<PAGE>
As filed with the Securities and Exchange Commission on January 23, 1995
Registration No. 33 -
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
Under The Securities Act of 1933
----------------------
TELE-COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 84-1260157
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5619 DTC Parkway
Englewood, Colorado 80111-3000
(303) 267-5500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
----------------------
Stephen M. Brett, Esq.
Tele-Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
(303) 267-5500
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
----------------------
Copy to:
Elizabeth M. Markowski, Esq.
Baker & Botts, L.L.P.
885 Third Avenue
New York, New York 10022-4834
(212) 705-5000
----------------------
Approximate date of commencement of proposed sale of the securities to the
public: From time to time after the effective date of the registration
statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================
Proposed Proposed
Amount to maximum maximum
be offering aggregate Amount of
Title of each class of Registered price per offering registration
securities to be registered (1) Unit (2) price (2) fee
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock,
par value $1.00 per share 500 $22.00 $11,000 $3.79
================================================================================
</TABLE>
(1) Pursuant to Rule 416 under the Securities Act of 1933,this Registration
Statement also relates to such additional shares of Class A Common Stock as
may be issued as a result of the anti-dilution provisions contained in
certain convertible notes issued by TCI-UA, Inc. described elsewhere in this
Registration Statement.
(2) Estimated solely for purposes of determining the registration fee in
accordance with Rule 457 on the basis of the average of the high and low
prices of the Class A Common Stock, par value $1.00 per share, of Tele-
Communications, Inc. on January 20, 1995.
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus included
herein also relates to 5,041,916 shares of Class A Common Stock registered
pursuant to Registration Statement No. 33-54263
================================================================================
<PAGE>
Subject to Completion, dated January 20, 1995
PROSPECTUS
TELE-COMMUNICATIONS, INC.
Class A Common Stock
($1.00 Par Value)
This Prospectus relates to shares (the "Shares") of the Class A Common
Stock, par value $1.00 per share (the "Class A Common Stock"), of Tele-
Communications, Inc., a Delaware corporation (the "Company"), to be issued from
time to time upon conversion of up to $30 million aggregate principal amount of
certain convertible notes (the "Notes") of TCI-UA, Inc. ("TCI-UA"), an indirect,
wholly-owned subsidiary of the Company, and the offering and sale of the Shares
by the holders thereof (each a "Selling Stockholder") from time to time
thereafter. At the date of this Prospectus, 5,042,016 shares of Class A Common
Stock are issuable upon conversion of such aggregate principal amount of the
Notes. See "The Shares Being Offered" and "Selling Stockholders."
The shares of the Company's Class A Common Stock and the Company's Class B
Common Stock, par value $1.00 per share (the "Class B Common Stock"), are traded
in the over-the-counter market on the NASDAQ National Market under the symbols
TCOMA and TCOMB, respectively. The Class A Common Stock and the Class B Common
Stock are identical in all respects except that each share of Class B Common
Stock has ten votes per share and each share of Class A Common Stock has one
vote per share. Each share of Class B Common Stock is convertible, at the option
of the holder, into one share of Class A Common Stock. The Class A Common Stock
is not convertible.
The Shares may be offered for sale by the Selling Stockholders from time to
time in varying amounts and at prices and on terms to be determined at the time
of a sale or sales and to be set forth in a supplement or supplements to this
Prospectus (each, a "Prospectus Supplement"). The Shares may be sold by the
Selling Stockholders directly, through agents designated from time to time or to
or through broker-dealers or underwriters designated from time to time. To the
extent required, the number of Shares to be sold, the name of the Selling
Stockholder, the purchase price, the public offering price, if applicable, the
name of any such agent, broker-dealer or underwriter, and any applicable
commissions, discounts or other items constituting compensation to such agents,
broker-dealers or underwriters with respect to a particular offering will be set
forth in an accompanying Prospectus Supplement. The aggregate proceeds to the
Selling Stockholders from the sale of the Shares so offered will be the purchase
price of the Shares sold less the aggregate commissions, discounts and other
compensation, if any, paid to agents, broker-dealers or underwriters, and other
expenses of the offering and sale not borne by the Company. See "The Shares
Being Offered" and "Plan of Distribution." There will be no proceeds to the
Company from the issuance or sale of the Shares. The Company knows of no selling
arrangement between any agent, broker-dealer or underwriter and the Selling
Stockholders.
The Selling Stockholders and any broker-dealers, agents or underwriters
that participate with the Selling Stockholders in the distribution of any of the
Shares may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended, and any discount or commission received by them and any
profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under such Act.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is January __, 1995.
<PAGE>
The Company was incorporated in 1994 under the name "TCI/Liberty Holding
Company" for the purpose of combining the Company's predecessor, Tele-
Communications, Inc. (renamed "TCI Communications, Inc." and referred to herein
as "TCIC"), and Liberty Media Corporation ("Liberty"). On August 4, 1994 the
mergers (the "TCI/Liberty Combination") of TCIC and Liberty with separate
wholly-owned subsidiaries of the Company were consummated and each of TCIC and
Liberty became wholly-owned subsidiaries of the Company. In connection with the
TCI/Liberty Combination, the Company changed its name to Tele-Communications,
Inc. and TCIC changed its name to TCI Communications, Inc. Unless the context
indicates otherwise, as used in this Prospectus the term "Company" means, on and
after August 4, 1994, Tele-Communications, Inc. (formerly named "TCI/Liberty
Holding Company") and, before August 4, 1994, TCIC (formerly named "Tele-
Communications, Inc."), and their respective consolidated subsidiaries.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (together with all amendments
and exhibits, referred to as the "Registration Statement") under the Securities
Act of 1933, as amended (the "Securities Act") with respect to the Shares. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information pertaining to the Shares
and the Company, reference is made to the Registration Statement. Statements
contained herein concerning the provisions of any document are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Reports,
proxy and information statements and other information filed by the Company,
including the Registration Statement, can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549; 500 West Madison Street, Suite
1400, Chicago, Illinois 60661; and at 7 World Trade Center, Suite 1300, New
York, New York 10048; and copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference: (i) the
Company's Annual Report on Form 10-K for the year ended December 31, 1993, as
amended by Form 10-K/A (Amendment 1) (Commission File No. 0-5550), (ii) the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994, as
amended by Form 10-Q/A (Amendment 1) (Commission File No. 0-5550), (iii) the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994
(Commission File No. 0-5550), (iv) the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1994, as amended by Form 10-Q/A (Amendment
1) and Form 10-Q/A (Amendment 2) (Commission File No. 0-20421), (v) the
Company's Current Reports on Form 8-K dated February 15, 1994, February 25,
1994, April 6, 1994 and May 27, 1994, as amended by Form 8-K/A (Amendment 1)
(Commission File No. 0-5550), and (vi) the Company's Current Reports on Form 8-K
dated August 5, 1994, August 18, 1994, August 26, 1994, October 27, 1994 and
December 2, 1994 , as amended by Form 8-K/A (Amendment 1) (Commission File No.
0-20421).
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to
the termination of the offering of the Shares described in this Prospectus shall
be deemed to be incorporated herein by reference and to be a part hereof from
the respective dates of the filing of such documents. Any statement contained in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a Prospectus
is delivered, on the written or oral request of any such person, a copy of any
or all of the documents incorporated by reference herein, other than certain
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into the documents that this Prospectus incorporates). Such
requests should be addressed to Stephen M. Brett, Esq., Executive Vice President
and General Counsel, Tele-Communications, Inc., Terrace Tower II, 5619 DTC
Parkway, Englewood, Colorado 80111-3000; telephone (303) 267-5500.
--------------------
-2-
<PAGE>
CERTAIN CONSIDERATIONS
The following factors, among others, should be considered carefully before
making an investment decision with respect to the Shares.
Losses. The Company incurred a net loss in each of the three fiscal years
in the period ended December 31, 1993 and losses from continuing operations in
the fiscal years ended December 31, 1993 and December 31, 1991. The Company had
net earnings for the nine-month periods ended September 30, 1994 and 1993.
Notwithstanding the losses it has incurred, the Company has been able to, and
expects to continue to be able to, satisfy its debt service and other
obligations as and when they become due. The Company's Operating Cash Flow
(operating income before depreciation, amortization and other non-cash credits
or charges) ($1,858 million, $1,637 million and $1,430 million for the years
ended December 31, 1993, 1992 and 1991, respectively, and $1,339 million and
$1,409 million for the nine-month periods ended September 30, 1994 and 1993,
respectively) has historically been sufficient to cover its interest expense
($731 million, $718 million and $826 million for the years ended December 31,
1993, 1992 and 1991, respectively, and $568 million and $549 million for the
nine-month periods ended September 30, 1994 and 1993, respectively). The
Company's interest coverage ratio for the years ended December 31, 1993, 1992
and 1991 was 254%, 228%, and 173%, respectively, and for the nine months ended
September 30, 1994 and 1993 was 236% and 257%, respectively. Operating Cash Flow
is a measure of value and borrowing capacity within the cable television
industry and is not intended to be a substitute for cash flows provided by
operating activities, a measure of performance prepared in accordance with
generally accepted accounting principles, and should not be relied upon as such.
THE COMPANY
The Company, through its subsidiaries and affiliates, is principally
engaged in the construction, acquisition, ownership and operation of cable
television systems and the provision of satellite-delivered video entertainment,
information and home shopping programming services to various video distribution
media, principally cable television systems. The Company believes that, measured
by the number of basic subscribers, it is the largest provider of cable
television services in the United States. The Company also has investments in
cable and telecommunications operations and television programming in certain
international markets. The Company has also invested in companies and joint
ventures involved in developing and providing programming for new television and
telecommunications technologies. The Company is a Delaware corporation and its
executive offices are located at Terrace Tower II, 5619 DTC Parkway, Englewood,
Colorado 80111-3000; telephone (303) 267-5500.
THE SHARES BEING OFFERED
On July 9, 1986, the Company entered into a Stock Purchase Agreement (the
"Naify Agreement") with Marshall Naify, Robert A. Naify, a corporation owned by
them, certain members of their respective families and certain trusts
established for the benefit of such persons and certain other members of their
respective families (the "Naify Family"), pursuant to which the Company acquired
from the Naify Family in December of 1986 all of the shares of common stock of
United Artists Communications, Inc. ("UACI") owned by them, which represented
approximately 55% of the UACI shares then outstanding. The consideration paid
for each share of UACI common stock acquired by the Company pursuant to the
Naify Agreement was $18.498, of which $6.64 was paid in cash and the balance of
$11.858 per share was represented by Notes.
The Notes are general unsecured obligations of TCI-UA, the principal amount
of which is payable on December 12, 2021 and bears interest at the rate of 1.85%
per annum until December 12, 2003 and no interest thereafter. The Notes are
presently convertible at any time at the option of the holder into approximately
one share of Class A Common Stock ("Conversion Shares") for each $5.95 principal
amount of Notes, subject to adjustment under stated circumstances.
-3-
<PAGE>
As of the date of this Prospectus, Notes in the aggregate principal amount
of $230,330,481 are outstanding, which Notes are convertible at the current
conversion rate into an aggregate of approximately 38,710,990 Conversion Shares
(excluding fractional shares issuable upon conversion of any particular Note).
The names of the members of the Naify Family who currently hold the Notes, the
aggregate principal amount of the Notes held by each such holder and the number
of whole shares of Class A Common Stock into which the Notes of such holder are
convertible at the current conversion rate are set forth under "Selling
Stockholders" below. In accordance with the terms of the Naify Agreement,
neither the Notes nor the Conversion Shares may be transferred unless they are
registered under the Securities Act or an exemption from registration is
available. The Notes have not been registered under the Securities Act and
neither the Company nor TCI-UA has any obligation to register the Notes. The
Naify Agreement provides the holders of the Notes with certain demand and
incidental or "piggyback" registration rights with respect to the Conversion
Shares. Specifically, the demand registration rights permit holders of the Notes
from time to time to require the Company to register Conversion Shares, in
minimum quantities of 1,000,000 Conversion Shares, under the Securities Act for
sale in an underwritten public offering, except that the Company is not
obligated to effect such registration more than once in any six month period or
if, in order to comply with such request, the Company could be required to
undergo a special interim audit (unless the parties requesting registration
agree to pay all fees and expenses of such special interim audit). The
incidental registration rights permit the holders of the Notes to have their
Conversion Shares included in certain types of registration statements proposed
to be filed by the Company. The Company's agreement to register the Shares
covered by this Prospectus as described below is contained in a letter agreement
which has been filed as Exhibit 99.1 to the Registration Statement and is
separate from the Company's obligation to register Conversion Shares under the
Naify Agreement. The full text of the Naify Agreement has been filed as Exhibit
99.2 to the Registration Statement of which this Prospectus forms a part. See
"Available Information."
The Company has agreed, for the benefit of the holders of the Notes, to
register the Conversion Shares to be issued from time to time upon conversion of
up to $30 million aggregate principal amount of the Notes and the resale of such
shares from time to time by the holders thereof. The Shares offered hereby
represent the number of Conversion Shares issuable upon conversion of such
aggregate principal amount of Notes, as such number may be increased or
decreased as a result of adjustments to the conversion rate pursuant to the
anti-dilution provisions of the Notes. At the current conversion rate, 5,042,016
Conversion Shares are issuable upon conversion of $30 million aggregate
principal amount of the Notes. The Conversion Shares will be included in the
Shares covered by this Prospectus on the basis of the order in which the Notes,
up to an aggregate principal amount of $30 million, are converted.
SELLING STOCKHOLDERS
A member of the Naify Family, or any person to whom a member of the Naify
Family has transferred Notes in a transaction permitted by the Naify Agreement,
for whose account Shares are being offered hereby is referred to herein as a
"Selling Stockholder". It is anticipated that, from time to time after the date
hereof, record ownership of certain of the Notes that are currently held in
trust for the benefit of members of the Naify Family will be transferred to the
beneficiaries of the applicable trust and/or that record ownership of certain of
the Notes may be transferred to living trusts of which the current record owner
or (in the case of Notes currently held in trust) beneficial owner would be a
trustee with sole control and complete discretion to revoke or amend such trust
during such person's lifetime. The table set forth below and the footnotes
thereto provide the following information: the names of the members of the Naify
Family who currently hold Notes, the aggregate principal amount of the Notes
held by each such holder, the number of whole shares of Class A Common into
which the Notes of such holder are convertible at the current conversion rate
and the number of shares of Class A Common Stock beneficially owned as of the
date of this Prospectus by each such holder. The Conversion Shares to be
included in the Shares covered by this Prospectus will be on the basis of the
order in which the Notes, up to an aggregate principal amount of $30 million,
are converted, therefore no estimate can be given as to the number of shares of
Class A Common Stock that will be held by each Selling Stockholder upon the
termination of this offering. However, the name of the Selling Stockholder in
connection with any particular sale of Shares, the number of Shares to be sold
and the
-4-
<PAGE>
number and (if one percent or more) the percentage of the outstanding shares of
Class A Common Stock to be owned by such Selling Stockholder after completion of
any offering hereunder will be specified in a Prospectus Supplement.
<TABLE>
<CAPTION>
No. of Whole
Shares of
Class A No. of Shares of
Aggregate Common Stock Class A Common
Principal Into Which Stock
Amount of Notes Notes are Beneficially
Noteholder Held Convertible Owned (1)
---------- --------------- ------------ ----------------
<S> <C> <C> <C>
Marshall Naify 73,924,889.75 12,424,351 12,944,918 (2)
Robert A. Naify 133,559,215.23 22,446,926 23,297,254 (3)
Valerie Naify 960,498.00 161,428 161,248
Leslie C. Naify 1,383,117.12 232,456 263,083 (4)
Christie M. Naify 1,383,117.12 232,456 263,083 (5)
Robert J. Naify 1,383,117.12 232,456 263,083 (6)
Mark S. Naify 20,331.02 3,416 3,416
Marshall Naify, Robert A. Naify and 2,032,556.06 341,606 341,606
Georgette N. Rosekrans, Trustees of the
Michael N. Naify testamentary trust for the
benefit of Marshall Naify
John M. Sherwood, as Trustee of the 182,233.74 30,627 30,627
Leslie C. Naify 1981 Trust
John M. Sherwood, as Trustee of the 182,233.74 30,627 30,627
Christie M. Naify 1981 Trust
John M. Sherwood, as Trustee of the 182,233.74 30,627 30,627
Robert J. Naify 1981 Trust
John M. Sherwood, as Trustee of the 139,734.67 23,484 23,484
Christina Cortese 1983 Trust
John M. Sherwood, as Trustee of the 139,734.67 23,484 23,484
Acela Cortese 1983 Trust
John M. Sherwood, as Trustee of the 139,734.67 23,484 23,484
Christina E. Naify 1985 Trust
John M. Sherwood, as Trustee of the Drew 114,619.43 19,263 19,263
Michael Andrade 1986 Trust
John M. Sherwood, as Trustee of the 132,856.16 22,328 23,902
Marsha J. Naify Living Trust
John M. Sherwood, as Trustee of the 650,506.16 109,328 112,264
Michael S. Naify 1981 Trust
John M. Sherwood, as Trustee of the 472,006.16 79,328 82,264
Christina E. Naify 1981 Trust
Michael S. Naify 973,335.44 163,585 505,845 (7)
Christina E. Naify 875,120.40 147,079 226,407 (8)
Marshall Naify, as Trustee under the 1,368,481.30 229,996 229,996
Michael S. Naify 1963 Trust
Richard Naify 3,833,900.00 644,352 743,005 (9)
Josephine Naify 5,995,736.82 1,007,686 1,141,076 (9)
James Naify 301,172.93 50,617 60,317
</TABLE>
- -------------
(1) The number of shares specified in this table as being beneficially owned
by each Selling Stockholder assumes the conversion of all Notes
beneficially owned by such Selling Stockholder, except as set forth in the
footnotes.
(2) This number includes the number of shares issuable upon conversion of Notes
owned by record by Marshall Naify, Robert A. Naify and Georgette N.
Rosekrans, as Trustees of the Michael N. Naify testamentary trust for the
benefit of Marshall Naify (341,606 shares). This number does not include,
although Marshall Naify may be deemed to beneficially own, the
-5-
<PAGE>
number of shares issuable upon conversion of Notes owned by record by
Marshall Naify as sole trustee under the Michael S. Naify 1963 Trust
(229,996).
(3) This number does not include, although Robert A. Naify may be deemed to
beneficially own, the number of shares issuable upon conversion of Notes
owned of record by Robert A. Naify as co-trustee under the Michael N. Naify
testamentary trust for the benefit of Marshall Naify.
(4) This number includes the number of shares issuable upon conversion of Notes
owned of record by the Leslie C. Naify 1981 Trust (30,627) of which Leslie
C. Naify is the sole beneficiary.
(5) This number includes the number of shares issuable upon conversion of Notes
owned of record by the Christie M. Naify 1981 Trust (30,627) of which
Christie M. Naify is the sole beneficiary.
(6) This number includes the number of shares issuable upon conversion of Notes
owned of record by the Robert J. Naify 1981 Trust (30,627) of which Robert
J. Naify is the sole beneficiary.
(7) This number includes the number of shares issuable upon conversion of Notes
owned of record by two trusts separately identified above of which Michael
S. Naify is sole beneficiary (the Michael S. Naify 1981 Trust and the
Michael S. Naify 1963 Trust)
(8) This number includes the number of shares issuable upon conversion of Notes
owned of record by the Christina E. Naify 1981 Trust (79,328) of which
Christina E. Naify is sole beneficiary.
(9) This number includes 66,070 shares owned jointly by Josephine Naify and
Richard Naify.
