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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
SCHEDULE 13D
AT&T CORP.
----------------------
(Name of Issuer)
(1) Class A Liberty Media Group Common Stock, par value $1.00 per share.
(2) Class B Liberty Media Group Common Stock, par value $1.00 per share.
- --------------------------------------------------------------------------------
(Title of Classes of Securities)
(1) Class A Liberty Media Group Common Stock: 001957208
(2) Class B Liberty Media Group Common Stock: 001957307
- --------------------------------------------------------------------------------
(CUSIP Numbers)
Dr. John C. Malone
c/o Liberty Media Corporation
8101 East Prentice Avenue, Englewood, CO 80111
(303-721-5400)
--------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 9, 1999
-------------------
(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(e), 13d-1(f) or 13d-1(g), check the following
box: [_]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
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).
Exhibit Index is on Page 15
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Cusip No. for Class A Liberty Media Group Common Stock: 001957208
Cusip No. for Class B Liberty Media Group Common Stock: 001957307
- --------------------------------------------------------------------------------
(1) Names of Reporting Persons
I.R.S. Identification Nos. of Above Persons (Entities Only)
Dr. John C. Malone
- --------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group
(a) [_]
(b) [_]
- --------------------------------------------------------------------------------
(3) SEC Use Only
- --------------------------------------------------------------------------------
(4) Source of Funds
OO
- --------------------------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d)
or 2(e) [_]
- --------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
U.S.
- --------------------------------------------------------------------------------
Number of Shares Beneficially Owned by Each Reporting Person With
(7) Sole Voting Power
1,790,807 Shares of Class A Liberty Group Stock /1, 2/
50,504,008 Shares of Class B Liberty Group Stock /1, 3, 4/
(8) Shared Voting Power
0 Shares
(9) Sole Dispositive Power
1,790,807 Shares of Class A Liberty Group Stock /1, 2/
25,751,028 Shares of Class B Liberty Group Stock /1, 3, 4/
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(10) Shared Dispositive Power
0 Shares
- --------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
1,790,807 Shares of Class A Liberty Group Stock /1, 2/
50,504,008 Shares of Class B Liberty Group Stock /1, 3, 4/
- --------------------------------------------------------------------------------
(12) Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [_]
- --------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11) /4, 5, 6/
Class A Liberty Group Stock less than 1%
Class B Liberty Group Stock 89.3%
- --------------------------------------------------------------------------------
(14) Type of Reporting Person
IN
____________________
1. Includes, as applicable, 12,726 shares of Class A Liberty Group Stock and
852,360 shares of Class B Liberty Group Stock beneficially owned by Dr.
Malone's spouse, as to which Dr. Malone disclaims beneficial ownership.
2. Includes 1,778,000 shares of Class A Liberty Group Stock which Dr. Malone
would acquire upon the exercise of stock options granted in tandem with
stock appreciation rights, of which options for 1,410,800 shares are
currently exercisable. Does not include shares of Class A Liberty Group
Stock issuable upon conversion of shares of Class B Liberty Group Stock
owned by Dr. Malone or his spouse.
3. Includes 1,456,000 shares of Class B Liberty Group Stock which Dr. Malone
would acquire upon the exercise of stock options granted in tandem with
stock appreciation rights, of which options for 291,200 shares are
currently exercisable. Shares of Class B Liberty Group Stock owned by Dr.
Malone and his spouse are subject to the Call Agreement and the
Stockholders' Agreement. See Item 6.
4. Includes (x) 23,895,582 shares of Class B Liberty Group Stock owned by the
Magness Group (with respect to which Dr. Malone is entitled to exercise
voting rights if the holders of such shares and Dr. Malone do not agree
upon the voting of such shares) and (y) 857,397 shares of Class B Liberty
Group Stock held by the Hindery Group, which shares Dr. Malone has the
power to vote. Dr. Malone has no right to dispose of any of the shares held
by the
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Magness Group or the Hindery Group (which shares are excluded in (9)
above). See Item 6.
5. Each share of Common Stock and Class B Liberty Group Stock is entitled to 1
vote per share and each share of Class A Liberty Group Stock is entitled to
.1 vote per share. Accordingly, when these classes of stock are
aggregated, Dr. Malone may be deemed to beneficially own voting equity
securities representing approximately 2.1% of the voting power with respect
to a general election of directors of the Issuer. Certain matters
concerning the Liberty Media Group require the approval of the holders of
Class A Liberty Group Stock and Class B Liberty Group Stock, voting
together as a separate class, in which case, Dr. Malone may be deemed to
beneficially own shares of Liberty Group Stock representing approximately
45.8% of the voting power of the Liberty Group Stock.
6. Based upon the following number of shares estimated to be outstanding
following the Merger: Common Stock: 2,189,239,921 shares; Class A Liberty
Group Stock: 539,993,860 shares; Class B Liberty Group Stock: 55,072,794
shares. See Item 5.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Statement of
DR. JOHN C. MALONE
Pursuant to Section 13(d) of the Securities Exchange Act of 1934
in respect of
AT&T Corp.
-------------------------
(Commission File No. 1-1105)
ITEM 1. Security and Issuer
Dr. John C. Malone is filing this Statement on Schedule 13D (the
"Statement") with respect to the following classes of stock of AT&T Corp., a New
York corporation (the "Issuer" or "AT&T"), beneficially owned by Dr. Malone:
(1) Class A Liberty Media Group Common Stock, par value $1.00 per share (the
"Class A Liberty Group Stock"); and
(2) Class B Liberty Media Group Common Stock, par value $1.00 per share (the
"Class B Liberty Group Stock", and together with the Class A Liberty Group
Stock, the "Liberty Group Stock").
The Issuer's executive offices are located 32 Avenue of the Americas, New
York, New York 10013.
Dr. Malone is filing this Statement to report his acquisition of beneficial
ownership, on March 9, 1999, of shares of Class A Liberty Stock and Class B
Liberty Stock in connection with the merger (the "Merger") of a wholly owned
subsidiary of the Issuer with and into Tele-Communications, Inc. ("TCI"). In
the Merger, Dr. Malone's shares of (i) Tele-Communications, Inc. Series A TCI
Group Common Stock, par value $1.00 per share ("Series A TCI Group Stock"), and
Tele-Communications, Inc. Series B TCI Group Common Stock, par value $1.00 per
share ("Series B TCI Group Stock"), were converted into shares of the Issuer's
Common Stock, par value $1.00 per shares (the "Common Stock"), (ii) Tele-
Communications, Inc. Series A Liberty Media Group Common Stock, par value $1.00
per share ("TCI Series A Liberty Group Stock"), and Tele-Communications, Inc.
Series A TCI Ventures Group Common Stock, par value $1.00 per share ("TCI Series
A Ventures Group Stock"), were converted into shares of Class A Liberty Group
Stock,
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and (iii) Tele-Communications, Inc. Series B Liberty Media Group Common Stock,
par value $1.00 per share ("TCI Series B Liberty Group Stock"), and Tele-
Communications, Inc. Series B TCI Ventures Group Common Stock, par value $1.00
per share ("TCI Series B Ventures Group Stock"), were converted into shares of
Class B Liberty Group Stock.
Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), this Statement relates to the shares of Class A
Liberty Group Stock issuable upon conversion of shares of Class B Liberty Group
Stock. At the option of the holder, each share of Class B Liberty Group Stock is
convertible into one share of Class A Liberty Group Stock. The shares of Class A
Liberty Group Stock are not convertible into shares of Class B Liberty Group
Stock.
ITEM 2. Identity and Background
The reporting person is Dr. John C. Malone, whose business address is 8101
East Prentice Avenue, Englewood, Colorado 80111. Dr. Malone is Chairman of the
Board of Liberty Media Corporation ("Liberty") and a Director of the Issuer.
During the last five years, Dr. Malone has not been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors), and has not
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and, as a result of such proceeding, is or was subject to
a judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws. Dr. Malone is a citizen of the United
States of America.
