<PAGE>
Filed Pursuant to
Rule 424(b)(3)
Registration No. 333-00835
PROSPECTUS
Tele-Communications, Inc.
Tele-Communications, Inc. Series A TCI Group Common Stock ($1.00 par value)
Tele-Communications, Inc. Series A Liberty Media Group Common Stock ($1.00 par
value)
This Prospectus relates to (i) 11,056,451 shares (the "TCI Group Shares")
of the Tele-Communications, Inc. Series A TCI Group Common Stock, par value
$1.00 per share (the "TCI Group Series A Common Stock"), of Tele-Communications,
Inc., a Delaware corporation (the "Company" or "TCI"), and (ii) 2,764,081 shares
(the "Liberty Group Shares," and collectively with the TCI Group Shares, the
"Shares") of the Tele-Communications, Inc. Series A Liberty Media Group Common
Stock, par value $1.00 per share (the "LMG Series A Common Stock"), of the
Company, to be offered and sold from time to time by the holders thereof (each a
"Selling Stockholder" and collectively, the "Selling Stockholders"). For
information with respect to the Selling Stockholders see "Selling Stockholders."
The Company's common stock, par value $1.00 per share (the "TCI Common
Stock"), is comprised of four series: TCI Group Series A Common Stock, Tele-
Communications, Inc. Series B TCI Group Common Stock (the "TCI Group Series B
Common Stock" and, together with the TCI Group Series A Common Stock, the "TCI
Group Common Stock"), LMG Series A Common Stock and Tele-Communications, Inc.
Series B Liberty Media Group Common Stock (the "LMG Series B Common Stock" and,
together with the LMG Series A Common Stock, the "Liberty Media Group Common
Stock").
Both series of TCI Group Common Stock are identical in all respects, except
(i) each share of TCI Group Series B Common Stock has ten votes and each share
of TCI Group Series A Common Stock has one vote and (ii) each share of TCI Group
Series B Common Stock is convertible, at the option of the holder, into one
share of TCI Group Series A Common Stock. Similarly, both series of Liberty
Media Group Common Stock are identical in all respects, except (i) each share of
LMG Series B Common Stock has ten votes and each share of LMG Series A Common
Stock has one vote and (ii) each share of LMG Series B Common Stock is
convertible, at the option of the holder, into one share of LMG Series A Common
Stock. The shares of TCI Group Series A Common Stock and LMG Series A Common
Stock are not convertible into shares of TCI Group Series B Common Stock and LMG
Series B Common Stock, respectively.
Shares of the TCI Group Series A Common Stock, the TCI Group Series B
Common Stock, the LMG Series A Common Stock and the LMG Series B Common Stock
are traded on the Nasdaq National Market under the symbols "TCOMA," "TCOMB,"
"LBTYA" and "LBTYB," respectively.
(continued)
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 April 16, 1996.
<PAGE>
The Shares may be offered for sale and sold by the Selling Stockholders
from time to time in varying amounts (subject to certain restrictions described
under the caption "Selling Stockholders"), on the Nasdaq National Market at then
prevailing prices or in private transactions at prices and on terms to be
determined at the time of sale. The Shares may be sold by the Selling
Stockholders directly or through agents designated from time to time or to or
through broker-dealers designated from time to time. To the extent required,
the number and type of Shares to be sold, the purchase price, the name of any
agent or broker-dealer, and any applicable commissions, discounts or other items
constituting compensation to such agents or broker-dealers with respect to a
particular offering will be set forth in a supplement or supplements to this
Prospectus (each, a "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 (i) the aggregate commissions, discounts and other
compensation, if any, paid by the Selling Stockholders to agents or broker-
dealers and (ii) certain other expenses of the offering and sale of the Shares
that will be the responsibility of the Selling Stockholders. See "Selling
Stockholders." The Selling Stockholders may also sell all or a portion of the
Shares pursuant to Rule 144 promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), to the extent that such sales may be made in
compliance with such Rule. See "Plan of Distribution." The Company will not
receive any proceeds from the sale of the Shares. The Company knows of no
selling arrangement between any agent or broker-dealer and the Selling
Stockholders.
The Selling Stockholders and any broker-dealers or agents 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 on the resale of the
Shares purchased by them may be deemed to be underwriting discounts or
commissions under the Securities Act.