Neither the Company nor any of its affiliates has had any material
relationship with any member of the Naify Family within the past three years,
except that Robert A. Naify has been a director of the Company since June 12,
1987. Any other material relationship between the Company or any of its
affiliates, on the one hand, and a Selling Stockholder, on the other, within
three years prior to the date of a sale by such Selling Stockholder hereunder
will be described in the Prospectus Supplement relating to such sale. The
Company has agreed to bear all costs and expenses of registering the Shares
under the Securities Act and certain state securities laws, including
registration fees, its legal and accounting fees and expenses and photocopying
costs. The Selling Stockholders will bear all other expenses of the offering and
sale of the Shares, including any underwriting discounts, selling commissions or
other compensation to agents, broker-dealers or underwriters, transfer fees or
taxes, if any, and fees and expenses of counsel and other advisers, if any, to
the Selling Stockholders. The Company and the Selling Stockholders have each
agreed to indemnify the other against certain liabilities, including civil
liabilities under the Securities Act.
-6-
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 1,100,000,000 shares of Class A Common
Stock and 150,000,000 shares of Class B Common Stock. In addition, it is
authorized to issue up to 12,375,096 shares of Preferred Stock, par value $.01
per share ("Preferred Stock"), divided into 700,000 shares of Class A Preferred
Stock, par value $.01 per share ("Class A Preferred Stock"), 1,675,096 shares of
Class B 6% Cumulative Redeemable Exchangeable Junior Preferred Stock, par value
$.01 per share ("Class B Preferred Stock"), and 10,000,000 shares of Series
Preferred Stock, par value $.01 per share (the "Series Preferred Stock"). The
following summary of certain provisions of the Company's Restated Certificate of
Incorporation and Bylaws does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all provisions of such Restated
Certificate of Incorporation and Bylaws, copies of which are filed as exhibits
to this Registration Statement.
Common Stock
Each share of Class A Common Stock has one vote and each share of Class B
Common Stock has 10 votes per share. The Class A and Class B Common Stock are
otherwise identical in all respects, except that each share of Class B Common
Stock is convertible into one share of Class A Common Stock at the option of the
holder. A number of shares of Class A Common Stock equal to the number of shares
of Class B Common Stock outstanding from time to time are set aside and reserved
for issuance upon conversion of shares of Class B Common Stock. The Class A
Common Stock is not convertible into Class B Common Stock. Subject to the
preferential rights of holders of any then outstanding Preferred Stock, the
holders of the Class A and Class B Common Stock are entitled to receive
dividends when and as declared by the Board of Directors out of funds legally
available for such payment. Holders of Class A and Class B Common Stock have no
preemptive rights to purchase additional shares. Subject to the preferential
rights of holders of any then outstanding Preferred Stock, the holders of Class
A and Class B Common Stock are entitled to share ratably in the assets of the
Company available for distribution to stockholders in the event of the Company's
liquidation, dissolution or winding up.
The holders of the Class A and Class B Common Stock vote as one class for
the election of directors and have no cumulative voting rights in the election
of directors. The Company's Restated Certificate of Incorporation also provides
that the Board of Directors be divided into three classes of approximately equal
size, with one class to be elected for a three-year term at each annual meeting
of stockholders.
The Restated Certificate of Incorporation may be amended or repealed only
upon a vote of the holders of 66 2/3% of the total voting power of the
outstanding Class A and Class B Common Stock and any then outstanding Preferred
Stock entitled to vote with the Class A and Class B Common Stock generally on
matters submitted to stockholders for a vote (collectively "Voting Stock"),
voting as one class, and the Company's Bylaws may be amended only upon the
affirmative vote of at least 75% of the members of the Board of Directors, or by
a vote of holders of 66 2/3% of the total voting power of the outstanding Voting
Stock, voting as a single class. In addition, the Restated Certificate of
Incorporation provides that, subject to the rights of the holders of any class
or series of Preferred Stock, a vote of the holders of 66 2/3% of the total
voting power of the outstanding Voting Stock, voting as a single class, is
required to remove directors (who may be removed only for cause) and to approve
dissolution and certain mergers, consolidations, sales of assets and similar
transactions. As of the date of this Prospectus, the Class A and Class B Common
Stock and the Class C Preferred Stock (as defined below) constitute the only
"Voting Stock" of the Company.
Class Preferred Stock
Class A Preferred Stock. The Company is authorized to issue 700,000 shares
of Class A Preferred Stock, of which 592,798 were issued and outstanding as of
the date of this Prospectus and all of which were held by a wholly owned
subsidiary of the Company. The dividend, liquidation and redemption features of
the Class A Preferred Stock, each of which is discussed below, are determined by
reference to the liquidation value of the Class A
-7-
<PAGE>
Preferred Stock, which as of any date of determination will be equal, on a per
share basis, to the sum of (i) $322.84, plus (ii) all dividends accrued on such
share through the dividend payment date on or immediately preceding such date of
determination to the extent not paid on or before such date, plus (iii), for
purposes of determining liquidation and redemption payments, all unpaid
dividends accrued on the sum of clauses (i) and (ii) above, to such date of
determination.
The holders of Class A Preferred Stock are entitled to receive preferential
cumulative cash dividends when and as declared by the Board of Directors out of
unrestricted funds legally available therefor. Dividends accrue cumulatively at
an annual rate of 9 3/8% of the liquidation value per share, whether or not such
dividends are declared or funds are legally or contractually available for
payment of dividends. Dividends not paid on any dividend payment date are added
to the liquidation value on such date and remain a part thereof until such
dividends and all dividends accrued thereon are paid in full.
Upon the dissolution, liquidation or winding up of the Company, holders of
Class A Preferred Stock will be entitled to receive from the assets of the
Company available for distribution to stockholders an amount in cash or property
or a combination thereof, per share, equal to the liquidation value.
The Class A Preferred Stock is subject to optional redemption at any time
by the Company, in whole or in part, and to mandatory redemption by the Company
on the twelfth anniversary of the issue date, in each case at a redemption price
per share equal to the liquidation value of the Class A Preferred Stock.
Class B Preferred Stock. The Company is authorized to issue 1,675,096
shares of Class B Preferred Stock, all of which were issued and outstanding as
of the date of this Prospectus. The holders of Class B Preferred Stock are
entitled to receive preferential cumulative dividends, when and as declared by
the Board of Directors out of unrestricted funds legally available therefor.
Dividends accrue cumulatively (but without compounding) at an annual rate of 6%
of the stated liquidation value of $100 per share (the "Stated Liquidation
Value"), whether or not such dividends are declared or funds are legally
available for the payment of dividends. Accrued dividends are payable annually
and, in the sole discretion of the Board of Directors, may be declared and paid
in cash, in shares of Class A Common Stock or in any combination of the
foregoing. Accrued dividends not paid as provided above on any dividend payment
date will accumulate and such accumulated unpaid dividends may be declared and
paid in cash, shares of Class A Common Stock or any combination thereof at any
time without reference to any regular dividend payment date, to holders of
record of Class B Preferred Stock as of a special record date fixed by the Board
of Directors.
Upon the liquidation, dissolution or winding up of the Company, the holders
of Class B Preferred Stock will be entitled to receive from the assets of the
Company available for distribution to stockholders an amount in cash or property
or a combination thereof, per share, equal to the Stated Liquidation Value
thereof, plus all accumulated and accrued but unpaid dividends thereon to the
date of payment.
The Class B Preferred Stock is redeemable at any time at the option of the
Company, in whole or in part, for a redemption price per share payable in cash
equal to the Stated Liquidation Value thereof, plus all accumulated and accrued
but unpaid dividends thereon to and including the redemption date.
The Class B Preferred Stock is exchangeable at the option of the Company in
whole but not in part at any time for junior subordinated debt securities of the
Company ("Junior Exchange Notes"). If the Company exercises its optional
exchange right, each holder of outstanding shares of Class B Preferred Stock
will be entitled to receive in exchange therefor newly issued Junior Exchange
Notes of a series authorized and established for the purpose of such exchange,
the aggregate principal amount of which will be equal to the aggregate Stated
Liquidation Value of the shares of Class B Preferred Stock so exchanged by such
holder, plus all accumulated and accrued but unpaid dividends thereon to and
including the exchange date. The Junior Exchange Notes will mature on the
fifteenth
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<PAGE>
anniversary of the date of issuance and will be subject to earlier redemption at
the option of the Company, in whole or in part, for a redemption price equal to
the principal amount thereof plus accrued but unpaid interest. Interest will
accrue, and be payable annually, on the principal amount of the Junior Exchange
Notes at a rate per annum to be determined prior to issuance by adding a spread
of 215 basis points to the "Fifteen Year Treasury Rate" (as defined in the
Indenture pursuant to which the Junior Exchange Notes will be issued). Interest
will accrue on overdue principal at the same rate, but will not accrue on
overdue interest.
Series Preferred Stock
The Series Preferred Stock is issuable, from time to time, in one or more
series, with such designations, preferences and relative, participating,
optional or other special rights, qualifications, limitations or restrictions
thereof as shall be stated and expressed in a resolution or resolutions
providing for the issue of such series adopted by the Board of Directors. All
shares of any one series of the Series Preferred Stock are required to be alike
in every particular and all series are required to rank equally and be identical
in all respects, except insofar as they may vary with respect to matters which
the Board is expressly authorized by the Company's Restated Certificate of
Incorporation to determine in the resolution or resolutions providing for the
issue of any series of the Series Preferred Stock. No assurance can be given
that the terms of any future series of Series Preferred Stock will not
materially limit or qualify the rights of the holders of Class A or Class B
Common Stock in a manner that is different from or in addition to the terms of
any class or series of Preferred Stock that are outstanding on the date of this
Prospectus.
Convertible Preferred Stock, Series C. The Company is authorized to issue
80,000 shares of Convertible Preferred Stock, Series C ("Series C Preferred
Stock"), of which 70,559 were issued and outstanding as of the date of this
Prospectus. Each share of Series C Preferred Stock is convertible, at the option
of the holder, into 100 shares of Class A Common Stock, subject to anti-dilution
adjustments. The dividend, liquidation and redemption features of the Series C
Preferred Stock, each of which is discussed below, are determined by reference
to the liquidation value of the Series C Preferred Stock, which as of any date
of determination is equal, on a per share basis, to the sum of (i) $2,375, plus
(ii) all dividends accrued on such share through the dividend payment date on or
immediately preceding such date of determination to the extent not paid on or
before such date, plus (iii), for purposes of determining liquidation and
redemption payments, all unpaid dividends accrued on the sums of clauses (i) and
(ii) above, to such date of determination. The holders of Series C Preferred
Stock are entitled to receive preferential cumulative cash dividends out of
funds legally available therefor. Dividends accrue cumulatively at an annual
rate of 5 1/2% of the liquidation value per share, whether or not such dividends
are declared or funds are legally or contractually available for payment of
dividends, except that if the Company fails to redeem shares of Series C
Preferred Stock required to be redeemed on a redemption date, dividends will
thereafter accrue cumulatively at an annual rate of 15% of the liquidation value
per share. Dividends not paid on any dividend payment date will be added to the
liquidation value on such date and remain a part thereof until such dividends
and all dividends accrued thereon are paid in full. Dividends will accrue on
unpaid dividends at the rate of 5 1/2% per annum, unless such dividends remain
unpaid for two consecutive quarters in which event such rate will increase to
15% per annum.
Upon the dissolution, liquidation or winding up of the Company, holders of
the Series C Preferred Stock will be entitled to receive from the assets of the
Company available for distribution to stockholders an amount in cash, per share,
equal to the liquidation value of the Series C Preferred Stock.
The Series C Preferred Stock is subject to optional redemption at any time
after the seventh anniversary of its issuance, in whole or in part, by the
Company at a redemption price per share equal to the then liquidation value of
the Series C Preferred Stock. Subject to the prior preferences and other rights
of any other class or series of Preferred Stock ranking senior to or on a parity
with the Series C Preferred Stock, the Series C Preferred Stock is required to
be redeemed by the Company at any time after such seventh anniversary at the
option of the holder,
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<PAGE>
in whole or in part (provided that the aggregate liquidation value of the shares
to be redeemed is in excess of $1 million), in each case at a redemption price
per share equal to the liquidation value.
Redeemable Convertible Preferred Stock, Series E. The Company is authorized
to issue 400,000 shares of Redeemable Convertible Preferred Stock, Series E
("Series E Preferred Stock") of which 246,402 were issued and outstanding as of
the date of this Prospectus and all of which were held by wholly owned
subsidiaries of the Company. At any time after the Company amends its Restated
Certificate of Incorporation to increase the number of authorized shares of
Class A Common Stock to a number that would permit the conversion of all of the
shares of Series E Preferred Stock then outstanding, the shares of Series E
Preferred Stock shall be convertible, at the option of the holder, into Class A
Common Stock at the rate of 1,000 shares of Class A Common Stock for each share
of Series E Preferred Stock, subject to anti-dilution adjustments. The dividend,
liquidation and redemption features of the Series E Preferred Stock, each of
which is discussed below, are determined by reference to the liquidation value
of the Series E Preferred Stock, which as of any date of determination is equal,
on a per share basis, to the sum of (i) $22,303, plus (ii) all dividends accrued
on such share through the dividend payment date on or immediately preceding such
date of determination to the extent not paid on or before such date, plus (iii)
for purposes of determining liquidation and redemption payments, all unpaid
dividends accrued on the sum of clauses (i) and (ii) above, to such date of
determination.
The holders of Series E Preferred Stock are entitled to receive
preferential cumulative cash dividends out of funds legally available therefor.
Dividends accrue cumulatively at an annual rate of 5% of the stated liquidation
value per share, whether or not such dividends are declared or funds are legally
available for payment of dividends. Dividends not paid on any dividend payment
date are added to the liquidation value on such date and remain a part thereof
until such dividends are paid.
Upon the dissolution, liquidation or winding up of the Company, holders of
the Series E Preferred Stock will be entitled to receive from the assets of the
Company available for distribution to stockholders an amount in cash or property
or a combination thereof, per share, equal to the liquidation value of the
Series E Preferred Stock.
The Series E Preferred Stock is subject to optional redemption by the
Company at any time, in whole or in part, at a redemption price, per share,
equal to the then liquidation value of the Series E Preferred Stock. The Company
may elect to pay the redemption price (or designated portion thereof) of the
shares of Series E Preferred Stock called for redemption by issuing to the
holder thereof, in respect of his shares to be redeemed, a number of shares of
Class A Common Stock equal to the aggregate redemption price (or designated
portion thereof) of such shares divided by the average of the last daily sales
prices of the Class A Common Stock for a specified period, subject to
adjustments described in the certificate of designations establishing the Series
E Preferred Stock.
Convertible Preferred Stock, Series D. The Company has entered into a
definitive merger agreement with TeleCable Corporation ("TeleCable") whereby
TeleCable will be merged with and into a wholly owned subsidiary of the Company
(the "TeleCable Merger"). The terms of the TeleCable Merger contemplate the
issuance to the former stockholders of TeleCable of one million shares of a new
series of Series Preferred Stock to be designated as "Convertible Preferred
Stock, Series D" (the "Series D Preferred Stock"), as partial consideration for
the proposed acquisition by the Company of TeleCable. If such series is issued,
the preferences and relative, participating, optional or other special rights,
qualifications, limitations or restrictions thereof are expected to be as set
forth below.
Each share of Series D Preferred Stock will be convertible, at the option
of the holder, into 10 shares of Class A Common Stock, subject to anti-dilution
adjustments. The dividend, liquidation and redemption features of the Series D
Preferred Stock, each of which is discussed below, will be determined by
reference to the liquidation value of the Series D Preferred Stock, which as of
any date of determination will equal, on a per share basis, the sum of (i) $300,
plus (ii) all dividends accrued on such share through the dividend payment date
on or immediately preceding such date of determination to the extent not paid on
or before such date, plus (iii) for purposes of
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<PAGE>
determining liquidation and redemption payments, all unpaid dividends accrued on
the sum of clauses (i) and (ii) above, to such date of determination.
The holders of Series D Preferred Stock will be entitled to receive
preferential cumulative cash dividends out of funds legally available therefor.
Dividends will accrue cumulatively at an annual rate of 5 1/2% of the
liquidation value per share, whether or not such dividends are declared or funds
are legally or contractually available for payment of dividends, except that if
the Company fails to redeem shares of Series D Preferred Stock required to be
redeemed on a redemption date, dividends thereafter will accrue cumulatively at
an annual rate of 10% of the liquidation value per share. Dividends not paid on
any dividend payment date will be added to the liquidation value on such date
and remain a part thereof until such dividends and all dividends accrued thereon
are paid in full. Dividends will accrue on unpaid dividends at the rate of 5
1/2% per annum, unless such dividends remain unpaid for two consecutive quarters
in which event such rate shall increase to 10% per annum. To the extent any cash
dividends are not paid on any dividend payment date, the amount of such
dividends will be converted, to the extent permissible under the Delaware
General Corporation Law, into shares of Class A Common Stock at a conversion
rate equal to 95% of the then current market price (as defined in the
certificate of designations establishing the Series D Preferred Stock) of Class
A Common Stock, and upon issuance of Class A Common Stock to holders of Series D
Preferred Stock in respect of such conversion such dividend will be deemed paid
for all purposes.
Upon the dissolution, liquidation or winding up of the Company, holders of
the Series D Preferred Stock will be entitled to receive from the assets of the
Company available for distribution to stockholders an amount in cash, per share,
equal to the liquidation value of the Series D Preferred Stock.
The Series D Preferred Stock will be subject to optional redemption by the
Company at any time after the fifth anniversary of its issuance, in whole or
from time to time in part, at a redemption price per share equal to the
liquidation value of the Series D Preferred Stock. Shares of Series D Preferred
Stock may also be subject to optional redemption by the Company after the third
anniversary of the issue date if the market value per share of Class A Common
Stock shall have exceeded $37.50 for the period specified in the certificate of
designations establishing the Series D Preferred Stock. Subject to the prior
preferences and other rights of any other class or series of Preferred Stock
ranking senior to or on a parity basis with, the Series D Preferred Stock and
subject to any prohibition or restriction contained in any instrument evidencing
indebtedness of the Company, any holder of Series D Preferred Stock, at such
holder's option, may require the Company, at any time after the tenth
anniversary of the issuance of such Series D Preferred Stock, to redeem all or a
portion of such holder's shares of Series D Preferred Stock, provided that the
aggregate liquidation value of the shares to be redeemed is in excess of $50,000
(or, if all of the shares of Series D Preferred Stock held by such holder has an
aggregate liquidation value of less than $50,000, all but not less than all of
such shares of Series D Preferred Stock), in each case at a redemption price per
share equal to the then liquidation value of the Series D Preferred Stock. If
the Company fails to effect any redemption of Series D Preferred Stock, the
holders thereof will have the option to convert their shares of Series D
Preferred Stock into Class A Common Stock at a conversion rate equal to 95% of
the current market value of the Class A Common Stock over a period specified in
the certificate of designations establishing the Series D Preferred Stock,
provided that such option may not be exercised unless the failure to redeem
continues for more than a year.
Ranking; Limitations on Rights of Holders of Common Stock
All classes and series of Preferred Stock outstanding on the date of this
Prospectus rank senior to the Class A Common Stock and Class B Common Stock as
to dividend rights, rights to redemption and rights on liquidation.