ITEM 3. Source and Amount of Funds or Other Consideration
Dr. Malone acquired beneficial ownership of the shares of Liberty Group
Stock reported on this Statement pursuant to the Agreement and Plan of
Restructuring and Merger, dated as of June 23, 1998 (the "Merger Agreement"),
among TCI, the Issuer and Italy Merger Corp., an indirect wholly owned
subsidiary of the Issuer. Dr. Malone also acquired beneficial ownership of
shares of the Common Stock as a result of the Merger. In the Merger, TCI became
a wholly owned subsidiary of AT&T and (i) each share of Series A TCI Group Stock
was converted into .7757 of a share of Common Stock, (ii) each share of Series B
TCI Group Stock was converted into .8533 of a share of Common Stock, (iii) each
share of TCI Series A Liberty Group Stock was converted into one share of Class
A Liberty Group Stock, (iv) each share of TCI Series B Liberty Group Stock was
converted into one share of Class B Liberty Group Stock, (v) each share of TCI
Series A Ventures Group Stock was converted into .52 of share of Class A Liberty
Group Stock, and (vi) each share of TCI Series B Ventures Group Stock was
converted into .52 of share of Class B Liberty Group Stock.
Dr. Malone had previously acquired beneficial ownership of equity
securities of TCI in transactions reported on Dr. Malone's Report on Schedule
13D, as amended, with respect to TCI.
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ITEM 4. Purpose of Transaction
Dr. Malone is the Chairman of the Board of Liberty and each of the other
Covered Entities (as defined in AT&T's Certificate of Incorporation, as amended
(the "AT&T Charter")), and is also a Director of the Issuer. In addition, Dr.
Malone owns and has the power to vote shares of Liberty Group Stock representing
approximately 45.8% of the combined voting power of the Class A Liberty Group
Stock and Class B Liberty Group Stock in circumstances where the Class A Liberty
Group Stock and Class B Liberty Group Stock vote together as a separate class.
Pursuant to the Merger Agreement, the Issuer appointed Dr. Malone to its Board
of Directors on March 17, 1999, and is required during the period ending March
9, 2002 to nominate Dr. Malone for re-election to the Issuer's Board at each
subsequent AT&T stockholder meeting at which directors are to be elected. This
Statement is being filed with respect to Dr. Malone's beneficial ownership of
Class A Liberty Group Stock and Class B Liberty Group Stock, and does not relate
to actions taken by Dr. Malone in his official capacity with respect to Liberty
or the Issuer.
Following the Merger, AT&T's "Liberty Media Group" consists of the assets
and businesses of TCI's Liberty Media Group and its TCI Ventures Group prior to
the Merger, except for certain assets which were transferred to the TCI Group in
connection with the Merger, and its "Common Stock Group" consists of all of the
other assets and businesses of AT&T. The Liberty Group Stock is intended to
reflect the results of the Liberty Media Group. Substantially all of the
business of the Liberty Media Group is conducted through Liberty and the Covered
Entities.
The holders of Common Stock, Class A Liberty Group Stock and Class B
Liberty Group Stock generally vote together as a single class with respect to
all matters voted on by the stockholders of the Issuer (including the election
of directors of the Issuer); except that the holders of the Class A Liberty
Group Stock and Class B Liberty Group Stock are entitled to vote together as a
separate class with respect to certain matters concerning the Liberty Media
Group. The holders of the Common Stock and the Class B Liberty Group Stock are
entitled to 1 vote per share and the holders of the Class A Liberty Group Stock
are entitled to .1 vote per share. The following circumstances will require the
separate class approval of the holders of Liberty Group Stock:
(i) any amendment to the AT&T Charter that would change the total number
of authorized shares or the par value of Liberty Group Stock or that
would adversely change the rights of the holders of Liberty Group
Stock;
(ii) a Covered Disposition (as defined in the AT&T Charter), which
generally includes a sale or transfer by AT&T of its equity interest
in Liberty, any Covered Entity, or Liberty Media Group LLC or a
grant of a pledge or other security interest in the equity interest
of AT&T in Liberty, any Covered Entity, or Liberty Media Group LLC;
or
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(iii) any merger or similar transaction in which the Liberty Group Stock
is converted, reclassified or changed into or otherwise exchanged
for any consideration unless specified requirements are met that are
generally intended to ensure that the rights of the holders are not
materially altered and the composition of the holders is not
changed.
Because the holders of Class B Liberty Group Stock are entitled to cast 1
vote per share while holders of Class A Liberty Group Stock are entitled to cast
.1 vote per share, Dr. Malone's beneficial ownership of Liberty Group Stock
constitutes approximately 45.8% of the voting power of the Liberty Group Stock
when voting as a separate class. Dr. Malone's ability to dispose of the Class B
Liberty Group Stock beneficially owned by him is subject to certain limitations
set forth in the Malone Call Agreement and the Stockholders' Agreement (each as
defined in Item 6 below). TCI's rights under each such agreement were assigned
to Liberty in connection with the Merger.
All of the equity interests in the Liberty Media Group are currently owned
by AT&T; however, a majority of the members of Liberty's Board of Directors (the
"Liberty Board") are individuals elected by TCI prior to the Merger. Liberty
has three classes of directors: one class elected for a term of one year; one
class elected for a term of seven years; and one class elected for a term of 10
years. Each class of directors will have an equal number of members. Such
directors may not be removed other than for "cause," and, in the event of the
death or resignation of a director, the remaining directors of such class will
choose a successor to fill the remaining term of such deceased or resigning
director. Upon the expiration of the term of a class of Liberty directors, the
stockholders of Liberty will be entitled to elect directors to fill such
vacancy. Currently, all of the outstanding capital stock of Liberty is owned by
Liberty Ventures Group LLC, which is an indirect wholly owned subsidiary of
AT&T.
As a result of the structure of the Liberty Board, the second and third
classes of directors will constitute a majority of the Liberty Board until at
least 2006. Under Delaware law, the business of a corporation is managed by its
board of directors. As a result, although AT&T owns all of the equity interests
in the Liberty Media Group and, initially, all of the common stock of Liberty,
the incumbent directors of Liberty (and their successors) will be able to
control most aspects of the day-to-day business of Liberty and its subsidiaries
following the Merger. Dr. Malone is a member of the class of directors of the
Liberty Board whose term will expire in 2009.
In the event the incumbent directors (or their designated successors) cease
to constitute a majority of the Liberty Board, or Liberty Media Management LLC
determines that, in its reasonable judgment, the incumbent Liberty directors (or
successors) are likely to cease to constitute a majority of the Liberty Board,
such event will constitute a "Triggering Event." Liberty Media Management LLC
is a limited liability company, the equity interests of which are currently
owned by Dr. Malone. Upon the occurrence of a Triggering Event, subject to the
terms and conditions of a contribution agreement entered into in connection with
the Merger among Liberty, Liberty Media Group LLC, Liberty Media Management LLC
and Liberty Ventures Group LLC, all of the assets of Liberty and
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the Covered Entities will be contributed to Liberty Media Group LLC,
substantially all of the equity interests of which are owned by AT&T, unless the
Triggering Event is waived by Liberty Media Management LLC. However, Liberty
Media Management LLC will own the remaining equity interests in Liberty Media
Group LLC and will be the sole manager of Liberty Media Group LLC.
The foregoing descriptions of the Merger, the Merger Agreement, and the
relationship between the Common Stock Group and the Liberty Media Group are
qualified in their entirety by reference to the Merger Agreement and the
AT&T/TCI Proxy Statement/Prospectus, dated January 8, 1999, regarding the
Merger, each of which is an exhibit to this Statement and is hereby incorporated
by reference herein.
