stock and
179,220 shares of Common Stock issuable upon the conversion of 17,922 shares of
Series B Preferred Stock, all of which are beneficially owed by TCI. Such
amount does not include any shares of Common Stock beneficially owned by
Comcast. Such amount also does not include 361,655 shares of Common Stock
(including 122,826 shares issuable upon exercise of certain Warrants and
187,020 shares issuable upon conversion of certain shares of Series C Preferred
Stock) owned by Lenfest Communications, Inc. ("LCI") and Sioux Falls Cable
Television, a general partnership ("Sioux Falls"). TCI possesses 50% of the
equity interests in each of LCI and Sioux Falls. As a result of such equity
ownership, TCI may be deemed to share beneficial ownership of the Common Stock
beneficially owned by such entities with the other holders of equity interests
in LCI and Sioux Falls. TCI disclaims beneficial ownership of the Company
Securities held by LCI and Sioux Falls.
By virtue of the Amended Letter Agreement, TCI may be deemed
to have shared voting and dispositive power with Comcast with respect to the
Company Securities beneficially owned by each of TCI and Comcast. See Items 4
and 6. As a result, TCI may be deemed to beneficially own Company Securities
representing approximately 41.0% of the outstanding Common Stock (calculated in
accordance with Rule 13d-3), consisting of the equivalent of 10,588,638 shares
of Common Stock held by TCI and the equivalent of 8,627,934 shares of Common
Stock held by Comcast. Such amounts do not include any shares beneficially
owned by Barry Diller, which shares may be deemed to be beneficially owned by
Comcast as a result of an agreement between Mr. Diller and Comcast entered into
in connection with the Merger Agreement and the Amended Letter Agreement.
Certain shares of Common Stock and Preferred Stock
beneficially owned by TCI and Comcast may be subject to the Company Repurchase
Rights. In the Amended Letter Agreement, Liberty and Comcast have agreed to
cause the Company, in connection with the consummation of the Merger, to waive
any remaining rights it may have pursuant to the
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Company Repurchase Rights (or any similar contingent right of the Company to
acquire Company Securities) with respect to all Company Securities currently
held by TCI, Liberty or Comcast (or any of their respective direct or indirect
subsidiaries and affiliates).
To the knowledge of TCI, the number of shares of Common Stock
beneficially owned by its executive officers, directors and controlling persons
listed on Schedule 1 hereto (beneficial ownership of which shares is disclaimed
by TCI) is set forth below:
<TABLE>
<CAPTION>
No. of Shares of Common
Individual Stock Beneficially Owned
---------- ------------------------
<S> <C>
Peter R. Barton 2,975
Bob Magness 3,750
Fred A. Vierra 50
</TABLE>
(b) Pursuant to the terms of the Amended Letter Agreement,
each member of the TCI-Comcast Group may be deemed to have shared voting and
dispositive power as to all of the Company Securities beneficially owned by the
TCI-Comcast Group (all of which are subject to certain of the provisions of
Amended Letter Agreement). In addition, TCI may also have shared voting and
dispositive power as to an aggregate of 361,655 shares of Common Stock held by
LCI and Sioux Falls.
(c) Except by virtue of the execution of the Letter Agreement
and the Amended Letter Agreement, TCI has not effected any transactions in the
classes of securities reported on herein during the past sixty (60) days, and
is not aware of any other transactions in such securities by any of the persons
listed on Schedule 1.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIP WITH
RESPECT TO THE SECURITIES OF THE ISSUER
The information contained in Items 2, 3 and 4 above is
incorporated by reference in this Item 6.
In the Amended Letter Agreement, each of Liberty and Comcast
has agreed that until the consummation of Merger, it will vote all Company
Securities beneficially owned by it in favor of the Merger and any related
matters, will not sell or dispose of any Company Securities or enter into any
agreement relating to the voting or sale or purchase of its Company Securities,
and will not solicit or encourage any Alternative Transaction. In addition,
TCI has agreed that until the consummation of the Merger, it will vote all
Company Securities beneficially owned by it in favor of the Merger and any
related matters and will not solicit or encourage any Alternative Transaction.
The descriptions contained herein of the Amended Letter
Agreement, the Merger Agreement and the related press release are qualified in
their entirety by reference to
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<PAGE> 10
the full text of such documents, copies of which have been filed as Exhibits
hereto and which are hereby incorporated by reference herein for all purposes.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
99.1 Press Release, dated August 5, 1994, by
Liberty Media Corporation, Comcast
Corporation and QVC, Inc.
99.2 Letter Agreement, dated August 4, 1994, from
Comcast Corporation to Liberty Media
Corporation and Tele-Communications, Inc.
99.3 Agreement and Plan of Merger among QVC, Inc.,
Comcast Corporation, Liberty Media
Corporation and Comcast QMerger, Inc., dated
as of August 4, 1994.
Page 10 of ___ pages
<PAGE> 11
SIGNATURE
After reasonable inquiry and to the best of his knowledge and belief,
the undersigned certifies that the information in this statement is true,
complete and correct.
Dated: August 8, 1994
TELE-COMMUNICATIONS, INC.
By: /s/ Peter R. Barton
-------------------------------
Name: Peter R. Barton
Title: Executive Vice President
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<PAGE> 12
SCHEDULE 1
DIRECTORS, EXECUTIVE OFFICERS AND CONTROLLING PERSONS
OF
TELE-COMMUNICATIONS, INC. ("TCI")
<TABLE>
<CAPTION>
Principal Business
or Organization in
Principal Occupation Which Such Employment
Name and Business Address is Conducted
---- -------------------- ---------------------
<S> <C> <C>
Bob Magness Chairman of the Board and Acquisition, development and
Director of TCI operation of cable television
5619 DTC Parkway systems and cable television
Englewood, CO 80111 programming
John C. Malone President and Chief Executive Acquisition, development and
Officer and Director of TCI operation of cable television
5619 DTC Parkway systems and cable television
Englewood, CO 80111 programming
Donne F. Fisher Executive Vice President, Acquisition, development and
Treasurer and Director of TCI operation of cable television
5619 DTC Parkway systems and cable television
Englewood, CO 80111 programming
John W. Gallivan Director of TCI Newspaper publishing
Chairman of the Board
Kearns-Tribune Corporation
400 Tribune Building
Salt Lake City, UT 84111
Anthony Lee Coelho Director of TCI Investment Services
President and CEO of
Wertheim Schroder Investment
Services, Inc.
787-7th Avenue, 5th Floor
New York, New York 10019
Kim Magness Director of TCI Ranching and horse breeding
Magness family business
interests, principally in
ranching and breeding Arabian horses;
1470 South Quebec Way, #148
Denver, CO 80231
</TABLE>
Page 12 of ___ pages
<PAGE> 13
<TABLE>
<CAPTION>
Principal Business
or Organization in
Principal Occupation Which Such Employment
Name and Business Address is Conducted
---- -------------------- ---------------------
<S> <C> <C>
Robert A. Naify Director of TCI Motion Picture Industry
President and CEO of
Todd-AO Corporation
172 Golden Gate Avenue
San Francisco, CA 94102
Jerome H. Kern Director of TCI; Senior Law
Partner in Baker & Botts, L.L.P.
885 Third Avenue, Suite 1900
New York, NY 10022
Stephen M. Brett Executive Vice President, Secretary Acquisition, development and
and General Counsel of TCI operation of cable television
5619 DTC Parkway systems and cable television
Englewood, CO 80111 programming
Brendan R. Clouston Executive Vice President Acquisition, development and
of TCI operation of cable television
5619 DTC Parkway systems and cable television
Englewood, CO 80111 programming
Larry E. Romrell Executive Vice President of TCI Acquisition, development and
5619 DTC Parkway operation of cable television
Englewood, CO 80111 systems and cable television
programming
J.C. Sparkman Executive Vice President of TCI Acquisition, development and
5619 DTC Parkway operation of cable television
Englewood, CO 80111 systems and cable television
programming
R.E. Turner Director of TCI Cable television and
Chairman of the Board and entertainment programming
President of Turner Broadcasting
System, Inc. since 1970
One CNN Center, 14th Fl North
Atlanta, GA 30303
Fred A. Vierra Executive Vice President of TCI Acquisition, development and
5619 DTC Parkway operation of cable television
Englewood, CO 80111 systems and cable television
programming
</TABLE>
Page 13 of ___ pages
<PAGE> 14
<TABLE>
<CAPTION>
Principal Business
or Organization in
Principal Occupation Which Such Employment
Name and Business Address is Conducted
---- -------------------- ---------------------
<S> <C> <C>
Peter R. Barton Executive Vice President of TCI Acquisition, development and
5619 DTC Parkway operation of cable television
Englewood, CO 80111 systems and cable television
programming
</TABLE>
Page 14 of ___ pages
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EXHIBIT INDEX
Exhibit
No. Description
------- -----------
99.1 Press Release, dated August 5, 1994, by
Liberty Media Corporation, Comcast
Corporation and QVC, Inc.
99.2 Letter Agreement, dated August 4, 1994, from
Comcast Corporation to Liberty Media
Corporation and Tele-Communications, Inc.
99.3 Agreement and Plan of Merger among QVC, Inc.,
Comcast Corporation, Liberty Media
Corporation and Comcast QMerger, Inc., dated
as of August 4, 1994.
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Exhibit 99.1
FOR IMMEDIATE RELEASE
COMCAST AND LIBERTY MEDIA
SIGN MERGER AGREEMENT WITH QVC
------------------------------------
PRICE INCREASED TO $46 PER SHARE
------------------------------------
Philadelphia, Pennsylvania, Englewood, Colorado and West Chester, Pennsylvania
- -- August 5, 1994: Comcast Corporation, Liberty Media Corporation and QVC,
Inc. jointly announced today that Comcast, Liberty and QVC have entered into a
definitive merger agreement pursuant to which Comcast and Liberty will acquire
QVC. QVC stockholders will receive $46 in cash per share of QVC Common Stock
and $460 in cash per share of QVC Preferred Stock.
QVC's Board of Directors has received the opinion of Allen &
Company Incorporated that the consideration to be received by QVC's
shareholders (other than Comcast, Liberty and their affiliates) pursuant to the
transaction is fair to such shareholders from a financial point of view.
In accordance with the merger agreement, Comcast and Liberty
expect to commence on or prior to Thursday, August 11, 1994, a tender offer for
all shares of stock of QVC at a net cash price of $46 per share of QVC Common
Stock and a net cash price of $460 per share of QVC Preferred
<PAGE> 2
Stock. Lazard Freres & Co. will act as dealer manager for the tender offer.
Following expiration of the tender offer, a corporation
controlled by both Comcast and Liberty will merge with QVC and any remaining
shares of QVC will be converted into cash at the same price as offered in the
tender offer.
The total cost of the acquisition of the remainder of QVC
stock not currently owned by Comcast or Liberty will be approximately $1.42
billion. Comcast and Liberty have agreed to fund approximately $267 million
and $20 million respectively, of the acquisition with the balance to be
provided through debt financing, which, after the merger, will be an obligation
of QVC. Following the acquisition, Comcast and Liberty will own approximately
57% and 43%, respectively, of QVC and QVC will be managed by Comcast.
The transaction is conditioned upon Comcast and Liberty
obtaining the requisite financing on satisfactory terms to purchase all of the
outstanding shares of QVC, receipt of certain governmental approvals and other
customary conditions.
Comcast, Liberty and Tele-Communications, Inc., who
collectively currently own approximately 35% of QVC's outstanding voting shares
on a fully diluted basis, have agreed to vote their shares of QVC in favor of
the transaction. Barry Diller has also agreed, among other
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things, to vote his QVC shares in favor of the transaction to the extent such
shares are not tendered in the offer.
QVC has agreed that if the merger agreement is terminated in
certain circumstances prior to consummation of the merger, QVC will pay an
aggregate of $55 million to Comcast and Liberty.
Comcast Corporation is principally engaged in the development,
management and operation of cable communications networks. Comcast's
consolidated and affiliated operations served approximately 3.0 million cable
subscribers at March 31, 1994. After completion of the acquisition of Maclean
Hunter's United States cable properties, Comcast's consolidated and pro-rated
affiliated operations will serve approximately 3.5 million cable subscribers,
making it the third largest cable operator in the country. Comcast provides
cellular telephone services in the Northeast United States to markets
encompassing a population in excess of 7.4 million. Comcast also has
investments in cable programming, telecommunications systems, and international
cable and telephony franchises.
Comcast's Class A and Class A Special Common Stock are traded
on The Nasdaq Stock Market under the symbols CMCSA and CMCSK, respectively.
Liberty, its affiliates and companies in which it holds
investments operate cable television systems serving an aggregate of
approximately 3.2 million subscribers in 30
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states. Liberty's programming interests include BET, The Family Channel,
Encore, Starz!, Home Shopping Club, QVC, Court TV, X*PRESS and regional and
national sports networks.
On August 4, 1994, TCI and Liberty consummated a business
combination transaction resulting in TCI and Liberty becoming wholly-owned
subsidiaries of a newly formed holding company, which has been renamed
Tele-Communications, Inc. Beginning August 5, 1994, the new TCI's Class A
Common Stock, Class B Common Stock and Class E Preferred Stock will trade on
the NASDAQ National Market System under the symbols TCOMA, TCOMB and TCOMP,
respectively. Liberty's Class A Common Stock, Class B Common Stock and Class E
6% Cumulative Redeemable Exchangeable Junior Preferred Stock discontinued
trading on such market at the close of business on August 4, 1994.
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QVC, Inc. is the world's largest electronic retailer, reaching
more than 50 million homes across the United States and an additional 17
million households through joint ventures in the United Kingdom and Mexico.
FOR FURTHER INFORMATION CONTACT:
Comcast Corporation
William E. Dordelman
Assistant Treasurer
(215) 981-7392
Kathleen B. Jacoby
Director of Investor Relations
(215) 981-7392
Liberty Media Corporation
Vivian Carr
Vice President - Investor Relations
(303) 721-5406
QVC, Inc.
Investors: William F. Costello
Executive Vice President - Chief Financial Officer
(610) 430-8938
Media: Donald A. Van de Mark
Dir., Corporate Communications
(610) 429-5666
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Exhibit 99.2
COMCAST CORPORATION
1500 Market Street
Philadelphia, PA 19102-4735
August 4, 1994
LIBERTY MEDIA CORPORATION
8101 East Prentice Avenue
Suite 500
Denver, Colorado 80111
Gentlemen:
This letter agreement (the "Agreement") confirms our agreement
with respect to the joint acquisition (the "Acquisition") of QVC, Inc. ("QVC")
on the terms described in the Merger Agreement (the "Merger Agreement") dated
the date hereof among Comcast Corporation ("Comcast"), Liberty Media
Corporation ("Liberty"), Comcast QMerger, Inc. ("QVC Holdings") and QVC. This
Agreement supersedes in its entirety the agreement dated July 21, 1994 between
Comcast and Liberty which, effective upon the execution and delivery of this
Agreement, shall terminate. Simultaneously with the execution of this
Agreement, Comcast, Arrow Investments, L.P. ("Arrow") and Barry Diller are
entering into a letter agreement (the "Letter Agreement") relating to the
Acquisition.
1. The Acquisition. Comcast and Liberty agree to
proceed with the transactions contemplated by this Agreement and the Merger
Agreement jointly and to use all reasonable efforts to cause the transactions
contemplated by this Agreement and the Merger Agreement to be consummated as
promptly as practicable. Until the merger (the "Merger") contemplated by the
Merger Agreement is consummated, except as provided in Section 7, all material
decisions with respect to the Acquisition shall be unanimous. Comcast and
Liberty agree to use all reasonable efforts, acting in good faith, to resolve,
on a mutually acceptable basis, any disagreements they may have with respect to
such material decisions.
In connection with the Acquisition, Comcast and Liberty shall
contribute to QVC Holdings (simultaneously with QVC Holdings' acceptance for
payment of shares tendered
<PAGE> 2
pursuant to the Offer (as defined in the Merger Agreement)) the QVC securities
(or shares of QVC common stock into which such securities are convertible) as
are respectively specified on Schedule IV. Comcast will also contribute at
such time to QVC Holdings an amount of cash equal to (i) the amount necessary
to exercise all warrants to acquire QVC common stock that are contributed by
Comcast to QVC Holdings (which warrants shall be exercised immediately
following such contribution) and (ii) $267 million (the "Comcast Additional
Contribution"). Liberty will also contribute at such time to QVC Holdings $20
million, in cash (the "Liberty Additional Contribution"). Based upon the
parties' relative contributions (with all shares valued at $46 per share of
common stock or common stock equivalent) to QVC Holdings, following the Merger
the equity interests in QVC Holdings will be owned 57.4% by Comcast and 42.6%
by Liberty. The parties agree that all such contributions shall be made by,
and the equity interests in QVC Holdings received in consideration therefor
shall be issued to, wholly-owned subsidiaries of Comcast or Liberty, as the
case may be.