For so long as any dividends are in arrears on any outstanding class or
series of Preferred Stock, and until all dividends accrued up to the immediately
preceding dividend payment date on such Preferred Stock and on any class or
series of Preferred Stock ranking on a parity with such Preferred Stock ("Parity
Stock") shall have been paid or declared and set apart so as to be available for
payment in full thereof and for no other purpose, neither the Company nor any
subsidiary thereof may purchase or otherwise acquire any shares of Class A
Common Stock or
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<PAGE>
Class B Common Stock, or set aside any money or assets for any such purpose,
unless all of the outstanding shares of such Preferred Stock and Parity Stock
are redeemed. For so long as any dividends are in arrears on any outstanding
class or series of Preferred Stock and until all dividends accrued up to the
immediately preceding dividend payment date on such Preferred Stock shall have
been paid or declared and set apart so as to be available for payment in full
thereof and for no other purpose, the Company may not declare or pay any
dividend on or make any distribution with respect to the Class A Common Stock or
Class B Common Stock or set aside any money or assets for any such purpose. If
the Company fails to redeem shares of Class A Preferred Stock, Class B Preferred
Stock or Series E Preferred Stock required to be redeemed on a redemption date,
the Company may not declare or pay any dividend on or make any distribution with
respect to the Class A Common Stock or Class B Common Stock or set aside money
or assets for any such purpose, and neither the Company nor any subsidiary
thereof may purchase or otherwise acquire any shares of Class A Common Stock or
Class B Common Stock or set aside any money or assets for any such purpose,
until all shares of such class or series of Preferred Stock are redeemed in
full. If the Company fails to redeem shares of Series C Preferred Stock or
Series D Preferred Stock required to be redeemed on a redemption date, neither
the Company nor any subsidiary thereof may purchase or otherwise acquire any
shares of Class A Common Stock or Class B Common Stock or set aside any money or
assets for any such purpose, until all shares of such series of Preferred Stock
are redeemed in full. Neither the Company nor any subsidiary thereof may
purchase or otherwise acquire any shares of Class A Common Stock or Class B
Common Stock, or set aside any money or assets for such purpose, if after giving
effect to such purchase or acquisition the amount that would be available for
distribution to the holders of Class A Preferred Stock, Class B Preferred Stock
and Series E Preferred Stock upon liquidation, dissolution or winding up of the
Company, if such liquidation, dissolution or winding up were to occur on the
date fixed for such purchase or acquisition of shares of Class A Common Stock or
Class B Common Stock, would be less than the aggregate liquidation preference of
all then outstanding shares of such classes and series of Preferred Stock. The
failure of the Company (i) to redeem on any date fixed for redemption any
outstanding shares of Class A Preferred Stock, Class B Preferred Stock or Series
E Preferred Stock or (ii) to pay dividends on the Series C Preferred Stock or
Series D Preferred Stock, shall not prevent the Company from paying any
dividends on Class A Common Stock or Class B Common Stock solely in shares of
capital stock ranking junior to such class or series of Preferred Stock or (with
respect to (i) above only) the purchase or other acquisition of Class A Common
Stock or Class B Common Stock solely in exchange for (together with a cash
adjustment for fractional shares, if any) shares of such junior capital stock.
PLAN OF DISTRIBUTION
The Shares may be sold by the Selling Stockholders directly or through
agents designated from time to time or to or through broker-dealers or
underwriters designated from time to time. To the extent required, any such
agent, broker-dealer or underwriter involved in the offer and sale of the Shares
and any applicable commissions, discounts or other items constituting
compensation to such agents, broker-dealers or underwriters will be set forth in
the accompanying Prospectus Supplement. The Company has been advised by the
Selling Stockholders that they have not, as of the date of this Prospectus,
entered into any arrangement with an agent, broker-dealer or underwriter for the
sale of the Shares.
The distribution of the Shares may be effected from time to time in one or
more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at prices determined on a negotiated or competitive bid basis.
If any Shares are sold in an underwritten offering, such Shares may be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
Unless otherwise indicated in the applicable Prospectus Supplement, the
obligations of any underwriters to purchase Shares will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all of
the Shares specified in such Prospectus Supplement if any are purchased. Shares
may be sold through a broker-dealer acting as agent or broker
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<PAGE>
for a Selling Stockholder, or to a broker-dealer acting as principal. In the
latter case, the broker-dealer may then resell such Shares to the public at
varying prices to be determined by such broker-dealer at the time of resale.
The Selling Stockholders and any broker-dealers, agents or underwriters
that participate with the Selling Stockholders in the distribution of any of the
Shares may be deemed to be "underwriters" within the meaning of the Securities
Act and any discount or commission received by them and any profit realized by
them on the resale of Shares may be deemed to be underwriting discounts and
commissions under the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the Shares will be passed upon for
the Company by Baker & Botts, L.L.P., 885 Third Avenue, Suite 1900, New York,
New York 10022-4834. Jerome H. Kern, a partner of Baker & Botts, L.L.P., is a
director of the Company. Mr. Kern holds options to purchase shares of Class A
Common Stock.
EXPERTS
The consolidated balance sheets of TCI Communications, Inc. (formerly Tele-
Communications, Inc.) and subsidiaries as of December 31, 1993 and 1992, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1993,
and the related financial statement schedules, which appear in the Annual Report
on Form 10-K, as amended, of TCI Communications, Inc. for the year ended
December 31, 1993, have been incorporated by reference herein in reliance upon
the reports, dated March 21, 1994, of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing. The reports of
KPMG Peat Marwick LLP refer to a change in the method of accounting for income
taxes in 1993.
The consolidated balance sheets of Liberty Media Corporation and
subsidiaries (Successor) as of December 31, 1993 and 1992, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years ended December 31, 1993 and 1992 and the period from April 1, 1991 to
December 31, 1991 (Successor Periods) and the consolidated statements of
operations, stockholders' equity, and cash flows of Liberty Media (a combination
of certain programming interests and cable television assets of TCI
Communications, Inc. (formerly Tele-Communications, Inc.)) (Predecessor) for the
period from January 1, 1991 to March 31, 1991 (Predecessor Period), included in
the Form 8-K of TCI Communications, Inc. dated April 6, 1994, have been
incorporated by reference herein in reliance upon the report, dated March 18,
1994, of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing. The report of KPMG Peat Marwick LLP refers to a
change in the method of accounting for income taxes in 1993.
The financial statements of TeleCable Corporation as of December 31, 1993
and 1992 and for each of the two years in the period ended December 31, 1993,
incorporated herein by reference to the Current Report on Form 8-K of the
Company dated August 26, 1994, have been so incorporated in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
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<PAGE>
================================================================================
No dealer, salesman or other person has been authorized to give any
information or to make any representation other than those contained in this
Prospectus or the Prospectus Supplement in connection with the offer made hereby
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company. Neither the delivery of this
Prospectus or the Prospectus Supplement nor any sale made hereunder shall, under
any circumstances, create an implication that the information contained or
incorporated by reference herein is correct as of any time subsequent to its
date or that there has been no change in the affairs of the Company since such
date. This Prospectus and the Prospectus Supplement do not constitute an offer
to sell or a solicitation of an offer to buy by anyone in any jurisdiction in
which such offer or solicitation is not authorized, or in which the person
making such offer or solicitation is not qualified to do so, or to anyone to
whom it is unlawful to make such offer or solicitation.
-----------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information................................................. 2
Incorporation of Documents by
Reference.......................................................... 2
Certain Considerations................................................ 3
The Company........................................................... 3
The Shares Being Offered.............................................. 3
Selling Stockholders.................................................. 4
Description of Capital Stock.......................................... 7
Plan of Distribution.................................................. 12
Legal Matters......................................................... 13
Experts............................................................... 13
</TABLE>
Tele-Communications, Inc.
Class A Common Stock
($1.00 Par Value)
-----------------------------------------
PROSPECTUS
-----------------------------------------
January __, 1995
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
-------------------------------------------
Expenses to be borne by the Company in connection with the issuance and
distribution of the Shares are set forth below. None of the listed expenses will
be borne by the Selling Stockholders.
<TABLE>
<CAPTION>
<S> <C>
Registration Fee...................... $ 3.79
Blue Sky Fees and Expenses
(including counsel fees) *.......... 15,000.00
Legal Fees and Expenses *............. 25,000.00
Accounting Fees and Expenses *........ 7,000.00
Miscellaneous *....................... 2,996.21
----------
Total *.......................... $50,000.00
</TABLE>
- -----------------------------
* Estimated.
Item 15. Indemnification of Directors and Officers.
-----------------------------------------
Section 145 of the Delaware General Corporation Law provides, generally,
that a corporation shall have the power to indemnify any person who was or is a
party or is threatened to be made a party to any suit or proceeding (except
actions by or in the right of the corporation) by reason of the fact that such
person is or was a director or officer of the corporation against all expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. A corporation may
similarly indemnify such person for expenses actually and reasonably incurred by
him in connection with the defense or settlement of any action or suit by or in
the right of the corporation, provided such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, in the case of claims, issues and matters as to which such
person shall have been adjudged liable to the corporation, provided that a court
shall have determined, upon application, that, despite the adjudication of
liability but in view of all of the facts and circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such court shall deem proper.
Section 102(b)(7) of the Delaware General Corporation Law provides,
generally, that the certificate of incorporation may contain a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision may not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
section 174 of Title 8, or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision may eliminate or limit
the liability of a director for any act or omission occurring prior to the date
when such provision becomes effective.
Article V, Section E of the Company's Amended and Restated Certificate of
Incorporation provides as follows:
II-1
<PAGE>
1. Limitation on Liability.
-----------------------
To the fullest extent permitted by the Delaware General
Corporation Law as the same exists or may hereafter be
amended, a director of the Corporation shall not be liable
to the Corporation or any of its stockholders for monetary
damages for breach of fiduciary duty as a director. Any
repeal or modification of this paragraph 1 shall be
prospective only and shall not adversely affect any
limitation, right or protection of a director of the
Corporation existing at the time of such repeal or
modification.
2. Indemnification.
---------------
(a) Right to Indemnification. The Corporation shall
indemnify and hold harmless, to the fullest extent permitted
by applicable law as it presently exists or may hereafter be
amended, any person who was or is made or is threatened to
be made a party or is otherwise involved in any action, suit
or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding") by reason of the fact that
he, or a person for whom he is the legal representative, is
or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director,
officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit
entity, including service with respect to employee benefit
plans, against all liability and loss suffered and expenses
(including attorneys' fees) reasonably incurred by such
person. Such right of indemnification shall inure whether
or not the claim asserted is based on matters which antedate
the adoption of this Section E. The Corporation shall be
required to indemnify a person in connection with a
proceeding (or part thereof) initiated by such person only
if the proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation.
(b) Prepayment of Expenses. The Corporation shall pay the
expenses (including attorneys' fees) incurred in defending
any proceeding in advance of its final disposition,
provided, however, that the payment of expenses incurred by
a director or officer in advance of the final disposition of
the proceeding shall be made only upon receipt of an
undertaking by the director or officer to repay all amounts
advanced if it should be ultimately determined that the
director or officer is not entitled to be indemnified under
this paragraph or otherwise.
(c) Claims. If a claim for indemnification or payment of
expenses under this paragraph is not paid in full within 60
days after a written claim therefor has been received by the
Corporation, the claimant may file suit to recover the
unpaid amount of such claim and, if successful in whole or
in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the Corporation
shall have the burden of proving that the claimant was not
entitled to the requested indemnification or payment of
expenses under applicable law.
(d) Non-Exclusivity of Rights. The rights conferred on any
person by this paragraph shall not be exclusive of any other
rights which such person may [have] or hereafter acquire
under any statute, provision of this Certificate, the
Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise.
(e) Other Indemnification. The Corporation's obligation,
if any, to indemnify any person who was or is serving at its
request as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, enterprise
or nonprofit entity shall
II-2
<PAGE>
be reduced by any amount such person may collect as
indemnification from such other corporation, partnership,
joint venture, trust, enterprise or nonprofit entity.
Article II, Section 2.9 of the Company's Bylaws also contains an indemnity
provision, requiring the Company to indemnify members of the Board of Directors
and officers of the Company and their respective heirs, personal representatives
and successors in interest for or on account of any action performed on behalf
of the Corporation, to the fullest extent provided by the laws of the State of
Delaware and the Company's Certificate of Incorporation, as then or thereafter
in effect.
The Company has also entered into indemnification agreements with each of
its directors (each director, an "indemnitee"). The indemnification agreements
provide (i) for the prompt indemnification to the fullest extent permitted by
law against any and all expenses, including attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with investigating,
defending, being a witness or participating in (including on appeal), or in
preparing for ("Expenses"), any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation ("Claim"), related to the fact that
such indemnitee is or was a director, officer, employee, agent or fiduciary of
the Company or is or was serving at the Company's request as a director,
officer, employee, trustee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise, or
by reason of anything done or not done by a director or officer in any such
capacity, and against any and all judgments, fines, penalties and amounts paid
in settlement (including all interest, assessments and other charges paid or
payable in connection therewith) of any Claim, unless the Reviewing Party (one
or more members of the Board of Directors or other person appointed by the Board
of Directors, who is not a party to the particular claim, or independent legal
counsel) determines that such indemnification is not permitted under applicable
law and (ii) for the prompt advancement of Expenses, and for reimbursement to
the Company if the Reviewing Party determines that such indemnitee is not
entitled to such indemnification under applicable law. In addition, the
indemnification agreements provide (i) a mechanism through which an indemnitee
may seek court relief in the event the Reviewing Party determines that the
indemnitee would not be permitted to be indemnified under applicable law (and
therefore is not entitled to indemnification or expense advancement under the
indemnification agreement) and (ii) indemnification against all expenses
(including attorneys' fees), and advancement thereof if requested, incurred by
the indemnitee in seeking to collect an indemnity claim or advancement of
expenses from the Company or incurred in seeking to recover under a directors'
and officers' liability insurance policy, regardless of whether successful or
not. Furthermore, the indemnification agreements provide that after there has
been a "change in control" in the Company (as defined in the indemnification
agreements), other than a change in control approved by a majority of directors
who were directors prior to such change, then, with respect to all
determinations regarding a right to indemnity and the right to advancement of
Expenses, the Company will seek legal advice only from independent legal counsel
selected by the indemnitee and approved by the Company.
The indemnification agreements impose upon the Company the burden of
proving that an indemnitee is not entitled to indemnification in any particular
case and negate certain presumptions that may otherwise be drawn against an
indemnitee seeking indemnification in connection with the termination of actions
in certain circumstances. Indemnitees' rights under the indemnification
agreements are not exclusive of any other rights they may have under Delaware
law, the Company's Bylaws or otherwise. Although not requiring the maintenance
of directors' and officers' liability insurance, the indemnification agreements
require that indemnitees be provided with the maximum coverage available for any
Company director or officer if there is such a policy.
The Company may purchase liability insurance policies covering its
directors and officers.
In addition, the Selling Stockholders, severally and not jointly, have
agreed to indemnify the Company, its directors and officers and each person, if
any, who controls the Company within the meaning of either the Securities Act or
the Securities Exchange Act of 1934, as amended, against certain liabilities,
including civil liabilities under the Securities Act.
II-3
<PAGE>
Item 16. Exhibits.
--------
4.1 Specimen Certificate for Class A Common Stock. (Incorporated by
reference herein to Exhibit 4.1 of Registration Statement on Form S-4
No. 33-54263).
4.2 Registrant's Restated Certificate of Incorporation. (Incorporated by
reference herein to Exhibit 3.1 of Registration Statement on Form S-4
No. 33-56135).
4.3 Registrant's By-laws. (Incorporated by reference herein to Exhibit 3.4
of Registration Statement on Form S-4 No. 33-54263).
5 Opinion of Baker & Botts, L.L.P., Counsel to Registrant.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Price Waterhouse LLP.
23.4 Consent of Baker & Botts, L.L.P.
(included in Exhibit 5).
24 Powers of Attorney (included on page II-6).
99.1 Letter agreement, dated January 10, 1995, between the Company and the
Selling Stockholders.
99.2 Stock Purchase Agreement, dated as of July 9, 1986, among Tele-
Communications, Inc. and certain shareholders of United Artists
Communications, Inc.
Item 17. Undertakings.
------------
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
- -------- -------
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
II-4
<PAGE>
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to section 13(a)
or section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Greenwood Village, State of Colorado, on January 20,
1995.
TELE-COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
--------------------------------------
Name: Stephen M. Brett
Title: Executive Vice President
II-6
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Stephen M. Brett, Esq., and Elizabeth M.
Markowski, Esq., and each of them, his true and lawful attorneys-in-fact and
agents with full power of substitution and re-substitution for him and in his
name, place and stead, in any and all capacities, to sign any or all amendments
(including post-effective amendments) to this Registration Statement and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them full power and authority, to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, to all intents and purposes and as fully as they might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents on their substitutes may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Bob Magness Chairman of the Board January 20, 1995
- ------------------------------------ and Director
(Bob Magness)
/s/ John C. Malone President and Director January 20, 1995
- ------------------------------------ (Principal Executive
(John C. Malone) Officer)
/s/ Donne F. Fisher Executive Vice President and January 20, 1995
- ------------------------------------ Director (Principal Financial
(Donne F. Fisher) and Accounting Officer)
/s/ John W. Gallivan Director January 20, 1995
- ------------------------------------
(John W. Gallivan)
/s/ Kim Magness Director January 20, 1995
- ------------------------------------
(Kim Magness)
/s/ Robert A. Naify Director January 20, 1995
- ------------------------------------
(Robert A. Naify)
/s/ Jerome H. Kern Director January 20, 1995
- ------------------------------------
(Jerome H. Kern)
/s/ Tony Coelho Director January 20, 1995
- ------------------------------------
(Tony Coelho)
/s/ R. E. Turner Director January 20, 1995
- ------------------------------------
(R. E. Turner)
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
Sequential
Exhibits Page No.
- -------- --------
4.1 Specimen Certificate for Class A Common Stock. (Incorporated
by reference herein to Exhibit 4.1 of Registration Statement
on Form S-4 No. 33-54263).
4.2 Registrant's Restated Certificate of Incorporation.
(Incorporated by reference herein to Exhibit 3.1 of
Registration Statement on Form S-4 No. 33-56135).
4.3 Registrant's By-laws. (Incorporated by reference herein to
Exhibit 3.4 of Registration Statement on Form S-4 No. 33-
54263).
5 Opinion of Baker & Botts, L.L.P., Counsel to Registrant.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Price Waterhouse LLP.
23.4 Consent of Baker & Botts, L.L.P.
(included in Exhibit 5).
24 Powers of Attorney (included on page II-6).
99.1 Letter agreement, dated January 10, 1995, between the Company
and the Selling Stockholders.
99.2 Stock Purchase Agreement, dated as of July 9, 1986, among
Tele-Communications, Inc. and certain shareholders of United
Artists Communications, Inc.
II-8
<PAGE>
January 20, 1995
EXHIBIT 5
---------
Tele-Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
Dear Sirs:
As counsel for Tele-Communications, Inc., a Delaware corporation (the
"Company"), we have examined and are familiar with the registration statement on
Form S-3 (the "Registration Statement"), which relates to the registration under
the Securities Act of 1933, as amended, of shares (the "Shares") of the
Company's Class A Common Stock, par value $1.00 per share, to be issued from
time to time upon conversion of up to $30 million aggregate principal amount of
certain convertible notes (the "Notes") of TCI-UA, Inc., an indirect, wholly-
owned subsidiary of the Company, and the offering and sale of the Shares by the
holders thereof named in the Registration Statement (the "Selling Stockholders")
from time to time thereafter.
In connection therewith, we have examined, among other things, originals,
certified copies or copies otherwise identified to our satisfaction as being
copies of originals, of the Restated Certificate of Incorporation and By-Laws of
the Company, as amended; resolutions of the Company's Board of Directors with
respect to the filing of the Registration Statement, the issuance of the Shares
upon conversion by the Selling Stockholders of the Notes held by them and
related matters; and such other documents, records, certificates of public
officials and questions of law as we deemed necessary or appropriate for the
purpose of this opinion. In rendering this opinion, we have relied, to the
extent we deem such reliance appropriate, on certificates of officers of the
Company as to factual matters. We have assumed the authenticity of all
documents submitted to us as originals and the conformity to authentic original
documents of all documents submitted to us as certified, conformed or
reproduction copies. We have further assumed that there will be no changes in
applicable
<PAGE>
January 20, 1995
Page 2
law between the date of this opinion and the date of issuance of the Shares to
the Selling Stockholders.
Based upon the foregoing, we are of the opinion that the Shares to be
issued upon conversion of the Notes by the Selling Stockholders have been duly
authorized and, when issued and delivered upon conversion of the Notes, will be
validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to us contained therein under the
heading "Legal Matters." In giving the foregoing consent, we do not admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
Jerome H. Kern, a partner of Baker & Botts, L.L.P., is a director of the
Company.