Other than as described herein, Dr. Malone does not otherwise have any
present plans or proposals which relate to or would result in: (i) any
acquisition by any person of additional securities of the Issuer, or any
disposition of securities of the Issuer; (ii) any extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Issuer or any of its subsidiaries; (iii) any sale or transfer of a material
amount of assets of the Issuer or any of its subsidiaries; (iv) any change in
the present board of directors or management of the Issuer, including any plans
or proposals to change the number or term of directors or to fill any existing
vacancies on the board; (v) any material change in the present capitalization or
dividend policy of the Issuer; (vi) any other material change in the Issuer's
business or corporate structure; (vii) any change in the Issuer's charter, by-
laws, or other instruments corresponding thereto or other actions which may
impede the acquisition of control of the Issuer by any person; (viii) any
delisting from a national securities exchange or any loss of authorization for
quotation in an inter-dealer quotation system of a registered national
securities association of a class of securities of the Issuer; (ix) any
termination of registration pursuant to Section 12(g)(4) of the Exchange Act of
a class of equity securities of the Issuer; or (x) any action similar to any of
those enumerated above.
In determining his future course of action with respect to the securities
of the Issuer, Dr. Malone will take into consideration various factors,
including but not limited to his financial position, the Common Stock Group's
business and prospects, the Liberty Media Group's business and prospects, other
developments concerning the Common Stock Group and the Liberty Media Group,
other business opportunities available to Dr. Malone, and general economic and
stock market conditions, including, but not limited to, the market price of the
Common Stock, Class A Liberty Group Stock and the Class B Liberty Group Stock.
Notwithstanding anything contained herein, Dr. Malone reserves the right,
depending on other relevant factors, to acquire additional shares of Common
Stock, Class A Liberty Group Stock, and Class B Liberty Group Stock in open
market or privately negotiated transactions, to dispose of all or a portion of
his holdings of shares of the Issuer or to change his intentions with respect to
any or all of the matters referred to in this Item.
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ITEM 5. Interest in Securities of the Issuer
(a) Dr. Malone beneficially owns (without giving effect to the conversion
of Class B Liberty Group Stock into Class A Liberty Group Stock): (i) 1,790,807
shares of Class A Liberty Group Stock (including options to acquire 1,778,000
shares, of which options for 1,410,800 shares are currently exercisable), which
represent less than 1% of the outstanding shares of Class A Liberty Group Stock;
and (ii) 50,504,008 shares of Class B Liberty Group Stock (which amount includes
(x) Dr. Malone's right to direct the voting of 23,895,582 shares owned by the
Magness Group and 857,397 shares owned by the Hindery Group and (y) options to
acquire 1,456,000 shares, of which options for 291,200 shares are currently
exercisable), which represent approximately 89.3% of the outstanding shares of
Class B Liberty Group Stock. The foregoing percentage interests are based on
541,771,860 shares of Class A Liberty Group Stock and 56,528,794 shares of Class
B Liberty Group Stock estimated to have been issued in the Merger, based upon
information provided to Dr. Malone by the Issuer (as adjusted to reflect shares
issued in respect of Dr. Malone's options as if exercised in full). When all
classes of stock beneficially owned by Dr. Malone are aggregated, Dr. Malone may
be deemed to beneficially own voting equity securities of the Issuer
representing approximately 2.1% the voting power with respect to a general
election of directors of the Issuer. See Items 4 and 6.
(b) Dr. Malone and, to his knowledge, his spouse each have the sole power
to vote, or to direct the voting of, their respective shares of Liberty Group
Stock. Subject to the Malone Call Agreement described in Item 6 below, Dr.
Malone and, to his knowledge, his spouse each have the sole power to dispose of,
or to direct the disposition of, their respective shares, of Class B Liberty
Group Stock. In addition, as indicated in Item 5(a) above, Dr. Malone has the
power to direct the voting of 857,397 shares of Class B Liberty Group Stock
owned by the Hindery Group as described in Item 6 below. Dr. Malone does not
have the power to dispose of such shares owned by the Hindery Group. He also
has the power to direct the voting of 23,895,582 shares of Class B Liberty Group
Stock owned by the Magness Group pursuant to the terms of the Stockholders'
Agreement described in Item 6 below. Dr. Malone does not have the power to
dispose of such shares owned by the Magness Group.
(c) Neither Dr. Malone nor, to his knowledge, his spouse, has executed any
transactions in respect of the Class A Liberty Group Stock or the Class B
Liberty Group Stock during the preceding 60 days, other than in connection with
the Merger or as reported in Item 6.
(d) Except as described in Item 6 below, there is no person that has the
right to receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, the Class A Liberty Group Stock or Class B Liberty
Group Stock beneficially owned by Dr. Malone or, to his knowledge, by his
spouse.
(e) Not applicable.
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ITEM 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer
TCI, Dr. Malone and Leslie Malone, his spouse (collectively, the "Malone
Group") and the Estate of Bob Magness, the Estate of Betsy Magness, and Gary and
Kim Magness (individually and in certain representative capacities)
(collectively the "Magness Group") are parties to a certain Stockholders'
Agreement, dated as of February 9, 1998, as amended (the "Stockholders'
Agreement") which provides, among other things, for: (a) a representative of
the Malone Group and a representative of the Magness Group to consult with each
other on all matters to be brought to a vote of the Issuer's stockholders;
provided, however, that if a mutual agreement on how to vote can not be reached,
Dr. Malone will vote all shares the Class B Liberty Group Stock owned by the
Magness Group pursuant to an irrevocable proxy; (b) the Magness Group to
participate, at its option, on a proportionate basis with Dr. Malone in any
acquisition of Class B Liberty Group Stock except for certain specified
acquisition opportunities; (c) a tag-along right in favor of the Magness Group
with respect to any sale by the Malone Group of shares of Class B Liberty Group
Stock, subject to certain exceptions such as transfers to related parties; and
(d) a drag-along right in favor of Dr. Malone exercisable in connection with the
sale of all or substantially all of the Class B Liberty Group Stock beneficially
owned by Dr. Malone. In connection with the Merger, TCI's rights under the
Stockholders' Agreement were assigned to Liberty. The foregoing description of
the Stockholders' Agreement is qualified in its entirety by reference to the
Stockholders' Agreement, which is an exhibit to this Statement and is
incorporated by reference herein.
TCI and the Malone Group are parties to a Call Agreement dated as of
February 9, 1998 (the "Malone Call Agreement"), pursuant to which the Malone
Group granted to TCI a right to acquire all of the shares of "High Vote Stock"
as defined in the Malone Call Agreement owned by them upon Dr. Malone's death or
a contemplated sale of such High Vote Stock to third parties, in consideration
of TCI paying to the Malone Group $150,000,000 for such right. In connection
with the Merger, TCI's rights under the Malone Call Agreement were assigned to
Liberty. When such right is triggered, Liberty may acquire the Class B Liberty
Group Stock at a price equal to the market price of the Class A Liberty Group
Stock, plus a 10% premium or, in the event of a sale, the lesser of such price
or the price offered by such third parties. In addition, the Malone Call
Agreement provides that, in connection with a sale of shares to a third party
resulting in a change in control of the Issuer, the maximum premium the Malone
Group may receive for their Class B Liberty Group Stock would be the price paid
for the Class A Liberty Group Stock by said third party, plus a 10% premium.
The Malone Call Agreement also prohibits any member of the Malone Group from
disposing of their Class B Liberty Group Stock, except for certain exempt
transfers. If Liberty exercises its call right, it may also be required to
purchase shares of Class B Liberty Group Stock from the members of the Magness
Group who exercise their "tag-along" rights under the Stockholders' Agreement.
This description of the Malone Call Agreement is qualified in its entirety by
reference to the Malone Call Agreement and the letter from TCI and Liberty to
the Malone Group, each of which is an exhibit to this Statement and is
incorporated by reference herein. A similar agreement (the "Magness Call
Agreement") was entered into with
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the Magness Group. The Magness Call Agreement was also assigned to Liberty in
connection with the Merger.