2
<PAGE>
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, 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 or in any document
incorporated herein by reference concerning the provisions of any contract or
other document are not necessarily complete and, in each instance, reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement or such other document. 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 statements and other information filed by the Company 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;
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661; and at Suite 1300,
7 World Trade Center, 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 the
following documents filed with the Commission (File No. 0-20421): (i) the
Company's Annual Report on Form 10-K for the year ended December 31, 1995, and
(ii) the financial statements and notes thereto of Cablevision (a combination of
certain cable television assets of Cablevision S.A., Televisora Belgrano S.A.,
Construred S.A. and Univent's S.A.) as of December 31, 1994 and 1993, and for
each of the years in the three-year period ended December 31, 1994, which appear
in the Current Report on Form 8-K of the Company, dated April 20, 1995, as
amended.
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, including any
beneficial owner, to whom a Prospectus is delivered, upon the written or oral
request of such person, a copy of any and 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.
3
<PAGE>
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 (i) has investments
in cable and telecommunications operations and television programming in certain
international markets and (ii) is involved, as an investor and developer, in new
television and telecommunications ventures and technologies. The Company is a
Delaware corporation and its principal executive offices are located at Terrace
Tower II, 5619 DTC Parkway, Englewood, Colorado 80111-3000; telephone (303) 267-
5500.
SELLING STOCKHOLDERS
The Shares being offered hereby were acquired by the Selling Stockholders
in accordance with the terms of an Agreement and Plan of Merger and
Reorganization, dated as of June 28, 1995 (the "Merger Agreement"), by and
between The Chronicle Publishing Company, a Nevada corporation ("Chronicle"),
and the Company. A copy of the Merger Agreement has been filed as an exhibit to
the Registration Statement. Pursuant to the Merger Agreement, Chronicle merged
with and into the Company (the "Merger"), and the shares of the Common Stock,
par value $.01 per share, of Chronicle ("Chronicle Common Stock") outstanding at
the time of the Merger were converted into the Shares. Pursuant to a
Contribution and Assumption Agreement (the "Contribution Agreement") between
Chronicle and a newly formed Nevada corporation ("Spinco"), prior to the closing
of the Merger Chronicle contributed certain of its assets to Spinco in return
for the capital stock of Spinco. The assets retained by Chronicle are specified
in the Contribution Agreement and include those assets relating to its cable
television operations and an undivided 49% interest in certain assets relating
to a local cable television network distributed in the San Francisco Bay Area. A
copy of the Contribution Agreement has been filed as an exhibit to the
Registration Statement. The capital stock of Spinco and certain unsecured notes
of Chronicle assumed by Spinco were then distributed to the holders of Chronicle
Common Stock prior to the closing of the Merger.
As required by the Merger Agreement, the Company has filed the Registration
Statement (of which this Prospectus forms a part) under the Securities Act to
register the Shares for resale by the Selling Stockholders. The Company is
obligated to keep the Registration Statement effective for a period of up to
three years (or until all of the Shares are disposed of by the Selling
Stockholders, if earlier).
Each Selling Stockholder has entered into a Shareholder Registration Rights
Agreement (the "Registration Rights Agreement") with the Company pursuant to
which such Selling Stockholder has agreed, among other things, not to sell or
otherwise distribute more than (i) 25% in the aggregate of the number of shares
of each of the TCI Group Series A Common Stock and the LMG Series A Common Stock
issued to such Selling Stockholder in the Merger within one year after the
closing of the Merger or (ii) 50% in the aggregate of the number of shares of
each of the TCI Group Series A Common Stock and the LMG Series A Common Stock
issued to such Selling Stockholder in the Merger within two years after the
closing of the Merger; provided, however, that the foregoing restriction shall
-------- -------
not apply to the following (and shall not be taken into account for purposes of
determining whether any other transfer complies with the foregoing restriction):
(i) any transfer by will or the laws of intestacy, (ii) any transfer by a trust
which is a Selling Stockholder to the beneficiaries of such trust, (iii) any
transfer by a Selling Stockholder to another Selling Stockholder, (iv) any
transfer by a Selling Stockholder to such Selling Stockholder's spouse, parents,
grandparents, or lineal descendants of such Selling Stockholder's grandparents,
or (v) any transfer by a Selling Stockholder to a trust all of the beneficial
interests in which are owned by one or more of the members of the group
consisting of the Selling Stockholder and the individuals described in the
preceding clause (iv). Pursuant to the Merger Agreement, the Company agreed
that, for a period of two years after the closing of the Merger, the Company
will not register in its stock transfer records any transfer of the Shares by
the Selling Stockholders, unless the Company receives the written consent of
Spinco to such transfer.