Very truly yours,
BAKER & BOTTS, L.L.P.
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
-------------------------------
The Board of Directors and Stockholders
Tele-Communications, Inc.:
We consent to the incorporation by reference in the Registration Statement on
Form S-3 of Tele-Communications, Inc. of our reports dated March 21, 1994,
relating to the consolidated balance sheets of TCI Communications, Inc.
(formerly Tele-Communications, Inc.) and subsidiaries as of December 31, 1993
and 1992, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1993, and all related schedules, which reports appear in the
December 31, 1993 Annual Report on Form 10-K, as amended, of TCI Communications,
Inc. and to the reference to our firm under the heading "Experts" in the
registration statement. Our reports refer to a change in the method of
accounting for income taxes in 1993.
KPMG Peat Marwick LLP
Denver, Colorado
January 19, 1995
<PAGE>
Exhibit 23.2
Consent of Independent Auditors
-------------------------------
The Board of Directors and Stockholders
Liberty Media Corporation:
We consent to the incorporation by reference in the Registration Statement on
Form S-3 of Tele-Communications, Inc. of our report dated March 18, 1994,
relating to the consolidated balance sheets of Liberty Media Corporation and
subsidiaries (Successor) as of December 31, 1993 and 1992, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years ended December 31, 1993 and 1992 and the period from April 1, 1991 to
December 31, 1991 (Successor Periods) and the consolidated statements of
operations, stockholders' equity, and cash flows of Liberty Media (a combination
of certain programming interests and cable television assets of TCI
Communications, Inc. (formerly Tele-Communications, Inc.)) (Predecessor) for the
period from January 1, 1991 to March 31, 1991 (Predecessor Period), which report
appears in the Form 8-K of TCI Communications, Inc. dated April 6, 1994 and to
the reference to our firm under the heading "Experts" in the registration
statement. Our report refers to a change in the method of accounting for income
taxes in 1993.
KPMG Peat Marwick LLP
Denver, Colorado
January 19, 1995
<PAGE>
Exhibit 23.3
Consent of Independent Accountants
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of the Registration Statement on Form S-3 of Tele-
Communications, Inc. of our report dated February 4, 1994, relating to the
consolidated financial statements of TeleCable Corporation which appears on page
12 of the TCI Communications, Inc. and Tele-Communications, Inc. Current Report
on Form 8-K dated August 26, 1994. We also consent to the reference to us under
the heading "Experts" in such Prospectus.
Price Waterhouse LLP
Norfolk, Virginia
January 23, 1995
<PAGE>
Exhibit 99.1
January 10, 1995
Tele-Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111
Gentlemen:
The persons listed on Schedule 1 hereto (the "Selling Stockholders")
are the holders of notes (the "Notes") issued by TCI-UA, Inc. ("TCI-UA"), an
indirect wholly-owned subsidiary of Tele-Communications, Inc. (the "Company").
The Notes are convertible into shares of the Class A Common Stock, $1.00 par
value per share, of the Company (the "Class A Stock"). The Selling Stockholders
have requested that the Company file pursuant to the Securities Act of 1933, as
amended (the "Act"), a registration statement with respect to the number of
shares of Class A Stock to be issued from time to time upon conversion of up to
$30 million aggregate principal amount of the Notes (the "Shares"), and the
offering and sale of the Shares from time to time by the Selling Stockholder or
Selling Stockholders to whom they are issued. The Company has prepared a
registration statement on Form S-3 (the "Registration Statement") with respect
to the Shares and the offering and sale thereof by the Selling Stockholders on a
delayed or continuous basis pursuant to Rule 415 under the Act. On the terms
and conditions set forth in this letter agreement (this "Agreement"), the
Company has agreed to file the Registration Statement with the Commission and to
use diligent efforts to cause said Registration Statement to become effective
under the Act and to remain effective until the earlier of (i) the termination
of the offering of the Shares by the Selling Stockholders or (ii) the first
anniversary of the effective date of the Registration Statement (or for such
longer period as the Company in its sole discretion may determine). As used
herein, the term "Registration Statement" means the Registration Statement,
including exhibits and financial statements and schedules and documents
incorporated by reference therein, as amended, when it becomes effective under
the Act and, in the case of references to the Registration Statement as of a
date subsequent to the effective date, as amended or supplemented as of such
date. As used herein, the term "Prospectus" means the prospectus included in
the Registration Statement as of the date it becomes effective under the Act
and, in the case of references to the Prospectus as of a date subsequent to the
effective date of the
<PAGE>
Tele-Communications, Inc.
January 10, 1995
Page 2
Registration Statement, as amended or supplemented as of such date, including
all documents incorporated by reference therein, as amended, and each prospectus
supplement relating to the offering and sale of any of the Shares. As used
herein, the term "Selling Stockholder" means each person listed on Schedule 1
hereto and each person (a "Permitted Transferee") to whom a person listed on
Schedule 1 hereto transfers Notes after the date hereof in a transaction
permitted by that certain Stock Purchase Agreement, dated as of July 9, 1986,
among the Company and certain shareholders of United Artists Communications,
Inc., provided that such Permitted Transferee becomes a party to this Agreement
as contemplated by paragraph 9 hereof.
The Selling Stockholders hereby confirm their agreement with the
Company as follows:
1. All expenses in connection with the Registration Statement, any
qualification or compliance with federal or state laws required in connection
therewith, and the distribution of the Shares shall, as between the Selling
Stockholders and the Company, be borne as follows:
(a) The Company shall pay and be responsible for the registration
fee payable under the Act, blue sky fees and expenses, if applicable
(subject to the limitations set forth in paragraph 4), and all fees
and disbursements of the Company's counsel and accountants. The
Company will not engage the services of a printer with respect to the
Registration Statement or the Prospectus, but will arrange for the
photocopying thereof and bear the photocopying costs.
(b) The Selling Stockholders shall pay all fees and disbursements
of their own counsel and advisers, all stock transfer fees or
expenses, if any, and all other expenses (including underwriting
discounts and selling commissions) related to the distribution of the
Shares that have not expressly been assumed by the Company as set
forth above.
2. Each Selling Stockholder hereby confirms to the Company that the
information contained in the sections of the Registration Statement entitled
"The Shares Being Offered", "Selling Stockholders" and "Plan of Distribution",
and on the first two pages of the Prospectus included therein, in each case as
it relates to such Selling Stockholder (including, without limitation, such
Selling Stockholder's ownership of Notes and offering of Shares) is accurate and
complete and may specifically be used in the Registration Statement. Without
<PAGE>
Tele-Communications, Inc.
January 10, 1995
Page 3
limiting the generality of the foregoing, each Selling Stockholder acknowledges
and confirms that the shares of Class A Stock issued upon conversion of the
Notes will be included in the Shares covered by the Registration Statement on
the basis of the order in which the Notes, up to an aggregate principal amount
of $30 million, are converted. Each Selling Stockholder further acknowledges
that the information referred to in the first sentence of this paragraph 2 is
disclosed in the Registration Statement in accordance with the requirements of
Items 507 and 508 of Regulation S-K promulgated by the Commission under the Act,
and each Selling Stockholder agrees to notify promptly the Company of any change
after the date hereof in such information and of any additional information
relating to such Selling Stockholder and the distribution of the Shares
(including, without limitation, the information referred to in paragraph 4
below) that may be required pursuant to said Items to be disclosed. The
information referred to in this paragraph 2 and in paragraph 4 below, as amended
or supplemented from time to time, is hereinafter called the "Selling
Stockholder Information".
3. During such time as the Selling Stockholders may be engaged in a
distribution of the Shares, each Selling Stockholder agrees to comply with Rules
10b-2, 10b-6 and 10b-7 promulgated under the Securities Exchange Act of 1934
(the "Exchange Act") and pursuant thereto will, among other things, (i) not
engage in any stabilization activity in connection with the securities of the
Company in contravention of such Rules; (ii) distribute the Shares owned by such
Selling Stockholder solely in the manner described in the Registration
Statement; (iii) cause to be furnished to each agent, broker-dealer or
underwriter to or through whom the Shares owned by such Selling Stockholder may
be offered, or to the offeree if an offer is made directly by such Selling
Stockholder, such copies of the Prospectus (as amended or supplemented to such
date) and documents incorporated by reference therein as may be required by such
agent, broker-dealer, underwriter or offeree and (iv) not bid for or purchase
any securities of the Company or attempt to induce any person to purchase any
securities of the Company other than as permitted under the Exchange Act.
4. Each Selling Stockholder agrees to notify the Company, at least
five (5) business days prior to any distribution of Shares by such Selling
Stockholder, of the dates on which the distribution will commence and terminate,
the number of Shares to be sold, the terms and manner of sale (including, to the
extent applicable, the purchase price, the public offering price, the name of
any agent, broker-dealer or underwriter to or through whom such distribution is
being made, and the amount of any selling commissions, underwriting discounts or
other items constituting compensation to such agent, broker-dealer or
underwriter), and the number of shares of Class A Stock that will be
beneficially owned by such Selling Stockholder after giving effect to such sale.
To the extent required, the Company will (i) prepare a supplement to the
Prospectus based upon the information so provided and file the
<PAGE>
Tele-Communications, Inc.
January 10, 1995
Page 4
same with the Commission pursuant to Rule 424(b) under the Act and (ii) register
or qualify at its expense the Shares to be sold under the securities or blue sky
laws of such reasonable number of jurisdictions in the United States as such
Selling Stockholder shall request; provided, however, that the Company shall in
-------- -------
no event be required to qualify to do business as a foreign corporation or as a
dealer in any jurisdiction where it is not so qualified, to conform its
capitalization or the composition of its assets at the time to the securities or
blue sky laws of any such jurisdiction, to execute or file any general consent
to service of process under the laws of any jurisdiction, to take any action
that would subject it to service of process in suits other than those arising
out of the offer and sale of the Shares, or to subject itself to taxation in any
jurisdiction where it has not theretofore done so. Each Selling Stockholder
also agrees to inform the Company and any agents or broker-dealers through whom
sales of Shares by such Selling Stockholder may be made when each distribution
of the Shares is over.
5. On notice from the Company that, in connection with action
proposed to be taken by the Company (including, without limitation, the
distribution or repurchase of any of its securities), it requires the suspension
by the Selling Stockholders of the distribution of any of the Shares, each
Selling Stockholder agrees to cease distributing the Shares until such time as
the Company notifies the Selling Stockholders that distribution of the Shares
may recommence.
6. (a) The Company agrees to indemnify and hold harmless each
Selling Stockholder and each person (if any) who controls such Selling
Stockholder within the meaning of either the Act or the Exchange Act
(collectively, the "Seller Indemnified Parties") from and against any losses,
claims, damages or liabilities, joint or several, to which such Seller
Indemnified Parties may become subject, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Prospectus, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or any violation by the Company of any
federal or state securities law or rule or regulation thereunder applicable to
the Company and relating to any action required of the Company in connection
with the Registration Statement; and, subject to paragraph 6(c), the Company
will reimburse such Seller Indemnified Parties for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage or liability; provided, however, that the Company will
-------- -------
not indemnify or hold harmless any Seller Indemnified Party from or against any
such loss, claim, damage, liability or expense (i) that arises out of or is
based upon any violation of any
<PAGE>
Tele-Communications, Inc.
January 10, 1995
Page 5
federal or state securities laws, rules or regulations committed by any of the
Seller Indemnified Parties (or any agent, broker-dealer or underwriter engaged
by them) or (ii) if the untrue statement, omission or allegation thereof upon
which such losses, claims, damages, liabilities or expenses are based (x) was
made in reliance upon and in conformity with the Selling Stockholder
Information, or (y) was made in any Prospectus used after such time as the
Company advised the Selling Stockholders that the filing of a post-effective
amendment or supplement thereto was required, except the Prospectus as so
amended or supplemented, or (z) was made in any Prospectus used after such time
as the obligation of the Company hereunder to keep the Registration Statement
effective and current has expired.
(b) Each Selling Stockholder, severally and not jointly, agrees to
indemnify and hold harmless, the Company, its directors and officers and each
person, if any, who controls the Company within the meaning of either the Act or
the Exchange Act (the "TCI Indemnified Parties"), from and against any losses,
claims, damages or liabilities, joint or several, to which the TCI Indemnified
Parties may become subject, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Prospectus, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, if the statement or omission was made in
reliance upon and in conformity with the Selling Stockholder Information
relating to such Selling Stockholder, or (ii) the use of any Prospectus after
such time and the Company has advised the Selling Stockholders that the filing
of a post-effective amendment or supplement thereto is required, except the
Prospectus as so amended or supplemented, or (iii) the use of any Prospectus
after such time as the obligation of the Company hereunder to keep the
Registration Statement effective and current has expired, or (iv) any violation
by such Selling Stockholder or any person who controls such Selling Stockholder
within the meaning of either the Act or the Exchange Act (or any agent, broker-
dealer or underwriter engaged by such Selling Stockholder or any such
controlling person) of any federal or state securities law or rule or regulation
thereunder; and, subject to paragraph 6(c), such Selling Stockholder will
reimburse such TCI Indemnified Parties for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage or liability.
(c) Each party entitled to indemnification under this paragraph 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and the
Indemnifying Party shall assume the
<PAGE>
Tele-Communications, Inc.
January 10, 1995
Page 6
defense of any such claim and any action or proceeding resulting therefrom,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all expenses. The failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of any
liability that it may have to any Indemnified Party otherwise than under this
paragraph 6. The Indemnified Party shall have the right to employ separate
counsel in any such action or proceeding and to participate in the defense
thereof, but the fees and expenses of such separate counsel shall be such
Indemnified Party's expense unless (i) the Indemnifying Party has agreed to pay
such fees and expenses or (ii) the Indemnifying Party shall have failed to
assume the defense of such action or proceeding and employ counsel reasonably
satisfactory to the Indemnified Party or (iii) the named parties to any such
action or proceeding (including any impleaded parties) include an Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that there may be a conflict of interest between such
Indemnified Party and the Indemnifying Party in the conduct of the defense of
such action (in which case, if such Indemnified Party notifies the Indemnifying
Party that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not assume the defense of such
action or proceeding on such Indemnified Party's behalf, it being understood,
however, that the Indemnifying Party shall not, in connection with any one such
action or proceeding or separate but substantially similar or related actions or
proceedings arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (unless the members of such firm are not admitted to practice in a
jurisdiction in which an action is pending, in which case the Indemnifying Party
will pay the reasonable fees and expenses of one additional firm of attorneys to
act as local counsel in such jurisdiction, provided that the services of such
counsel are substantially limited to that of appearing as attorneys of record)
at any time for all Indemnified Parties, which firm shall be designated in
writing by the Representatives (as defined in paragraph 7 below) or the Company
as the case may be). No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of the Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. The Indemnifying Party shall not be liable for any settlement of
any such action or proceeding effected without its written consent, but if
settled with its written consent, or if there be a final judgment for the
plaintiff in any such action or proceeding, the Indemnifying Party shall
indemnify and hold harmless the Indemnified Party from and against any loss or
liability by reason of such settlement or judgment.
<PAGE>
Tele-Communications, Inc.
January 10, 1995
Page 7
7. Each Selling Stockholder represents and warrants to the Company
that (i) such Selling Stockholder has duly authorized John M. Sherwood, Robert
A. Naify and Marshall Naify (the "Representatives") and each of them, in such
Selling Stockholder's name and on behalf of such Selling Stockholder, to execute
and deliver this Agreement and any other document necessary or desirable in
connection with the transactions contemplated hereby and to give all notices to
the Company, and to receive all notices from the Company, that may be required
or permitted hereunder, and to take such other action as may be necessary or
desirable in connection with this Agreement and the transactions contemplated
hereby, and (ii) a power of attorney to the foregoing effect has been duly
authorized, executed and delivered by such Selling Stockholder and is a legal,
valid and binding agreement of such Selling Stockholder. Without limiting the
generality of the foregoing, each Selling Stockholder agrees that the Company
may rely, without independent investigation, upon information contained in any
notice given by a Representative to the Company pursuant to paragraphs 2 and 4
hereof, as fully and with the same effect as if the notice had been given by
such Selling Stockholder directly.
8. All notices or other communications required or permitted
hereunder shall be given in writing, either delivered by hand, by mail or by
telex, telecopier or telegram, and any such notice shall be effective when
received at the address specified below:
<PAGE>
Tele-Communications, Inc.
January 10, 1995
Page 8
If to the Company:
Tele-Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
Attention: Stephen M. Brett
Executive Vice President and
General Counsel
Telephone: (303) 267-4800
Facsimile: (303) 488-3245
If to the Representative or a Selling
Stockholder:
John M. Sherwood
John M. Sherwood Law Corporation
172 Golden Gate Ave.
San Francisco, CA 94102
Telephone: (415) 928-3200
Facsimile: (415) 673-3329
or at such other address as such party may designate from time to time by notice
duly given in accordance with the terms of this paragraph 8.
9. Each Selling Stockholder hereby acknowledges that TCI
Communications, Inc. (formerly Tele-Communications, Inc. and, as referred to
herein, "Old TCI") has withdrawn its Registration Statement on Form S-3 (Reg.
No. 33-51104) (the "Former Shelf Registration Statement"), which covered the
issuance of shares of Class A Stock to the Selling Stockholders upon conversion
of up to $30 million aggregate principal amount of Notes, and the subsequent
resale of those shares by the holders thereof from time to time thereafter.
Each Selling Stockholder further acknowledges that such Selling Stockholder may
no longer sell any shares of Class A Stock pursuant to the Former Shelf
Registration Statement, nor shall such Selling Stockholder have any rights to
require the Company or Old TCI to register any shares of Class A Stock pursuant
to that certain letter agreement, dated September 30, 1992, among Old TCI and
the Selling Stockholders.
10. This Agreement shall be binding upon and inure to the benefit of
the Company and each of the persons listed on Schedule 1 hereto and their
respective Permitted
<PAGE>
Tele-Communications, Inc.
January 10, 1995
Page 9
Transferees; provided, however, that no Permitted Transferee shall be entitled
-------- -------
to the benefits of this Agreement unless, in connection with the transfer of
Notes to such Permitted Transferee, such Permitted Transferee signifies its
agreement to and acceptance of the terms and conditions of this Agreement by
executing and delivering a counterpart of this Agreement to the Company and a
power of attorney to the effect set forth in paragraph 7 hereof to the
Representatives.
If the foregoing accurately sets forth our understanding, please so
signify by signing the enclosed copy of this letter agreement in the space
provided and returning it to the undersigned.
Very truly yours,
THE SELLING STOCKHOLDERS
NAMED IN SCHEDULE I ATTACHED
HERETO
By: /s/ John M. Sherwood
----------------------------
Attorney-in-fact
TELE-COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
--------------------------
Stephen M. Brett
Executive Vice President
<PAGE>
SCHEDULE 1
to Letter Dated January 10, 1995
Selling Stockholders to Tele-Communications, Inc.
Robert A. Naify
Marshall Naify
Valerie Naify
Leslie C. Naify
Christie M. Naify
Robert J. Naify
Mark S. Naify
Marshall Naify, Robert A. Naify, Georgette N. Rosekrans as Trustees under the
Michael N. Naify testamentary trust for the benefit of Marshall Naify
John M. Sherwood as Trustee under the Leslie C. Naify 1981 Trust, dated December
22, 1981
John M. Sherwood as Trustee under the Christie M. Naify 1981 Trust, dated
December 22, 1981
John M. Sherwood as Trustee under the Robert J. Naify 1981 Trust, dated December
22, 1981
John M. Sherwood as Trustee under the Christina Cortese 1983 Trust, dated
December 21, 1983
John M. Sherwood as Trustee under the Acela Cortese 1983 Trust, dated December
21, 1983
John M. Sherwood as Trustee under the Christina E. Naify 1985 Trust, dated June
26, 1985
John M. Sherwood as Trustee under the Drew Michael Andrade 1986 Trust, dated
April 25, 1986
John M. Sherwood as Trustee under the Marsha J. Naify Living Trust, dated
October 1, 1990
John M. Sherwood as Trustee under the Michael S. Naify 1981 Trust, dated
December 29, 1981
John M. Sherwood as Trustee under the Christina E. Naify 1981 Trust, dated
December 29, 1981
Michael S. Naify
Christina E. Naify
Marshall Naify as Trustee under the Michael Stephen Naify Trust, dated January
21, 1963
Richard R. Naify
Josephine Naify
James Naify
<PAGE>
Exhibit 99.2
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of July 9,
1986, is made by and among TeleCommunications, Inc., a Delaware corporation
("TCI"), and the undersigned shareholders (the "Shareholders") of United Artists
Communications, Inc., a Maryland corporation (the "Company").