Pursuant to a stockholders' agreement, dated as of March 9, 1999 (the
"Malone/Hindery Agreement"), among Leo J. Hindery and the Robin Cook Hindery
1989 Trust (collectively, the "Hindery Group") and Dr. Malone, Dr. Malone has
the right to direct the vote of all shares of Class B Liberty Group Stock owned
by the Hindery Group. In addition, the Malone/Hindery Agreement provides that
transfers of shares of Class B Liberty Group Stock by the Hindery Group are
subject to a right of first refusal in favor of Dr. Malone, subject to certain
exceptions. Dr. Malone may exercise such right of first refusal by exchanging
shares of Class A Liberty Group Stock for the shares of Class B Liberty Group
Stock proposed to be transferred or by purchasing such shares of Class A Liberty
Group Stock for cash. In addition, subject to certain exceptions, the Hindery
Group may not convert shares of Class B Liberty Group Stock to Class A Liberty
Group Stock without first offering Dr. Malone the right to exchange shares of
Class A Liberty Group Stock for the shares of Class B Liberty Group Stock
proposed to be converted. The foregoing description of the Malone/Hindery
Agreement is qualified in its entirety by reference to the Malone/Hindery
Agreement, which is an exhibit to this Statement and is incorporated by
reference herein.
The information set forth in Items 3, 4 and 5 is hereby incorporated by
reference herein.
ITEM 7. Material to be filed as Exhibits
7(a) Agreement and Plan of Restructuring and Merger, dated as of June 23, 1998,
among AT&T Corp., Italy Merger Corp. and Tele-Communications, Inc.
incorporated by reference to Appendix A to the AT&T/TCI Proxy
Statement/Prospectus that forms a part of the Registration Statement on
Form S-4 of AT&T (File No. 333-70279), filed on January 8, 1999 (the "AT&T
Registration Statement")).
7(b) AT&T/TCI Proxy Statement/Prospectus, dated January 8, 1999 (incorporated by
reference to the AT&T Registration Statement).
7(c) Stockholders' Agreement dated as of February 9, 1998, among Tele-
Communications, Inc., the Malone Group, and the Magness Group (incorporated
by reference to Exhibit 7(m) to Dr. Malone's Amendment No. 8 to Schedule
13D in respect of TCI).
7(d) Letter Agreement, dated as of March 5, 1999, amending certain terms of the
Stockholders' Agreement dated as of February 9, 1998.
7(e) Call Agreement dated as of February 9, 1998, between Tele-Communications,
Inc. and the Malone Group (incorporated by reference to Exhibit 7(n) to Dr.
Malone's Amendment No. 8 to Schedule 13D in respect of TCI)
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7(f) Letter, dated as of March 5, 1999, from TCI and Liberty addressed to Dr.
Malone and Leslie Malone.
7(g) Stockholders' Agreement, dated as of March 9, 1999, by and among Dr.
Malone, Leo J. Hindery, Jr. and the Robin Cook Hindery 1989 Trust.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
March 29, 1999 /s/ John C. Malone
------------------------------
John C. Malone
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EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT PAGE
7(a) Agreement and Plan of Restructuring and Merger,
dated as of June 23, 1998, among AT&T Corp., Italy
Merger Corp. and Tele-Communications, Inc.
incorporated by reference to Appendix A to the
AT&T/TCI Proxy Statement/Prospectus that forms a
part of the Registration Statement on Form S-4 of
AT&T (File No. 333-70279), filed on January 8, 1999
(the "AT&T Registration Statement")).
7(b) AT&T/TCI Proxy Statement/Prospectus, dated January
8, 1999 (incorporated by reference to the AT&T
Registration Statement).
7(c) Stockholders' Agreement dated as of February 9, 1998,
among Tele-Communications, Inc., the Malone Group, and
the Magness Group (incorporated by reference to
Exhibit 7(m) to Dr. Malone's Amendment No. 8 to
Schedule 13D in respect of TCI).
7(d) Letter Agreement, dated as of March 5, 1999,
amending certain terms of the Stockholders'
Agreement dated as of February 9, 1998.
7(e) Call Agreement dated as of February 9, 1998, between
Tele-Communications, Inc. and the Malone Group
(incorporated by reference to Exhibit 7(n) to
Dr. Malone's Amendment No. 8 to Schedule 13D in
respect of TCI)
7(f) Letter, dated as of March 5, 1999, from TCI and
Liberty addressed to Dr. Malone and Leslie Malone.
7(g) Stockholders' Agreement, dated as of March 9, 1999,
by and among Dr. Malone, Leo J. Hindery, Jr. and the
Robin Cook Hindery 1989 Trust.
15
<PAGE>
Exhibit 7(d)
Tele-Communications, Inc. Liberty Media Corporation
5619 DTC Parkway 8101 East Prentice Avenue, Suite 500
Englewood, Colorado 80111 Englewood, Colorado 80111
March 5, 1999
Dr. John C. Malone
Ms. Leslie Malone
Mr. Gary Magness
Mr. Kim Magness
Magness Securities LLC
Magness FT Investment Company, LLC
The Kim Magness Family Foundation
The Gary Magness Family Foundation
c/o Tele-Communications, Inc.
5619 DTC Parkway
Englewood, Colorado 80111
Ladies and Gentlemen:
Reference is made to the Stockholders' Agreement, dated as of February
9, 1998, among TCI, John C. Malone, Leslie Malone, Gary Magness, both in any
Representative Capacity and individually, Kim Magness, both in any
Representative Capacity and individually, the Estate of Bob Magness and the
Estate of Betsy Magness (the "Stockholders' Agreement"). As you know, after the
original execution of the Stockholders' Agreement, Magness Securities LLC,
Magness FT Investment Company, LLC, The Kim Magness Family Foundation and The
Gary Magness Family Foundation were each added as a party and a member of the
"Magness Group." Capitalized terms used but not expressly defined in this letter
have the meanings given to them in the Stockholders' Agreement. Section
references in this letter are to Sections of the Stockholders' Agreement.
The purpose of this letter is to confirm and clarify the following:
1. Each of you consents to the assignment by TCI to Liberty Ventures
Group LLC, a Delaware limited liability company ("LVG"), and the subsequent
assignment by LVG to Liberty Media Corporation, a Delaware corporation ("LMC"),
of all of TCI's rights, interests and obligations under the Stockholders'
Agreement, and agrees that upon such assignments TCI shall have no further
rights or obligations under the Stockholders' Agreement.
<PAGE>
2. TCI agrees with each of you that if, for any reason, the
Agreement and Plan of Restructuring and Merger, dated as of June 23, 1998, among
TCI, AT&T Corp., a New York corporation ("AT&T"), and Italy Merger Corp., a
Delaware corporation and a wholly owned subsidiary of AT&T ("MergerSub"),
terminates without consummation of the merger of MergerSub into TCI contemplated
thereby (the "Merger"), the assignments described in paragraph 1 will be
rescinded.
3. From and after the Merger (and after giving effect to the
assignments provided for above), the Stockholders' Agreement will continue in
effect in accordance with its terms and the following:
(a) References to "TCI" will be references to LMC and any successor (by
merger, consolidation, sale, transfer, exchange, or otherwise) to all or
substantially all of its business and assets, other than a Spin-Off Company (LMC
and any such successor being referred to herein as "Liberty").
(b) The definition of the term "Director Votes" is deleted from Exhibit A
to the Stockholders' Agreement.
(c) The term "Company" will mean (i) Liberty if and while common stock of
which it is the issuer is registered under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended, or (ii) any "Spin-Off Company" if
and while common stock of which it is the issuer is registered under Section
12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, and a
majority of Liberty's directors then in office constitute a majority of the
Board of Directors of such Spin-Off Company.
(d) The term "High Vote Share" will mean:
(i) the Class B Liberty Media Group Common Stock, par value $1.00 per
share, of AT&T and any capital stock into which such stock may be
changed (whether as a result of a recapitalization,
reorganization, merger, consolidation, share exchange, stock
dividend or other transaction or event) (the "LMCB-Common"), and
(ii) common stock of any class or series issued by Liberty or any
Spin-Off Company that entitles the holders to greater voting
power per share than the voting power per share to which holders
of some other class or series of common stock of such issuer are
entitled with respect to significant matters (such as the
election of directors) as to which the holders of outstanding
-2-
<PAGE>
shares of both classes or series vote together (with each other
or with each other and one or more other classes or series of
common stock of that issuer).