4
<PAGE>
Pursuant to the Registration Rights Agreements, the Company and the Selling
Stockholders have agreed that if the Company determines, in its reasonable
judgment, that the use of the Registration Statement would adversely affect any
financing, acquisition, corporate reorganization, or other material transaction
involving the Company or any of its affiliates or require the Company to
disclose matters that otherwise would not be required to be disclosed at such
time, then the Company may require the suspension by each Selling Stockholder of
the distribution of any Shares registered pursuant to the Registration Statement
for a reasonable period of time not to exceed 15 consecutive business days (a
"Blackout Period"). There may not be more than four Blackout Periods in any
period of twelve consecutive calendar months, and the number of days the Selling
Stockholders may be required to suspend distributions of Shares may not exceed
45 business days in any period of twelve consecutive calendar months.
Pursuant to the Registration Rights Agreements, the Company has agreed to
pay all expenses in connection with the registration of the offer and sale of
the Shares (including, without limitation, all registration and filing fees
incurred in connection with the filing of this Registration Statement with the
Commission and state securities commissioners), other than (i) discounts and
commissions and transfer taxes attributable to the sale of any of the Shares and
(ii) fees and disbursements of counsel or of any advisors retained by the
Selling Stockholders in connection with the registration of the offer and sale
of the Shares.
The Company has agreed to indemnify the Selling Stockholders against
certain liabilities that may arise in connection with any offer and sale of the
Shares, including liabilities under the Securities Act, and to contribute to
payments that the Selling Stockholders may be required to make in respect
thereof.
Except as discussed above, neither the Company nor any of its affiliates
has had within the past three years any material relationship with any of the
Selling Stockholders. Chronicle has entered into programming affiliation
agreements and had other dealings in the ordinary course of business with the
Company and its subsidiaries. Any 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
if not then described in the Prospectus.
The table set forth below provides the following information: the names of
the Selling Stockholders who currently hold Shares and the number of TCI Group
Shares and Liberty Group Shares owned as of the date of this Prospectus by each
such holder (which in each case represents less than one percent of the
outstanding shares of TCI Group Series A Common Stock and LMG Series A Common
Stock). Unless otherwise indicated in a footnote to this table, the Selling
Stockholders do not own any shares of TCI Group Common Stock or Liberty Media
Group Common Stock, other than those shares set forth in the table, as of the
date of this Prospectus.
<TABLE>
<CAPTION>
NO. OF WHOLE
SHARES OF TCI NO. OF WHOLE
GROUP SERIES A SHARES OF LMG SERIES A
SELLING STOCKHOLDER COMMON STOCK COMMON STOCK
------------------- ------------ ------------
<S> <C> <C>
Bark, Dennis, Trustee U/A Dated December 31, 1986 7,984 1,995
f/b/o Elizabeth F. Thieriot
Bark, Dennis, Trustee U/A Dated December 31, 1986 7,984 1,995
f/b/o Ferdinand M. Thieriot, III
Bark, Dennis, Trustee U/A Dated December 31, 1986 7,984 1,995
f/b/o Joshua P. Thieriot
Bianchi, George R., Trustee of Michael Tobin Children's 87,749 21,937
Trust f/b/o Patricia Tobin Kubal
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NO. OF WHOLE
SHARES OF TCI NO. OF WHOLE
GROUP SERIES A SHARES OF LMG SERIES A
SELLING STOCKHOLDER COMMON STOCK COMMON STOCK