Each Shareholder owns the number of shares of the Class A Stock, $1.00
par value, of the Company (the "Company Class A Stock") and the number of shares
of the Class B Stock, $1.00 par value, of the Company (the "Company Class B
Stock") set forth opposite such Shareholder's name on Exhibit A hereto and is
willing to accept TCI's offer that an affiliate of TCI to be designated by TCI
("Acquiror") acquire such shares on the terms set forth herein. As used herein,
the term "Company Common Stock" shall include the Company Class A Stock and the
Company Class B Stock.
Therefore, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE 1
SALE AND PURCHASE OF SHARES
---------------------------
1.1 Sale and Purchase of Shares. Subject to the terms and conditions
---------------------------
hereof, each Shareholder severally
<PAGE>
agrees to sell, transfer, assign and convey to Acquiror, and TCI agrees to cause
Acquiror to purchase and acquire, the number of shares of the Company Common
Stock set forth opposite such Shareholder's name on Exhibit A hereto. The number
of shares set forth opposite any Shareholder's name on Exhibit A hereto is
referred to herein as such Shareholder's "Shares," and the aggregate number of
Shares of all Shareholders is referred to as the "Acquired Shares."
1.2 Consideration. The consideration (the "Consideration") payable
-------------
for each Acquired Share purchased and acquired pursuant to Section 1.1 hereof
shall consist of $18.498, of which $6.64 shall be paid in cash at the Closing
and the balance of $11.858 shall be represented by convertible notes (the
"Notes") of the Acquiror in the form of Exhibit B hereto, maturing on the
thirty-fifth anniversary of the Closing with interest payable on each of the
first seventeen anniversary dates of the Closing at the rate of 1.85%, and with
no interest payable thereafter. The Notes will be convertible, at the option of
the holders, into .332 of a share of the Class A Common Stock, $1.00 par value
of TCI (the "TCI Stock"), for each $11.858 principal amount of the Notes.
1.3 Closing. The closing of the sale and purchase of the Acquired
-------
Shares (the "Closing" shall take place at the offices of Orrick, Herrington &
Sutcliffe, San Francisco,
-2-
<PAGE>
California, at 10:00 A.M., local time, on such date (the "Closing Date") as TCI
may select by at least ten days' written notice to the Representatives (as
defined in Section 1.5 hereof), which date shall be as soon as practicable after
all conditions set forth in Articles 5 and 6 hereof have been satisfied or
waived.
1.4 Exchange of Certificates. At the Closing, (i) each Shareholder
------------------------
shall deliver to Acquiror a certificate or certificates, representing all of
such Shareholder's Shares, duly endorsed in blank or accompanied by a separate
instrument or instruments of assignment duly executed in blank, with signature
guaranteed by a commercial bank, trust company or registered broker-dealer with
all necessary stock transfer tax stamps attached, and (ii) Acquiror shall
deliver to such Shareholder the Cash and Notes to which such Shareholder is
entitled pursuant to Section 1.2 hereof. The Notes delivered to each
Shareholder shall be in such denominations as the Representatives may reasonably
request.
1.5 Representatives of the Shareholders. Each of the Shareholders
-----------------------------------
hereby appoints each of Marshall Naify and Robert A. Naify as such Shareholder's
representative (a "Representative") for purposes of this Agreement, and agrees
that either of the Representatives, acting alone, may exercise the rights,
powers and privileges herein granted to the Representatives or either of them.
-3-
<PAGE>
1.6 Recapitalization, etc.; Additional Shares.
-----------------------------------------
In the event of (i) the declaration or payment with respect to any
class of the Company's capital stock of any cash dividend or other cash
distribution (other than the Company's regular quarterly dividend of not in
excess of 1c per share after giving effect to the two-for-one split-up of
the Company Common Stock on May 29, 1986) or any distribution of property other
than capital stock of the Company or (ii) any increase or decrease or other
change (a "Recapitalization") in the capital stock of the Company for any reason
and of any nature, including by reason of a stock dividend, stock split,
recapitalization, capital reorganization, combination of shares, exchange of
shares, merger, consolidation, sale of assets or otherwise, then (x) the terms
"Shares" and "Acquired Shares" as used in this Agreement shall be deemed to mean
or include (as appropriate) the number and class of shares of capital stock or
other securities (whether or not the Company is the issuer thereof), cash and
property which Acquiror would have received in respect of the Acquired Shares if
the Acquired Shares had been purchased and acquired by Acquiror immediately
prior to the record date for such event or, if more than one such event shall
occur, prior to the record date for the first of such events, (y) the numbers of
Shares specified in Sections 2.3 and 2.4 shall be appropriately and equitably
adjusted, and (z) the
-4-
<PAGE>
Consideration payable for each Acquired Share shall be appropriately and
equitably adjusted; provided, however, that in no event shall the aggregate
number of shares of TCI Stock required upon conversion of the Notes to be
delivered to any Shareholder exceed the number which would be required to be
delivered pursuant to Section 1.2 hereof if such event had not occured;
provided, further, that if the property distributed by the Company consists
solely of voting stock (the "Todd-AO Stock") of The Todd-AO Corporation, a New
York corporation which is a majority-owned subsidiary of the Company
("Todd-AO"), which is distributed in a rights offering to all of the Company's
shareholders, for which the Company receives, as consideration for the Todd-AO
Stock, the fair market value of such stock as determined by the Company's Board
of Directors, and with respect to which the Shareholders commit to and purchase
any shares of the Todd-AO Stock not purchased by any other shareholders of the
Company for such consideration, Acquiror shall not be entitled to acquire the
Todd-AO stock distributed in respect of or attributable to the Acquired Shares,
and there shall be no adjustment to the Consideration payable for the Acquired
Shares.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
------------------------------
Each of the Shareholders, severally and not jointly, hereby
represents and warrants to, and covenants with, TCI as follows:
<PAGE>
2.1 Organization and Good Standing. To the best of the
------------------------------
Shareholder's knowledge, the Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. The Shareholders
previously have delivered to TCI true and complete copies of the Articles of
Incorporation and By-Laws of the Company as presently in effect.
2.2 Financial Statements. The Shareholders previously have furnished
--------------------
to TCI true and complete copies of (i) the Company's Annual Report on Form 10-K
for its fiscal year ended August 31, 1985, in the form (including exhibits)
filed with the Securities and Exchange Commission (the "SEC") which report,
together with the portion of the annual report to shareholders that is
incorporated therein by reference, is referred to herein as the "Company 10-K"
and (ii) the Company's Quarterly Report on Form 10-Q for the twenty-six weeks
ended February 27, 1986 in the form filed with the SEC (the "Company 10-Q"). To
the best of the Shareholders' knowledge, the audited balance sheets included in
the Company 10-K and the unaudited balance sheets included in the Company 10-Q
(including any related notes and schedules) each fairly presents the
consolidated financial position of the Company and its consolidated subsidiaries
as of its date and the
-6-
<PAGE>
other financial statements included in the Company 10-K and the Company 10-Q
(including any related notes and schedules) fairly present the consolidated
results of operations of or other information set forth therein with respect to
the Company and its consolidated subsidiaries for the respective periods or as
of the respective dates therein set forth, subject, in the case of unaudited
financial statements, to normal year-end adjustments which are not material in
amount or effect, in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved and Regulation S-X
promulgated by the SEC.
2.3 Ownership of Shares. On the date hereof, such Shareholder (i)
-------------------
owns as sole owner, beneficially and of record, all of his Shares, free and
clear of all liens, claims, charges, encumbrances, security interests and rights
or interests of any kind ("Security Interests"), except as created hereunder;
provided, however, that the Shareholders may have pledged prior to the Closing
not in excess of an aggregate of 8,000,000 of the Acquired Shares to secure not
in excess of an aggregate of $60,000,000 of indebtedness pursuant to certain
bank loans, brokers' margin account agreements and other secured borrowings
described on Schedule 2.3 attached hereto (collectively, the "Margin Accounts"),
and except as are created hereunder; and (ii) has full right, power, authority
and legal capacity to sell and vote his
-7-
<PAGE>
Shares and to enter into and perform this Agreement, subject, in the case of a
Shareholder which is a trust, to compliance with the provisions of the trust
agreement (and the Shareholders agree to take all actions required under all
such trust agreements which are required so that the representation and warranty
set forth in the last sentence of Section 2.4 shall be true and correct at the
Closing). Other than this Agreement and the agreements described in Schedule
2.3, there is no option, warrant, right, call, proxy, agreement, commitment or
understanding of any nature whatsoever, fixed or contingent (a "Restriction")
that directly or indirectly (i) calls for the sale, pledge or other transfer or
disposition of any of such Shareholder's Shares, any interest therein or any
rights with respect thereto, or relates to the voting or control of such Shares
or (ii) obligates such Shareholder to grant, offer or enter into any of the
foregoing. Except as disclosed in Schedule 2.3, such Shareholder does not own
any capital stock or other securities of the Company except the Shares or any
options or other rights to subscribe for, purchase or otherwise acquire any such
capital stock or other securities.
2.4 Binding Agreement; Approvals and Consents. This Agreement has
-----------------------------------------
been duly executed and delivered by, and constitutes a legal, valid and binding
obligation of, such Shareholder enforceable against such Shareholder in accord-
-8-
<PAGE>
ance with its terms (except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally or by principles
governing the availability of equitable remedies). The execution, delivery and
performance of this Agreement by such Shareholder and the performance by such
Shareholder of its obligations hereunder do not and will not:
(i) contravene any provision of the Articles of Incorporation or
By-Laws of the Company, except that the transfer to the Acquiror of
shares of Company Class B Stock by those Shareholders holding Company
Class B Stock will, pursuant to Article Fifth, Section 6(d) of the
Articles of Incorporation of the Company, result in the conversion of
such shares of Company Class B Stock into Company Class A Stock;
(ii) (after notice or lapse of time or both) conflict with,
result in a breach of any provision of, constitute a default under,
or require any consent or waiver of any party to, any contract,
agreement, note, instrument or other commitment, arrangement or
understanding, whether written or oral, to which such Shareholder is
a party or by which such Shareholder is bound, except that the
-9-
<PAGE>
performance of this Agreement will require the satisfaction of, or
substitution of collateral for, any then existing Margin Account
indebtedness, and the Shareholders agree to effect such satisfaction
or substitution of collateral prior to the Closing;
(iii) result in the creation of any Security Interest or
Restriction upon, or any person obtaining any right to acquire, any of
the Shares or any of the other properties or assets of such
Shareholder;
(iv) result in a violation of or conflict with any judgment,
decree, order, law, rule or regulation applicable to such Shareholder;
or
(v) to the best of the Shareholders' knowledge, require any
authorization, consent, order, permit or approval of, or notice to, or
filing, registration or qualification with, any federal, state, local
or foreign government or governmental, administrative or judicial
authority, agency or body, except (A) pursuant to the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 and the rules and
regulations thereunder (the "Hart-Scott Act") and (B) filings with,
notices to and consents, orders and approvals (the "Approvals") of the
Federal Communications Commission (the "FCC") and
-10-
<PAGE>
state and local governments and governmental authorities,
agencies and bodies which may be necessary to authorize a
transfer of control of the franchises, licenses, permits,
certificates and other authorizations required for the cable
television operations of the Company and its subsidiaries.
During the term of this Agreement, (i) such Shareholder will keep all of his
Shares free and clear of any Security Interests or Restrictions of any kind
other than not in excess of 8,000,000 Shares pledged to secure Margin Accounts
with an aggregate debit balance not in excess of $60,000,000 and (ii) shall not
take any action which would have the effect of preventing, delaying or disabling
such Shareholder from delivering his Shares to Acquiror upon the Closing or
otherwise performing such Shareholder's obligations under this Agreement. All of
such Shares have been duly and validly authorized and issued, and are fully paid
and nonassessable with no personal liability attaching to the ownership thereof.
Upon the Closing, such Shareholder shall convey to Acquiror good and marketable
title to his Shares, free and clear of all Security Interests and Restrictions
of any kind.
2.5 Investment in the Notes. The Notes acquired by such Shareholder
-----------------------
upon the Closing shall be acquired for
-11-
<PAGE>
such Shareholder's own account for investment and not with a view to, or for
resale in connection with, any distribution or public offering of all or any
part thereof or any interest therein within the meaning of the Securities Act of
1933, as amended (the "Securities Act"), or the rules and regulations of the
SEC. Such Shareholder understands and agrees that such Notes and the shares of
TCI Stock issuable upon conversion of the Notes (i) have not been registered
under the Securities Act by reason of their issuance and delivery in a
transaction believed to be exempt from the registration requirements of the
Securities Act, (ii) have not been registered or qualified under the securities
laws of any state by reason of their issuance and delivery in a transaction
believed to be exempt from the registration requirements of any applicable state
securities laws and (iii) that, except as provided in Article 7 hereof, no such
registration or qualification is required or contemplated. Accordingly, such
Shareholder understands that such Shareholder must bear the economic risk of his
investment in such Notes and shares of TCI Stock for an indefinite period of
time unless a disposition thereof is registered or qualified under the
Securities Act and any applicable state securities laws or is exempt from
registration or qualification thereunder. Such Shareholder further understands
that the exemptions from registration under the Securities Act,
-12-
<PAGE>
including the exemption afforded by Rule 144 promulgated under the Securities
Act, depend on the satisfaction of various conditions. Such Shareholder, alone
or together with any persons he has retained for advice with respect to the
transactions contemplated hereby and the proposed investment in such Notes and
shares of TCI Stock, has such knowledge and experience in financial and business
matters as to be capable of understanding and evaluating the merits and risks of
acquiring and holding such shares as provided in this Agreement. Such
Shareholder, alone or together with persons so retained by him for advice, has
had the opportunity to ask questions of, and receive answers from, TCI and its
executive officers, employees and accountants concerning the terms and
conditions of such transactions and the business and finances of TCI and has had
the opportunity to obtain from TCI any additional information requested by such
Shareholder needed to verify the accuracy of any information supplied to such
Shareholder.
Such Shareholder, alone or together with persons retained by him for
advice, has received, read and understood the contents of (i) the Annual Reports
and Proxy Statements of TCI for the year ended December 31, 1985; and (ii) all
reports, definitive proxy and information statements and documents (including
all exhibits to such reports and proxy and information statements) filed by TCI
with the SEC during
-13-
<PAGE>
the period commencing January 1, 1985 and ending the date hereof. Such
Shareholder acknowledges that neither TCI nor any of its officers, agents or
employees, nor anyone acting on its or any of their behalf, have given the
Shareholder any other information concerning TCI's business, operations and
financial condition or any inducement to enter into this Agreement or made any
representation, warranty or agreement to or with the Shareholder as to the
business, operations and financial condition of TCI not contained in this
Agreement.
2.6 Finders and Brokers. Such Shareholder has not entered into any
-------------------
agreement, arrangement or understanding with any person or firm which will
result in the obligation of TCI or the Company to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the transactions (including the
Business Combination) contemplated hereby, except for the agreement of the
Company to pay a fee to Peter Bauer-Mengelberg in an amount previously disclosed
in writing to TCI.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND
CERTAIN COVENANTS OF TCI
-------------------------------
TCI hereby represents and warrants to, and covenants with, each
Shareholder as follows:
-14-
<PAGE>
3.1 Due Organization. TCI is a corporation duly organized, validly
----------------
existing and in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, and to execute,
deliver and perform its obligations under this Agreement.
3.2 TCI Information. TCI has furnished the Shareholders with true
---------------
and correct copies of all of the information referred to in Section 2.5 hereof.
Without limiting the generality of the foregoing, TCI has previously furnished
to the Shareholders true and complete copies of (i) TCI's Annual Report on Form
10-K for its fiscal year ended December 31, 1985, in the form (including
exhibits) filed with the SEC (the "TCI 10-K") and (ii) TCI's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1986 in the form filed with the SEC
(the "TCI 10-Q"). The audited balance sheets included in the TCI 10-K and the
unaudited balance sheets included in the TCI 10-Q (including any related notes
and schedules) each fairly presents the consolidated financial position of TCI
and its consolidated subsidiaries as of its date and the other financial
statements included in the TCI 10-K and the TCI 10-Q (including any related
notes and schedules) fairly present the consolidated results of operations of or
other information set forth therein with
-15-
<PAGE>
respect to TCI and its consolidated subsidiaries for the respective periods or
as of the respective dates therein set forth, subject, in the case of unaudited
financial statements, to normal year-end adjustments which are not material in
amount or effect, in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved and Regulation S-X
promulgated by the SEC.
3.3 TCI Shares. The Acquiror agrees that it will deliver, and TCI hereby
agrees with each Shareholder that it will cause the Acquiror to deliver, to the
holder of any of the Notes surrendered for conversion such number of shares of
TCI Stock as may be required by such conversion, which shares will be duly
authorized, validly issued and fully paid and non-assessable with no personal
liability attaching to the ownership thereof. TCI may itself issue such shares
of TCI Stock unless in the opinion of counsel for the Shareholders, which
counsel shall be reasonably acceptable to TCI, the issuance by TCI of the TCI
Stock to be issued upon conversion of the Notes would render the Shareholders
unable to use the installment method of reporting the gain represented by the
Notes.
3.4 Authority; Consents. This Agreement has been duly authorized by all
necessary corporate action of the part of TCI, has been duly executed and
delivered on behalf of TCI by a duly authorized officer of TCI and constitutes a
legal, valid and binding obligation of TCI enforceable against TCI in accordance
with its terms (except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
-16-
<PAGE>
affecting the enforcement of creditors' rights generally or by principles
governing the availability of equitable remedies). The execution, delivery and
performance of this Agreement by TCI and the performance by TCI and Acquiror of
its obligations hereunder do not:
(i) contravene any provision of the Certificate of
Incorporation or By-Laws of TCI;
(ii) (after notice or lapse of time or both) conflict with,
result in a breach of any provision of, constitute a default under,
or require any consent or waiver of any party to, any contract,
agreement, note, instrument or other commitment, arrangement or
understanding, whether written or oral, to which TCI or Acquiror is a
party or by which it is bound;
(iii) result in a violation of or conflict with any judgment,
decree, order, law, rule or regulation applicable to TCI or Acquiror;
or
(iv) to the best of TCI's knowledge, require any authorization,
consent, order, permit or approval of, or notice to, or filing,
registration or qualification with, any federal, state, local or
foreign government or governmental, administrative or judicial
authority, agency or body, except (A) pursuant to the Hart-Scott Act,
(B) the Approvals,
-17-
<PAGE>
and (C) as may be required in order to effect the Business Combination, as
defined in Section 9.1.
3.5 Investment. The Acquired Shares acquired by Acquiror upon the Closing
----------
shall be acquired for Acquiror's own account for investment and not with a view
to, or for resale in connection with, any distribution or public offering of all
or any part thereof or any interest therein within the meaning of the Securities
Act or the rules and regulations of the SEC.
3.6 Finders and Brokers. TCI has not entered into any agreement,
-------------------
arrangement or understanding with any person or firm which will result in the
obligation of the Company or the Shareholders to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
(including the Business Combination) contemplated hereby, and TCI shall be
responsible for any such fee that may be payable to Allen & Company
Incorporated.