(e) The term "Low Vote Stock" will mean:
(i) the Class A Liberty Media Group Common Stock, par value $1.00 per
share, of AT&T and any capital stock into which such stock may be
changed (whether as a result of a recapitalization,
reorganization, merger, consolidation, share exchange, stock
dividend or other transaction or event) (the "LMCA-Common"), and
(ii) common stock of any class or series issued by Liberty or any
Spin-Off Company that entitles the holders to lesser voting
power per share than the voting power per share to which holders
of some other class or series of common stock of such issuer are
entitled with respect to significant matters (such as the
election of directors) as to which the holders of outstanding
shares of both classes or series vote together (with each other
or with each other and one or more other classes or series of
common stock of that issuer).
(c) The term "Spin-Off Company" shall mean any corporation or limited
liability company which initially is a subsidiary of Liberty, which succeeds to
substantially all of the businesses and assets of Liberty and which is then
"spun-off" to either Liberty shareholders (if Liberty then has common stock
which is registered under Section 12(b) or 12(g) of the Securities Exchange Act
of 1934, as amended) or the holders of the LMCA-Common and the LMCB-Common.
If the foregoing accurately expresses our understanding, please sign
and return the enclosed counterpart of this letter.
Sincerely,
TELE-COMMUNICATIONS, INC.
By:
---------------------------------
Stephen M. Brett
Executive Vice President,
Secretary and General Counsel
-3-
<PAGE>
LIBERTY VENTURES GROUP LLC
By:
---------------------------------
Stephen M. Brett
Vice President
LIBERTY MEDIA CORPORATION
By:
---------------------------------
Stephen M. Brett
Vice President
Confirmed:
ESTATE OF BETSY MAGNESS
By:
- -------------------------- ---------------------------------
JOHN C. MALONE Kim Magness, Personal Representative
- --------------------------
LESLIE MALONE ESTATE OF BOB MAGNESS
By:
---------------------------------
- -------------------------- Kim Magness, Personal
KIM MAGNESS, individually Representative
and as Trustee of the
Magness Family Irrevocable By:
Trusts and the Magness ---------------------------------
Issue GST Trusts Gary Magness, Personal
Representative
-4-
<PAGE>
__________________________
GARY MAGNESS, individually MAGNESS SECURITIES LLC
and as Trustee of the
Magness Family Irrevocable
Trusts and the Magness By:
Issue GST Trusts ---------------------------------
Kim Magness, Manager
MAGNESS FT INVESTMENT COMPANY, LLC
By:
---------------------------------
Kim, Magness, Manager
THE KIM MAGNESS FAMILY FOUNDATION
By:
---------------------------------
Kim Magness, President
THE GARY MAGNESS FAMILY FOUNDATION
By:
---------------------------------
Gary Magness, President
-5-
<PAGE>
Exhibit 7(e)
Tele-Communications, Inc. Liberty Media Corporation
5619 DTC Parkway 8101 East Prentice Avenue, Suite 500
Englewood, Colorado 80111 Englewood, Colorado 80111
March 5, 1999
Dr. John C. Malone
Ms. Leslie Malone
c/o Tele-Communications, Inc.
5619 DTC Parkway
Englewood, Colorado 80111
Dear John and Leslie:
Reference is made to the Call Agreement, dated as of February 9, 1998
(the "Malone Call Agreement"), between Tele-Communications, Inc., a Delaware
corporation ("TCI"), and John C. Malone and Leslie Malone (the "Malones").
Capitalized terms used but not expressly defined in this letter have the
meanings given to them in the Malone Call Agreement. Section references in this
letter are to Sections of the Malone Call Agreement.
The purpose of this letter is to confirm and clarify the following:
1. Each of the Malones consents to the assignment by TCI to Liberty
Ventures Group LLC, a Delaware limited liability company ("LVG"), and the
subsequent assignment by LVG to Liberty Media Corporation, a Delaware
corporation ("LMC"), of all of TCI's rights, interests and obligations under the
Malone Call Agreement, and agrees that upon such assignments TCI shall have no
further rights or obligations under the Malone Call Agreement. Each of the
Malones also agrees that if a Triggering Event (as defined below) occurs in the
future and is not waived, LMC may assign all of its rights, interests and
obligations under the Malone Call Agreement to Liberty Media Group LLC and, in
the event of such assignment, references to LMC herein shall thereafter refer to
Liberty Media Group LLC. "Triggering Event" has the meaning ascribed to such
term in the Contribution Agreement, being entered into on March 9, 1999, among
LMC, Liberty Media Management LLC, Liberty Media Group LLC and Liberty Ventures
Group LLC.
2. TCI and the Malones agree that if, for any reason, the Agreement
and Plan of Restructuring and Merger, dated as of June 23, 1998, as amended,
among TCI, AT&T Corp., a
<PAGE>
New York corporation ("AT&T"), and Italy Merger Corp., a Delaware corporation
and a wholly owned subsidiary of AT&T ("MergerSub"), terminates without
consummation of the merger of MergerSub into TCI contemplated thereby (the
"Merger"), the assignments described in paragraph 1 shall be rescinded.
3. The Malones confirm and agree that TCI has exercised its right
under Section 7.9 of the Malone Call Agreement to require that, from and after
the Merger (and after giving effect to the assignments provided for above), the
Malone Call Agreement continue in effect in accordance with its terms and the
following:
a. References to the "Company" will be references to AT&T and any
successor (by merger, consolidation, sale, transfer, exchange, or otherwise) to
all or substantially all of its business and assets, except as indicated below:
i. in order to effectively give LMC the rights and obligations
it is intended to have after the assignments referred to in paragraph 1 above,
(x) the rights, interests, covenants and obligations of the "Company"
under the first sentence of Section 2.1 and under Sections 2.2
through 7.16, inclusive, will be rights, interests, covenants and
obligations of LMC and any successor (by merger, consolidation,
sale, transfer, exchange, or otherwise) to all or substantially
all of its business and assets (LMC or such successor being
referred to as "Liberty"), and
(y) references to the "Company" in the definitions of the terms
"Board of Directors" and "Malone Group" in Section 1.1 will be
references to Liberty;
ii. references to the Company with respect to covenants of the
Company that have been fully performed by TCI prior to the date hereof,
including, without limitation, in the second sentence of Section 2.1, shall
continue to refer to TCI, and
iii references to the Company in the definitions of Magness
Call Agreement and Stockholders Agreement refer to TCI.
b. The definition of the term "High Vote Stock" shall mean the Class B
Liberty Media Group Common Stock, $1.00 par value per share, issued by AT&T (or
any successor referred to in paragraph 3(a) above), as it exists immediately
after the Merger, and any capital stock into which the Class B Liberty Media
Group Common Stock may thereafter be changed (whether as a result of a
recapitalization, reorganization, merger, consolidation, share exchange, stock
dividend, stock redemption, spinoff, split off or other transaction or event).
The definition of the term "Low Vote
-2-
<PAGE>
Stock" shall mean the Class A Liberty Media Group Common Stock, $1.00 par value
per share, issued by AT&T (or any successor referred to in paragraph 3(a)
above), as it exists immediately after the Merger, and any capital stock into
which the Class A Liberty Media Group Common Stock may thereafter be changed
(whether as a result of a recapitalization, reorganization, merger,
consolidation, share exchange, stock dividend, stock redemption, spinoff, split
off or other transaction or event).
c. The term "Sale of the Company" shall mean a transaction which
results in a Change of Control of the issuer of the High Vote Stock (subject to
the same exclusions as currently pertain in the definition of such term).
d. In any case where the Holder has the right to elect under Section
2.2(d) to receive payment of the Gross Purchase Price for any High Vote Stock
included in the Subject Shares in shares of a corresponding series of Low Vote
Stock, and in any case where the Company has the right under Section 3.1 to
elect to pay all or any portion of the Closing Date Amount or Company Price in
shares of Low Vote Stock, such election will not be effective unless Liberty
arranges for AT&T to issue such Low Vote Stock and to grant to the selling
Holder the registration rights with respect to such shares of Low Vote Stock
contemplated by Section 2.2(e). Similarly, the Company's election under Section
3.1 will not be effective unless Liberty arranges for AT&T to comply with
Section 3.2.