The parties agree to work together to arrange the financing
required by the Merger Agreement, as heretofore proposed by Comcast, including
(i) a margin credit facility to be made available to QVC Holdings for purposes
of purchasing shares of QVC capital stock tendered pursuant to the Offer, which
margin credit facility shall be secured by the shares of QVC capital stock
purchased in the Offer and the shares contributed to QVC Holdings as provided
above; and (ii) permanent financing to be put in place in connection with the
Merger consisting of (A) $200 million of subordinated debt of QVC Holdings and
(B) a $950 million senior secured bank facility to be made available to QVC
which, together with the proceeds of such subordinated debt, shall be used to
repay the margin tender offer facility, to pay for shares of QVC acquired in
the Merger, to pay certain fees and expenses of the transaction (and/or
reimburse the parties for certain previously paid fees and expenses as provided
below) and to provide certain working capital to QVC. Neither Comcast nor
Liberty shall be required to give any guarantee or similar credit support to
QVC Holdings or QVC in connection with any such financing referred to in
clauses (i) and (ii) above.
In connection with the consummation of the Merger, Comcast and
Liberty agree to cause QVC (i) to waive any remaining rights that it may have
pursuant to the Company Repurchase Rights (as defined in the Stockholders
Agreement (the "Stockholders Agreement") dated July 16, 1993 among Comcast,
Liberty, Barry Diller and Arrow) (or any similar contingent right of QVC to
reacquire shares of its capital stock) with respect to all shares of capital
stock of QVC (or rights to acquire such shares) currently held by Liberty, TCI
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or Comcast (or any of their respective direct and indirect subsidiaries and
affiliates); and (ii) to agree that all of such shares (and related rights) are
vested and no longer subject to such repurchase rights.
2. Post-Merger Structure. Following the Merger, the
charter and by-laws of QVC Holdings will provide that matters submitted to the
board of directors or to the shareholders of QVC Holdings shall be determined
by a majority vote of the directors or shareholders, as the case may be. The
parties also agree that without the consent of Liberty, QVC Holdings may not
take or cause or permit to be taken any of the actions set forth on Schedule I
hereto.
Each of Comcast and Liberty will be entitled to cause its
shares of QVC Holdings to be registered under the Securities Act of 1933 in the
manner set forth in Schedule II hereto, subject to a right of first refusal by
the other party. Unless Liberty through the exercise of its demand
registration rights set forth in Schedule II shall have been the party which
first caused the common stock of QVC Holdings to be registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), then Liberty
may at any time during the 60-day period following the fifth anniversary of the
Merger (or if not previously exercised, at any time during the 60-day period
following each of the sixth, seventh, eighth and ninth anniversaries of the
Merger) exercise its exit rights set forth in Schedule III. All other
transfers (except to majority-owned affiliates that agree to be bound by all of
the terms of the definitive agreement referred to below) will be subject to a
right of first refusal to the other party except that a change of control of
Liberty Parent (as defined in Schedule III), Comcast, any successor controlling
shareholder thereof or any subsidiary thereof in which QVC Holdings securities
do not constitute more than 50% of such subsidiary asset shall not be deemed to
trigger such rights of first refusal.
The foregoing provisions of this Section 2 will be included in
a definitive stockholders' agreement to be prepared and executed by the parties
hereto as soon as practicable, but in any event prior to the consummation of
the Offer.
3. Representations and Warranties of Comcast. Comcast
represents and warrants to Liberty that: (a) Comcast is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, and has full power and authority to execute,
deliver and perform this Agreement and the performance of Comcast's obligations
hereunder have been duly authorized by all necessary action (corporate or
other) on the part of Comcast;
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(b) this Agreement has been duly executed and delivered by Comcast and,
assuming the due execution and delivery thereof by Liberty and TCI, is a valid
and binding obligation of Comcast, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the rights of
creditors generally and by general principles of equity; (c) the execution and
delivery of this Agreement and the performance of Comcast's obligations
hereunder will not (i) require the consent, approval or authorization of, or
any registration, qualification or filing with, any governmental agency or
authority or any other person or (ii) conflict with or result in a material
breach or violation of (A) any material agreement to which Comcast is a party
or (B) assuming expiration of all applicable waiting periods under the
Hart-Scott- Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), without objection to the transactions contemplated hereby by the DOJ or
the FTC, any applicable law or regulation; (d) except for certain Delaware
shareholder suits, there is no litigation, governmental or other proceeding,
investigation or controversy pending or, to Comcast's knowledge, threatened
against Comcast relating to the transactions contemplated by this Agreement;
(e) except for filings under the HSR Act, no consent, approval or authorization
of, nor any registration, qualification or filing with, any governmental agency
or authority or any other person is required in order for Comcast to execute,
deliver or perform this Agreement; (f) neither Comcast nor any of its
subsidiaries or affiliates has any remaining obligations under the Stockholders
Agreement (or any successor or other similar agreement); and (g) Comcast has
good title to all of the QVC securities set forth under its name on Schedule IV
hereto, subject to no liens, claims or encumbrances (including pursuant to the
Stockholders Agreement or any successor or other similar agreement) other than
pursuant to the Company Repurchase Rights (or any similar contingent rights of
QVC).
4. Representations and Warranties of Liberty. Liberty
represents and warrants to Comcast that: (a) Liberty is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full power and authority to execute, deliver and perform this
Agreement and the performance of Liberty's obligations hereunder have been duly
authorized by all necessary action (corporate or other) on the part of Liberty;
(b) this Agreement has been duly executed and delivered by Liberty and,
assuming the due execution and delivery thereof by Comcast and TCI, is a valid
and binding obligation of Liberty, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the rights of
creditors generally and by general principles of equity; (c) the
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execution and delivery of this Agreement and the performance of Liberty's
obligations hereunder will not (i) require the consent, approval or
authorization of, or any registration qualification or filing with, any
governmental agency or authority or any other person or (ii) conflict with or
result in a material breach or violation of (A) any material agreement to which
Liberty is a party or (B) assuming expiration of all applicable waiting periods
under the HSR Act without objection to the transactions contemplated hereby by
the DOJ or the FTC, any applicable law or regulation; (d) Liberty has
previously made filings (and the applicable waiting period has expired) under
the HSR Act with respect to the acquisition of up to 49.9% of the shares of
common stock of QVC; (e) except for certain Delaware shareholder suits, there
is no litigation, governmental or other proceeding, investigation or
controversy pending or, to Liberty's knowledge, threatened against Liberty
relating to the transactions contemplated by this Agreement; and (f) except for
filings under the HSR Act, no consent, approval or authorization of, nor any
registration, qualification or filing with, any governmental agency or
authority or any other person is required in order for Liberty to execute,
deliver or perform this Agreement; and (g) Liberty has good and valid title to
all of the QVC securities set forth under its name on Schedule IV hereto,
subject to no liens, claims or encumbrances other than pursuant to the Company
Repurchase Rights (or any similar contingent rights of QVC).
5. Covenants of Liberty, Comcast and TCI. Each of
Liberty, Comcast and TCI (but as to TCI, only with respect to clauses (i) and
(iv) below) agree that it will (i) vote (or, if requested by any other party
hereto, cause QVC Holdings to exercise all warrants and convert all shares of
QVC preferred stock contributed to QVC Holdings and to vote) all shares of QVC
capital stock in respect of which it has, directly or indirectly, the power to
vote or control the voting of, in favor of the Merger and the related matters
provided for in the Merger Agreement; (ii) except for transfers to QVC Holdings
as provided above, not sell or dispose of any shares of QVC capital stock (or
rights to acquire such shares) owned (now or at any time prior to the Merger),
directly or indirectly, by it or enter into any agreement, arrangement or
understanding with any other person the effect of which is to limit or restrict
its right to vote such shares in accordance with the terms of this Agreement;
(iii) not enter into any agreement, arrangement or understanding with any other
person with respect to the purchase, sale or voting of shares of QVC; and (iv)
not solicit or encourage any Alternative Transaction (as defined in the Merger
Agreement).
If any proposal for an Alternative Transaction which offers an
amount per share greater than that offered in the
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Merger (a "Superior Proposal") shall be received by QVC prior to the
consummation of the Merger, Comcast and Liberty agree to use all reasonable
efforts, acting in good faith, to agree on a response to such Superior
Proposal. If the parties are unable to agree on such response, each of Liberty
and Comcast shall have the right to propose to QVC one or more other
transactions at a price in excess of $46 per share of QVC common stock;
provided that, if both Liberty and Comcast desire to make proposals and such
proposals are different, then Liberty and Comcast shall use all reasonable
efforts to resolve any such difference, or if they are unable to do so then
Lazard Freres & Co. shall determine the manner in which such difference shall
be resolved. Prior to making each such proposal to QVC, the party making such
proposal (the "Proposing Party") shall offer to the other party (the
"Responding Party") the right to participate in such transaction substantially
on the terms contemplated by this Agreement except that the Comcast Additional
Contribution (other than such of it as is attribute to the Warrant exercise)
and the Liberty Additional Contribution shall be increased proportionately such
that QVC Holdings shall continue to be owned following the Merger 57.4% and
42.6% by Comcast and Liberty, respectively (such increase to be in cash or such
other consideration as the parties shall agree). If the Responding Party fails
to accept such proposal within 48 hours, this Agreement shall terminate;
provided, that notwithstanding any such termination, the provisions of the
first paragraph of this Section 5 shall remain binding on each party with
respect to the most recent of such proposals made by a Proposing Party to the
extent that the shares of QVC stock held by the Responding Party and TCI (if
Liberty is the Responding Party) are treated in such proposal the same as all
other shares held by QVC shareholders other than the Proposing Party (and any
other joint bidder with the Proposing Party) but only until such Proposing
Party withdraws or otherwise terminates all such proposals (of which withdrawal
or termination such Proposing Party shall promptly notify the other parties
hereto). The provisions of this paragraph shall apply to successive Superior
Proposals (as well as successive responses by a Proposing Party).
In addition, Comcast agrees that in the event Liberty is the
Proposing Party and Comcast has not elected to participate in the transaction
being proposed by Liberty, that Comcast shall cooperate fully with Liberty with
respect to any consents or approvals Comcast is entitled to grant pursuant to
the Letter Agreement, and that upon the written request of Liberty, Comcast
shall grant or withhold such approvals and consents as Liberty shall direct.
6. Mutual Covenants. Each of Comcast and Liberty agree,
following consummation of the Merger, to cooperate in
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good faith to cause QVC and Home Shopping Network, Inc. to pursue jointly
business opportunities outside the United States and Canada. The parties also
agree that following consummation of the Merger, no party shall be under any
obligation (legal or otherwise) to offer to QVC or any other party any business
opportunity which any of them may now or thereafter desire to pursue.
7. Regulatory Approvals. The obligations of the parties
under this Agreement will be conditioned upon the receipt of all necessary
governmental and agency approvals required for the consummation of the
transactions contemplated hereby, including but not limited to, compliance with
all securities laws and the termination of all applicable waiting periods under
the HSR Act; provided that, either Comcast or Liberty shall be entitled to
cause QVC Holdings to terminate the Offer as provided in the Merger Agreement
(and in connection therewith, the Merger Agreement pursuant to 8.01(b)(x)
thereof) in the event that all waiting periods applicable to the Acquisition
and the related transactions under the HSR Act have not terminated prior to
December 31, 1994.
8. Fees and Expenses. All costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby
(other than any costs and expenses related to the Comcast Additional
Contribution or the Liberty Additional Contribution, which shall be paid by
Comcast and Liberty, respectively) shall be paid or reimbursed by QVC following
the Merger, or if the Merger is not consummated, then paid by the party
incurring such expenses (except for financing and financial advisory fees not
related to the Comcast Additional Contribution or the Liberty Additional
Contribution, which shall be borne equally by the parties).
If QVC makes a payment pursuant to Section 8.05(b) of the
Merger Agreement, then all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid out of the
proceeds of such payment. After the payment of all such costs and expenses,
any remainder of the proceeds of such payment shall be divided equally between
Comcast and Liberty.
9. Indemnification. If any act or omission of a party
causes the termination of the Merger Agreement pursuant to Section 8.01(b)(z)
thereof, then such party shall indemnify the other party for any loss, damage
or expense such other party may incur or suffer as a result of such
termination. If an act or omission by MergerCo (as defined in the Merger
Agreement) causes such termination pursuant to Section 8.01(b)(z), of if the
acts or omissions of both parties cause
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or contribute to such loss, damage or expense, then such loss, damage or
expense shall be allocated among Comcast and Liberty in proportion to the
relative fault of each party.
10. Governing Law. This letter shall be governed by and
construed in accordance with the substantive law of the State of New York.
11. Termination. Except as provided in Section 5, the
obligations of the parties hereunder shall only terminate if the Merger
Agreement is terminated pursuant to Section 8.01(a) through (d) thereof or
pursuant to Section 8.01(e) (except in the case of the making of a Superior
Proposal to which the second paragraph of Section 5 above applies).
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12. Binding Obligation. It is understood that this
letter agreement constitutes a legally binding obligation of the parties
hereto. The parties acknowledge and agree that the proposed business
combination of TCI and Liberty shall not constitute a sale or transfer of the
shares of QVC capital stock held by Liberty.
Very truly yours,
COMCAST CORPORATION
By: --------------------------
Name:
Title:
Agreed to:
LIBERTY MEDIA CORPORATION
By: ----------------------
Name:
Title:
TELE-COMMUNICATIONS, INC.
Agreed to, as to clauses (i) and
(iv) of Section 5 only:
By: ---------------------
Name:
Title:
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SCHEDULE I
MANAGEMENT STRUCTURE
MANAGEMENT Subsequent to the Merger, the Management
COMMITTEE: Committee of QVC Holdings will be
comprised of three
representatives appointed by
Comcast and two representatives
appointed by Liberty; provided,
that each of such representatives
shall be reasonably acceptable to
the other party.
DAY-TO-DAY The day-to-day operations of QVC Holdings
MANAGEMENT: will be managed by Comcast.
Comcast shall use reasonable
efforts to manage QVC Holdings in
the best interests of QVC
Holdings, subject to the
provision of this Agreement.
SIGNIFICANT Neither QVC Holdings nor QVC shall engage in
TRANSACTIONS: any of the following transactions
or take any of the following
actions unless approved in
advance by Liberty:
(i) any transaction or action
which would result in QVC
Holdings, directly or
indirectly, (x) conducting or
engaging in any business
other than the Primary
Business, (y) participating
(whether by means of a
management, advisory,
operating, consulting or
similar agreement or
arrangement) in a business
other than the Primary
Business, or (z) having any
record or beneficial equity
interest, either as a
principal, trustee,
stockholder, partner, joint
venturer or otherwise, in any
Person not primarily engaged
in the Primary Business (a
"Restricted Person");
provided, however, that the
beneficial ownership for
investment purposes of ten
percent (10%) or less of the
equity of any such Restricted
Person shall not constitute a
violation of this clause; the
term "Primary Business" shall
mean the business of (x)
marketing of goods or
services over any electronic
media (other than principally
entertainment programming)
and (y) any activities
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ancillary thereto or vertically
integrated therewith
(including, without
limitation, manufacturing,
production, warehousing and
distribution of such goods
and services and customer
financing);
(ii) any transaction not in the
ordinary course of business,
launching new or additional
channels or engaging in any
new field of business, in
each case, which would result
in, or would have a
reasonable likelihood of
resulting in, Liberty or any
of its affiliates being
required (pursuant to any
law, statute, rule,
regulation, order or
judgement promulgated or
issued by any court of
competent jurisdiction or the
United States government or
any Federal governmental,
regulatory, or administrative
authority or agency or
tribunal) to divest itself of
its QVC Holdings securities,
or interests therein, or any
other assets of such entity,
or which would render such
entity's continued ownership
of such stock or assets
illegal or subject to the
imposition of a fine or
penalty or which would impose
material restrictions or
limitations on such entity's
full rights of ownership
(including, without
limitation, voting) thereof
or therein;
(iii) the disposition, directly
or indirectly by QVC Holdings
(or any subsidiary thereof)
in a transaction or series of
transactions not in the
ordinary course of business
of QVC Holdings or any
subsidiary of QVC Holdings,
of a material amount of the
assets of QVC Holdings or any
such subsidiary (to be
defined in the definitive
agreements), except for
pledges, grants of security
interests, security deeds,
mortgages or similar
encumbrances securing bona
fide indebtedness;
(iv) the merger or consolidation
of QVC Holdings or QVC
(except (A) a merger between
a wholly-owned subsidiary and
QVC
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Holdings or QVC where QVC Holdings or
QVC, as the case may be, is
the surviving entity of such
merger and where there is no
change in any class or series
of outstanding capital stock
of QVC Holdings or QVC, as
the case may be, or (B) a
merger between QVC Holdings
and QVC in which QVC Holdings
is the surviving entity of
such merger and there is no
change in any class or series
of outstanding capital stock
of QVC Holdings) or the
dissolution or liquidation of
QVC Holdings;
(v) any amendments to the
Certificate of Incorporation
or By-Laws of QVC Holdings;
(vi) the issuance, grant, offer,
sale, acquisition, redemption
or purchase by QVC Holdings
or QVC of any shares of its
capital stock or other equity
securities, or any securities
convertible into, or options,
warrants or rights of any
kind to subscribe to or
acquire, any shares of its
capital stock or other equity
securities; any split-up,
combination or
reclassification of the
capital stock of QVC Holdings
or the entering into of any
contract, agreement,
commitment or arrangement
with respect to any of the
foregoing, except that QVC
Holdings may issue an
aggregate of up to 1% of its
capital stock (at any time
outstanding) pursuant to
employee stock options
granted to employees on or
after the closing and
repurchase stock or options
from present or former
employees;
(vii) the amendment or
modification of any
outstanding options, warrants
or rights to acquire, or
securities convertible into,
shares of the capital stock
or other securities of QVC
Holdings or of any
outstanding stock option or
stock purchase plans or
agreements;
(viii) the filing by QVC Holdings
(or any material subsidiary
thereof) of a petition under
the Bankruptcy Act or any
other insolvency law, or the
admission in
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writing of its bankruptcy, insolvency
or general inability to pay
its debts;
(ix) except with the consent of
Liberty (such consent not to
be unreasonably withheld),
the commencement or
settlement of litigation or
arbitration which is other
than in the ordinary course
of business and is likely to
have a material impact on QVC
Holdings and its
subsidiaries, taken as a
whole;
(x) the entering into by QVC
Holdings or any of its
subsidiaries of material
contracts, except any such
contract which is connected
with carrying on the Primary
Business; and
(xi) (a) without the consent of
Liberty, such consent not to
be unreasonably withheld, any
transactions between QVC
Holdings or any of its
affiliates and Comcast or any
of its affiliates or
associates, other than
transactions between Comcast
and its affiliates or
associates and QVC Holdings
and its affiliates that are
on arms-length terms (which
Comcast shall advise Liberty
of) and (b) agreements
between QVC Holdings or its
affiliates and Comcast or its
affiliates or associates
relating to carriage of the
Primary Business which are on
terms no more favorable than
those granted to Liberty and
its affiliates.