3.7 Consents; Cooperation. Subject to the terms and conditions hereof, TCI
---------------------
will, and will use its best efforts to cause its subsidiaries and affiliates to,
use their respective best efforts at their own expense:
(i) to obtain as soon as reasonably possible all waivers, permits,
licenses, approvals,
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<PAGE>
authorizations, qualifications, orders and consents of all third parties and
governmental authorities, and make all filings and registrations with
governmental authorities, which are required on their respective parts for the
consummation of the transactions contemplated by this Agreement;
(ii) if any stay, injunction or other order of the type referred to in
Section 5.3 or 6.3 hereof shall be issued, to have such stay, injunction or
other order lifted; and
(iii) to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and effect the transactions contemplated by this
Agreement.
3.8 TCI Class A Common Stock; Board of Directors. So long as (a) either
--------------------------------------------
of the Representatives is living and (b) the Notes owned by the Shareholders in
the aggregate are convertible into (considered together with any TCI Stock owned
by the Shareholders) at least 5% of the outstanding Common Stock of TCI:
(i) TCI will not take any action, and will use its reasonable best
efforts to prevent the taking of action by others, as a result of which the
holders of Class B Common Stock, par value $1.00 per share, of TCI will receive
economic
-19-
<PAGE>
benefits (as distinguished from voting rights) greater than those to which the
holders of TCI Class A Common Stock are entitled;
(ii) in the event that all of Bob Magness, John C. Malone (or
their respective heirs in the event of their death) and the representatives of
Kearns-Tribune, Inc. or its successors (the "Principal Shareholders of TCI")
are no longer part of the control group of TCI, TCI will exchange shares of TCI
Class B Common Stock, at the option of the Shareholders, for up to 18% of the
aggregate TCI Stock then held by the Shareholders and subject to being acquired
by the Shareholders upon conversion of the Notes;
(iii) in the event TCI or any substantial assets or substantial
subsidiary thereof is sold or otherwise disposed of to another entity in which
one or more of the Principal Shareholders of TCI have a significant equity
interest, TCI will provide the Shareholders with an opportunity to participate
in such other entity on a pro rata basis with the Principal Shareholders of
TCI, pro rata for such purposes meaning the relationship between (i) 18% of the
aggregate TCI stock then held by the Shareholders and subject to being
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<PAGE>
acquired by the Shareholders upon conversion of the Notes and (ii) the
aggregate number of shares of TCI Class B Common Stock then held by
the Principal Shareholders of TCI; and
(iv) so long as he is able and willing to serve, TCI will use its
reasonable best efforts to cause the election of Robert A. Naify to
TCI's Board of Directors, and should Robert A. Naify be unable or
unwilling to serve will so support and recommend a successor designee
of the Shareholders reasonably acceptable to TCI.
ARTICLE 4
CERTAIN COVENANTS OF THE SHAREHOLDERS
-------------------------------------
Each Shareholder, severally and not jointly, covenants and agrees with
TCI as follows:
4.1 Access; Confidentiality. During the period commencing on the
------------------------
date hereof and ending upon the Closing, such Shareholder shall use his best
efforts to cause the Company and its subsidiaries to, upon reasonable request,
afford to TCI and its counsel, accountants and other authorized representatives
full access during normal business hours to the properties, books and records of
the Company and its subsidiaries in order that they may have the opportunity to
make such reasonable investigations as they shall desire
-21-
<PAGE>
to make of the affairs of the Company and its subsidiaries, and to cause the
Company and its subsidiaries to cause their respective officers, employees,
accountants and other agents to furnish such additional data and other
information as TCI shall from time to time reasonably request. Such Shareholder
shall provide, and use his best efforts to cause the Company and its
subsidiaries and affiliates to provide, TCI and its counsel, accountants and
other authorized representatives with such information concerning such
Shareholder and the Company and its subsidiaries and affiliates as may be
necessary or reasonably requested to prepare such applications or other
documents as may be required to obtain all necessary Approvals, to verify the
performance of and compliance with such Shareholder's representations,
warranties, covenants and agreements herein contained or to effect the Business
Combination (as defined in Section 9.1 hereof). Until the earlier of the Closing
or the effective time of the Business Combination, TCI will hold in confidence
(unless and to the extent compelled to disclose by judicial or administrative
process or, in the opinion of its counsel, by other requirements of law) all
Confidential Information (as defined below) and will not disclose the same to
any third party except in connection with and otherwise as may reasonably be
necessary to carry out this Agreement or effect the Business Combination. If
this Agreement is terminated, TCI will
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<PAGE>
promptly return to the Company, upon the reasonable request of the Company, all
Confidential Information furnished to TCI by the Company. As used herein,
"Confidential Information" shall mean all information concerning the Company and
its subsidiaries obtained by TCI pursuant to this Agreement or in connection
with the transactions contemplated hereby except information (x) ascertainable
or obtained from public information, (y) received from a third party not
employed by or otherwise affiliated with the Company, or (z) which is or becomes
known to the public, other than through a breach of this Agreement.
4.2 Consents; Cooperation. Subject to the terms and conditions hereof,
---------------------
such Shareholder will, and will use its best efforts to cause the Company and
its subsidiaries and affiliates to, use their respective best efforts in
cooperation with TCI:
(i) to obtain as soon as reasonably possible all waivers, permits,
licenses, approvals, authorizations, qualifications, orders and consents of all
third parties and governmental authorities, and make all filings and
registrations with governmental authorities, which are required on their
respective parts for the consummation of the transactions contemplated by this
Agreement;
-23-
<PAGE>
(ii) subject to Article 8 hereof, to defend any lawsuit or other legal
proceedings, whether judicial or administrative, whether brought
derivatively or on behalf of third parties (including governmental
authorities) challenging this Agreement or the transactions contemplated
hereby and, if any stay, injunction or other order of the type referred to
in Section 5.3 or 6.3 hereof shall be issued, to have such stay, injunction
or other order lifted; and
(iii) to take, or cause to be taken, all action and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws
and regulations or reasonably requested by TCI to consummate and make
effective the transactions contemplated by this Agreement (including the
Business Combination).
4.3 Financial Statements. Such Shareholders shall use his best efforts to
--------------------
cause the Company to prepare and cause to be prepared, in accordance with
generally accepted accounting principles consistently applied and Regulation S-X
promulgated by the SEC, and to deliver to TCI, as promptly as practicable after
a request by TCI, all audited or unaudited financial statements of the Company
and its subsidiaries which, in the opinion of counsel to TCI, as required to be
-24-
<PAGE>
filed by TCI with the SEC by reason of the execution of this Agreement as a
condition to the registration of its securities under the Securities Act,
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act")
or otherwise.
4.4 Confidential Information. Such Shareholder acknowledges that TCI
------------------------
would be irreparably damaged if confidential information concerning the business
and affairs of the Company or any of its subsidiaries were disclosed to or
utilized on behalf of any person. Such Shareholder covenants and agrees that it
will not, at any time, directly or indirectly, without the prior written consent
of TCI, make use of or divulge, or permit any of its associates or agents to
make use of or divulge, to any person any non-public information concerning the
business or financial or other affairs of, or any of the methods of doing
business used by, the Company or any of its subsidiaries, unless and to the
extent compelled to disclose by judicial or administrative process or, in the
opinion of counsel for the Company, by other requirements of law.
4.5 Non-Competition. Each Representative covenants and agrees that, for
---------------
the period commencing on the Closing Date and continuing until the fifth
anniversary thereof, such Representative shall not, directly or indirectly,
manage, operate, join, control, participate, or
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<PAGE>
become interested in, or be connected with (as an employee, consultant, partner,
officer, director, stockholder or investor, other than through ownership of up
to a 5% equity interest in a publicly-traded entity) any business which competes
with the cable television or movie theatre exhibition businesses now or
hereafter conducted by the Company or any of its subsidiaries.
ARTICLE 5
CONDITIONS TO THE OBLIGATIONS
OF TCI AND ACQUIROR
-----------------------------
The obligations of TCI to consummate the Closing shall be subject to the
satisfaction, at or prior to the Closing, of each of the following conditions,
each of which may be waived by TCI as provided herein:
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<PAGE>
5.1 Representations and Warranties, Agreements, Covenants. Each
-----------------------------------------------------
Shareholder's representations and warranties contained in this Agreement shall
be true and correct in all material respects as of the date hereof and shall be
true and correct in all material respects at and as of the Closing, with the
same force and effect as though made at and as of the Closing. Each Shareholder
shall have performed all obligations and agreements, and complied in all
material respects with all covenants and conditions, of such Shareholder
contained in this Agreement to be performed or complied with by such Shareholder
prior to or at the Closing. At the Closing, TCI and Acquiror shall have
received from the Representatives a certificate, dated the Closing Date and duly
executed by the Representatives, to the effect that the conditions set forth in
this Section 5.1 have been satisfied.
5.2 Authorizations and Consents. The waiting period required under the
---------------------------
Hart-Scott Act shall have expired or been terminated. All material Approvals
shall have been obtained and shall be in full force and effect. The time for
filing a request for administrative or judicial relief with respect to such
Approvals, or for instituting administrative review thereof sua sponte, shall
--- ------
have expired without any such filing having been made or notice of such review
having been issued, or, in the event of such filing or review sua sponte shall
--- ------
have been disposed of favorably to the grant and
-27-
<PAGE>
the time for seeking further relief with respect thereto shall have expired
without any request for such further relief having been filed. As used in this
Agreement, an Approval shall not be deemed to be material unless the failure to
obtain such Approval (together with all other Approvals which have not been
obtained) would adversely affect the right or authority of the Company or any of
its subsidiaries to provide cable television service to 7% or more of the basic
subscribers to cable television service provided by the Company and its
subsidiaries. Notwithstanding the foregoing, in the event that the Closing does
not occur by reason of the failure to obtain all material Approvals as herein
provided, TCI agrees to negotiate with the Shareholders in good faith concerning
amendments of this Agreement and a restructuring of the transaction contemplated
hereby in order to avoid termination of this Agreement. The Shareholders
acknowledge that any such amendments or restructuring pursuant to the preceding
sentence will involve adjustment of the consideration receivable by the
Shareholders and that TCI shall not be under any obligation to reach any such
agreement.
5.3 Absence of Injunctive Relief. No order, stay, injunction,
----------------------------
judgment or decree shall have been issued and be in effect by any court or
governmental authority restraining,
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<PAGE>
prohibiting or materially restricting or delaying the consummation of the
transactions contemplated hereby.
5.4 Absence of Certain Changes.
--------------------------
(a) Except for the two-for-one split of the Company Common Stock on May 29,
1986, there shall not have been any change in the capitalization of the Company
as set forth in the Company 10-Q, other than (i) the issuance of approximately
19,274,382 shares of Company Class B Stock in exchange for an equal number of
shares of Company Class A Stock, and (ii) the issuance by the Company of not in
excess of an aggregate of 870,000 shares of Company Class A Stock pursuant to
the exercise of options under the Company's 1982 Stock Option Plan granted prior
to the date hereof or granted pursuant to Section 5.4(b) hereof. Other than such
options and the conversion rights of the Company Class B Stock, there shall not
be outstanding any security, option, warrant, call, subscription or other right
of any kind that directly or indirectly calls for the issuance or sale of any
shares of capital stock of the Company. Except as (x) disclosed in the Company
10-Q, (y) set forth on Schedule 5.4 attached hereto, and (z) subsequently
disclosed to and approved by TCI, since August 31, 1985 there shall not have
occurred: (i) any material acquisition; (ii) any amendment or other change to
the Articles of Incorporation or Bylaws of the Company, except the amendment to
the Articles of Incorporation
-29-
<PAGE>
attached as Appendix A to the Company's Proxy Statement dated February 7, 1986;
(iii) any sale or other disposition of any material assets or properties of the
Company or any of its subsidiaries or, except in the ordinary course of the
Company's business, the grant or creation of any mortgage thereof or security
interest therein; or (iv) any incurrence, assumption or guarantee by the Company
or any of its subsidiaries of any long-term debt except in the ordinary
course of the Company's business. For purposes of this Section 5.4(a), (i) an
acquisition or disposition of assets or properties shall not be deemed material
unless such acquisition or disposition includes a gross consideration (including
debt assumed by the buyer or carried by the seller) of $5,000,000 or more, (ii)
the incurrence, assumption or guarantee of long-term debt or the grant or
creation of a mortgage or security interest shall be deemed to be in the
ordinary course of the Company's business unless the amount involved is
$5,000,000 or more, and (iii) debt incurred or renewed by the Company's
subsidiary United Artists Cablevision, Inc. in accordance with the provisions of
existing agreements shall be deemed to be in the ordinary course of the
Company's business. The Acquired Shares shall constitute at least 50.1% of the
Company Common Stock outstanding on the Closing Date and represent at least
50.1% of the aggregate number of votes entitled to be cast for the
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<PAGE>
election of directors of the Company represented by all of the shares of the
Company Common Stock outstanding on the Closing Date. There shall be no
provision of the Articles of Incorporation or Bylaws of the Company, any
resolution or other action by the Board of Directors of the Company or
applicable law which would require for the merger, consolidation or dissolution
of the Company, the transfer of all or substantially all of the assets of the
Company or any transaction by the Company with TCI or any of the Company's
affiliates approval by the affirmative vote of more than two-thirds of the votes
entitled to be cast by the holders of any class of the capital stock of the
Company (or by the holders of all such classes voting as a single class) or
exclude from the calculation of the number of votes of shareholders required for
any such approval any of the Acquired Shares or any shares of capital stock of
the Company held by TCI or any affiliate of TCI.
(b) For purposes of this Section 5.4, the granting to employees of the
Company and its subsidiaries, other than the Shareholders or any other directors
of the Company, after the date hereof of options to purchase up to but not in
excess of 100,000 shares of Company Common Stock (after giving effect to the
two-for-one split of the Company Common Stock on May 29, 1986) at such prices
(but in no event less than the fair market value of the Company Common Stock
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<PAGE>
subject to such options on the date of grant) and upon such other terms and
conditions as may be fixed by the Board of Directors of the Company shall not be
considered a change in the capitalization of the Company.
ARTICLE 6
CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDERS
-------------------------------------------------
The obligations of the Shareholders to consummate the Closing shall be
subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, each of which may be waived by either of the
Representatives as provided herein except as otherwise provided by law:
6.1 Representations and Warranties; Agreements. Each of the
------------------------------------------
representations and warranties of TCI contained in this Agreement shall be true
and correct in all material respects as of the date hereof and shall be true and
correct in all material respects at and as of the Closing, with the same force
and effect as though made at and as of the Closing. TCI and Acquiror shall have
performed all obligations and agreements, and complied in all material respects
with all covenants and conditions, contained in this Agreement to be performed
or complied with by them prior to or at the Closing. At the Closing, the
Shareholders shall have received a certificate from each of TCI and Acquiror,
dated the Closing Date and duly executed by its chief executive
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<PAGE>
officer, to the effect that the conditions set forth in this Section 6.1 have
been satisfied.
6.2 Authorizations and Consents. All corporate action on the part of
---------------------------
TCI and Acquiror necessary to authorize the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
shall have been duly and validly taken. The waiting period required under the
Hart-Scott Act shall have expired or been terminated.
6.3 Absence of Injunction. No order, stay, injunction, judgment or
---------------------
decree shall have been issued and be in effect by any court or governmental
authority restraining or prohibiting or materially restricting or delaying the
consummation of the transactions contemplated hereby.
6.4 Absence of Chance in Tax Treatment. No amendment of the Internal
----------------------------------
Revenue Code or the Regulations thereunder shall be in effect or publicly known
to be under active consideration which would prevent the Shareholders from
using the installment method of reporting with respect to that portion of
the gain realized upon the sale of the Company Common Stock being sold by
them hereunder which is represented by the Notes received by them.
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<PAGE>
ARTICLE 7
TRANSFER OF TCI SHARES;
REGISTRATION RIGHTS
-----------------------
7.1 Certain Definitions. As used in this Article 7, the following
-------------------
terms have the following meanings:
Average Market Price: The average of the daily average of the high
--------------------
and low prices per share of TCI Stock in the over-the-counter market at the
close of business on each trading day during the relevant period, as reported in
the Wall Street Journal.
Registrable Shares: Shares of TCI Stock issued upon conversion of the
------------------
Notes and any other shares of TCI stock or other capital stock of TCI issued in
respect of such shares (because of stock splits, stock dividends,
reclassifications, recapitalizations, mergers, consolidations or similar
events).
Transfer: (i) Any sale, exchange, assignment, gift, pledge or other
--------
transfer or disposition of Notes or Registrable Shares or any interest
(including any security interest) therein or (ii) the making of any agreement,
commitment, or arrangement to do any of the foregoing.
7.2 Permitted Transfers
-------------------
(a) Each Shareholder covenants and agrees with TCI that neither
such Shareholder, nor any direct or indirect Permitted Transferee of such
Shareholder, shall at any time transfer any Notes or Registrable Shares except:
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<PAGE>
(i) a Transfer to TCI or with TCI's prior written consent;
(ii) a Transfer to a Permitted Transferee who agrees to be bound
by all of the provisions of this Article 7;
(iii) sales of Registrable Shares for cash made after the second
anniversary of the Closing Date and in accordance with the provisions of
Rule 144 under the Securities Act, provided, however, that the aggregate number
of Registrable Shares sold pursuant to this clause (iii) during any period of
six consecutive calendar months by all of the Shareholders, all of their
Permitted Transferees and all other persons subject to this Section 7.2 shall
not exceed 1,000,000 (after giving effect to the two-for-one split of the TCI
Stock effective on July 14, 1986); or
(iv) sales of Registrable Shares pursuant to the registration
rights granted in Section 7.5 hereof.
(b) Notwithstanding any contrary provision of Article 7 hereof, the
aggregate number of Registrable Shares which may be sold by the Shareholders,
their Permitted Transferees and all other persons subject to this Section 7.2
pursuant to clauses (iii) and (iv) of this Section 7.2 shall
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<PAGE>
not exceed: (i) 4,500,000 shares until the third anniversary of the Closing
Date, (ii) 6,300,000 shares until the fourth anniversary of the Closing Date and
(iii) 7,200,000 shares until the fifth anniversary of the Closing date;
provided, however, that neither the foregoing restriction nor any other
provisions of Article 7 hereof shall prevent the Shareholders from selling
such number of Registrable Shares as may be required to permit the Shareholders
to pay all federal income taxes for which they may become liable if as a result
of any amendment of the Internal Revenue Code (or any subsequent provision of
similar purport) or the Regulations thereunder or the interpretation thereof by
the Internal Revenue Service or by the courts, the Shareholders cease to be
eligible to use the installment method of reporting with respect to that portion
of the gain realized by them upon the sale of the Company Common Stock which is
represented by the Notes then held by them.
(c) In the event of any Recapitalization affecting TCI's capital
stock (other than the two-for-one split of the TCI Stock effective on July 14,
1986), the numbers of shares specified in clause (iii) of subsection (a) of this
Section 7.2, clause (i)(E) of Section 7.3, clauses (i)(B), (ii)(D) and (ii)(E)
of Section 7.5(d) and Section 7.4(c) hereof shall be appropriately and equitably
adjusted. In the event of any Recapitalization affecting TCI's capital stock
(including the
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<PAGE>
two-for-one split of the TCI Stock effective on July 14, 1986), the numbers of
shares specified in subsection (b) of this Section 7.2 shall be appropriately
and equitably adjusted.
(d) Any person who sells Registrable Shares pursuant to clause (iii)
of subsection (a) of this Section 7.2 shall, promptly after effecting any such
sale (or, if reasonably practicable, prior to effecting any such sale) notify
TCI of the date of such sale, the number of Registrable Shares sold and the
manner of such sale.