------------------- ------------ ------------
<S> <C> <C>
Bianchi, George R., Trustee of Michael Tobin Children's 87,749 21,937
Trust f/b/o Joseph O. Tobin, II
Bianchi, George R., Trustee of Michael Tobin Children's 87,749 21,937
Trust f/b/o Katherine O. Tobin
Bianchi, George R., Trustee of Michael Tobin Children's 87,749 21,937
Trust f/b/o Michael H. Tobin, II
Bianchi, George R., Trustee of Michael Tobin Spousal Trust 584,999 146,249
Bianchi, George R., Trustee of Tobin 1994 Trust 36,561 9,139
f/b/o Patricia Tobin Kubal
Bianchi, George R., Trustee of Tobin 1994 Trust 36,561 9,139
f/b/o Joseph O. Tobin, II
Bianchi, George R., Trustee of Tobin 1994 Trust 36,561 9,139
f/b/o Katherine O. Tobin
Bianchi, George R., Trustee of Tobin 1994 Trust 36,561 9,139
f/b/o Michael H. Tobin, II
Folger, Peter M., Trustee of Consuelo Tobin Martin 67,567 16,891
Children's Trust f/b/o Constance M. Goodyear
Folger, Peter M., Trustee of Consuelo Tobin Martin 67,567 16,891
Children's Trust f/b/o Candyce Martin
Folger, Peter M., Trustee of Consuelo Tobin Martin 67,567 16,891
Children's Trust f/b/o Francis A. Martin, III
Folger, Peter M., Trustee of Consuelo Tobin Martin 67,567 16,891
Children's Trust f/b/o Helen M. Spalding
Folger, Peter M., Trustee of Consuelo Tobin Martin 67,567 16,891
Children's Trust f/b/o Priscilla M. Tamkin
Folger, Peter M., Trustee Martin 1994 Trust 169,649 42,412
f/b/o Constance M. Goodyear
Folger, Peter M., Trustee Martin 1994 Trust 169,649 42,412
f/b/o Candyce Martin
Folger, Peter M., Trustee Martin 1994 Trust 169,649 42,412
f/b/o Francis A. Martin, III
Folger, Peter M., Trustee Martin 1994 Trust 169,649 42,412
f/b/o Helen M. Spalding
Folger, Peter M., Trustee Martin 1994 Trust 169,649 42,412
f/b/o Priscilla M. Tamkin
Goodyear, Constance M./(1)(5)/ 55,281 13,820
Kubal, Patricia Tobin, Trustee of the Patricia Tobin Kubal 153,561 38,390
Separate Property Trust
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NO. OF WHOLE
SHARES OF TCI NO. OF WHOLE
GROUP SERIES A SHARES OF LMG SERIES A
SELLING STOCKHOLDER COMMON STOCK COMMON STOCK
------------------- ------------ ------------
<S> <C> <C>
Martin, Candyce/(2)(5)/ 55,281 13,820
Martin, Consuelo Tobin aka Nini Tobin Martin Family Trust/(3)/ 380,249 95,061
Martin, Francis A., III, Trustee of Francis A. Martin, III 55,281 13,820
Trust/(4)(5)/
McEvoy, Nan T./(6)/ 2,911,544 727,885
McEvoy, Nion T. 221,129 55,281
Mosley, Daniel M., Trustee u/a dated January 1, 1988 552,824 138,205
f/b/o Nion T. McEvoy
Spalding, Helen M./(5)/ 55,281 13,820
Stent, Ferdinand T. and Margaret DeBord Stent, Trustees of 614,249 153,561
the Ferdinand T. Stent Revocable Trust
Stent, Peter D., Trustee of the Peter D. Stent Separate 614,249 153,561
Property Trust
Tamkin, Priscilla M./(5)/ 55,281 13,820
Thieriot, Charles C., Trustee of the Charles C. Thieriot 614,249 153,561
Revocable Trust Under Declaration
Dated February 27, 1991
Thieriot, George C. 299,446 74,860
Thieriot, John D., Trustee of the John Dade Thieriot Living 307,124 76,780
Trust Dated October 8, 1987
Thieriot, Nion R. 307,124 76,780
Thieriot, Peter E. 290,846 72,711
Thieriot, Richard T. 614,249 153,561
Tobin, Joseph O., II, Trustee of the J.O. Tobin II Family 153,561 38,390
Trust
Tobin, Katherine O. 153,561 38,390
Tobin, Michael H., Trustee of Michael Tobin Family Trust 146,249 36,561
Tobin, Michael H., II 153,561 38,390
---------- ---------
TOTAL 11,056,451 2,764,081
========== =========
</TABLE>
- ---------------
/(1)/ In addition, Constance M. Goodyear shares beneficial ownership of 500
shares of TCI Group Series B Common Stock and 125 shares of LMG Series B Common
Stock with her spouse. Such shares and the shares of TCI Group Series A Common
Stock and LMG Series A Common Stock into which such shares are convertible are
not being offered pursuant to this Prospectus.