CORPORATE Notwithstanding anything contained herein,
OPPORTUNITIES: neither party (nor the directors,
officers, members of the
Management Committee, employees
or agents of QVC Holdings or any
subsidiary who are also
directors, officers, employees or
agents of either party) shall be
obligated to present any
corporate opportunity to QVC
Holdings or its subsidiaries and
each such party shall be free to
pursue such opportunity for its
sole benefit.
TRANSFER OF Upon the occurrence of a Management Transfer
MANAGEMENT Event (as defined below), day-to-day
FUNCTIONS: management of QVC Holdings shall be
transferred from Comcast to
Liberty and Liberty shall
thereafter
4
<PAGE> 14
be entitled to appoint three
representatives of the Management
Committee and Comcast shall be
entitled to appoint two such
representatives. From and after
the date of the Management
Transfer Event, (a) all rights
and obligations of Comcast, as
manager of the business of QVC
Holdings, shall terminate and
Liberty shall thereafter succeed
to all such rights and
obligations, and (b) any right to
consent to the taking of any
action theretofore granted to
Liberty shall become the right of
Comcast upon the same terms and
conditions.
The term "Management Transfer Event"
shall mean the first to occur of
(x) the delivery of written
notice by Liberty to Comcast
exercising Liberty's right to
purchase all of the common stock
of QVC Holdings held by Comcast
and its subsidiaries pursuant to
Paragraph D of Schedule III of
this Agreement and (y) a Comcast
Purchase Default (as defined in
Schedule III of this Agreement)
5
<PAGE> 15
SCHEDULE II
Following the Merger, each of Comcast and Liberty shall be entitled to three
demand registrations with respect to their stock of QVC Holdings pursuant to
customary registration rights agreements to be included in the definitive
agreement referred to in paragraph 2 of this Agreement. Prior to the time QVC
Holdings has publicly-traded common stock, the price at which the non-demanding
party may purchase the shares proposed to be registered of the demanding party
pursuant to the right of first refusal shall be based upon a projected initial
secondary public offering price of QVC Holdings common stock as determined by
three investment bankers (one chosen by Comcast, one chosen by Liberty and, if
they cannot agree, by a third independent investment banker chosen by the first
two investment bankers).
<PAGE> 16
SCHEDULE III
A. In the event that Liberty, through the exercise of its demand registration
rights set forth in Schedule II of this Agreement, shall not have been the
party which first caused the common stock of QVC Holdings to be registered
under the Exchange Act, then Liberty shall have the right at any time during
the 60-day period following the fifth anniversary of the Merger (or if not
previously exercised, at any time during the 60-day period following each of
the sixth, seventh, eighth and ninth anniversaries of the Merger)) to exercise
its exit rights hereunder by notice in writing to Comcast, whereupon Liberty
and Comcast shall seek to agree upon the "Fair Market Value" of QVC Holdings on
the date such notice is given. The "Fair Market Value" of QVC Holdings shall
mean the fair market value of QVC Holdings on a going concern or liquidation
basis, whichever method would yield the highest valuation. The Fair Market
Value of QVC Holdings on a going concern basis shall take into account such
considerations as would customarily affect the price at which a willing seller
would sell and a willing buyer would buy QVC Holdings as a going concern in an
arms-length transaction in which such buyer purchases all of the stock of QVC
Holdings. The Fair Market Value of QVC Holdings on a liquidation basis shall
take into account tax liabilities that would be incurred on a liquidation
assuming the most tax efficient and practical plan of liquidation.
B. If Liberty and Comcast are unable to agree upon the Fair Market Value
within 30 days, then such value shall be determined pursuant to the appraisal
process hereafter described. Liberty and Comcast shall, within 15 days after
the expiration of such 30-day period, each designate a qualified independent
appraiser to determine such value. Such appraisers shall submit their written
appraisals not later than 45 days after the date of their retention. If the
amount of the higher of the two appraisals is greater than 110% of the amount
determined in the lower appraisal, then a third qualified independent appraiser
designated by the first two qualified independent appraisers shall be retained
promptly by Liberty and Comcast and shall deliver its written appraisal within
30 days after the date of such retention. If any valuation is made pursuant to
such appraisal process, the value to be determined shall be the average of the
first two appraisals, if only two appraisals are required, or if three
appraisals are required, the average of the two closest appraisals (or if there
are not two closest appraisals, the average of all three such appraisals). The
term "qualified independent appraiser" shall mean a nationally recognized
appraiser or investment banking firm with substantial experience in evaluating
significant communications properties, including cable television programming
businesses, that is not directly or indirectly affiliated with any party to
this
<PAGE> 17
Agreement and which has no interest (other than the receipt of customary fees)
in any of the transactions contemplated hereby.
C. Comcast shall have the right (exercisable by notice in writing to Liberty
within 30 days after the determination of such Fair Market Value) to purchase
all of the common stock of QVC Holdings held by Liberty and its subsidiaries
for an amount (the "Liberty Exit Price") equal to the fraction of the Fair
Market Value represented by such common stock as a percentage of the fully
diluted common stock of QVC Holdings (after giving effect to any consideration
that would be received by QVC Holdings upon the exercise of any options or
warrants). The purchase price of each share of preferred stock or other
securities of QVC Holdings convertible without payment of further consideration
into common stock of QVC Holdings shall be determined by reference to the
number of shares of common stock of QVC Holdings into which such share may be
converted. The purchase price of each warrant or option or other securities of
QVC Holdings exercisable in respect of shares of common stock of QVC Holdings
shall be the applicable purchase price of the underlying share of common stock
of QVC Holdings, less the applicable exercise price per share. If Comcast
exercises such right, Comcast shall have the right to pay such purchase price
in (at Comcast's election) one or more of the following: (i) cash; (ii) a
Comcast promissory note maturing not later than three years after issuance and
having an interest rate (determined by appraisal if the parties cannot agree)
that, taking into account the terms of such note, would cause such note to
trade at par immediately following its issuance; provided that, Comcast may
only pay the Liberty Exit Price with such a promissory note if the interest
rate thereon does not exceed 500 basis points over the three-year treasury note
rate on the date of issuance of such note; or (iii) shares of Comcast common
stock or other equity securities having an aggregate Average Market Price (as
of the date the last of such appraisals are delivered to Comcast and Liberty)
equal to the Liberty Exit Price; provided, that such Comcast common stock or
other equity securities have been previously listed or traded on a national
securities exchange or quoted on an inter-dealer quotation system. The term
"Average Market Price" shall mean the average for the twenty prior trading days
of the closing sales price of such security in the over-the-counter market, as
reported by NASDAQ, or if listed on a national securities exchange, as reported
on the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which such
securities are listed or admitted for trading (as such Average Market Price
shall be adjusted for splits, recapitalizations, stock dividends and other
events occurring during such twenty trading day period).
2
<PAGE> 18
Notwithstanding Comcast's election as to the form in which to pay the Liberty
Exit Price, Liberty shall have the right, exercisable within 5 days of
Comcast's written notice to it as to the form of consideration in which it
intends to pay the Liberty Exit Price, to require that Comcast pay such amount
by delivering to it Comcast common stock or other equity securities having an
aggregate Average Market Price equal to the Liberty Exit Price; provided that,
Comcast shall not be obligated to issue stock if (i) it would represent more
than 4.9% of the outstanding common stock or more than 4.9% of the stockholder
voting power of Comcast; or (ii) such issuance would result in, or would have a
reasonable likelihood of resulting in, Comcast or any of its affiliates being
required (pursuant to any law, statute, rule, regulation, order or judgement
promulgated or issued by any court of competent jurisdiction or the United
States government or any Federal governmental, regulatory, or administrative
authority or agency or tribunal) to divest itself of any of its assets, or
would render its continued ownership of such assets illegal or subject to the
imposition of a fine or penalty or would impose material restrictions or
limitations on its full rights of ownership of its assets. In the event
Comcast elects to deliver Comcast stock to Liberty as aforesaid, it shall also
grant to Liberty rights substantially equivalent to the registration rights set
forth in Schedule II hereto with respect to the registration of such shares of
Comcast stock. Any closing of the purchase of the QVC Holdings common stock
held by Liberty and its subsidiaries pursuant to this Schedule III shall be
consummated as soon as practicable after receipt of all applicable regulatory
approvals, but in any event not later than the 135th day following the date
upon which the form of the consideration to be paid to Liberty in payment of
the Liberty Exit Price shall have been determined in accordance with this
Paragraph (the "Liberty Determination Date"); provided however, that in the
event Comcast is prohibited from consummating such purchase by such date
because of the entry of any injunction, order, or decree or the enactment of
any law or regulation, in each case subsequent to the date Liberty notifies
Comcast of its exercise of the Liberty Exit Right, then the date by which such
purchase was to be consummated pursuant to the foregoing clause shall be
extended for an additional period ending on the earlier to occur of (x) the
10th day following the date such purchase is no longer prohibited as aforesaid
and (y) the 195th day following the Liberty Determination Date.
D. In the event that Comcast (x) shall fail to elect to purchase Liberty's
shares of QVC common stock within the time period specified or (y) following an
election to so purchase, shall fail to consummate such purchase by the date
specified in Paragraph C
3
<PAGE> 19
(the event specified in clause (y) is hereafter referred to as the "Comcast
Purchase Default"), then Liberty shall have the right (exercisable by notice in
writing to Comcast within 30 days thereafter) to purchase all of the common
stock of QVC Holdings held by Comcast and its subsidiaries for an amount (the
"Comcast Exit Price") equal to the fraction of the Fair Market Value
represented by such common stock as a percentage of the fully diluted common
stock of QVC Holdings (after giving effect to any consideration that would be
received by QVC Holdings upon the exercise of any options or warrants). The
purchase price of each share of preferred stock or other securities of QVC
Holdings convertible without payment of further consideration into common stock
of QVC Holdings shall be determined by reference to the number of shares of
common stock of QVC Holdings into which such share may be converted. The
purchase price of each warrant or option or other securities of QVC Holdings
exercisable in respect of shares of common stock of QVC Holdings shall be the
applicable purchase price of the underlying share of common stock of QVC
Holdings, less the applicable exercise price per share. If Liberty exercises
such right, Liberty shall have the right to pay such purchase price in (at
Liberty's election) one or more of the following: (i) cash; (ii) a promissory
note issued by Liberty (or if it is a subsidiary, issued by its ultimate parent
entity) ("Liberty Parent") maturing not later than three years after issuance
and having an interest rate (determined by appraisal if the parties cannot
agree) that, taking into account the terms of such note, would cause such note
to trade at par immediately following its issuance; provided that, Liberty may
only pay the Comcast Exit Price with such a promissory note if the interest
rate thereon does not exceed 500 basis points over the three-year treasury note
rate on the date of issuance of such note; or (iii) shares of Liberty Parent
common stock or other equity securities of Liberty Parent having an aggregate
Average Market Price (as of the date the last of such appraisals are delivered
to Liberty and Comcast) equal to the Comcast Exit Price; provided that such
Liberty Parent common stock or other equity securities have been previously
listed or traded on a national securities exchange or quoted on an inter-dealer
quotation system. Notwithstanding Liberty's election as to the form in which
to pay the Comcast Exit Price, Comcast shall have the right, exercisable within
5 days of Liberty's written notice to it as to the form of consideration in
which it intends to pay the Comcast Exit Price, to require that Liberty pay
such amount by delivering to it Liberty Parent stock having an aggregate
Average Market Price equal to the Comcast Exit Price; provided that, Liberty
Parent shall not be obligated to issue stock if (i) it would represent more
than 4.9% of the outstanding common stock or more than 4.9% of the stockholder
voting power of Liberty Parent; or (ii) if
4
<PAGE> 20
such issuance would result in, or would have a reasonable likelihood of
resulting in, Liberty Parent or any of its affiliates being required (pursuant
to any law, statute, rule, regulation, order or judgement promulgated or issued
by any court of competent jurisdiction or the United States government or any
Federal governmental, regulatory, or administrative authority or agency or
tribunal) to divest itself of any of its assets or would render its continued
ownership of such stock or assets illegal or subject to the imposition of a
fine or penalty or would impose material restrictions or limitations on its
full rights of ownership of its assets. In the event Liberty elects to deliver
Liberty Parent stock to Comcast as aforesaid, it shall also grant to Comcast
rights substantially equivalent to the registration rights set forth in
Schedule II hereto with respect to the registration of such shares of Liberty
Parent stock. Any closing of the purchase of the QVC Holdings common stock
held by Comcast and its subsidiaries pursuant to this Schedule III shall be
consummated as soon as practicable after receipt of all applicable regulatory
approvals, but in any event not later than the 135th day following the date
upon which the form of the consideration to be paid to Comcast in payment of
the Comcast Exit Price shall have been determined in accordance with this
Paragraph (the "Comcast Determination Date"); provided however, that in the
event Liberty is prohibited from consummating such purchase by such date
because of the entry of any injunction, order, or decree or the enactment of
any law or regulation, in each case subsequent to the date Comcast notifies
Liberty of its exercise of the Comcast Exit Right, then the date by which such
purchase was to be consummated pursuant to the foregoing clause shall be
extended for an additional period ending on the earlier to occur of (x) the
10th day following the date such purchase is no longer prohibited as aforesaid
and (y) the 195th day following the Comcast Determination Date.
E. In the event that Liberty (x) shall fail to elect to purchase Comcast's
shares of QVC common stock within the time period specified or (y) following an
election to so purchase, shall fail to consummate such purchase by the date
specified in Paragraph D, then Liberty and Comcast shall use their best efforts
to sell QVC Holdings. Liberty, Comcast or any of their respective affiliates
may be purchasers (individually or as part of a group) in any such sale.
F. Notwithstanding anything contained herein, the parties agree to use all
reasonable efforts to consummate any such purchase and sale pursuant to this
Schedule III in a tax-free transaction or, if not available, most tax efficient
method available. In the event that the party whose QVC Holdings securities
are to be
5
<PAGE> 21
purchased pursuant to this Schedule III (the "Selling Party") shall notify the
party required to purchase the Selling Party's QVC Holdings securities (the
"Purchasing Party") at the time of its election to exercise its right to cause
the other party to purchase, as to a structure of the transactions contemplated
by the Liberty Exit Right or the Comcast Exit Right which is otherwise in
accordance with the provisions of Paragraphs C or D above (as applicable) and
which such Selling Party reasonably believes to be tax-free or the most tax
efficient structure for such transaction (the "Proposed Structure"), and if
requested by the Purchasing Party within 10 days of receipt of notice of the
Proposed Structure, such Selling Party shall deliver an opinion of counsel
(such counsel to be reasonably acceptable to the Purchasing Party) reasonably
confirming the tax free or tax efficient nature of the Proposed Structure, then
such sale shall be consummated in accordance with the Proposed Structure
unless, within 15 days of the last to occur of the notice as to the Proposed
Structure or such opinion of counsel, the Purchasing Party delivers to the
Selling Party a notice setting forth an alternate structure for such
transaction (the "Alternate Structure"), which is no less favorable from a tax
standpoint to the Selling Party than the Proposed Structure (as evidenced by an
opinion of counsel addressed to and reasonably acceptable to the Selling Party)
and which does not result in the creation of restrictions or limitations
applicable to the Selling Party which are, in the good faith, reasonable
judgment of the Selling Party, more onerous to it than those which would result
in the Proposed Structure, then the parties shall proceed to consummate such
transaction in accordance with the Alternate Structure.
6
<PAGE> 22
SCHEDULE IV
QVC Securities held
by Comcast and Liberty
to be contributed to QVC Holdings
I. Liberty
Common Stock: 6,527,207 shares
Class C. Preferred Stock: 372,866 shares (convertible
into 3,728,660 shares of Common Stock)
II. Comcast
Common Stock: 6,207,434 shares
Class C. Preferred Stock: 72,050 shares (convertible
into 720,500 shares of Common Stock)
Warrants to Purchase Common Stock: 1,700,000
<PAGE> 1
Exhibit 99.3
-------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
QVC, INC.,
COMCAST CORPORATION,
LIBERTY MEDIA CORPORATION
AND
COMCAST QMERGER, INC.