7.3 Permitted Transferees. (a) A "Permitted Transferee" shall mean,
---------------------
with respect to each person from time to time holding Notes or Registrable
Shares (a "Holder"):
(i) In the case of a Holder who is a natural person:
(A) The spouse of such Holder, any lineal descendant of such
Holder, any spouse of such lineal descendent and any lineal descendent of such
spouses;
(B) The trustee of a trust principally for the benefit of such
Holder or one or more of his Permitted Transferees described in each subclause
of this clause (i) other than this subclause (B);
(C) A corporation a majority of the beneficial ownership of
outstanding capital stock of
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<PAGE>
which entitled to vote for the election of directors is owned by, or a
partnership a majority of the beneficial ownership of the partnership
interests of which entitled to participate in the management of the
partnership are held by, such Holder or his Permitted Transferees
determined under this clause (i);
(D) The estate of such Holder; and
(E) An institutional investor which has been approved by TCI as a
prospective purchaser of Notes or Registrable Shares (such approval not to
be unreasonably withheld) and which acquires Notes or Registrable Shares
for a gross consideration of at least $5,000,000, provided that no more
than 1,000,000 Registrable Shares in the aggregate (or Notes convertible
into no more than 1,000,000 Registrable Shares) may be sold to not more
than five such investors.
(ii) In the case of a Holder holding Notes or Registrable Shares as
trustee pursuant to a trust (other than a trust described in clause (iii)
below), "Permitted Transferee" means (A) any person transferring Notes or
Registrable Shares to such trust and (B) any Permitted Transferee of any
such transferor determined pursuant to clause (i) above.
-38-
<PAGE>
(iii) In the case of a Holder holding Notes or Registrable Shares as
trustee pursuant to an irrevocable trust, "Permitted Transferee" means (A)
any person to whom or for whose benefit principal or income may be
distributed either during or at the end of such trust whether by power of
appointment or otherwise and (B) any Permitted Transferee of such person
determined pursuant to clause (i) above.
(iv) In the case of a Holder which is a corporation or a partnership,
"Permitted Transferee" means (A) any person transferring Notes or
Registrable Shares to such corporation or partnership and (B) any Permitted
Transferee of any such transferor determined under clause (i) above.
(v) In the case of Holder which is the estate of a deceased Holder,
or which is the estate of a bankrupt or insolvent Holder, "Permitted
Transferee" means a Permitted Transferee of such deceased, bankrupt or
insolvent Holder as determined pursuant to clause (i), (ii), (iii) or (iv)
above, as the case may be.
(b) Notwithstanding anything to the contrary set forth herein, any Holder
may pledge such Holder's Notes or Registrable Shares to a pledgee pursuant to a
bona fide
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<PAGE>
pledge of such Notes or shares as collateral security for indebtedness due to
the pledgee, provided that such Notes or shares shall remain subject to the
provisions of this Article. In the event of foreclosure or other similar action
by the pledgee, such pledged Notes or shares may only be transferred to a person
who agrees, pursuant to an agreement in form and substance satisfactory to TCI,
to be bound by all of the provisions of this Article 7 and Section 1.7 hereof.
(c) For purposes of this Section 7.3:
(i) The relationship of any person that is derived by or through legal
adoption shall be considered a natural one.
(ii) Each joint owner of Notes or Registrable Shares shall be
considered a Holder of such Notes or shares.
(iii) A person for whom Notes or Registrable Shares are held pursuant
to a Uniform Gifts to Minors Act (the "UGMA") or similar law shall be considered
a Holder of such Notes or shares.
7.4 Legend and Stop Transfer Order. To assist in effectuating the
------------------------------
provisions of this Agreement, each Shareholder hereby consents and agrees as
follows:
(a) All certificates representing ownership of Registrable Shares
beneficially owned or held by him and his Permitted Transferees shall bear (in
addition to any other
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<PAGE>
legend required by applicable securities laws) the following legend until such
Registrable Shares have been sold, transferred or disposed of pursuant to clause
(iii) or (iv) of Section 7.2 hereof:
The shares represented by this certificate are subject to
the provisions of an Agreement, dated as of July 9, 1986,
among Tele-Communications, Inc. and certain former shareholders
of United Artists Communications, Inc., and may not be sold,
transferred, pledged, hypothecated or otherwise disposed of
except in accordance therewith. A copy of said Agreement
is on file at the office of the corporate Secretary of
Tele-Communications, Inc.
(b) No Transfer or attempted Transfer of Registrable Shares or Notes in
violation of this Article 7 shall be effective for any purpose. TCI may enter a
stop transfer order with the transfer agent or agents of the Corporation's
securities against the transfer of Registrable Shares or Notes except in
compliance with the requirements of this Agreement, or if TCI shall become its
own transfer agent with respect to any Registrable Shares or Notes, TCI may
refuse to transfer any Registrable Shares or Notes except in compliance with the
requirements of this Agreement.
(c) Upon the request of the Representatives and the delivery to TCI of
certificates for Registrable Shares bearing the legend set forth in Section
7.4(a) hereof, TCI
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<PAGE>
shall promptly issue new certificates for such Registrable Shares not bearing
such legend in the following amounts:
(i) On or after the second anniversary of the Closing, TCI shall
issue unlegended certificates for an aggregate of 2,000,000 Registrable Shares;
(ii) On or after each succeeding anniversary of the Closing Date,
in addition to the number of shares referred to in (i) above, TCI shall issue
unlegended certificates for an aggregate of 2,000,000 Registrable Shares.
7.5 Registration Rights.
-------------------
(a) Demand Registration.
-------------------
(i) The Shareholders and their Permitted Transferees (the
"Eligible Holders") shall have the right to request registration (a "Demand
Registration") under the Securities Act of the Registrable Shares then owned by
the Eligible Holders, or which the Eligible Holders have the right to acquire
upon the conversion of Notes owned by them, upon the terms and subject to the
conditions set forth in this Section 7.5. As soon as practicable after the
receipt by TCI of a written request by an Eligible Holder for registration under
this Section 7.5(a). TCI shall (A) give written notice of such request to all of
the Shareholders and (B) file, and use
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<PAGE>
its best efforts to cause to become effective, a registration statement
under the Securities Act covering the Registrable Shares requested to
be registered by the Eligible Holder making such request and by each
other Eligible Holder who requests that TCI include his Registrable
Shares in such Demand Registration within 10 days after receipt of
TCI's notice thereof. The public offering or distribution of Registrable
Shares under this Section 7.5(a) shall be pursuant to a firm commitment
underwriting, the managing underwriter of which shall be a nationally
recognized investment banking firm selected by TCI and approved by the
Eligible Holders who hold a majority of the Registrable Shares requested
to be included in the Demand Registration in question (which approval shall
not be unreasonably withheld). TCI shall enter into the same underwriting
agreement as shall the Eligible Holders, containing representations,
warranties and agreements not substantially different from those
customarily made by an issuer in underwriting agreements with respect
to secondary distributions. TCI, as a condition to fulfilling its
obligations under this Section 7.5(a), may require the underwriters to
-43-
<PAGE>
enter into an agreement indemnifying the TCI Indemnified Parties
against any Losses (as such capitalized terms are defined in Section 7.7
hereof) that arise out of or are based upon an untrue statement
or an alleged untrue statement or omission or alleged omission in the
registration statement or any related prospectus made in reliance
upon and in confirmity with written information furnished to TCI by
the underwriters specifically for use in the preparation thereof.
(ii) TCI shall be entitled to postpone, for a reasonable period of
time not to exceed 90 days, the filing of a registration statement
otherwise required to be prepared and filed by it pursuant to this
Section 7.5(a), if at the time it receives a request therefor it
determines, in its reasonable business judgment, that such registration
and offering could interfere with any financing, acquisition, corporate
reorganization, or other material transaction or development involving
TCI or any of its affiliates and gives the participating Eligible Holders
written notice of such determination. In the event of such postponement,
TCI shall file such registration statement as soon as practicable after
it shall determine, in its
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<PAGE>
reasonable business judgment, that such registration and offering will
not interfere with the matters described in the preceding sentence.
If TCI shall postpone the filing of any registration statement, the
participating Eligible Holders shall have the right to withdraw their
request for such registration by giving notice to TCI within 15 days
of the notice of postponement. In the event that the participating
Eligible Holders withdraw their request, such request shall not be
counted for purposes of determining the number of registrations to
which the Eligible Holders are entitled pursuant to this Section 7.5(a).
(b) Piggyback Registration Rights. If TCI shall propose the registration
-----------------------------
under the Securities Act of an offering of any of its equity securities to be
sold for cash pursuant to a firm commitment underwriting, for its own account or
for the account of other securities holders (other than in connection with a
dividend reinvestment, employee stock purchase, stock option or similar plan, a
merger, consolidation or reorganization, or an offering or rights, warrants or
securities convertible into equity securities), the Eligible Holders shall be
entitled, on each such occasion, to request to have any or all of the
Registrable Shares owned by them, or which the Eligible Holders have the
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<PAGE>
right to acquire upon the conversion of Notes owned by them, included in such
registration. On each such occasion, TCI shall, as promptly as practicable but
in no event later than 15 days prior to the proposed filing date, give written
notice to the Shareholders of its intention to effect such registration. Upon
the written request of an Eligible Holder that TCI include any Registrable
Shares in such registration statement (which request shall state the number of
Registrable Shares for which registration is sought), given within 10 days after
receipt of notice from TCI, TCI shall use its best efforts to cause such
Registrable Shares to be so registered and to be included in the offering
covered by such registration. The inclusion of some or all of the Registrable
Shares which Eligible Holders have requested TCI to register pursuant to this
Section 7.5(b) may be conditioned or restricted if, in the reasonable business
judgment of TCI or the managing underwriter of the proposed offering for which
the registration statement has been or is to be filed, such inclusion will have
an adverse impact on the offering of securities by TCI (provided that such
conditions or restrictions apply on a proportional basis not only to the
Registrable Shares but also to all other securities to be included other than
those for which TCI initiated registration). TCI may, without the consent of any
Eligible Holder, withdraw any registration statement filed pursuant to
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<PAGE>
this Section 7.5(b) and abandon the proposed offering in
which Eligible Holders requested inclusion of any Registrable
Shares. Any request for inclusion of Registrable Shares made
pursuant to this Section 7.5(b) shall not be deemed a request
for registration pursuant to Section 7.5(a) hereof.
(c) Expenses of Registration. TCI shall pay all
------------------------
costs and expenses incurred in connection with the registra-
tion of Registrable Shares pursuant to Section 7.5(a) or
7.5(b) hereof, except that the Eligible Holders shall pay all
fees and disbursements of the Eligible Holders' counsel and
accountants, and all transfer taxes and brokerage and under-
writers' discounts and commissions attributable to the
Registrable Shares being offered and sold by the Eligible
Holders.
(d) Limitations on Registration Rights. Notwith-
----------------------------------
standing the provisions of Section 7.5(a) and 7.5(b) hereof:
(i) the Eligible Holders shall have no right
to request registration of (A) any Registrable
Shares prior to the first business day following
the second anniversary of the Closing Date, except
as provided in Section 7.2(b), or (B) a number of
Registrable Shares which would result in sales in
excess of the limitations contained in Section
7.2(b) hereof;
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<PAGE>
(11) TCI shall not be required to effect any
registration if (A) in the case of a request pur-
suant to Section 7.5(a), TCI has previously filed a
registration statement under the Securities Act
pursuant to Section 7.5(a) hereof within six
months; (B) in the case of a request pursuant to
Section 7.5(a) hereof, TCI could be required to
undergo a special interim audit in order to comply
with such request (unless the Eligible Holders
execute an undertaking, reasonably satisfactory to
TCI, to pay all fees and expenses of such special
interim audit); (C) in the opinion of counsel for
TCI, the Eligible Holders could sell under Rule 144
promulgated under the Securities Act the number of
Registrable Shares they propose to have registered
in compliance with this Agreement, and TCI notifies
the Eligible Holders in writing that TCI desires
that they do so; (D) if the number of Registrable
Shares requested to be registered shall be less
than 1,000,000 or (E) at any time following the
date on which the aggregate number of Registrable
Shares held by all Eligible Holders shall first be
less than 1,000,000 (for this purpose Registrable
Shares which Eligible Holders are then entitled to
- 48 -
<PAGE>
acquire upon the conversion of Notes held by them shall be deemed to
be held by Eligible Holders).
(e) Obligations with Respect to Registration.
----------------------------------------
(i) If and whenever TCI is obligated by the provisions of this
Section 7.5 to effect the registration of any Registrable Shares under the
Securities Act, TCI shall:
(A) prepare and file with the SEC any amendments and supplements
to such registration statement and to the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act and the rules and
regulations promulgated thereunder with respect to the disposition of all
Registrable Shares covered by such registration statement for the period
required to effect the distribution thereof, but in no event shall TCI be
required to do so for a period of more than 90 days following the effective date
of such registration statement;
(B) notify the participating Eligible Holders and confirm such
advice in writing, (1) when such registration statement becomes effective, (2)
when any post-effective amendment to such registration statement becomes
effective, and (3) of any request by the SEC for any amendment of or supplement
to such registration statement or any prospectus relating thereto or for
additional information;
-49-
<PAGE>
(C) furnish at TCI's expense to the participating Eligible Holders such
number of copies of a preliminary, final, supplemental or amended prospectus, in
conformity with the requirements of the Securities Act and the rules and
regulations promulgated thereunder, as may reasonably be required in order to
facilitate the disposition of the Registrable Shares covered by such
registration statement, but only while TCI is required under the provisions
hereof to cause the registration statement to remain effective;
(D) register or qualify at TCI's expense the Registrable Shares covered by
such registration statement under such other securities or blue sky laws of such
jurisdictions in the United States as the managing underwriter shall reasonably
request; provided, however, that TCI shall in no event be required to qualify
-------- -------
to do business as a foreign corporation or as a dealer in any jurisdiction
where it is not so qualified, to conform the composition of its assets at the
time to the securities or blue sky laws of such jurisdiction, to execute or file
any general consent to service of process under the laws of any jurisdiction,
to take any action that would subject it to service of process in suits other
than those arising out of the offer and sale of the Registrable Shares covered
by such registration
-50-
<PAGE>
statement, or to subject itself to taxation in any jurisdiction where it has not
theretofore done so.
(ii) As a condition to the obligations of TCI under this Section 7.5,
the Eligible Holders shall provide such information and materials, execute all
such documents and take all such other actions as TCI shall reasonably request
in order to permit TCI to comply with all applicable requirements of law and to
effect the registration of the Registrable Shares.
7.6 Cooperation, Etc. Each Shareholder covenants and agrees with TCI
----------------
that such Shareholder will and will cause each of its Permitted Transferees to:
(a) cooperate with TCI in connection with the preparation of each
registration statement contemplated by Section 7.5 hereof, and for so long as
TCI is obligated to keep such registration statement effective, provide TCI, in
writing, for use in such registration statement, such information regarding the
Shareholders as may be necessary to enable TCI to prepare such registration
statement and to maintain the currency and effectiveness thereof.
(b) During such time as any of the Holders may be engaged in a distribution
of Registrable Shares, comply with Rules 10b-2, 10b-6 and 10b-7 promulgated
under the Exchange Act and pursuant thereto, among other things: (i) not engage
in any stabilization activity in connection with the securi-
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<PAGE>
ties of TCI in contravention of such Rules; (ii) distribute Registrable Shares
solely in the manner described in the applicable registration statement; (iii)
cause to be furnished at the expense of TCI to each underwriter, broker and
dealer through whom Registrable Shares may be offered, such copies of the
registration statement and related prospectus and any amendment or supplement
thereto and documents incorporated by reference therein as may be required by
such underwriter, broker or dealer; and (iv) not bid for or purchase any
securities of TCI or attempt to induce any person to purchase any securities of
TCI other than as permitted under the Exchange Act.
(c) On written notice from TCI that TCI intends to proceed with a
distribution of any of its securities and, that in connection therewith it
requires the suspension by any of the Holders of the distribution of any of the
Registrable Shares, cease distributing Registrable Shares until such time as the
distribution by TCI has been completed.
7.7 Indemnification.
---------------
(a) In the event of any registration of any Registrable Shares under the
Securities Act pursuant to this Article 7, TCI will indemnify and hold harmless
the Eligible Holders of such Registrable Shares (the "Seller Indemnified
Parties") against any losses, claims, damages, liabilities or expenses
(including reasonable attorneys' fees), joint or
-52-
<PAGE>
several ("Losses"), to which such Seller Indemnified Parties may become subject,
insofar as such Losses (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in the registration statement or the final prospectus contained in the
registration statement and any post-effective amendment or supplement to such
prospectus, or (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (iii) any violation of any federal or state securities law or
rule or regulation thereunder committed by TCI in connection with the
performance of its obligations under Section 7.5; and TCI will reimburse such
Seller Indemnified Parties for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage or liability; provided, however, that TCI will not be liable in any such
-------- -------
case to the extent that any such Loss arises out of or is based upon any actual
or alleged untrue statement in, or actual or alleged omission from, any
registration statement or prospectus made by TCI in reliance upon and in
conformity with written information furnished to TCI by or on behalf of such
Holder for use in connection with the preparation of the registration statement
or prospectus, or for the use of any prospectus after such time as the
obligation
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<PAGE>
of TCI under Section 7.5 to keep the registration statement effective and
current has expired or for any other violation of any federal or state
securities laws, rules or regulations committed by any of the Seller Indemnified
Parties.
(b) In the event of any registration of any Registrable Shares under the
Securities Act pursuant to this Article 7, each of the Holders of such
Registrable Shares will indemnify and hold harmless TCI, and each of its
directors and officers and each person, if any, who controls TCI, within the
meanings of the Securities Act or the Exchange Act (the "TCI Indemnified
Parties"), against any Losses, joint or several, to which the TCI Indemnified
Parties may become subject, insofar as such Losses (or Actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in any registration statement or
the final prospectus contained in any registration statement or any post-
effective amendment or supplement to such prospectus or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if the statement or
omission was made in reliance upon and in conformity with written information
furnished to TCI by or on behalf of any Holder for use in connection with the
preparation of the registration statement or prospectus, or (ii) the use of any
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<PAGE>
prospectus after such time as the obligation of TCI to keep
the registration statement effective and current has expired,
or (iii) any violation by any Holder of any federal or state
securities law or rule or regulation thereunder; and each
Holder will reimburse such TCI Indemnified Parties for any
legal or other expenses reasonably incurred by them in
connection with investigating or defending any such Loss.
(c) Any person that proposes to assert the right
to be indemnified under Section 7.7 will, promptly after
receipt of notice of any claim, action, suit, proceeding or
other litigation (collectively, an "Action") against such
person in respect of which a claim is to be made against an
indemnifying party under this Section 7.7, notify each such
indemnifying party of the commencement of such Action, en-
closing a copy of all papers served, but the omission so to
notify such indemnifying party of any such Action shall not
relieve it from any liability that it may have to any indem-
nified party otherwise than under this Section 7.7. In case
any such Action shall be brought and notice given to the
indemnifying party of the commencement thereof, the indem-
nifying party shall be entitled to participate in, and, to
the extent that it shall wish, jointly with any other indem-
nifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to the indemnified party,
and after notice from the indemnifying party to such indem-
- 55 -
<PAGE>
nified party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal or other
expenses, except as provided below and except for the reasonable costs of in-
vestigation subsequently incurred by such indemnified party in connection with
the defense thereof. The indemnified party shall have the right to employ
separate counsel and to participate in (but not control) any such Action, but
the fees and expenses of such counsel shall be the expense of such indemnified
party unless (i) the employment of counsel by such indemnified party has been
authorized by the indemnifying parties, (ii) the indemnified party shall have
been advised by its counsel that there may be a conflict of interest between the
indemnifying parties and the indemnified party in the conduct of the defense of
such Action (in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party) or (iii)
the indemnifying parties shall not in fact have employed counsel to assume the
defense of such action, in each of which cases, the fees and expenses of counsel
shall be at the expense of the indemnifying parties. An indemnifying party shall
not be liable for any settlement of any Action or claims effected without its
written consent.