If the foregoing accurately expresses our understanding, please sign
and return the enclosed counterpart of this letter.
Sincerely,
TELE-COMMUNICATIONS, INC.
By:
----------------------------
Stephen M. Brett
Executive Vice President,
Secretary and General Counsel
-3-
<PAGE>
LIBERTY VENTURES GROUP LLC
By:
----------------------------
Stephen M. Brett
Vice President
LIBERTY MEDIA CORPORATION
By:
----------------------------
Stephen M. Brett
Vice President
Confirmed:
- -----------------------------
JOHN C. MALONE
- -----------------------------
LESLIE MALONE
-4-
<PAGE>
Exhibit 7(g)
STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement (this "Agreement") is made as of March 9,
1999, by and among John C. Malone ("Malone"); Leo J. Hindery, Jr. ("Hindery");
and The Robin Cook Hindery 1989 Trust (the "Robin Trust").
In consideration of the mutual promises and covenants contained in this
Agreement, and intending to be legally bound, the parties agree as follows:
ARTICLE I: DEFINITIONS
1.1 Definitions. The following terms, when used in this Agreement, will have
-----------
the meanings set forth below.
Affiliate: of a Person is any other Person that Controls, is
Controlled by or is under common Control with such
Person.
Affiliate Offer: a bona fide written offer from an Affiliate of any
member of the Stockholder Group to purchase or otherwise
acquire all or part of the Liberty Shares owned by one
or more members of the Stockholder Group.
AT&T: AT&T Corp., a New York corporation.
AT&T Transaction: the transactions contemplated by the Agreement and Plan
of Restructuring and Merger dated as of June 23, 1998,
by and among AT&T, Italy Merger Corp., and Tele-
Communications, Inc.
Business Day: any day that is not a Saturday, a Sunday or a day on
which banking institutions in New York, New York,
Denver, Colorado or San Francisco, California are
required or authorized to be closed.
Control: the power to elect a majority of the directors (or
similar officials) of a Person or to direct or cause the
direction of the management and policies of a Person,
whether by the ownership of voting interests, by
contract or otherwise.
Fair Market Value: the cash price at which a willing seller would sell and
a willing buyer would buy specified property, both
having full
-1-
<PAGE>
knowledge of the relevant facts and being under no
compulsion to buy or sell, in an arm's-length
transaction without unusual time constraints.
HSR Act: the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
Liberty Class A Stock: the Class A Liberty Media Group Common Stock of
AT&T having a par value of $1.00 per share.
Liberty Class B Stock: the Class B Liberty Media Group Common Stock of AT&T
having a par value of $1.00 per share.
Liberty Shares: the 662,889 shares of Liberty Class B Stock acquired by
Hindery pursuant to the AT&T Transaction and the 194,507
shares of Liberty Class B Stock acquired by the Robin
Trust pursuant to the AT&T Transaction, and any other
securities issued in exchange for any of the foregoing
(except shares of Liberty Class A Stock exchanged for
Liberty Class B Stock as provided in Article III), that
are held by or for the benefit of any member of the
Stockholder Group from time to time.
Malone Election Notice: as defined in Section 3.2(a).
Material Consent: the consent, waiver or authorization of, or filing with,
any Person the lack of which reasonably could be
expected to result in (a) material liability to the
Offeror or the Purchaser if a purchase of Liberty Shares
by Malone pursuant to Article III is consummated or (b)
either the Offeror or the Purchaser being deprived of
all or a material part of the benefits incident to the
purchase and sale of Liberty Shares pursuant to Article
III.
Person: any natural person, corporation, partnership, trust,
unincorporated organization, association, limited
liability company or other entity.
Stockholder Group: Hindery, the Robin Trust, any Person that is a trustee
or beneficiary of the Trust from time to time, and each
Transferee.
-2-
<PAGE>
Third Party Offer: a bona fide written offer from a prospective purchaser
that is not an Affiliate of any member of the
Stockholder Group to purchase all or a portion of the
Liberty Shares.
Trading Price: the average of the daily market prices of one Liberty
Share for 25 consecutive Business Days commencing 30
Business Days before the date on which Malone gives a
Malone Election Notice. The daily market price of a
Liberty Share on any Business Day will be (a) the last
sale price on such day on the principal stock exchange
on which Liberty Shares are then listed or admitted to
trading or (b) if no sale takes place on such date on
that exchange, the average of the reported closing bid
and asked prices on such day as officially noted on that
exchange. The Trading Price will be appropriately
adjusted to reflect the effects of any stock dividend,
stock split, reclassification or combination affecting
Liberty Shares as a class, the record date or ex-
dividend date of which occurs during the period in which
the Trading Price is to be determined or thereafter
prior to the closing of the purchase of Liberty Shares
for which the calculation of the Trading Price is
required to be made.
Transfer: with respect to any property, a sale, exchange,
transfer, assignment, pledge, grant of a security
interest in or other disposition of all or any interest,
of record or beneficially, in such property (whether
voluntary, involuntary or by operation of law).
Transferee: a Person to whom a Transfer of Liberty Shares is
made in compliance with this Agreement.
ARTICLE II: VOTING ARRANGEMENTS
Each member of the Stockholder Group agrees to exercise all of the voting
and consent rights associated with the Liberty Shares owned by such Person on
all matters as to which such voting or consent rights are required or permitted
to be exercised as Malone directs. Each member of the Stockholder Group will
execute and deliver to Malone such proxies and other instruments and documents
as Malone may request from time to time to give effect to or to evidence the
rights granted in this Article II.
-3-
<PAGE>
ARTICLE III: TRANSFER RESTRICTIONS
3.1 Liberty Share Transfers. No member of the Stockholder Group will Transfer
-----------------------
any of the Liberty Shares, or any interest therein, held by it or of which it is
a beneficial owner except to the extent specifically permitted by this Article
III. Any Transfer of Liberty Shares or an interest therein other than as
specifically permitted by this Article III will be void and of no effect. The
restrictions on, and obligations with respect to, Transfers of Liberty Shares
set forth in this Agreement will be in addition to, and not in lieu of, any
other restrictions or obligations imposed by applicable law or set forth in any
instrument or agreement by which the Liberty Shares or any member of the
Stockholder Group is bound.
3.2 Right of First Refusal.
----------------------
(a) A member of the Stockholder Group may Transfer all or any portion of
the Liberty Shares held or beneficially owned by it to an Affiliate or to a
Person that is not an Affiliate only after complying with the provisions of this
Section 3.2. No member of the Stockholder Group may Transfer any record or
beneficial interest in any Liberty Share separately from all of the legal and
beneficial interests in such Liberty Share, except to the extent necessary for
the Liberty Shares to be held of record by any trust or for Liberty Shares to be
distributed to beneficiaries of any trust to the extent permitted by Section
3.3. If any member of the Stockholder Group wishes to sell on the NASDAQ
National Market System or on any national securities exchange (an "Open Market
Sale"), or receives and wishes to accept a Third Party Offer or an Affiliate
Offer for, or wishes to contribute to an entity qualified under Section
501(c)(3) of the Internal Revenue Code of 1986, as amended (a "Charitable
Contribution"), all or any portion of the Liberty Shares held or beneficially
owned by it (the "Offered Shares"), that Person (the "Offeror") must first offer
to Malone the opportunity to purchase the Offered Shares. The offer will be
made by notice (an "Offer Notice") given by the Offeror to Malone (a)
accompanied (i) in the case of a Third Party Offer, by a copy of the Third Party
Offer that specifically identifies the Person making the Third Party Offer and,
to the extent known to the Offeror, each Person that directly or indirectly
Controls such Person, (ii) in the case of an Affiliate Offer, by a notice that
specifically identifies the Affiliate making the Affiliate Offer and each Person
that directly or indirectly Controls such Affiliate, or (iii) in the case of a
Charitable Contribution, by a notice identifying the charitable organization to
which the Offeror desires to transfer Offered Shares, and (b) in any case
stating the Offeror's bona fide intention to Transfer the Offered Shares in an
Open Market Sale or pursuant to the Third Party Offer, Affiliate Offer, or
Charitable Contribution. The Offeror will provide such additional information
as may reasonably be requested by Malone to evaluate the terms of the
prospective Transfer. Malone may elect to purchase all or a portion of the
Offered Shares by giving notice of such election to the Offeror (the "Malone
Election Notice") within 20 days after his receipt of the Offer Notice (the
"Malone Election Period").