DATED AS OF AUGUST 4, 1994
-------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER AND THE MERGER
<TABLE>
<S> <C> <C>
SECTION 0.1. The Offer . . . . . . . . . . . . . . . . . . . . . 1
SECTION 0.2. Company Action . . . . . . . . . . . . . . . . . . 2
SECTION 0.3. Directors . . . . . . . . . . . . . . . . . . . . . 3
SECTION 0.4. The Merger . . . . . . . . . . . . . . . . . . . . 5
SECTION 0.5. Action by Stockholders . . . . . . . . . . . . . . 5
SECTION 0.6. Proxy Statement . . . . . . . . . . . . . . . . . . 5
SECTION 0.7. Closing . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 0.8. Effective Time . . . . . . . . . . . . . . . . . . 7
SECTION 0.9. Effect of the Merger . . . . . . . . . . . . . . . 7
SECTION 0.10. Certificate of Incorporation . . . . . . . . . . . 7
SECTION 0.11. Bylaws . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 0.12. Directors and Officers . . . . . . . . . . . . . . 7
</TABLE>
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
1
<TABLE>
<S> <C> <C>
SECTION 1.1. Conversion of Securities . . . . . . . . . . . . . 8
SECTION 2.02. Exchange of Certificates and Cash . . . . . . . . . 9
SECTION 2.03. Stock Transfer Books . . . . . . . . . . . . . . . 10
SECTION 2.04. Stock Options; Payment Rights . . . . . . . . . . . 11
SECTION 2.05. Dissenting Shares . . . . . . . . . . . . . . . . . 11
</TABLE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF QVC
2
<TABLE>
<S> <C> <C>
SECTION 2.1. Organization and Qualifications;
Subsidiaries . . . . . . . . . . . . . . . . . . . 12
SECTION 2.2. Certificate of Incorporation and
Bylaws . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.3. Capitalization . . . . . . . . . . . . . . . . . . 13
SECTION 2.4. Authority Relative to This Agreement . . . . . . . 14
SECTION 2.5. No Conflict; Required Filings
and Consents . . . . . . . . . . . . . . . . . . . 14
SECTION 2.6. Compliance . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.7. SEC Filings; Financial Statements . . . . . . . . . 16
SECTION 2.8. Absence of Certain Changes and Events . . . . . . . 17
SECTION 2.9. Employee Benefit Plans . . . . . . . . . . . . . . 17
SECTION 2.10. Opinion of Financial Advisor . . . . . . . . . . . 18
SECTION 2.11. Brokers . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.12. Taxes . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
ARTICLE IV
-i-
<PAGE> 3
REPRESENTATIONS AND WARRANTIES OF COMCAST,
LIBERTY AND BUYER
3
<TABLE>
<S> <C> <C>
SECTION 3.1. Organization and Qualification . . . . . . . . . . 19
SECTION 3.2. Authority Relative to This Agreement . . . . . . . 20
SECTION 3.3. No Conflict; Required Filings
and Consents . . . . . . . . . . . . . . . . . . . 20
SECTION 3.4. SEC Filings, Financial Statements . . . . . . . . . 21
SECTION 3.5. Brokers . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.6. Organization and Qualification . . . . . . . . . . 22
SECTION 3.7. Authority Relative to This Agreement . . . . . . . 22
SECTION 3.8. No Conflict; Required Filings
and Consents . . . . . . . . . . . . . . . . . . . 23
SECTION 3.9. SEC Filings, Financial Statements . . . . . . . . . 24
SECTION 3.10. Brokers . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.11. Organization and Qualification . . . . . . . . . . 25
SECTION 3.12. Certificate of Incorporation
and Bylaws . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.13. Authority Relative to This
Agreement . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.14. No Conflict; Required Filings
and Consents . . . . . . . . . . . . . . . . . . . 26
SECTION 3.15. Brokers . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
4
<TABLE>
<S> <C> <C>
SECTION 4.1. Conduct of Business by QVC
Pending the Merger . . . . . . . . . . . . . . . . 27
</TABLE>
ARTICLE VI
ADDITIONAL COVENANTS
5
<TABLE>
<S> <C> <C>
SECTION 5.1. Access to Information;
Confidentiality . . . . . . . . . . . . . . . . . . 28
SECTION 5.2. No Solicitation . . . . . . . . . . . . . . . . . . 29
SECTION 5.3. Directors' and Officers'
Indemnification and Insurance . . . . . . . . . . . 30
SECTION 5.4. Notification of Certain Matters . . . . . . . . . . 31
SECTION 5.5. Further Action; Best Efforts . . . . . . . . . . . 31
SECTION 5.6. Public Announcements . . . . . . . . . . . . . . . 32
SECTION 5.7. Conveyance Taxes . . . . . . . . . . . . . . . . . 32
SECTION 5.8. Gains Tax . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.9. Obligations of Buyer . . . . . . . . . . . . . . . 33
SECTION 5.10. Severance Policy; Employee Benefits . . . . . . . . 33
SECTION 5.11. FCC Approvals. . . . . . . . . . . . . . . . . . . 34
SECTION 5.12. Tax Certification . . . . . . . . . . . . . . . . . 34
</TABLE>
ARTICLE VII
CLOSING CONDITIONS
-ii-
<PAGE> 4
6
<TABLE>
<S> <C> <C>
SECTION 6.1. Conditions to Obligations of Each
Party to Effect the Merger . . . . . . . . . . . . 34
</TABLE>
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
7
<TABLE>
<S> <C> <C>
SECTION 7.1. Termination . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.2. Effect of Termination . . . . . . . . . . . . . . . 36
SECTION 7.3. Amendment . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.4. Waiver . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.5. Fees, Expenses and Other Payments . . . . . . . . . 37
</TABLE>
ARTICLE IX
GENERAL PROVISIONS
8
<TABLE>
<S> <C> <C>
SECTION 8.1. Effectiveness of Representations,
Warranties and Agreements . . . . . . . . . . . . . 37
SECTION 8.2. Notices . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.3. Certain Definitions . . . . . . . . . . . . . . . . 39
SECTION 8.4. Headings . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.5. Severability . . . . . . . . . . . . . . . . . . . 40
SECTION 8.6. Entire Agreement . . . . . . . . . . . . . . . . . 40
SECTION 8.7. Assignment . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.8. Parties in Interest . . . . . . . . . . . . . . . . 41
SECTION 8.9. Governing Law . . . . . . . . . . . . . . . . . . . 41
SECTION 8.10. Enforcement of the Agreement . . . . . . . . . . . 41
SECTION 8.11. Counterparts . . . . . . . . . . . . . . . . . . . 41
</TABLE>
-iii-
<PAGE> 5
ANNEX I Conditions to Offer
<PAGE> 6
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM SECTION
- ---- -------
<S> <C>
affiliate 9.03
Agreement PREAMBLE
Alternative Transaction 6.02
Bidding Agreement 4.08
business day 9.03
Buyer PREAMBLE
Buyer Material Adverse Effect 4.13
Certificates 2.02
Claim 6.03
Code 2.02
Comcast PREAMBLE
Comcast Material Adverse Effect 4.01
Comcast SEC Reports 4.04
Common Merger Consideration 2.01
Common Shares 1.01
Confidentiality Agreements 6.01
control 9.03
Delaware Law PREAMBLE
Dissenting Shares 2.05
Effective Time 1.08
ERISA 3.09
Exchange Act 3.05
Exchange Agent 2.02
Exchange Fund 2.02
Expenses 8.05
Fair Market Value 6.02
FCC 6.11
Gains Tax 6.08
Governmental Entity 3.05
HSR Act 3.05
Indemnified Parties 6.03
IRS 3.09
Liberty PREAMBLE
Liberty Material Adverse Effect 4.06
Liberty SEC Reports 4.09
Material QVC Subsidiary 3.01
Merger PREAMBLE
Merger Consideration 2.02
MergerCo PREAMBLE
Minimum Condition 1.01
Offer Documents 1.01
Offer PREAMBLE
Options 3.03
Preferred Shares 1.01
Preferred Merger Consideration 2.01
Proxy Statement 1.06
QVC PREAMBLE
QVC Common Stock 1.01
QVC Disclosure Schedule 3.03
</TABLE>
-1-
<PAGE> 7
<TABLE>
<S> <C>
QVC Material Adverse Effect 3.01
QVC Plans 3.09
QVC Preferred Stock 1.01
QVC SEC Reports 3.07
QVC Stock 1.01
QVC Stock Options 3.03
QVC Subsidiary 3.01
Respective Representatives 6.01
Restated Certificate of Incorporation 3.05
Schedule 14D-9 1.02
SEC 3.01
Securities Act 3.07
Shares 1.01
subsidiary 9.03
Surviving Corporation 1.04
taxes 3.12
Transactions 1.02
Transfer Taxes 6.08
Transmittal Documents 2.02
</TABLE>
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 4, 1994
(the "Agreement"), among COMCAST CORPORATION, a Pennsylvania corporation
("Comcast"), LIBERTY MEDIA CORPORATION, a Delaware corporation ("Liberty"),
COMCAST QMERGER, INC., a Delaware corporation ("Buyer"), and QVC, INC., a
Delaware corporation ("QVC").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of
this Agreement and in accordance with the General Corporation Law of the State
of Delaware ("Delaware Law"), Buyer will make the offer described in Section
1.01 below (the "Offer") and thereafter QVC and Buyer will enter into a
business combination transaction pursuant to which a wholly-owned subsidiary of
Buyer ("MergerCo") will merge with and into QVC (the "Merger");
WHEREAS, the Board of Directors of QVC has determined that
the Offer and the Merger are fair to, and in the best interests of, QVC and its
stockholders and has approved and adopted this Agreement, has approved the
Offer and the Merger and the other transactions contemplated hereby and has
recommended approval and adoption of this Agreement and approval of the Merger
by the stockholders of QVC; and
WHEREAS, the Board of Directors of each of Comcast, Liberty
and Buyer have approved and adopted this Agreement and have approved the Offer
and the Merger and the other transactions contemplated hereby;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth in
this Agreement, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND THE MERGER
SECTION 0.1. The Offer. (a) Provided that nothing shall
have occurred that would result in a failure to satisfy any of the conditions
set forth in paragraphs (a) through (d) of Annex I hereto, Buyer (or a
subsidiary of Buyer) shall, as promptly as practicable after the date hereof,
but in no event later than five business days following the public announcement
of the terms of this Agreement, commence an offer to purchase (i) all of the
outstanding shares (the "Common Shares") of Common Stock, par value $.01 per
share, of QVC (the "QVC Common Stock") at a price of $46.00 per Common Share,
and (ii) all of the outstanding shares (the "Preferred
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Shares") of QVC Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock, par value $.10 per share (collectively, the "QVC Preferred
Stock") at a price of $460 per Preferred Share, in each case net to the seller
in cash. For purposes of this Agreement, "Shares" means the Common Shares and
the Preferred Shares and "QVC Stock" means the QVC Common Stock and the QVC
Preferred Stock.
(b) The Offer shall be subject to the conditions set forth
in Annex I hereto. Buyer shall not, without the prior written consent of QVC,
make any change in the terms or conditions of the Offer that is adverse to the
holders of QVC Stock, change the form of consideration to be paid in the Offer,
decrease the price per Share payable in the Offer or the number of Shares
sought in the Offer, waive the Minimum Condition (as defined in Annex I) or
impose conditions to the Offer in addition to those set forth in Annex I.
(c) As soon as practicable on the date of commencement of
the Offer, Comcast, Liberty and Buyer shall file with the SEC (as defined in
Section 3.01) a Tender Offer Statement on Schedule 14D-1 and, together with
QVC, a Rule 13E-3 Transaction Statement on Schedule 13E-3, with respect to the
Offer which will contain the offer to purchase and form of the related letter
of transmittal (together with any supplements or amendments thereto,
collectively the "Offer Documents"). QVC agrees to provide Comcast, Liberty
and Buyer with such information concerning QVC as any of such parties may
reasonably request in connection with the preparation of the Schedule 13E-3.
Each party hereto agrees promptly to supplement, update and correct any
information provided by it for use in the Offer Documents if and to the extent
that it is or shall have become incomplete, false or misleading. Each of
Comcast, Liberty and Buyer agrees to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws. QVC and its counsel shall be given an opportunity to
review and comment on the Schedule 14D-1 prior to its being filed with the SEC.
SECTION 0.2. Company Action. (a) QVC hereby consents to
the Offer and represents that its Board of Directors, at a meeting duly called
and held, has unanimously (other than the directors affiliated with Comcast)
(i) determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to and in the best interest of
QVC's stockholders (other than Comcast and Liberty and their affiliates), (ii)
approved this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, which approval satisfies in full the requirements of
Delaware Law (including all approvals required under Section 203 of Delaware
Law in
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connection with the consummation of the transactions contemplated hereby (the
"Transactions") and the contribution by each of Comcast and Liberty of Shares
and other QVC Securities to Buyer in connection with the consummation of the
Offer) and (iii) subject to its fiduciary duties under applicable law, resolved
to recommend acceptance of the Offer, and approval and adoption of this
Agreement and the Merger, by its stockholders. QVC further represents that
Allen & Company Incorporated has delivered to QVC's Board of Directors its
written opinion dated the date hereof that the consideration to be paid in the
Offer and the Merger is fair to the holders of Shares (other than Comcast and
Liberty) from a financial point of view. To the best of QVC's knowledge, all
of its directors (other than those directors affiliated with Comcast) and
executive officers intend either to tender their Shares pursuant to the Offer
or to vote in favor of the Merger. QVC will promptly furnish Buyer with a list
of its stockholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of Shares and lists of
securities positions of Shares held in stock depositories, in each case true
and correct as of the most recent practicable date, and will provide to Buyer
such additional information (including, without limitation, updated lists of
stockholders, mailing labels and lists of securities positions) and such other
assistance as Buyer may reasonably request in connection with the Offer.
(b) As soon as practicable on the day that the Offer is
commenced QVC will file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") which shall reflect the recommendations
of QVC's Board of Directors referred to above. Each party hereto agrees
promptly to supplement, update and correct any information provided by it for
use in the Schedule 14D-9 if and to the extent that it is or shall have become
incomplete, false, or misleading. QVC agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required
by applicable federal securities laws. Buyer and its counsel shall be given an
opportunity to review and comment on the Schedule 14D-9 prior to its being
filed with the SEC.
SECTION 0.3. Directors. (a) Effective upon the
acceptance for payment by Buyer of any Shares, Buyer shall be entitled to
designate the number of directors, rounded up to the next whole number, on
QVC's Board of Directors that equals the product of (i) the total number of
directors on QVC's Board of Directors (giving effect to the election of any
additional directors pursuant to this Section) and (ii) the percentage that the
number of Shares owned by Buyer, Comcast, Liberty or any of their respective
wholly owned subsidiaries (including Shares accepted for payment) bears to the
total
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number of Shares outstanding, and QVC shall take all action necessary to cause
Buyer's designees to be elected or appointed to QVC's Board of Directors,
including, without limitation, increasing the number of directors or seeking
and accepting resignations of incumbent directors. At such times, QVC will use
its best efforts to cause individuals designated by Buyer to constitute the
same percentage as such individuals represent on QVC's Board of Directors of
(x) each committee of the Board (other than any committee of the Board
established to take action under this Agreement), (y) each board of directors
of each QVC Subsidiary (as defined in Section 3.01) and (z) each committee of
each such board (in each case rounded up to the next whole number).
Notwithstanding the foregoing, until such time as Buyer acquires a majority of
the outstanding Common Shares on a fully-diluted basis, QVC shall use its
reasonable best efforts to ensure that all of the members of the Board of
Directors and such boards and committees as of the date hereof who are not
employees of QVC shall remain members of the Board of Directors and such boards
and committees until the Effective Time (as defined in Section 1.06).
(b) QVC's obligations to appoint designees to the Board of
Directors shall be subject to Section 14(f) of the Exchange Act (as defined in
Section 3.05) and Rule 14f-1 promulgated thereunder and any other required
material regulatory approvals. QVC shall promptly take all actions required
pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section and shall include in the Schedule 14D-9 such information
with respect to QVC and its officers and directors (and to the extent required
by law, those persons designated by Buyer) as is required under Section 14(f)
and Rule 14f-1 to fulfill its obligations under this Section 1.03. Buyer will
supply to QVC in writing and be solely responsible for any information with
respect to itself and its nominees, officers, directors and affiliates required
by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Buyer's
designee(s) pursuant to this Section and prior to the Effective Time (as
defined in Section 1.08), any amendment or termination of this Agreement, grant
by QVC of any extension for the performance or waiver of the obligations or
other acts of Buyer, Comcast or Liberty or waiver of QVC's rights hereunder, or
action with respect to any QVC (or Surviving Corporation) employee benefit plan
or option agreement, including, without limitation, any equity compensation
agreement, shall require the concurrence of a majority of QVC's directors then
in office who are directors on the date hereof, or are directors (other than
directors designated by Buyer in accordance with Section 1.03(a) and other than
the directors affiliated with Comcast) designated by such persons to fill any
vacancy.