7.8 Right of First Refusal. Prior to effecting
----------------------
any sale of any Registrable Shares pursuant to clause (iv) of
- 56 -
<PAGE>
Section 7.2(a) hereof, the Holder of such Registrable Shares shall give TCI the
opportunity to acquire such Registrable Shares in the following manner:
(a) TCI shall have the right, exercisable by written notice to such Holder
given within 30 business days after the receipt of written notice of Holder's
request for registration to purchase all or any part of the Registrable Shares
proposed to be registered by such Holder pursuant to Section 7.5 hereof for cash
at a per share price equal to the Average Market Price during the ten
consecutive trading days immediately preceding the date such notice is given,
less (i) in the case of a request for registration pursuant to Section 7.5(a),
one-half of the per share underwriting discount which, in the opinion of a
nationally-recognized investment banking firm selected by TCI and reasonably
satisfactory to such Holder, would be appropriate for a registered offering of
the proposed size and nature or (ii) in the case of a request for registration
pursuant to Section 7.5(b), one-half of the maximum per share underwriting
discount proposed by the managing underwriter for the offering covered by such
registration.
(b) If TCI exercises the right of first refusal granted under Section
7.8(a), the closing of the purchase of the Registrable Shares with respect to
which such right has been exercised shall take place at such time as shall be
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<PAGE>
designated by TCI; provided, however, that such closing shall occur not later
-------- -------
than 30 days after the date that the written notice of such exercise of such
right of first refusal is given pursuant to Section 7.8(a) hereof. Each closing
pursuant to this Section 7.8(b) shall be held at a mutually convenient location.
At such closing, each Holder of the Registrable Shares to be purchased shall
transfer to TCI good and marketable title to all of his Registrable Shares with
respect to which such right of first refusal was exercised, free and clear of
all Security Interests and Restrictions. Such transfer shall be effected by
delivery by such Holder to TCI, against payment by TCI of the purchase price for
such Registrable Shares, or the certificates representing such Shares, duly
endorsed for transfer or accompanied by duly executed instruments of assignment,
with signature guaranteed, and with all required stock transfer tax stamps
attached.
ARTICLE 8
INDEMNIFICATION
---------------
8.1 Indemnification by TCI. TCI agrees to indemnify and hold harmless each
----------------------
Shareholder from and against (i) any and all expenses reasonably incurred by
such Shareholder in investigating or defending against any Action commenced or
threatened by any person, other than a Share-
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<PAGE>
holder, a sister of the Representatives, any grantor or beneficiary of any
trust the trustee of which is a Shareholder or a person for whom Shares are
held by a Shareholder pursuant to the UGMA or similar law, or any affiliate
or associate of any Shareholder or any such grantor, beneficiary or person,
based on or arising in any manner out of or in connection with any conduct
by TCI or its affiliates related to the transactions contemplated by this
Agreement, the execution, delivery and performance of this Agreement by
such Shareholder and the acceptance by such Shareholder of the terms and
provisions of this Agreement or the sale of such Shareholder's Shares
pursuant hereto and the receipt of the Consideration therefor and (ii) any
and all liabilities incurred by such Shareholder as a result of such
Action, excluding any such expenses or liabilities arising solely out of or
resulting solely from a breach by such Shareholder of any representation or
warranty, or a breach or failure by such Shareholder to perform any
covenant or agreement, of such Shareholder contained herein or arising
pursuant to Section 7.7 hereof.
8.2 Third Party Claims. Promptly after the receipt by any Shareholder
------------------
of notice of any Action which is subject to indemnification hereunder, such
party (the "Indemnified Party") shall give written notice to TCI. The
Indemnified Party shall be entitled, at the sole expense and
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<PAGE>
liability of TCI, to exercise full control of the defense,
compromise or settlement of any such Action unless TCI,
within a reasonable time after the giving of such notice by
the Indemnified Party, shall notify the Indemnified Party in
writing of TCI's intention to assume the defense thereof and
retain legal counsel reasonably satisfactory to the
Indemnified Party to conduct the defense of such Action. The
Indemnified Party and TCI shall cooperate with the party
assuming the defense, compromise or settlement of any such
Action in accordance herewith in any manner that such party
reasonably may request. If TCI so assumes the defense of any
such Action, the Indemnified Party shall have the right to
employ separate counsel and to participate in (but not
control) the defense, compromise, or settlement thereof, but
the fees and expenses of such counsel shall be the expense of
the Indemnified Party unless (i) the employment of counsel by
the Indemnified Party has been authorized by TCI, (ii) the
Indemnified Party shall have been advised by its counsel that
there may be a conflict of interest between TCI and the
Indemnified Party in the conduct of the defense of such
Action (in which case TCI shall not have the right to direct
the defense of such Action on behalf of the Indemnified
Party) or (iii) TCI shall not in fact have employed counsel
to assume the defense of such action, in each of which cases,
the fees and expenses of counsel shall be at the expense of
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<PAGE>
TCI. No Indemnified Party shall settle or compromise any such Action for which
it is entitled to indemnification hereunder without the prior written consent of
TCI, unless TCI shall have failed, after reasonable notice thereof, to undertake
control of such Action in the manner provided above in this Section 8.2.
ARTICLE 9
PROPOSED BUSINESS COMBINATION
-----------------------------
9.1 Business Combination Proposal. TCI intends to pursue and implement a
-----------------------------
plan for a business combination with the Company pursuant to which TCI will
attempt to acquire the entire equity interest in the Company (the "Business
Combination") in which each shareholder of the Company other than the
Shareholders and each holder of options to purchase shares of Company Common
Stock would be given an opportunity to receive, for each share of Company Common
Stock owned by such shareholder (and, in the case of holders of options, the
right to acquire for the same consideration that would have been payable upon
the exercise of such options), consideration having a fair market value
equivalent to or greater than the fair market value on such date of the
consideration per Share to be received by each Shareholder pursuant to this
Agreement. TCI's development and implementation of a plan for a Business
Combination shall be
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<PAGE>
subject to such terms and conditions as, in TCI's reasonable judgment, are
normal in the development and implementation of such business combination
proposals, including, without limiting the generality of the foregoing,
conditions relating to the absence of (i) material changes in the business or
financial condition of the Company and its subsidiaries, (ii) pending or
threatened litigation affecting the Company or its subsidiaries or the proposed
Business Combination, and (iii) adverse changes in laws or regulations
applicable to the Company or its subsidiaries or the proposed Business
Combination.
ARTICLE 10
TRANSACTIONS PENDING THE CLOSING
--------------------------------
10.1 Certain Transactions Pending the Closing.
----------------------------------------
(a) Each of the Shareholders agrees that, during the term of this
Agreement, he shall not (i) purchase, or enter into any contract to purchase,
any shares of Company Common Stock, except in connection with the exercise of
outstanding stock options, (ii) tender any shares of Company Common Stock
pursuant to any tender or exchange offer, other than by TCI or its affiliates,
(iii) except as permitted by Section 2.3, sell, transfer, pledge, hypothecate or
otherwise dispose of any shares of Company Common Stock (or any interest
therein) or (iv) enter into any contract, agreement, com-
-62-
<PAGE>
mitment or arrangement with respect to any of the foregoing, or offer to do any
of the foregoing.
(b) During the term of this Agreement and other than with respect to the
Business Combination, none of the Shareholders shall (i) initiate, solicit or
encourage, directly or indirectly, inquiries, discussions, negotiations or
proposals with respect to, or furnish any information relating to, or
participate in any negotiations or discussions concerning, any proposal for a
merger, tender offer, exchange offer or other business combination involving the
Company or any of its subsidiaries, the acquisition or purchase of all or a
substantial portion of the assets of, or a substantial equity interest in, the
Company or any of its subsidiaries or any business combination with the Company
or any of its subsidiaries, or (ii) form or participate in any "group" (as that
term is used in Rule 13(d)(3) of the Exchange Act) which intends to seek control
of the Company or any of its subsidiaries or enter into any agreement or
understanding with any person or "group" with respect to the voting of shares of
Company Common Stock. Each Shareholder agrees to immediately notify TCI if any
such inquiries or proposals are received by, any such information is requested
from, or any negotiations or discussions are sought to be initiated with such
Shareholder.
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<PAGE>
ARTICLE 11
ENFORCEMENT AND RELATED MATTERS
-------------------------------
11.1 Enforcement Provisions. In the event that all of the conditions
----------------------
to TCI's obligations provided in Article 5 hereof have been satisfied prior to
December 31, 1986, the Representatives by written notice to TCI may compel the
Closing to be held on December 31, 1986 or as soon as reasonably possible
thereafter. It is the intention of the parties that the Closing shall take
place on or before December 31, 1986, and all parties shall use their best
efforts to consummate the Closing on or prior to such date. In the event that
the Closing shall not have occurred on or before December 31, 1986 and the
period during which the Closing can occur shall not have been extended by mutual
consent of the Representatives and TCI, then the Agreement may be terminated by
either TCI or the Representatives by written notice to the other.
11.2 Termination by Mutual Consent. This Agreement may be terminated
-----------------------------
prior to the Closing by the mutual consent of TCI and the Representatives.
11.3 Fees and Expenses. Regardless of whether the transactions
-----------------
contemplated by this Agreement are consummated, each of the parties hereto shall
pay its own fees and expenses incident to the negotiation, preparation and
execution
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<PAGE>
of this Agreement, including attorneys' and accountants' fees.
ARTICLE 12
MISCELLANEOUS
-------------
12.1 Certain Consents and Approvals.
------------------------------
(a) Without limiting the generality of Sections 3.7 and 4.2 hereof,
TCI and the Acquiror shall, and the Shareholders shall and shall use their
best efforts to cause the Company and each of its subsidiaries to, as
expeditiously as reasonably practicable:
(i) File with the FCC and such other federal, state and local
governments and governmental agencies, departments and bodies as may
be required, such applications or other documents as may be necessary
to obtain the Approvals and take all steps necessary to prosecute such
applications with diligence and diligently oppose any objections to
(to the extent such objections are directed at a particular party),
appeals from, or petitions to reconsider such approvals, to the end
that preliminary orders and final orders or such other authorizations
as may be
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required, of the FCC and such other governments and governmental agencies,
departments and bodies may be obtained as soon as practicable.
(ii) Coordinate the preparation, timing and filing of notification under
the Hart-Scott Act so as to present all notices at the time selected by TCI
(which shall be as soon as reasonably practicable after the date of
execution and delivery of this Agreement) and to avoid substantial errors
and inconsistencies between such notices in the description of the
transaction.
(b) Nothing contained in this Section 12.1 or in any other provision of
this Agreement shall require or be deemed to require TCI or any of its direct or
indirect subsidiaries or affiliates to divest itself or dispose of any of its
properties or assets or make special payments or grant any special concessions
or in any way diminish or impair its control, ownership or operation of any of
its properties or assets.
(c) Notwithstanding the provisions of Sections 4.2 and 12.1(a) hereof, the
Shareholders shall not permit the Company or any of its direct or indirect
subsidiaries or af-
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filiates to divest itself or dispose of any of its properties or assets or make
special payments or grant any special concessions or in any way diminish or
impair its control, ownership or operation of any of its properties or assets in
order to obtain any Approval or any other waivers, permits, licenses, approvals,
authorizations, qualifications, orders or consents referred to in Section 4.2 or
12.1(a) hereof, without the prior written consent of TCI.
12.2 Modification or Amendment. Subject to applicable law, this Agreement
-------------------------
may be amended, modified and supplemented by a written instrument executed and
delivered by TCI and the Representatives. No waiver by TCI or any Shareholder of
any provisions hereof shall be effective unless explicitly set forth in writing
and executed by TCI or a Representative, respectively. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants, or agreements contained herein, and
in any documents delivered or to be delivered pursuant to this Agreement and in
connection with the Closing hereunder. The waiver by any party hereto of a
breach of any provisions of this Agreement shall not operate or be construed as
a waiver of any subsequent breach.
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12.3 Waiver of Conditions. The conditions to each of the parties'
--------------------
obligations to effect the Closing are for the sole benefit of such party and may
be waived by such party in whole or in part to the extent permitted by
applicable law.
12.4 Survival. The respective representations, warranties, covenants and
--------
agreements of the parties contained in this Agreement shall survive the Closing
and any investigation made by or on behalf of any party.
12.5 Headings. The section headings herein are for convenience of
--------
reference only, do not constitute part of this Agreement and shall not be
deemed to limit or otherwise affect any of the provisions hereof.
12.6 Notices. All notices or other communications required or permitted
-------
hereunder shall be given in writing and shall be delivered or sent by registered
or certified mail, postage prepaid, as follows:
If to the Company:
Marshall Naify
Robert A. Naify
c/o United Artists Communications, Inc.
172 Golden Gate Avenue
San Francisco, California 94102
with a copy to:
James F. Crafts, Jr.
Orrick, Herrington & Sutcliffe
600 Montgomery Street, 12th Floor
San Francisco, California 94111
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If to the Shareholders or the Representatives:
Marshall Naify
Robert A. Naify
c/o United Artists Communications, Inc.
172 Golden Gate Avenue
San Francisco, California 94102
with a copy to:
John M. Sherwood
c/o United Artists Communications, Inc.
172 Golden Gate Avenue
San Francisco, California 94102
If to TCI:
Tele-Communications, Inc.
55 Denver Technological Center
5455 South Valentia Way
Englewood, Colorado 80111
Attention: President
with copies to:
Tele-Communications, Inc.
55 Denver Technological Center
5455 South Valentia Way
Englewood, Colorado 80111
Attention: General Counsel
Jerome H. Kern, P.C.
Shea & Gould
330 Madison Avenue
New York, New York 10017
or such other address as shall be furnished in writing by such party, and any
such notice or communication shall be effective and be deemed to have been given
as of the date so delivered or mailed; provided, however, that any notice or
-------- -------
communication changing any of the addresses set forth above shall be effective
and deemed given only upon its receipt.
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12.7 Binding Effect; Benefit. This Agreement shall inure to the
-----------------------
benefit of and be binding upon the parties hereto and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties thereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
12.8 Assignability. This Agreement shall not be assignable by any
-------------
of the parties hereto without the prior written consent of each of the other
parties.
12.9 Complete Agreement. This Agreement (including the Schedules and
------------------
Exhibits hereto) contains the entire understanding of the parties with respect
to the transactions contemplated hereby and supersedes all prior written or oral
commitments, arrangements or understandings with respect thereto. There are no
restrictions, agreements, promises, warranties, covenants or undertakings other
than those expressly set forth herein.
12.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
12.11 Governing Law. This Agreement shall be governed by the laws of
-------------
the State of Maryland (regardless of the laws that might be applicable under
principles of conflicts
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of law) as to all matters, including but not limited to matters of validity,
construction, effect and performance.
12.12 Accounting Terms. All accounting terms used herein which are
----------------
not expressly defined in this Agreement shall have the respective meanings given
to them in accordance with generally accepted accounting principles on the date
hereof.
12.13 Certain Definitions. For purposes of this Agreement, (i) the terms
-------------------
"affiliate" and "associate" shall have the respective meanings ascribed to such
terms under the rules and regulations promulgated by the SEC under the Exchange
Act and (ii) the term "person" shall include natural persons, corporations,
partnerships, associations, trusts, joint ventures, unincorporated organizations
and entities of every kind, as well as groups consisting of any of the foregoing
formed for any purpose.
12.14 Rights in Shares. On and after the Closing, Acquiror shall be
----------------
entitled to all the rights of beneficial ownership of the Acquired Shares,
including, without limitation, the right to exercise any and all voting rights
pertaining to the Acquired Shares at any meeting of shareholders of the Company
held on or after the Closing Date and to receive any and all dividends and other
distributions with respect to the Acquired Shares, the record date for which is
on or after the Closing Date. In furtherance of the foregoing,
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each Shareholder agrees to deliver to Acquiror, promptly upon receipt by
such Shareholder, any dividend or other distribution with respect to
Acquired Shares, received by such Shareholder on or after the Closing Date,
the record date for which is on or after the Closing Date.
12.15 Further Assurances. Each party hereto shall perform such further
------------------
acts and execute such further documents as may reasonably be required to
carry out the provisions of this Agreement, including instruments necessary
or desirable to complete the transfer, sale and assignment of the Acquired
Shares.
12.16 Disclosure. The Shareholders will not, except as and to the
----------
extent required by applicable law and after consultation with TCI, disclose
to any other person the existence of this Agreement, or any of the terms
hereof, prior to any public announcement by TCI of the existence of the
Agreement or such terms. TCI agrees to consult with the Representatives
concerning the form and content of any such public announcement by TCI.
12.17 Specific Performance. The parties recognize that any breach of
--------------------
the terms of this Agreement may give rise to irreparable harm for which
money damages would not be an adequate remedy, and accordingly agree that,
in addition to other remedies, any non-breaching party shall be entitled to
enforce the terms of this Agreement by a decree of specific
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performance without the necessity of proving the inadequacy as a remedy of money
damages.
12.18 Effective Date. This Agreement shall become effective and binding
--------------
upon the signatories hereto upon its execution by TCI and Shareholders owning
50.1% of the Company Common Stock. Prior to the close of business on July 23,
1986 any Shareholder who has not previously executed the Agreement may become a
party to and be bound by the Agreement by executing it.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
TELE-COMMUNICATIONS, INC.
By [SIGNATURE APPEARS HERE]
------------------------------------
/s/ Marshall Naify
------------------------------------
(Marshall Naify)
/s/ R. A. Naify
------------------------------------
(Robert A. Naify)
/s/ Valerie Naify
------------------------------------
(Valerie Naify)
/s/ Leslie C. Naify
------------------------------------
(Leslie C. Naify)
/s/ Christie M. Naify
------------------------------------
(Christie M. Naify)
/s/ Robert J. Naify
------------------------------------
(Robert J. Naify)
/s/ Mark S. Naify
------------------------------------
(Mark S. Naify)
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<PAGE>
/s/ Marshall Naify
- ----------------------------------------
(Marshall Naify,
Custodian for Michael
Stephen Naify)
/s/ Marshall Naify
- ----------------------------------------
(Marshall Naify,
Custodian for Christina
Elizabeth Naify)
/s/ Marshall Naify,
- ----------------------------------------
(Marshall Naify as trustee with
investment powers under the
Michael N. Naify Testamentary
Trust for the Benefit of Marshall Naify)
/s/ John M. Sherwood
- ----------------------------------------
(John M. Sherwood as trustee under
the following Trusts: (i) the Leslie
C. Naify 1981 Trust, dated December
22, 1981; (ii) the Christie M. Naify
1981 Trust, dated December 22, 1981;
(iii) the Robert J. Naify 1981 Trust,
dated December 22, 1981; (iv) the Mark
S. Naify 1983 Trust, dated December 21,
1983; (v) the Christina Cortese 1983
Trust, dated December 21, 1983;
(vi) the Acela Cortese 1983 Trust,
dated December 21, 1983; (vii) the
Christina E. Naify 1985 Trust, dated
June 26, 1985; (viii) the Drew Michael
Andrade 1986 Trust, dated April 25,
1986; (ix) the Marsha J. Naify 1981
Trust, dated December 29, 1981; (x)
the Michael S. Naify 1981 Trust,
dated December 29, 1981; (xi) and
the Christina E. Naify 1981 Trust,
dated December 29, 1981)
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/s/ Marshall Naify
- ------------------------------------
(Marshall Naify as trustee
under the Michael Stephen Naify
Trust, dated January 21, 1986)
EXCELSIOR AMUSEMENT CO.
By /s/ R. A. Naify - Pres.
----------------------------------
/s/ James C. Naify
----------------------------------
(James Naify)
/s/ Josephine Naify
----------------------------------
(Josephine Naify)
/s/ Richard R. Naify
----------------------------------
(Richard R. Naify)
/s/ Georgette N. Rosekrans
- ----------------------------------
(Georgette N. Rosekrans as trustee
with investment powers under the
Michael N. Naify Testamentary
Trust for the Benefit of
Georgette N. Rosekrans)
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