(b) The consideration payable by Malone for each Offered Share that Malone
has elected to purchase, at Malone's election will be either (i) one share of
Liberty Class A Stock (or that number of shares of Liberty Class A Stock, or
shares of any successor class or series of stock issued in
-4-
<PAGE>
replacement of Liberty Class A Stock, into which one Liberty Share is
convertible at the time of determination) or (ii) if the Offered Shares are the
subject of a Third Party Offer, cash in an amount equal to the consideration
payable for one Liberty Share pursuant to the Third Party Offer, and if the
Offered Shares are to be sold in an Open Market Sale or are the subject of an
Affiliate Offer, cash in an amount equal to the Trading Price; provided,
however, that if the Offered Shares are to be Transferred as a Charitable
Contribution, the consideration payable by Malone for the Offered Shares will be
determined under paragraph (b)(i) and Malone will not have the right to elect to
pay the consideration determined under paragraph (b)(ii) for such Offered
Shares. Malone will indicate in the Malone Election Notice whether he elects to
pay the purchase price in cash or shares of Liberty Class A Stock. To the extent
the consideration proposed to be paid for Liberty Shares in a Third Party Offer
consists of property other than cash, if Malone elects to purchase Offered
Shares for cash he will pay an amount equal to the Fair Market Value of such
property.
(c) For purposes of this Article III, the Fair Market Value of the non-
cash consideration proposed to be paid for Liberty Shares in a Third Party Offer
will be determined by agreement of the Offeror and Malone. If they cannot agree
on such Fair Market Value within 10 Business Days after a Malone Election Notice
is given, such Fair Market Value will be determined by an appraiser acceptable
to the Offeror and Malone. If they are unable to agree on a single appraiser
within 10 Business Days after a Malone Election Notice is given (the "Selection
Period"), the Offeror and Malone each will select an appraiser by giving notice
to each other of such appraiser's identity within 10 Business Days after the end
of the Selection Period. The Offeror and Malone each will cause the appraiser
they have selected to determine the Fair Market Value of the non-cash
consideration in question and to submit a written report of its determination
within 30 Business Days after the appraiser is selected. If the higher of the
two appraisals is equal to or less than 120% of the lower appraisal, the average
of the two will be the Fair Market Value of the non-cash consideration. If the
higher of the two appraisals is more than 120% of the lower appraisal, the two
appraisers will appoint a third appraiser within 10 Business Days and cause the
third appraiser to submit a written report of its determination of the Fair
Market Value of the non-cash consideration within 30 Business Days after such
appraiser's selection. Such third appraiser will not be informed of the
determinations of the other two appraisers. If three appraisals are necessary,
then the average of the two appraisals in which the Fair Market Values are
closest together will be deemed the Fair Market Value of the non-cash
consideration or, if the highest and lowest appraisal differ from the middle
appraisal by equal amounts, then the middle appraisal will be deemed the Fair
Market Value. Any appraiser appointed pursuant to this Section 3.2(c) will be a
nationally-recognized investment banking firm. The Offeror and Malone will pay
the fees and costs of the appraisers appointed by them. The Offeror and Malone
will share equally the fees and costs of any third appraiser appointed pursuant
to this Section 3.2 (c).
(d) Unless the Offeror and Malone otherwise agree, the closing of any
purchase of Liberty Shares pursuant to this Section 3.2 will be held at the
principal corporate offices of Liberty Media Corporation at 10:00 a.m. local
time on the later of (i) the day that is 20 days after the Malone Election
Notice is given and (ii) two Business Days after the parties have obtained all
Material Consents. If a purchase of Liberty Shares pursuant to this Section 3.2
requires any filing under the
-5-
<PAGE>
HSR Act, the requirement for obtaining that consent for purposes of this Section
3.2 will be deemed satisfied if the applicable waiting period under the HSR Act
has expired or has been terminated without the receipt of a notice of objection
or the commencement or threat of litigation by a government entity to restrain
the consummation of the purchase of the Liberty Shares to be purchased. The
Offeror and Malone will cooperate to prevent any inconsistency between any HSR
Act filings they are required to make and will furnish to each other such
information and reasonable assistance as the other may reasonably request in
connection with such filings and any request by a governmental agency for
additional information. Each party to this Agreement covenants to and with the
other parties that it will use its reasonable best efforts to obtain any
Material Consent required to consummate any purchase of Liberty Shares by Malone
pursuant to this Article III as promptly as practicable.
(e) At the closing of any purchase and sale of the Offered Shares by
Malone, (i) Malone will pay the purchase price in the form in which Malone has
elected to make such payment pursuant to Section 3.2(b) and (ii) the Offeror
will transfer to Malone all of the record and beneficial interests in the
Offered Shares to be purchased, free and clear of all liens, claims and
encumbrances, and will deliver such bills of sale, assignments and other
agreements and instruments to Malone, and will take all such other reasonable
actions at and after the closing as Malone may request, to effectively vest the
Offered Shares to be purchased in Malone.
(f) If any Material Consent cannot be obtained within 12 months after the
date a Malone Election Notice is given, the Malone Election Notice will be
deemed rescinded and the Offeror may Transfer the Offered Shares (i) in an Open
Market Sale on such terms as are generally available on such markets if a
proposed Open Market Sale by the Offeror gave rise to the right of first refusal
pursuant to this Section 3.2, (ii) pursuant to a Charitable Contribution, or
(iii) to the Person that made the Third Party Offer or Affiliate Offer for the
consideration and upon the terms and conditions set forth in the Third Party
Offer or Affiliate Offer (or, if the Person that made the Third Party Offer or
Affiliate Offer no longer wishes to purchase the Offered Shares, in an Open
Market Sale on such terms as are generally available on such markets) if a Third
Party Offer or Affiliate Offer gave rise to the right of first refusal pursuant
to this Section 3.2, in any case for a period of 60 days beginning on the day
after the first anniversary of the date the Malone Election Notice was given,
provided that the Offered Shares so Transferred are first converted into Liberty
- --------
Class A Stock. Upon such conversion the Liberty Class A Stock so converted will
not again be subject to the right of first refusal provisions of this Section
3.2 prior to the Transfer of such stock within the 60-day period as permitted by
this paragraph (f). If the Offered Shares are not so Transferred during such
60-day period, the Offeror's right to Transfer such Offered Shares will again be
subject to the provisions of this Section 3.2.
(g) If Malone does not elect to purchase all of the Offered Shares, the
Offeror will be free for a period of 60 days after the end of the Malone
Election Period to Transfer the Offered Shares that Malone has not elected to
purchase in an Open Market Sale on such terms as are generally available on such
markets, pursuant to a Charitable Contribution, or to the Person that made the
Third Party Offer or Affiliate Offer for the consideration and upon the terms
and conditions set forth
-6-
<PAGE>
in the Third Party Offer or Affiliate Offer, as applicable. If those Offered
Shares are not so Transferred during such 60-day period, the Offeror's right to
Transfer such Offered Shares will again be subject to the provisions of this
Section 3.2.