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SECTION 0.4. The Merger. Upon the terms and subject to
the conditions set forth in this Agreement, and in accordance with Delaware
Law, at the Effective Time (as defined in Section 1.08), Buyer shall cause
MergerCo to be merged with and into QVC. As a result of the Merger, the
separate existence of MergerCo shall cease and QVC shall continue as the
surviving corporation of the Merger (the "Surviving Corporation") under the
name "QVC, Inc."
SECTION 0.5. Action by Stockholders. If required by
applicable law to consummate the Merger, QVC, acting through its Board of
Directors, shall, in accordance with applicable law, its Certificate of
Incorporation and bylaws: (i) as soon as practicable after consummation of the
Offer, duly call, give notice of, convene and hold a special meeting of
stockholders for the purpose of adopting this Agreement and approving the
Merger; (ii) subject to its fiduciary duties on the basis of advice of
independent counsel, include in any proxy statement the determination and
recommendation of the Board of Directors to the effect that the Board of
Directors, having determined that this Agreement and the transactions
contemplated hereby are in the best interests of QVC and its stockholders, has
approved this Agreement and such transactions and recommends that the
stockholders vote in favor of the approval and adoption of this Agreement and
the Merger; and (iii) use its best efforts, subject to its fiduciary duties on
the basis of advice of independent counsel, to obtain the necessary approval of
this Agreement and the Merger by stockholders. Comcast, Liberty, MergerCo and
Buyer shall vote all Shares acquired in the Offer, or heretofore owned, in
favor of the Merger.
SECTION 0.6. Proxy Statement. (a) As promptly as
practicable after consummation of the Offer, QVC shall prepare and file with
the SEC (if necessary) a proxy statement relating to the meeting of QVC's
stockholders to be held in connection with the Merger (together with any
amendments thereof or supplements thereto, the "Proxy Statement"). Comcast,
Liberty, MergerCo and Buyer shall furnish to QVC all information concerning
Comcast, Liberty and Buyer as QVC may reasonably request in connection with the
preparation of the Proxy Statement. As promptly as practicable after the Proxy
Statement has been cleared by the SEC, QVC shall mail the Proxy Statement to
its stockholders. The Proxy Statement shall include the recommendation of the
Board of Directors of QVC in favor of the Merger, unless otherwise necessary
due to the applicable fiduciary duties of the directors of QVC, as determined
by such directors in good faith after consultation with, and based upon the
advice of, outside counsel.
(b) The information supplied by each of Comcast, Liberty,
MergerCo and Buyer for inclusion in the Proxy Statement shall not, at (i) the
time the Proxy Statement (or any
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amendment thereof or supplement thereto) is first mailed to the stockholders of
QVC, (ii) the time of the QVC stockholders' meeting contemplated by such Proxy
Statement, and (iii) the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. If at any
time prior to the Effective Time any event or circumstance relating to any
party hereto, or their respective officers or directors, should be discovered
by such party which should be set forth in an amendment or a supplement to the
Proxy Statement, such party shall promptly inform QVC and Buyer thereof and
take appropriate action in respect thereof.
(c) Notwithstanding anything in the foregoing to the
contrary, in the event that Comcast, Liberty, MergerCo, Buyer and/or any other
direct or indirect subsidiary thereof, shall acquire at least 90 percent of the
outstanding shares of each class of capital stock of QVC, Comcast, Liberty and
QVC hereby agree to take all necessary and appropriate action (subject to
Section 1.07 hereof) to cause the Merger to become effective as promptly as
practicable after the expiration of the Offer and the satisfaction or waiver of
the conditions set forth in Article VII hereof, without a meeting of QVC's
stockholders, in accordance with Section 253 of Delaware Law.
SECTION 0.7. Closing. Unless this Agreement shall have
been terminated and the transactions herein contemplated shall have been
abandoned pursuant to Section 8.01 and subject to the satisfaction or, if
permissible, waiver of the conditions set forth in Article VII, the closing of
the Merger will take place as promptly as practicable (and in any event,
subject to the proviso at the end of this sentence, within ten business days)
after satisfaction or waiver of the conditions set forth in Article VII, at the
offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York,
unless another date, time or place is agreed to in writing by the parties
hereto, provided that the Closing shall not occur prior to October 21, 1994.
SECTION 0.8. Effective Time. As promptly as practicable
after the satisfaction or, if permissible, waiver of the conditions set forth
in Article VII (but subject to Section 1.07 hereof), the parties hereto shall
cause the Merger to be consummated by filing a certificate of merger with the
Secretary of State of the State of Delaware and by making any related filings
required under Delaware Law in connection with the Merger. The Merger shall
become effective at such time (but not prior to October 21, 1994) as the
certificate of merger is duly filed with the Secretary of State of the State of
Delaware or at such later time as is specified in the certificate of merger
(the "Effective Time").
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SECTION 0.9. Effect of the Merger. From and after the
Effective Time, the Surviving Corporation shall possess all the rights,
privileges, powers and franchises and be subject to all of the restrictions,
disabilities and duties of QVC and MergerCo, and the Merger shall otherwise
have the effects, all as provided under Delaware Law.
SECTION 0.10. Certificate of Incorporation. The
certificate of incorporation of MergerCo in effect at the Effective Time shall
be the certificate of incorporation of the Surviving Corporation until amended
in accordance with applicable law, except that the name of the Surviving
Corporation shall be "QVC, Inc.", provided that (i) the par value of the common
stock of the Surviving Corporation shall not be $.01 per share, or (ii) there
shall be such other changes made to the certificate of incorporation of the
Surviving Corporation or otherwise as shall be reasonably acceptable to the
parties hereto as shall be necessary or appropriate in order for the Merger and
the Transactions to qualify as a reclassification under Delaware Law.
SECTION 0.11. Bylaws. The bylaws of MergerCo in effect at
the Effective Time shall be the bylaws of the Surviving Corporation until
amended in accordance with applicable law.
SECTION 0.12. Directors and Officers. From and after the
Effective Time, until successors are duly elected or appointed and qualified
(or earlier resignation or removal) in accordance with applicable law, (i) the
directors of MergerCo at the Effective Time shall be the directors of the
Surviving Corporation and (ii) the officers of QVC at the Effective Time shall
be the officers of the Surviving Corporation.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
1
SECTION 1.1. Conversion of Securities. At the Effective
Time, by virtue of the Merger and without any action on the part of Buyer or
MergerCo, QVC or the holders of any of the following securities:
(a) Each share of QVC Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares of QVC
Common Stock to be canceled pursuant to Section 2.01(b) and any
Dissenting Shares (as defined in Section 2.05)) shall be converted
into the right to receive $46.00 in cash, without interest (the
"Common Merger Consideration"). Each share of QVC Preferred Stock
issued and outstanding immediately prior to the Effective Time (other
than any shares of QVC Pre-
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ferred Stock to be canceled pursuant to Section 2.01(b) and any
Dissenting Shares), shall be converted into the right to receive
$460.00 in cash, without interest (the "Preferred Merger
Consideration"). At the Effective Time, all shares of QVC Stock
shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each certificate previously
evidencing any such shares shall thereafter represent the right to
receive, upon the surrender of such certificate in accordance with
the provisions of Section 2.02, the Common Merger Consideration or
the Preferred Merger Consideration, as the case may be. The holders
of such certificates previously evidencing such shares of QVC Stock
outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such shares of QVC Stock except as
otherwise provided herein or by law.
(b) Each share of QVC Stock held in the treasury of QVC or
by any wholly owned subsidiary thereof and each share of QVC Stock
owned by Buyer and MergerCo or any of its subsidiaries, immediately
prior to the Effective Time shall automatically be canceled and
extinguished without any conversion thereof and no payment shall be
made with respect thereto.
(c) Each share of common stock of MergerCo outstanding
immediately prior to the Effective Time shall be converted into and
become one share of common stock of the Surviving Corporation with
the same rights, powers and privileges as the shares so converted and
shall constitute the only outstanding shares of capital stock of the
Surviving Corporation.
SECTION 1.2. Exchange of Certificates and Cash. (a)
Exchange Agent. Prior to the Effective Time, Buyer shall deposit, or shall
cause to be deposited, with or for the account of a bank or trust company
designated by Comcast, which shall be reasonably satisfactory to QVC (the
"Exchange Agent"), for the benefit of the holders of shares of QVC Stock (other
than Dissenting Shares), for exchange in accordance with this Article II,
through the Exchange Agent, an amount in cash equal to the Common Merger
Consideration and the Preferred Merger Consideration payable pursuant to
Section 2.01(a) in exchange for all of the outstanding shares of QVC Stock
(such cash funds are hereafter referred to as the "Exchange Fund"). The
Exchange Agent shall, pursuant to irrevocable instructions, deliver the Merger
Consideration (as defined in paragraph (b) below) to be paid and issued
pursuant to Section 2.01(a) out of the Exchange Fund to holders of shares of
QVC Stock. The Exchange Fund shall not be used for any other purpose. Any
interest, dividends or other income
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earned on the investment of cash held in the Exchange Fund shall be for the
account of Buyer.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, Buyer will instruct the Exchange Agent to
mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time evidenced outstanding shares of QVC
Stock (other than Dissenting Shares) (the "Certificates"), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as Buyer may reasonably specify) and (ii) instructions to
effect the surrender of the Certificates in exchange for cash. Upon surrender
of a Certificate for cancellation to the Exchange Agent or to such other agent
or agents as may be appointed by Buyer together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions (collectively, the "Transmittal
Documents"), the holder of such Certificate shall be entitled to receive in
exchange therefor an amount in cash which such holder has the right to receive
pursuant to Section 2.01(a) (the "Merger Consideration"), and the Certificate
so surrendered shall forthwith be canceled. In the event of a transfer of
ownership of shares of QVC Stock which is not registered in the transfer
records of QVC, the Merger Consideration may be issued and paid in accordance
with this Article II to a transferee if the Certificate evidencing such shares
of QVC Stock is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. The Merger Consideration will
be delivered by the Exchange Agent as promptly as practicable following
surrender of a Certificate and the related Transmittal Documents, and cash
payments may be made by check (unless otherwise required by a depositary
institution in connection with the book-entry delivery of securities). No
interest will be payable on such Merger Consideration regardless of any delay
in making payments. Until surrendered as contemplated by this Section 2.02,
each Certificate shall be deemed at any time after the Effective Time to
evidence only the right to receive, upon such surrender, the Merger
Consideration, without interest.
(c) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of QVC Stock for six
months after the Effective Time shall be delivered to Buyer, upon demand, and
any holders of QVC Stock who have not theretofore complied with this Article II
shall thereafter look only to Buyer for the Merger Consideration to which they
are entitled pursuant to this Article II.
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(d) No Liability. Neither Buyer, Comcast, Liberty, the
Surviving Corporation nor QVC shall be liable to any holder of shares of QVC
Stock for any cash from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(e) Withhold Rights. Buyer or the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of QVC Stock such amounts as
Buyer or the Exchange Agent is required to deduct and withhold with respect to
the making of such payment under the United States Internal Revenue Code of
1986, as amended (the "Code"), or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by Buyer or the Exchange
Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of QVC Stock in
respect of which such deduction and withholding was made by Buyer or the
Exchange Agent.
SECTION 1.3. Stock Transfer Books. At the Effective Time,
the stock transfer books of QVC shall be closed, and there shall be no further
registration of transfers of shares of QVC Stock thereafter on the records of
QVC. On or after the Effective Time, any Certificates presented to the
Exchange Agent or the Surviving Corporation for any reason shall be converted
into the Merger Consideration.
SECTION 1.4. Stock Options; Payment Rights. At the
Effective Time, each outstanding QVC Stock Option (as defined in Section 3.03)
to purchase shares of QVC Common Stock, whether or not then exercisable, shall
be canceled and the holder thereof shall be entitled to receive, and shall
receive, cash in an amount equal to the difference between $46.00 and the per
share exercise price thereof, multiplied by the number of shares issuable
pursuant to such QVC Stock Option, provided, that if such QVC Stock Option was
not issued pursuant to an employee benefit plan meeting the requirements
described in Rule 16b-3 of the Exchange Act (as hereinafter defined), and is
held by a person subject to the short swing profit recovery provisions of
Section 16(b) of the Exchange Act, such QVC Stock Option shall not be canceled
at the Effective Time and shall remain an obligation of the Surviving
Corporation and shall remain enforceable in accordance with the terms thereof.
The Surviving Corporation shall perform all of QVC's obligations under all QVC
Stock Options and shall honor all rights with respect thereto, and the
Surviving Corporation shall have no right of offset, counterclaim, reduction,
recoupment or similar right with respect to any such QVC Stock Options or any
Optionee's rights with respect thereto, on any basis whatsoever.
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SECTION 1.5. Dissenting Shares. (a) Notwithstanding any
other provision of this Agreement to the contrary, shares of QVC Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall be entitled to and shall have demanded
properly in writing appraisal for such shares in accordance with Section 262 of
Delaware Law and who shall not have withdrawn such demand or otherwise have
forfeited appraisal rights (collectively, the "Dissenting Shares") shall not be
converted into or represent the right to receive the Merger Consideration.
Such stockholders shall be entitled to receive payment of the appraised value
of such shares of QVC Stock held by them in accordance with the provisions of
Delaware Law, except that all Dissenting Shares held by stockholders who shall
have failed to perfect or who effectively shall have withdrawn, forfeited or
lost their rights to appraisal of such shares of QVC Stock under Delaware Law
shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration, upon surrender, in the manner
provided in Section 2.02, of the certificate or certificates that formerly
evidenced such shares of QVC Stock.
(b) QVC shall give Buyer prompt notice of any demands for
appraisal received by it, withdrawals of such demands, and any other
instruments served pursuant to Delaware Law and received by QVC and relating
thereto. QVC and Buyer shall jointly direct all negotiations and proceedings
with respect to demands for appraisal under Delaware Law. Neither QVC nor
Buyer shall, except with the prior written consent of the other, make any
payment with respect to any demands for appraisal, or offer to settle, or
settle, any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF QVC
2
QVC hereby represents and warrants to Comcast, Liberty and
Buyer that:
SECTION 2.1. Organization and Qualifications;
Subsidiaries. (a) Each of QVC and each Material QVC Subsidiary (as defined
below) is a corporation, partnership or other legal entity duly incorporated or
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has the requisite power
and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such
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power, authority and governmental approvals would not, individually or in the
aggregate, have a QVC Material Adverse Effect (as defined below). QVC and each
Material QVC Subsidiary is duly qualified or licensed as a foreign corporation
to transact business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that would not,
individually or in the aggregate, have a material adverse effect on the
business, results of operations or financial condition of QVC and the QVC
Subsidiaries, taken as a whole (a "QVC Material Adverse Effect").
(b) Each subsidiary of QVC (a "QVC Subsidiary") that
constitutes a Significant Subsidiary of QVC within the meaning of Rule 1-02 of
Regulation S-X of the Securities and Exchange Commission (the "SEC") is
referred to herein as a "Material QVC Subsidiary."
SECTION 2.2. Certificate of Incorporation and Bylaws. QVC
has heretofore made available to Buyer a complete and correct copy of the
certificate of incorporation and the bylaws or equivalent organizational
documents, each as amended to the date hereof, of QVC and each Material QVC
Subsidiary. Such certificates of incorporation, bylaws and equivalent
organizational documents are in full force and effect. Neither QVC nor any
Material QVC Subsidiary is in violation of any provision of its certificate of
incorporation, bylaws or equivalent organizational documents, except for such
violations that would not, individually or in the aggregate, have a QVC
Material Adverse Effect.
SECTION 2.3. Capitalization. The authorized capital stock
of QVC consists of 175,000,000 shares of QVC Common Stock and 5,000,000 shares
of QVC Preferred Stock. As of June 30, 1994, (i) (a) 40,226,197 shares of QVC
Common Stock were issued and outstanding, all of which were validly issued,
fully paid and nonassessable, (b) 5,586,730 shares of QVC Common Stock were
reserved for issuance upon conversion of the QVC Preferred Stock, (c) 8,194,650
shares of QVC Common Stock were reserved for issuance upon the exercise of
outstanding stock options granted pursuant to QVC's employee stock plans and
certain other stock options not issued pursuant to employee stock plans ("QVC
Stock Options"), (d) 1,700,000 shares of QVC Common Stock were reserved for
issuance upon exercise of all outstanding warrants of QVC, (e) 730 shares of
QVC Common Stock and no shares of QVC Preferred Stock were held in the treasury
of QVC, (f) no shares of QVC Common Stock or QVC Preferred Stock were held by
QVC Subsidiaries, and (g) 553,713 shares of QVC Common Stock and 0 shares of
QVC Preferred Stock were reserved for future issuance pursuant to QVC Stock
Options to be granted; and (ii) 27,788 shares of QVC
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Series B Preferred Stock, 530,757 shares of QVC Series C Preferred Stock, and
128 shares of QVC Series D Preferred Stock were issued and outstanding, all of
which were fully paid and nonassessable and no other shares of QVC Preferred
Stock were issued or outstanding. Except as set forth above, as of June 30,
1994, no shares of capital stock or other voting securities of QVC were issued,
reserved for issuance or outstanding. Except as set forth in this Section 3.03
or in Section 3.03 of the Disclosure Schedule previously delivered by QVC to
Comcast (the "QVC Disclosure Schedule"), there are no options, stock
appreciation rights, warrants or other rights, agreements, arrangements or
commitments of any character (collectively, "Options") relating to the issued
or unissued capital stock of QVC or any QVC Subsidiary, or obligating QVC or
any QVC Subsidiary to issue, grant or sell any shares of capital stock of, or
other equity interests in, or convertible into equity interests in, QVC or any
QVC Subsidiary. Since June 30, 1994, QVC has not issued any shares of its
capital stock or Options in respect thereof, except upon the conversion of the
securities or the exercise of the options or warrants referred to above. All
shares of QVC Common Stock subject to issuance as aforesaid, upon issuance on
the terms and conditions specified in the instruments pursuant to which they
are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in Section 3.03 of the QVC Disclosure
Schedule, there are no outstanding contractual obligations of QVC or any QVC
Subsidiary to repurchase, redeem or otherwise acquire any shares of QVC Common
Stock or any capital stock of any Material QVC Subsidiary, or make any material
investment (in the form of a loan, capital contribution or otherwise) in, any
QVC Subsidiary or any other person. Except as set forth in Section 3.03 of the
QVC Disclosure Schedule, each outstanding share of capital stock of each
Material QVC Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and is owned by QVC or another QVC Subsidiary free and clear of
all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on QVC's or such other QVC Subsidiary's voting
rights, charges and other encumbrances of any nature whatsoever.
SECTION 2.4. Authority Relative to This Agreement. QVC
has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by QVC and the
consummation by QVC of the Transactions have been duly and validly authorized
by all necessary corporate action and no other corporate proceedings on the
part of QVC are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the approval and adoption
of this Agreement by the holders of a majority of the then outstanding
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<PAGE> 21
shares of QVC Common Stock and QVC Preferred Stock, voting together as a single
class, and the filing and recordation of appropriate merger documents as
required by Delaware Law). This Agreement has been duly and validly executed
and delivered by QVC and, assuming the due authorization, execution and
delivery by the other parties hereto, constitutes the legal, valid and binding
obligation of QVC, enforceable against QVC in accordance with its terms. QVC
has taken all appropriate actions so that the restrictions on business
combinations contained in Section 203 of Delaware Law will not apply with
respect to or as a result of the Transactions or the transactions contemplated
by the Bidding Agreement (as defined in Section 4.08).
SECTION 2.5. No Conflict; Required Filings and Consents.
(a) Except as set forth in Section 3.05 of the QVC Disclosure Schedule, the
execution and delivery of this Agreement by QVC do not, and the performance of
this Agreement and the consummation of the Transactions by QVC will not, (i)
conflict with or violate the certificate of incorporation or by-laws or
equivalent organizational documents of QVC or any Material QVC Subsidiary, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to QVC or any QVC Subsidiary or by which any property or asset of
QVC or any QVC Subsidiary is bound or affected, or (iii) result in any breach
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, result in the loss of a material benefit
under, or give to others any right of termination, amendment, acceleration,
increased payments or cancellation of, or result in the creation of a lien or
other encumbrance on any property or asset of QVC or any QVC Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which QVC or
any QVC Subsidiary is a party or by which QVC or any QVC Subsidiary or any
property or asset of QVC or any QVC subsidiary is bound or affected, except, in
the case of clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which would not prevent or delay
consummation of the Merger in any material respect, or otherwise prevent QVC
from performing its obligations under this Agreement in any material respect,
and would not, individually or in the aggregate, have a QVC Material Adverse
Effect.
(b) The execution and delivery of this Agreement by QVC do
not, and the performance of this Agreement and the consummation of the
Transactions by QVC will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic or foreign (each a "Governmental Entity"), except (i) for
(A) applicable requirements, if any, of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and state
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takeover laws, (B) the pre-merger notification requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act"), and (C) filing and recordation of
appropriate merger and similar documents and the restated certificate of
incorporation (the "Restated Certificate of Incorporation") as required by
Delaware Law and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Merger in any material respect, or
otherwise prevent QVC from performing its obligations under this Agreement in
any material respect, and would not, individually or in the aggregate, have a
QVC Material Adverse Effect.
SECTION 2.6. Compliance. Except as set forth in Section
3.06 of the QVC Disclosure Schedule, neither QVC nor any QVC Subsidiary is in
conflict with, or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree applicable to QVC or any QVC Subsidiary or by which
any property or asset of QVC or any QVC Subsidiary is bound or affected, or
(ii) any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which QVC or any QVC
Subsidiary is a party or by which QVC or any QVC Subsidiary or any property or
asset of QVC or any QVC Subsidiary is bound or affected, except for any such
conflicts, defaults or violations that would not, individually or in the
aggregate, have a QVC Material Adverse Effect.
SECTION 2.7. SEC Filings; Financial Statements. (a) QVC
has filed all forms, reports and documents required to be filed by it with the
SEC since January 31, 1992, and has heretofore made available to Buyer, in the
form filed with the SEC (excluding any exhibits thereto), (i) its Annual
Reports on Form 10-K for the fiscal years ended January 31, 1992, 1993 and
1994, respectively, (ii) its Quarterly Report on Form 10-Q for the quarter
ended April 30, 1994, (iii) all proxy statements relating to QVC's meetings of
stockholders (whether annual or special) held since February 1, 1992, and (iv)
all other forms, reports and other registration statements (other than
Quarterly Reports on Form 10-Q not referred to in clause (iii) above and
preliminary materials) filed by QVC with the SEC since January 31, 1992 (the
forms, reports and other documents referred to in clauses (i), (ii), (iii) and
(iv) above being referred to herein, collectively, as the "QVC SEC Reports").
The QVC SEC Reports and any forms, reports and other documents filed by QVC
with the SEC after the date of this Agreement (x) were or will be prepared in
accordance with the requirements of the Securities Act of 1933, as amended (the
"Securities Act") and the Exchange Act, as the case may be, and the rules and
regulations thereunder and (y) did not at the time they were filed, or will not
at the time they are
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<PAGE> 23
filed, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading. No QVC Subsidiary is required to file any form,
report or other document with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the QVC SEC Reports
was prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated (except as may
be indicated in the notes thereto), and each fairly presented the consolidated
financial position, results of operations and cash flows of QVC and the
consolidated QVC Subsidiaries as at the respective dates thereof and for the
respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which were not and are
not expected, individually or in the aggregate, to be material in amount).
Since January 31, 1994, there has been no change in any of the significant
accounting (including tax accounting) policies, practices or procedures of QVC
or any QVC Material subsidiary.
(c) Except (i) as set forth in Section 3.07 of the QVC
Disclosure Schedule, (ii) as and to the extent set forth in the QVC SEC Reports
filed with the SEC prior to the date of this Agreement, or (iii) since April
30, 1994, as incurred in the ordinary course of business, and not in violation
of this Agreement (assuming this Agreement was in effect as of April 30, 1994),
QVC and the QVC Subsidiaries do not have any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) other than
liabilities and obligations which would not, individually or in the aggregate,
have a QVC Material Adverse Effect.
SECTION 2.8. Absence of Certain Changes and Events.
Except as set forth in Section 3.08 of the QVC Disclosure Schedule,
contemplated by this Agreement or disclosed in any QVC SEC Report filed since
April 30, 1994 and prior to the date of this Agreement, since April 30, 1994,
(i) QVC and the QVC Subsidiaries have conducted their businesses only in the
ordinary course and have not taken any of the actions set forth in paragraphs
(a) through (j) of Section 5.01 and (ii) there has not been any material
adverse change in the business, financial condition or results of operations of
QVC and the QVC Subsidiaries, taken as a whole.
SECTION 2.9. Employee Benefit Plans. With respect to all
the employee benefit plans, programs and arrangements maintained for the
benefit of any current or former employee, officer or director of QVC or any
QVC Subsidiary (the "QVC Plans"), except as set forth in Section 3.09 of the
QVC
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<PAGE> 24
Disclosure Schedule or the QVC SEC Reports filed prior to the date of this
Agreement: (i) none of the QVC Plans is a multi-employer plan within the
meaning of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), (ii) none of the QVC Plans promises or provides retiree medical or
life insurance benefits to any person, (iii) each QVC Plan intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service (the "IRS") that it is
so qualified and nothing has occurred since the date of such letter that could
reasonably be expected to affect the qualified status of such QVC Plan other
than occurrences that would not, individually or in the aggregate, have a QVC
Material Adverse Effect; (iv) each QVC Plan has been operated in all material
respects in accordance with its terms and the requirements of applicable law;
(v) neither QVC nor any QVC Subsidiary has incurred any direct or indirect
liability under, arising out of or by operation of Title IV of ERISA in
connection with the termination of, or withdrawal from, any QVC Plan or other
retirement plan or arrangement, and no fact or event exists that could
reasonably be expected to give rise to any such liability, other than any
liability that would not, individually or in the aggregate, have a QVC Material
Adverse Effect; and (vi) QVC and the QVC Subsidiaries have not incurred any
liability under, and have complied in all material respects with, the Worker
Adjustment Retraining Notification Act, and no fact or event exists that could
give rise to liability under such act, other than any liability that would not,
individually or in the aggregate, have a QVC Material Adverse Effect. Except
as set forth in Section 3.09 of the QVC Disclosure Schedule or the QVC SEC
Reports, the aggregate accumulated benefit obligations of each QVC Plan subject
to Title IV of ERISA (as of the date of the most recent actuarial valuation
prepared for such QVC Plan) do not exceed the fair market value of the assets
of such QVC Plan (as of the date of such valuation).
SECTION 2.10. Opinion of Financial Advisor. QVC's Board
of Directors has received the opinion of Allen & Company Incorporated dated the
date hereof, to the effect that, as of such date, the consideration to be
received by the holders of the Shares (other than Comcast and Liberty) pursuant
to the Offer and the Merger is fair to such holders from a financial point of
view, a copy of which opinion has been delivered to Buyer.
SECTION 2.11. Brokers. No broker, finder or investment
banker (other than Allen & Company Incorporated) is entitled to any brokerage,
finder's or other fee or commission in connection with the proposed transaction
with CBS Inc., the Offer, the Merger or the Transactions based upon
arrangements made by or on behalf of QVC. QVC has heretofore furnished to
Comcast a complete and correct copy of all agreements between QVC and Allen &
Company Incorporated as of the date hereof
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<PAGE> 25
pursuant to which such firm would be entitled to any payment relating to the
Transactions or the proposed transaction with CBS Inc.
SECTION 2.12. Taxes. (a) Except as set forth in Section
3.12(a) of the QVC Disclosure Schedule, each of QVC and the QVC Subsidiaries
has filed all tax returns and reports required to be filed by it or requests
for extensions to file such returns or reports have been timely filed, granted
and have not expired, except to the extent that such failures to file or to
have extensions granted that remain in effect individually and in the aggregate
would not have a QVC Material Adverse Effect. All returns filed by QVC and
each of the QVC Subsidiaries are complete and accurate in all material
respects. QVC and each of the QVC Subsidiaries has timely paid (or QVC has
paid on its behalf) all taxes shown as due on such returns, and the most recent
financial statements contained in the QVC SEC Reports reflect an adequate
reserve for all taxes payable by QVC and the QVC Subsidiaries for all taxable
periods and portions thereof accrued through the date of such financial
statements. Except as set forth in Section 3.12(a) of the QVC Disclosure
Schedule, no deficiencies for any taxes have been proposed, asserted or
assessed against QVC or any QVC Subsidiary that are not adequately reserved
for, except for deficiencies that individually or in the aggregate would not
have a QVC Material Adverse Effect, and no requests for waivers of the time to
assess any such taxes have been granted or are pending. QVC is not nor has it
been within 5 years of the date hereof a "United States real property holding
corporation" as defined in Section 897 of the Code.
(b) As used in this Section 3.12, "taxes" shall include
all Federal, state, local and foreign income, franchise, alternative or add-on
minimum tax, gross receipts, transfer, withholding on amounts paid to or by QVC
or any QVC Subsidiary, payroll, employment, license, property, sales, use,
excise and other taxes, tariffs or governmental charges of any nature
whatsoever, together with any interest, penalty or addition to tax attributable
to such taxes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMCAST, LIBERTY
AND BUYER
3
Comcast hereby makes to QVC the representations and
warranties set forth below in Sections 4.01 through 4.06:
SECTION 3.1. Organization and Qualification. Comcast is a
corporation duly incorporated, validly existing and in good standing under the
laws of Pennsylvania and has the requisite power and authority and all
necessary
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<PAGE> 26
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where the failure to be so
incorporated, existing or in good standing or to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
material adverse effect on the business, results of operations or financial
condition of Comcast and its subsidiaries, taken as a whole (a "Comcast
Material Adverse Effect"). Neither Comcast nor any of its subsidiaries is in
violation of any provision of its certificate of incorporation, bylaws or
equivalent organizational documents, except for such violations that would not,
individually or in the aggregate, have a Comcast Material Adverse Effect.
SECTION 3.2. Authority Relative to This Agreement.
Comcast has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Comcast and the
consummation by Comcast of the Transactions have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of Comcast are necessary to authorize this Agreement or to
consummate the Transactions (other than the filing and recordation of
appropriate merger documents as required by Delaware Law). This Agreement has
been duly and validly executed and delivered by Comcast and, assuming the due
authorization, execution and delivery by QVC and Liberty, constitutes the
legal, valid and binding obligation of Comcast, enforceable against Comcast in
accordance with its terms.
SECTION 3.3. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Comcast do not, and the
performance of the Transactions by Comcast will not, (i) conflict with or
violate the certificate of incorporation or by-laws or equivalent
organizational documents of Comcast, (ii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to Comcast or by which
any property or asset of Comcast is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, result in the loss of a material
benefit under or give to others any right of termination, amendment,
acceleration, increased payments or cancellation of, or result in the creation
of a lien or other encumbrance on any property or asset of Comcast pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or any other instrument or obligation to which Comcast is a
party or by which Comcast or any property or asset of Comcast is bound or
affected, except in the case of clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which would not prevent or
delay consummation of the Merger in any
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<PAGE> 27
material respect, or otherwise prevent Comcast from performing its obligations
under this Agreement in any material respect, and would not, individually or in
the aggregate, have a Comcast Material Adverse Effect.
(b) The execution and delivery of this Agreement by
Comcast do not, and the performance of this Agreement and the consummation of
the Transactions by Comcast will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Entity, except (i) for (A) applicable requirements, if any, of the Exchange Act
and state takeover laws, (B) the pre-merger notification requirements of the
HSR Act, and (C) filing and recordation of appropriate merger and similar
documents as required by Delaware Law and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Merger in any
material respect, or otherwise prevent Comcast from performing its obligations
under this Agreement in any material respect, and would not, individually or in
the aggregate, have a Comcast Material Adverse Effect.
SECTION 3.4. SEC Filings, Financial Statements. (a)
Comcast has filed all forms, reports and documents required to be filed by it
with the SEC since December 31, 1991, and has heretofore made available to QVC,
in the form filed with the SEC (excluding any exhibits thereto), (i) its Annual
Reports on Form 10-K for the fiscal years ended December 31, 1991, 1992 and
1993, respectively, (ii) its Quarterly Report on Form 10-Q for the quarter
ended March 31, 1994, (iii) all proxy statements relating to Comcast's meetings
of stockholders (whether annual or special) held since January 1, 1992, and
(iv) all other forms, reports and other registration statements (other than
Quarterly Reports on Form 10-Q not referred to in clause (ii) above and
preliminary materials) filed by Comcast with the SEC since December 31, 1991
(the forms, reports and other documents referred to in clauses (i), (ii),
(iii), and (iv) above being referred to herein, collectively, as the "Comcast
SEC Reports"). The Comcast SEC Reports and any other forms, reports and other
documents filed by Comcast with the SEC after the date of this Agreement (x)
were or will be prepared in accordance with the requirements of the Securities
Act and the Exchange Act, as the case may be, and the rules and regulations
thereunder and (y) did not at the time they were filed, or will not at the time
they are filed, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the
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<PAGE> 28
Comcast SEC Reports was prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and each fairly
presented the consolidated financial position, results of operations and cash
flows of Comcast and the consolidated Comcast subsidiaries as at the respective
dates thereof and for the respective periods indicated therein (subject, in the
case of unaudited statements, to normal and recurring year-end adjustments
which were not and are not expected, individually or in the aggregate, to be
material in amount). Since December 31, 1993, there has been no change in any
of the significant accounting (including tax accounting) policies, practices or
procedures of Comcast.
SECTION 3.5. Brokers. No broker, finder or investment
banker (other than Lazard Freres & Co.) is entitled to any brokerage, finder's
or other fee or commission in connection with the Merger and the Transactions
based upon arrangements made by or on behalf of Comcast.
Liberty hereby makes to QVC the representations and
warranties set forth below in Sections 4.06 through 4.10:
SECTION 3.6. Organization and Qualification. Liberty is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where the failure to be so
incorporated, existing or in good standing or to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
material adverse effect on the business, results of operations or financial
condition of Liberty and its subsidiaries, taken as a whole (a "Liberty
Material Adverse Effect"). Neither Liberty nor any of its subsidiaries is in
violation of any provision of its certificate of incorporation, bylaws or
equivalent organizational documents, except for such violations that would not,
individually or in the aggregate, have a Liberty Material Adverse Effect.
SECTION 3.7. Authority Relative to This Agreement.