(h) If any Offeror entitled to Transfer Offered Shares during a 60-day
period pursuant to paragraph (f) or (g) is precluded from Transferring all of
the Offered Shares such Offeror otherwise would be entitled to Transfer solely
because of restrictions imposed by Rule 144 under the Securities Act of 1933, as
amended, on the volume of securities that may be sold within a three-month
period, such Offeror may Transfer the Offered Shares the Offeror is precluded by
Rule 144 from Transferring during an additional period of 90 days, beginning on
the day after the end of the 60-day Transfer period permitted by paragraphs (f)
and (g).
(i) Except for the conversion of Offered Shares into Liberty Class A Stock
pursuant to paragraph (f), any member of the Stockholder Group who wishes to
convert any Liberty Shares of which such Person is the holder or beneficial
owner into Liberty Class A Stock will first offer to Malone the opportunity to
purchase such Liberty Shares, which will be treated as Offered Shares that are
subject to the provisions of Section 3.2(a). If Malone gives a Malone Election
Notice with respect to all or any portion of such Offered Shares, the
consideration payable upon the purchase of such Offered Shares will be the
Trading Price, payable in the form elected by Malone as described in Section
3.2(b).
3.3 Distributions to Beneficiaries. Notwithstanding any other provision of
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this Agreement, any trust that holds Liberty Shares may distribute to any Person
that is a beneficiary of such trust from time to time the number of Liberty
Shares that are beneficially owned by such Person, provided that such Person
complies with the provisions of Section 3.5.
3.4 Other Permitted Transfers. Notwithstanding any other provision of this
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Agreement, subject to the provisions of Section 3.5, any member of the
Stockholder Group may (a) pledge all or part of the Liberty Shares of which such
Person is the legal or beneficial owner to US Bank or any other lending
institution as security for a loan, or (b) Transfer all or part of the Liberty
Shares owned by such Person to any spouse, parent, child, grandchild or sibling
of such Person or to any trust or other investment vehicle established primarily
for the benefit of any of the foregoing persons or their heirs, provided that
prior to a Transfer permitted by clause (a) or (b) the member of the Stockholder
Group making the Transfer causes the Transferee to provide a written certificate
establishing that the Transfer qualifies as a private placement of the Liberty
Shares to be Transferred under applicable securities laws and as to the
Transferee's investment intent with respect to such Liberty Shares.
3.5 Other Conditions to Transfer. Any Person (other than Malone) to whom
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Liberty Shares are permitted by this Article III to be Transferred must (except
in the case of a Transfer of Shares pursuant to Section 3.2(g)), prior to such
Transfer, agree in writing to be bound by the terms of this Agreement as a
member of the Stockholder Group if such Person is not already a party hereto and
all references to the "Stockholder Group" in this Agreement will be deemed to
include the Transferee with respect to any Liberty Shares that are Transferred
to such Transferee. No member of the
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Stockholder Group will make any Transfer of Liberty Shares that would violate
U.S. federal or state securities laws.
ARTICLE IV: MISCELLANEOUS
4.1 Stock Certificate Legend. All certificates representing Liberty Shares
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will bear a legend in substantially the following form:
"The shares represented by this certificate may not be sold,
transferred or encumbered except in accordance with the terms of a
Stockholders' Agreement, dated as of March 9, 1999, a copy of which is
on file with the Company."
If an Offeror Transfers all or part of the Offered Shares to a Transferee as
permitted by Section 3.2(f) or 3.2(g), the Transferee of such Offered Shares
will be issued a new certificate evidencing such Offered Shares without the
legend set forth above (other than, in the case of Liberty Shares Transferred
pursuant to Section 3.4, the portion of such legend referring to the
restrictions imposed by this Agreement) upon the receipt by AT&T of evidence
satisfactory to it and its legal counsel that the Offered Shares are registered
or that such sale will comply with Rule 144 or 145 under the Securities Act of
1933, as amended, and any applicable state securities laws, and upon
satisfaction of the transfer procedures normally applicable to the Liberty
Shares.
4.2 Termination. This Agreement will terminate upon the earliest to occur of
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(a) the death of Malone, or (b) April 30, 2008. The termination of this
Agreement will not affect the rights and obligations of the parties accrued
prior to such termination.
4.3 Notices. All notices, requests, demands and other communications required
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or permitted to be made pursuant to this Agreement will be in writing and will
be deemed to have been given if delivered in person or by courier, sent by
telecopy or sent by United States certified or registered mail, prepaid,
addressed as follows:
To Malone at:
Liberty Media Corporation
8101 E. Prentice Ave.
Englewood, CO 80111
Telecopy: (303) 721-5443
with a copy to the same address, Attention: Charles Y. Tanabe, Esq.
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To Hindery at:
Tele-Communications, Inc.
5619 DTC Parkway
Englewood, Colorado 80111
Telecopy: (303) 488-3201
To the Robin Trust at:
The Robin Cook Hindery 1989 Trust
Stephen I. Leonard, Trustee
Farallon Real Estate Services Company, Inc.
620 Davis Street
San Francisco, CA 94111
Telecopy: (415) 956-3665
with a copy in the case of Hindery or the Robin Trust to:
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, California 94104
Attention: David L. Klott, Esq.
Telecopy: (415) 983-1200
Any party may change the address to which notices are required to be sent
by giving notice of such change in the manner provided in this Section. Any
notice delivered personally or by courier will be deemed to be received on the
date of delivery; any notice sent by telecopy will be deemed to be received upon
confirmation of transmission by person or machine; and any notice so mailed will
be deemed to be received on the date shown on the return receipt (evidence of
rejection of delivery or inability to deliver because of a changed address of
which no notice was given pursuant to the provisions of this Agreement will be
deemed to be a receipt).
4.4 Modification; Waiver. This Agreement may be modified or terminated by
--------------------
mutual agreement only by a writing signed by all the parties, and no provision
or condition herein may be waived other than by a writing signed by the party
waiving such provision or condition.
4.5 Headings. Article and Section headings in this Agreement are for the sole
--------
purpose of convenient reference and in no way define, limit or prescribe the
scope or intent of this Agreement or any part hereof, and such headings will not
be considered in interpreting or construing this Agreement.
4.6 Assignment. Any rights exercisable by Malone under this Agreement may be
----------
exercised by any designee of Malone. Except as provided in the preceding
sentence, no party will assign any of
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its rights under this Agreement or delegate its duties hereunder unless it
obtains the prior written consent of the other parties, which consent may be
withheld at each such party's absolute discretion.
4.7 Specific Performance. The parties acknowledge that Malone would be
--------------------
irreparably damaged if any member of the Stockholder Group violates or breaches
its obligations under Article II or Article III, and that in either case money
damages would be an inadequate remedy for such breach or violation.
Accordingly, each member of the Stockholder Group agrees that the provisions of
Article II and Article III will be specifically enforceable by Malone, and that
Malone will be entitled to temporary and permanent injunctive relief and other
equitable remedies, at his sole election, to enforce such provisions. Such
rights of enforcement will be without prejudice to any other right or remedy
available to Malone.
4.8 Counterparts. This Agreement may be executed in any number of
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counterparts, each of which may be deemed to be an original, and all of which
taken together will constitute one instrument.
4.9 Governing Law. THIS AGREEMENT WILL BE GOVERNED BY THE LAWS OF THE STATE OF
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DELAWARE, WITHOUT REGARD TO ANY CONFLICTS OF LAWS RULES.
4.10 Other. This Agreement constitutes the entire agreement of the parties
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regarding the subject matter hereof, and all prior or contemporaneous
agreements, understandings, representations and statements, oral or written, are
hereby merged into this Agreement. This Agreement will be binding upon and
inure to the benefit of the parties and, subject to the limitations set forth in
Section 4.6, their respective successors and assigns. The provisions of this
Agreement are for the exclusive benefit of the parties and their permitted
successors and assigns, and no other Person is intended to be a third party
beneficiary or to have any rights by virtue of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
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John C. Malone
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Leo J. Hindery, Jr.
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THE ROBIN COOK HINDERY 1989 TRUST
By:
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Stephen I. Leonard, Trustee
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