Liberty has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Liberty and the
consummation by Liberty of the Transactions have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of Liberty are necessary to authorize this Agreement or to
consummate the Transactions (other than the filing and recordation of
appropriate merger documents as required by Delaware Law). This Agreement has
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<PAGE> 29
been duly and validly executed and delivered by Liberty and, assuming the due
authorization, execution and delivery by QVC and Comcast, constitutes the
legal, valid and binding obligation of Liberty, enforceable against Liberty in
accordance with its terms.
SECTION 3.8. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Liberty do not, and the
performance of the Transactions by Liberty will not, (i) conflict with or
violate the certificate of incorporation or by-laws or equivalent
organizational documents of Liberty, (ii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to Liberty or by which
any property or asset of Liberty is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, result in the loss of a material
benefit under or give to others any right of termination, amendment,
acceleration, increased payments or cancellation of, or result in the creation
of a lien or other encumbrance on any property or asset of Liberty pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or any other instrument or obligation to which Liberty is a
party or by which Liberty or any property or asset of Liberty is bound or
affected, except in the case of clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which would not prevent or
delay consummation of the Merger in any material respect, or otherwise prevent
Liberty from performing its obligations under this Agreement in any material
respect, and would not, individually or in the aggregate, have a Liberty
Material Adverse Effect.
(b) The execution and delivery of this Agreement by
Liberty do not, and the performance of this Agreement and the consummation of
the Transactions by Liberty will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Entity, except (i) for (A) applicable requirements, if any, of the Exchange Act
and state takeover laws, (B) the pre-merger notification requirements of the
HSR Act applicable to the transactions contemplated by the letter agreement
dated August 4, 1994 among Comcast, Liberty and TCI (the "Bidding Agreement")
and (C) filing and recordation of appropriate merger and similar documents as
required by Delaware Law and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay consummation of the Merger in any material respect,
or otherwise prevent Liberty from performing its obligations under this
Agreement in any material respect, and would not, individually or in the
aggregate, have a Liberty Material Adverse Effect.
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<PAGE> 30
SECTION 3.9. SEC Filings, Financial Statements. (a)
Liberty has filed all forms, reports and documents required to be filed by it
with the SEC since December 31, 1991, and has heretofore made available to QVC,
in the form filed with the SEC (excluding any exhibits thereto), (i) its Annual
Reports on Form 10-K for the fiscal years ended December 31, 1991, 1992 and
1993, respectively, (ii) its Quarterly Report on Form 10-Q for the quarter
ended March 31, 1994, (iii) all proxy statements relating to Liberty's meetings
of stockholders (whether annual or special) held since January 1, 1992, and
(iv) all other forms, reports and other registration statements (other than
Quarterly Reports on Form 10-Q not referred to in clause (ii) above and
preliminary materials) filed by Liberty with the SEC since December 31, 1991
(the forms, reports and other documents referred to in clauses (i), (ii),
(iii), and (iv) above being referred to herein, collectively, as the "Liberty
SEC Reports"). The Liberty SEC Reports and any other forms, reports and other
documents filed by Liberty with the SEC after the date of this Agreement (x)
were or will be prepared in accordance with the requirements of the Securities
Act and the Exchange Act, as the case may be, and the rules and regulations
thereunder and (y) did not at the time they were filed, or will not at the time
they are filed, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the Liberty SEC
Reports was prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and each fairly presented the
consolidated financial position, results of operations and cash flows of
Liberty and the consolidated Liberty subsidiaries as at the respective dates
thereof and for the respective periods indicated therein (subject, in the case
of unaudited statements, to normal and recurring year-end adjustments which
were not and are not expected, individually or in the aggregate, to be material
in amount). Since December 31, 1993, there has been no change in any of the
significant accounting (including tax accounting) policies, practices or
procedures of Liberty, except in connection with the business combination
transaction between Liberty and Tele-Communications, Inc.
SECTION 3.10. Brokers. No broker, finder or investment
banker (other than Lazard Freres & Co.) is entitled to any brokerage, finder's
or other fee or commission in connection with the Merger and the Transactions
based upon arrangements made by or on behalf of Liberty.
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<PAGE> 31
Buyer, Comcast and Liberty each hereby makes to QVC the
representations and warranties in respect of Buyer set forth below in Sections
4.11 through 4.15:
SECTION 3.11. Organization and Qualification. Buyer is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where the failure to be so
incorporated, existing or in good standing or to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
material adverse effect on the business, results of operations or financial
condition of Buyer and its subsidiaries, taken as a whole (a "Buyer Material
Adverse Effect"). Since the date of its incorporation, Buyer has not engaged
in any activities other than in connection with or as contemplated by this
Agreement or in connection with arranging any financing required to consummate
Transactions. Buyer does not have any operating subsidiaries.
SECTION 3.12. Certificate of Incorporation and Bylaws.
Buyer has heretofore made available to QVC a complete and correct copy of its
certificate of incorporation and bylaws, each as amended to the date hereof.
Such certificates of incorporation and bylaws are in full force and effect.
Buyer is not in violation of its certificate of incorporation or bylaws.
SECTION 3.13. Authority Relative to This Agreement. Buyer
has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Buyer and the
consummation by Buyer of the Transactions have been duly and validly authorized
by all necessary corporate action and no other corporate proceedings on the
part of Buyer are necessary to authorize this Agreement or to consummate the
Transactions (other than the filing and recordation of appropriate merger
documents as required by Delaware Law). This Agreement has been duly and
validly executed and delivered by Buyer and, assuming the due authorization,
execution and delivery by QVC, constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
SECTION 3.14. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Buyer do not, and the
performance of the Transactions by Buyer will not, (i) conflict with or violate
the certificate of incorporation or by-laws or equivalent organizational
documents of Buyer, (ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to
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Buyer or by which any property or asset of Buyer is bound or affected, or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, result in the loss of a
material benefit under or give to others any right of termination, amendment,
acceleration, increased payments or cancellation of, or result in the creation
of a lien or other encumbrance on any property or asset of Buyer pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or any other instrument or obligation to which Buyer is a
party or by which Buyer or any property or asset of Buyer is bound or affected,
except in the case of clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which would not prevent or
delay consummation of the Merger in any material respect, or otherwise prevent
Buyer from performing its obligations under this Agreement in any material
respect, and would not, individually or in the aggregate, have a Buyer Material
Adverse Effect.
(b) The execution and delivery of this Agreement by Buyer
do not, and the performance of this Agreement and the consummation of the
Transactions by Buyer will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Entity, except
(i) for (A) applicable requirements, if any, of the Exchange Act and state
takeover laws, (B) the pre-merger notification requirements of the HSR Act and
(C) filing and recordation of appropriate merger and similar documents as
required by Delaware Law and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay consummation of the Merger in any material respect,
or otherwise prevent Buyer from performing its obligations under this Agreement
in any material respect, and would not, individually or in the aggregate, have
a Buyer Material Adverse Effect.
SECTION 3.15. Brokers. No broker, finder or investment
banker (other than Lazard Freres & Co.) is entitled to any brokerage, finder's
or other fee or commission in connection with the Merger and the Transactions
based upon arrangements made by or on behalf of Buyer.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
4
SECTION 4.1. Conduct of Business by QVC Pending the
Merger. QVC covenants and agrees that, between the date of this Agreement and
the Effective Time, unless Buyer shall have consented in writing (such consent
not to be unreasonably withheld), QVC and its respective subsidiaries shall
not,
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except as set forth on Schedule 5.01 to the QVC Disclosure Schedule:
(a) conduct its business in any manner other
than in the ordinary course of business consistent with
past practice;
(b) amend or otherwise change the certificate of
incorporation or by-laws of QVC;
(c) issue, grant, sell, pledge, redeem or
acquire for value (i) any of its or their securities,
including options thereon (other than the issuance of
equity securities upon the conversion of outstanding
convertible securities or in connection with any dividend
reinvestment plan or by any QVC Plan with an employee stock
fund or employee stock ownership plan feature, consistent
with applicable securities laws, or the exercise of options
or warrants outstanding as of the date of this Agreement
and in accordance with the terms of such options or
warrants in effect on the date of this Agreement) or (ii)
any material assets, except for sales of assets in the
ordinary course of business;
(d) declare, set aside, make or pay any dividend
or other distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock, except
dividends declared and paid by a subsidiary of QVC only to
QVC, or subdivide, re-classify, recapitalize, split,
combine or exchange any of its shares of capital stock
(other than in connection with the exercise of currently
outstanding options or warrants);
(e) incur any material amount of indebtedness
for borrowed money or make any loans or advances, except
borrowings under existing bank lines of credit in the
ordinary course of business;
(f) increase the compensation payable or to
become payable to its executive officers or employees,
except for increases in the ordinary course of business in
accordance with past practices, or grant any severance or
termination pay to, or enter into any employment or
severance agreement with any director or executive officer
of it or any of its subsidiaries, or establish, adopt,
enter into or amend in any material respect or take action
to accelerate any rights or benefits under any collective
bargaining agreement or any employee benefit plan,
agreement or policy;
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(g) take any action, other than reasonable and
usual actions in the ordinary course of business and
consistent with past practice, with respect to accounting
policies or procedures (including tax accounting policies
and procedures);
(h) acquire by merger or consolidation, or by
purchase of assets, or by any other manner, any material
business;
(i) mortgage or otherwise encumber or subject to
any lien any of its properties or assets that are material
to it and its subsidiaries taken as a whole, except for
liens in connection with indebtedness incurred in
connection with the Merger as permitted by clause (e)
above; or
(j) authorize any of, or commit or agree to take
any of, the foregoing actions.
ARTICLE VI
ADDITIONAL COVENANTS
5
SECTION 5.1. Access to Information; Confidentiality. (a)
From the date hereof to the Effective Time, QVC shall (and shall cause its
subsidiaries and officers, directors, employees, auditors and agents to) afford
the officers, employees and agents of Comcast and Liberty (the "Respective
Representatives") reasonable access at all reasonable times to its officers,
employees, agents, properties, offices, plants and other facilities, books and
records, and shall furnish such Respective Representatives with all financial,
operating and other data and information as may be reasonably requested. All
information obtained will be subject to the Confidentiality Agreement, dated as
of July 13, 1994, between Comcast and QVC, and the Confidentiality Agreement,
dated as of July 21, 1994, between Liberty and QVC (collectively, the
"Confidentiality Agreements").
(b) No investigation pursuant to this Section 6.01 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto.
SECTION 5.2. No Solicitation. QVC shall not, nor shall it
permit any of its subsidiaries, or its or its subsidiaries' officers,
directors, employees, agents or representatives (including, without limitation,
any investment banker, attorney or accountant retained by it) to, initiate,
solicit or encourage, directly or indirectly, any inquiries or the making of
any proposal with respect to an Alternative
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Transaction (as defined below), engage in any discussions or negotiations
concerning, or provide to any other person any information or data relating to
it or its subsidiaries for the purposes of, or otherwise cooperate in any way
with or assist or participate in, facilitate or encourage, any inquiries or the
making of any proposal which constitutes, or may reasonably be expected to lead
to, a proposal to seek or effect an Alternative Transaction, or agree to or
endorse any Alternative Transaction; provided, however, that nothing contained
in this Section 6.02 shall prohibit QVC, or its Board of Directors from (i)
taking and disclosing to its stockholders a position contemplated by Exchange
Act Rule 14e-2 or (ii) making any disclosure to its stockholders that, in the
judgment of its Board of Directors in accordance with, and based upon the
advice of, outside counsel, is required under applicable law; and, provided,
further, that (x) the QVC Board of Directors on behalf of QVC may upon the
unsolicited request of a third party furnish information or data (including,
without limitation, confidential information or data) relating to QVC for the
purposes of an Alternative Transaction and participate in negotiations with a
person making an unsolicited proposal regarding an Alternative Transaction and
(y) following receipt of a proposal for an Alternative Transaction, the QVC
Board of Directors may withdraw or modify its recommendation relating to the
Offer or the Merger to the extent that it determines in good faith in
accordance with, and based upon the advice of, outside counsel that such action
is necessary or appropriate in order for the QVC Board of Directors to act in a
manner that is consistent with its fiduciary obligations under applicable law.
QVC shall promptly advise Buyer of, and communicate the terms of, any proposal
it may receive, or any inquiries it receives which may reasonably be expected
to lead to a proposal, and the identity of the person making it; prior to
taking any such action, if QVC intends to participate in any such discussion or
negotiation or provide any such information to any such third party, it shall
give reasonable notice to Buyer and shall consult, and thereafter shall
continue to consult, with Buyer. If QVC is required by this Section 6.02 to
give notice of a request, Alternative Transaction proposal or inquiry, it shall
keep Buyer reasonably informed of the status and details of any such request,
Alternative Transaction, inquiry or proposal (or any amendment to any
proposal). Nothing in this Section 6.02 shall (x) permit QVC to enter into any
agreement with respect to an Alternative Transaction during the term of this
Agreement (it being agreed that during the term of this Agreement QVC shall not
enter into any agreement with any person that provides for, or in any way
facilitates, an Alternative Transaction, other than a confidentiality agreement
in customary form) or (y) affect any other obligation of QVC under this
Agreement. "Alternative Transaction" means a transaction or series of related
transactions (other than the Transactions) resulting in (a) any change of
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control of QVC, (b) any merger or consolidation of QVC in which another person
acquires 25% or more of the aggregate voting power of all voting securities of
it or the surviving corporation, as the case may be, (c) any tender offer or
exchange offer for, or any acquisitions of, any securities of QVC which, if
consummated, would result in another person owning 25% or more of the aggregate
voting power of all voting securities of it, or (d) any sale or other
disposition of assets of QVC or any of its subsidiaries if the Fair Market
Value of such assets exceeds 25% of the aggregate Fair Market Value of the
assets of QVC and its subsidiaries taken as a whole before giving effect to
such sale or other disposition. "Fair Market Value" of any assets or
securities means the fair market value of such assets or securities, as
determined by the Board of Directors of QVC in good faith.
SECTION 5.3. Directors' and Officers' Indemnification and
Insurance. (a) From and after the Effective Time, the Surviving Corporation
shall indemnify, defend and hold harmless the present and former officers and
directors of QVC (collectively, the "Indemnified Parties") against all losses,
expenses, claims, damages, liabilities or amounts that are paid in settlement
of, with the approval of the Surviving Corporation (which approval shall not
unreasonably be withheld), or otherwise in connection with any claim, action,
suit, proceeding or investigation (a "Claim"), based in whole or in part on the
fact that such person is or was a director or officer of QVC and arising out of
actions or omissions occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this Agreement), in each
case to the full extent permitted under Delaware Law (and shall pay any
expenses in advance of the final disposition of any such action or proceeding
to each Indemnified Party to the fullest extent permitted under Delaware Law,
upon receipt from the Indemnified Party to whom expenses are advanced of any
undertaking to repay such advances required under Delaware Law).
(b) For a period of three years after the Effective Time,
the Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by QVC
(provided that the Surviving Corporation may substitute therefor policies of at
least the same coverage and amounts containing terms and conditions which are
no less advantageous to such officers and directors) with respect to claims
arising from facts or events which occurred before the Effective Time;
provided, however, that in no event shall the Surviving Corporation be required
to expend pursuant to this Section 6.03(b) more than an amount equal to 200% of
the current annual premiums paid by QVC for such insurance (which premiums QVC
represents and warrants to be approximately $700,000 in the aggregate on an
annualized basis in addition to the remaining premium to be paid during
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the next twelve months in connection with a prior acquisition by QVC).
(c) This Section 6.03 is intended to be for the benefit
of, and shall be enforceable by, the Indemnified Parties, their heirs and
personal representatives and shall be binding on the Surviving Corporation and
its respective successors and assigns.
SECTION 5.4. Notification of Certain Matters. QVC shall
give prompt notice to Buyer, and Buyer shall give prompt notice to QVC, of (a)
the occurrence, or nonoccurrence, of any event the occurrence, or
nonoccurrence, of which would be likely to cause (i) any representation or
warranty contained in this Agreement to be untrue or inaccurate or (ii) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied and (b) any failure of QVC or Buyer (or Comcast or Liberty),
as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section 6.04 shall not limit
or otherwise affect the remedies available hereunder to the party receiving
such notice.
SECTION 5.5. Further Action; Best Efforts. (a) Upon the
terms and subject to the conditions hereof, each of the parties hereto shall
(i) make promptly its respective filings, and thereafter make any other
required submissions, under the HSR Act with respect to the Transactions, and
(ii) use its best efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations or otherwise to consummate and
make effective the Transactions, including, without limitation, using its best
efforts to obtain all financing necessary to consummate the Transactions as
well as all licenses, permits, waivers, orders, consents, approvals,
authorizations, qualifications and orders of Governmental Entities and parties
to contracts with QVC and its subsidiaries as are necessary for the
consummation of the Transactions. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall use their best efforts to take all such action.
(b) Each party shall use its best efforts not to take any
action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or
result in a breach of any covenant made by it in this Agreement.
SECTION 5.6. Public Announcements. Buyer, Comcast,
Liberty and QVC shall consult with each other before issuing
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any press release or otherwise making any public statements with respect to
this Agreement or any Transaction and shall not issue any such press release or
make any such public statement without the prior consent of the other parties,
which consent shall not be unreasonably withheld; provided, however, that a
party may, without the prior consent of the other parties, issue such press
release or make such public statement as may be required by law or any listing
agreement or arrangement to which Buyer, Comcast, Liberty or QVC is a party
with a national securities exchange or the National Association of Securities
Dealers, Inc. Automated Quotation System if it has used all reasonable efforts
to consult with the other parties and to obtain such parties' consent but has
been unable to do so in a timely manner.
SECTION 5.7. Conveyance Taxes. Buyer and QVC shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the Transactions that are
required or permitted to be filed on or before the Effective Time.
SECTION 5.8. Gains Tax. Buyer shall pay any New York
State Tax on Gains Derived from Certain Real Property Transfers (the "Gains
Tax"), New York State Real Estate Transfer Tax and New York City Real Property
Transfer Tax (the "Transfer Taxes") and any similar taxes in any other
jurisdiction (and any penalties and interest with respect to such taxes), which
become payable in connection with the Offer and the Merger, on behalf of the
stockholders of QVC. Buyer and QVC shall cooperate in the preparation,
execution and filing of any required returns with respect to such taxes
(including returns on behalf of the stockholders of QVC) and in the
determination of the portion of the consideration allocable to the real
property of QVC and the QVC Subsidiaries in New York State and City (or in any
other jurisdiction, if applicable). The terms of the Offer and Proxy Statement
shall provide that the stockholders of QVC shall be deemed to have agreed to be
bound by the allocation established pursuant to this Section 6.08 in the
preparation of any return with respect to the Gains Tax and the Transfer Taxes
and any similar taxes, if applicable.
SECTION 5.9. Obligations of Buyer. Comcast and Liberty
each agree to take all action necessary to cause Buyer and the Surviving
Corporation to perform their respective obligations under this Agreement and to
consummate, and cause MergerCo to consummate, the Offer and the Merger on the
terms and conditions set forth in this Agreement. Comcast and Liberty shall be
jointly and severally liable for any breach
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of any representation, warranty, covenant or agreement of Buyer and for any
breach of this covenant.
SECTION 5.10. Severance Policy; Employee Benefits. (a)
Comcast, Liberty and Buyer will cause the Surviving Corporation to maintain for
a period ending on the second anniversary of the Effective Time, without
interruption, employee compensation and benefit plans, programs and policies
and fringe benefits (including post-employment welfare benefits) that, in the
aggregate, are no less favorable than those provided to such employees of QVC
and its subsidiaries, as applicable, as in effect on the date hereof.
Notwithstanding the foregoing, for a period ending on the second anniversary of
the Effective Time, Comcast, Liberty and Buyer will cause the Surviving
Corporation to provide to all employees of QVC and its subsidiaries severance
pay and benefits which are no less favorable than under the applicable
severance plans, programs and policies of QVC and its subsidiaries, as
applicable, as in effect on the date hereof.
(b) Immediately prior to consummation of the Offer, Buyer
shall establish with a trustee satisfactory to QVC and Buyer, a "Rabbi" trust,
in a form reasonably acceptable to QVC, and shall deposit in such trust cash in
an amount sufficient to satisfy all obligations under QVC Stock Options. The
terms of such trust shall provide that payments shall be made to the holders of
QVC Stock Options following the Effective Time, in accordance with the
provisions of Section 2.04, upon delivery to the trustee by or on behalf of the
option holder of a copy of the option agreement evidencing such QVC Stock
Options (or other appropriate documentation) and certification by the option
holder that such option holder is entitled to such payment under the terms of
such option agreement and Section 2.04.
SECTION 5.11. FCC Approvals. If not already withdrawn,
within five business days after the date hereof QVC will withdraw any
applications pending with the Federal Communications Commission (the "FCC")
relating to the transfer of control of any licenses or other permits issued by
the FCC to QVC or any QVC Subsidiary. QVC will not make any applications to
the FCC in respect of the Transactions without Buyer's prior approval.
SECTION 5.12. Tax Certification. At any time during the
period beginning on the date hereof and ending on the Effective Time, QVC shall
provide to Buyer, within two business days of a request by Buyer, a certificate
signed by QVC to the effect that QVC is not, nor has it been within five years
of the date thereof, a "United States real property holding corporation" as
defined in Section 897 of the Code.
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ARTICLE VII
CLOSING CONDITIONS
6
SECTION 6.1. Conditions to Obligations of Each Party to
Effect the Merger. The respective obligations of each party to effect the
Merger and the Transactions shall be subject to the satisfaction at or prior to
the Effective Time of the following conditions, any or all of which may be
waived, in whole or in part, to the extent permitted by applicable law:
(a) Stockholder Approval. If required by
Delaware Law, this Agreement and the Merger shall have been
approved and adopted by the requisite vote of the
stockholders of QVC.
(b) No Order. No Governmental Entity or federal
or state court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary
or permanent) which is in effect and which materially
restricts, prevents or prohibits consummation of the Merger
or any Transaction contemplated by this Agreement;
provided, however, that the parties shall use their
reasonable efforts to cause any such decree, judgment,
injunction or other order to be vacated or lifted.
(c) Other Approvals. Other than the filing of
merger documents in accordance with Delaware Law, all
authorizations, consents, waivers, orders or approvals
required to be obtained, and all filings, notices or
declarations required to be made, by Comcast, Liberty or
Buyer and QVC prior to the consummation of the Merger and
the Transactions shall have been obtained from, and made
with, all required Governmental Entities, except for such
authorizations, consents, waivers, orders, approvals,
filings, notices or declarations the failure to obtain or
make which would not have a material adverse effect, at or
after the Effective Time, on the business, results of
operations or financial condition (as existing immediately
prior to the consummation of the Merger) of QVC and the QVC
Subsidiaries, taken as a whole.
(d) The Offer. Buyer shall have purchased
shares pursuant to the Offer.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
7
SECTION 7.1. Termination. This Agreement may be
terminated at any time prior to the Effective Time, whether before or after
approval of this Agreement and the Merger by the stockholders of QVC:
(a) by mutual consent of QVC and Buyer;
(b) prior to the purchase of Shares pursuant to
the Offer, (x) by Buyer or QVC upon termination of the
Offer by Buyer pursuant to Annex I, (y) by Buyer upon a
breach of any covenant or agreement on the part of QVC set
forth in this Agreement which has not been cured, or if any
representation or warranty of QVC shall have become untrue,
in either case such that such breach or untruth is
incapable of being cured by February 28, 1995 or (z) by QVC
in the event of a breach of any representation, warranty,
agreement or covenant (other than the covenant contained in
Section 6.10(b)) of Comcast, Liberty or Buyer set forth in
this Agreement, provided that such breach has not been
cured (and cannot reasonably be expected to be cured before
February 28, 1995) and will prevent or delay consummation
of the Merger by or beyond February 28, 1995;
(c) by either Buyer or QVC, if any permanent
injunction or action by any Governmental Entity preventing
the consummation of the Merger shall have become final and
nonappealable;
(d) by either Buyer or QVC, if the Offer shall
not have been consummated before February 28, 1995, unless,
in the case of termination by Buyer, Buyer shall not have
purchased Shares pursuant to the Offer by reason of any
failure by Buyer, Comcast or Liberty to fulfill its
obligations hereunder; or
(e) by Buyer or QVC if (i) the Board of
Directors of QVC shall withdraw, modify or change its
recommendation so that it is not in favor of this
Agreement, the Offer or the Merger or shall have resolved
to do any of the foregoing or (ii) the Board of Directors
of QVC shall have recommended or resolved to recommend to
its stockholders an Alternative Transaction, provided that,
in the case of any such termination by QVC, simultaneously
with such termination it complies with Section 8.05(b) of
this Agreement.
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The right of any party hereto to terminate this Agreement pursuant to this
Section 8.01 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
SECTION 7.2. Effect of Termination. Except as provided in
Section 8.05 or Section 9.01, in the event of the termination of this Agreement
pursuant to Section 8.01, this Agreement shall forthwith become void, there
shall be no liability on the part of any party hereto, or any of their
respective officers or directors, to the other and all rights and obligations
of any party hereto shall cease; provided, however, that nothing herein shall
relieve any party from liability for the wilful breach of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
SECTION 7.3. Amendment. This Agreement may be amended by
the parties hereto by action taken by or on behalf of their respective Boards
of Directors at any time prior to the Effective Time; provided, however, that,
after approval of this Agreement and the Merger by the stockholders of QVC, no
amendment, which under applicable law may not be made without the approval of
the stockholders of QVC, may be made without such approval. This Agreement may
not be amended except by an instrument in writing signed by the parties hereto.
SECTION 7.4. Waiver. At any time prior to the Effective
Time, either party hereto may (a) extend the time for the performance of any of
the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto, and (c) waive compliance
by the other party with any of the agreements or conditions contained herein.
Any such extension or waiver shall be valid only if set forth in an instrument
in writing signed by the party or parties to be bound thereby.
SECTION 7.5. Fees, Expenses and Other Payments. (a) All
costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred by the parties hereto
shall be borne solely and entirely by the party which has incurred such costs
and expenses (with respect to such party, its "Expenses"); provided, however,
that all costs and expenses related to printing and mailing the Proxy Statement
shall be borne equally by QVC and Buyer.
(b) Except to the extent earlier payment is required
pursuant to Section 8.01(e), QVC agrees that if this Agreement shall be
terminated by Buyer or QVC pursuant to
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Section 8.01(e), then QVC will pay to Buyer an amount equal to $55,000,000,
which amount is inclusive of all expenses of Buyer, Comcast and Liberty. Any
payment required to be made pursuant to this paragraph (b) shall be made as
promptly as practicable but not later than two business days after termination
of this Agreement and, in any such case, shall be made by wire transfer of
immediately available funds to an account designated by Buyer.
ARTICLE IX
GENERAL PROVISIONS
8
SECTION 8.1. Effectiveness of Representations, Warranties
and Agreements. (a) Except as set forth in Section 9.01(b), the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party
or any of their respective officers or directors, whether prior to or after the
execution of this Agreement.
(b) The representations, warranties and agreements in this
Agreement shall terminate at the Effective Time or upon the termination of this
Agreement pursuant to Article VIII, except that the agreements set forth in
Articles I, II and IX, and Sections 6.03, 6.09, 6.10 and 6.11 shall survive the
Effective Time and those set forth in the last sentence of Section 6.01(a) and
Sections 8.02 and 8.05 and Article IX shall survive termination.
SECTION 8.2. Notices. All notices and other
communications given or made pursuant hereto shall be in writing and shall be
deemed to have been duly given or made as of the date delivered or transmitted,
and shall be effective upon receipt, if delivered personally, mailed by
registered or certified mail (postage prepaid, return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like changes of address) or sent by electronic
transmission to the telecopier number specified below:
(a) If to Comcast or Buyer:
Comcast Corporation
1500 Market Street
Philadelphia, Pennsylvania 19102-4735
Attention: General Counsel
Telecopier No.: (215) 981-7794
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with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Attention: Dennis S. Hersch
Telecopier No.: (212) 450-4800
(b) If to Liberty or Buyer:
Liberty Media Corporation
8101 East Prentice Avenue
Suite 500
Englewood, CO 80111
Attention: President
Telecopier No.: (303) 721-5415
with a copy to:
Baker & Botts
885 Third Avenue
New York, NY 10022
Attention: Jerome H. Kern
Telecopier No.: (212) 705-5125
(c) If to QVC:
QVC, Inc.
1365 Enterprise Drive
Goshen Corporate Park
West Chester, PA 19380
Attention: Corporate Secretary
Telecopier No.: (610) 430-2380
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Pamela S. Seymon
Telecopier No.: (212) 403-2000
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SECTION 8.3. Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliate" means a person that, directly or
indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, the
first mentioned person;
(b) "business day" means any day other than a
day on which (i) banks in the State of New York are
authorized or obligated to be closed or (ii) the SEC or
NYSE is closed;
(c) "control" (including the terms "controlled,"
"controlled by" and "under common control with") means the
possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of
the management or polices of a person, whether through the
ownership of stock or as trustee or executor, by contract
or credit arrangement or otherwise; and
(d) "subsidiary" or "subsidiaries" of any person
means any corporation, partnership, joint venture or other
legal entity of which such person (either alone or through
or together with any other subsidiary) owns, directly or
indirectly, 50% or more of the stock or other equity
interests, the holders of which are generally entitled to
vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
SECTION 8.4. Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 8.5. Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the extent possible.
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SECTION 8.6. Entire Agreement. This Agreement (together
with the Exhibits, the QVC Disclosure Schedule, the Confidentiality Agreements
and the other documents delivered in connection herewith), constitutes the
entire agreement of the parties and supersedes all prior agreements and
undertakings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof.
SECTION 8.7. Assignment. This Agreement shall not be
assigned by operation of law or otherwise and any purported assignment shall be
null and void, provided that any of Comcast, Liberty or Buyer may assign its
rights, but not its obligations, under this Agreement to any affiliate of
Comcast, Liberty or Buyer.
SECTION 8.8. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied (other than the provisions of Sections
6.03 and 6.10, which provisions are intended to benefit and may be enforced by
the beneficiaries thereof), is intended to or shall confer upon any person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
SECTION 8.9. Governing Law. Except to the extent that
Delaware Law may be applicable to the Merger and the rights of the stockholders
of QVC, this Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law.
SECTION 8.10. Enforcement of the Agreement. The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions hereof,
this being in addition to any other remedy to which they are entitled at law or
in equity.
SECTION 8.11. Counterparts. This Agreement may be
executed in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, Comcast, Liberty, Buyer and QVC have
caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
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<PAGE> 47
COMCAST CORPORATION
By_________________________
Name:
Title:
LIBERTY MEDIA CORPORATION
By_________________________
Name:
Title:
COMCAST QMERGER, INC.
By__________________________
Name:
Title:
QVC, INC.
By_________________________
Name:
Title:
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<PAGE> 48
ANNEX I
Notwithstanding any other provision of the Offer, Buyer
shall not be required to accept for payment or pay for any Shares, and may
terminate the Offer, if (i) the Shares tendered pursuant to the Offer by the
expiration of the Offer and not withdrawn, together with the Shares agreed to
be contributed by Comcast and Liberty to Buyer pursuant to the Bidding
Agreement (as in effect on the date hereof), represent, on a fully diluted
basis, less than a majority of the outstanding Common Shares, in each case
calculated on a fully diluted basis (the "Minimum Condition"), (ii) Buyer has
not obtained sufficient financing on terms satisfactory to it to purchase all
of the outstanding Shares pursuant to the Offer, consummate the Merger and pay
related fees and expenses, (iii) the waiting periods under the HSR Act
applicable to the proposed Transactions and the transactions contemplated by
the Bidding Agreement shall not have expired or been terminated, provided that
prior to December 31, 1994, Buyer shall not terminate the Offer by reason of
nonsatisfaction of the condition in this clause (iii) and will extend the offer
in such event (it being understood that this provision shall not prohibit Buyer
from terminating the Offer or failing to extend the Offer by reason of the
nonsatisfaction of any other condition of the Offer), (iv) Buyer shall not be
satisfied that it has received all consents as are required from the FCC for
consent to the transfer of control of the FCC licenses listed in the QVC
Disclosure Schedule, or (v) at any time prior to the acceptance for payment of
Shares, any of the following conditions exist:
(a) there shall be instituted or pending any
action or proceeding by any government or governmental
authority or agency, domestic or foreign, or by any other
person, domestic or foreign, before any court or
governmental authority or agency, domestic or foreign, (i)
challenging or seeking to make illegal, to delay materially
or otherwise directly or indirectly to restrain or prohibit
the making of the Offer, the acceptance for payment of or
payment for some of or all the Shares by Buyer or the
consummation by Buyer of the Merger, seeking to obtain
material damages or imposing any material adverse
conditions in connection therewith or otherwise directly or
indirectly relating to the transactions contemplated by the
Offer or the Merger, (ii) seeking to restrain or prohibit
the exercise of full rights of ownership or operation by
Buyer or its affiliates of all or any portion of the
business or assets of QVC and its subsidiaries, taken as a
whole, or of Buyer or any of its affiliates, or to compel
Buyer or any of its affiliates to dispose of or hold
separate all or any material portion of the business or
assets of QVC and its subsidiaries, taken as a whole, or of
Buyer or any of its affiliates, (iii) seeking to impose
limitations on the ability of Buyer or any of its
affiliates effectively to exercise full rights of ownership
of
<PAGE> 49
ANNEX I
the Shares, including, without limitation, the right to
vote any Shares acquired or owned by Buyer or any of its
affiliates on all matters properly presented to QVC's
stockholders, or (iv) seeking to require divestiture by
Buyer or any of its affiliates of any Shares; or
(b) there shall be any action taken, or any
statute, rule, regulation, injunction, order or decree
proposed, enacted, enforced, promulgated, issued or deemed
applicable to the Offer, the acceptance for payment of or
payment for any Shares or the Merger, by any court,
government or governmental authority or agency, domestic,
foreign or supranational, other than the application of the
waiting period provisions of the HSR Act to the Offer or
the Merger, that, in the reasonable judgment of Buyer,
might, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (iv) of
paragraph (a) above; or
(c) QVC shall have breached or failed to perform
in any material respect any of its covenants or agreements
under the Merger Agreement which has not been cured, or any
of the representations and warranties of QVC set forth in
the Merger Agreement shall not be true in any material
respect when made or at any time prior to consummation of
the Offer as if made at and as of such time, in each case
and shall continue to be untrue; or
(d) the Merger Agreement shall have been
terminated in accordance with its terms;
which, in the reasonable judgment of Buyer in any such case, and regardless of
the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.
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