/(2)/ In addition, Candyce Martin may be deemed to share beneficial ownership
of 6,035 shares of TCI Group Series A Common Stock and 1,508 shares of LMG
Series A Common Stock with Consuelo T.
7
<PAGE>
Martin and Francis A. Martin, III by virtue of her position as co-trustee of the
George T. Cameron Trust and the Helen de Young Cameron Trust. Such shares are
not being offered pursuant to this Prospectus.
/(3)/ In addition, Consuelo T. Martin may be deemed to share beneficial
ownership of 6,035 shares of TCI Group Series A Common Stock and 1,508 shares of
LMG Series A Common Stock with Candyce Martin and Francis A. Martin, III by
virtue of her position as co-trustee and income beneficiary of the George T.
Cameron Trust and the Helen de Young Cameron Trust. Such shares are not being
offered pursuant to this Prospectus.
/(4)/ In addition, Francis A. Martin, III may be deemed to share beneficial
ownership of 6,035 shares of TCI Group Series A Common Stock and 1,508 shares of
LMG Series A Common Stock with Candyce Martin and Consuelo T. Martin by virtue
of his position as co-trustee of the George T. Cameron Trust and the Helen de
Young Cameron Trust. Such shares are not being offered pursuant to this
Prospectus.
/(5)/ Constance M. Goodyear, Candyce Martin, Francis A. Martin, III, Helen M.
Spalding and Priscilla M. Tamkin have contingent interests in the George T.
Cameron Trust and the Helen de Young Cameron Trust.
/(6)/ In addition, Nan T. McEvoy beneficially owns 4,800 shares of TCI Group
Series A Common Stock and 1,200 shares of LMG Series A Common Stock. Such shares
are not being offered pursuant to this Prospectus.
The name of the Selling Stockholder in connection with any particular sale
of Shares, the number of Shares to be sold and the number and (if one percent or
more) the percentage of the outstanding shares of TCI Group Series A Common
Stock or LMG Series A Common Stock to be owned by such Selling Stockholder after
completion of any offering hereunder will be specified in the Prospectus
Supplement relating to such sale. It is anticipated that, from time to time
after the date hereof, record ownership of certain of the Shares that are
currently held in trust for the benefit of certain Selling Stockholders will be
transferred to the beneficiaries of the applicable trust and/or that record
ownership of certain of the Shares may be transferred to living trusts of which
the current record owner or (in the case of Shares 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.
PLAN OF DISTRIBUTION
Subject to the restrictions described under the caption "Selling
Stockholders," the Shares may be offered for sale and sold by the Selling
Stockholders from time to time in one or more public or private 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. Subject to the
restrictions described under the caption "Selling Stockholders," the Shares may
be sold by the Selling Stockholders directly or through agents designated from
time to time or to or through broker-dealers designated from time to time. The
Shares may be sold through a broker-dealer acting as agent or broker for the
Selling Stockholders, 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 Shares
may be sold in connection with equity swap, put or call, margin and similar
transactions entered into by a Selling Stockholder, including sales by or at the
direction of the counterparty to any such transactions.
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 or broker-dealer for the sale of the Shares.
The Selling Stockholders may also sell all or a portion of the Shares
pursuant to Rule 144 promulgated under the Securities Act, to the extent that
such sales may be made in compliance with such Rule.
8
<PAGE>
The Selling Stockholders and any agents or broker-dealers 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 on the resale of the
Shares purchased by them may be deemed to be underwriting discounts or
commissions under the Securities Act.
In connection with a sale of Shares, the following information will, to the
extent then required, be provided in the Prospectus Supplement relating to such
sale: the number and type of Shares to be sold, the purchase price, the name of
any agent or broker-dealer, and any applicable commissions, discounts or other
items constituting compensation to such agents or broker-dealers with respect to
the particular sale.
DESCRIPTION OF TCI COMMON STOCK
The following description of certain terms of the TCI Common Stock does not
purport to be complete and is qualified in its entirety by reference to the
Restated Certificate of Incorporation, as amended, of TCI (the "TCI Charter").
GENERAL
The TCI Charter provides, among other things, that TCI is authorized to
issue 2,725,000,000 shares of common stock, par value $1.00 per share, of which
1,750,000,000 shares are designated Tele-Communications, Inc. Series A TCI Group
Common Stock, 150,000,000 shares are designated Tele-Communications, Inc. Series
B TCI Group Common Stock, 750,000,000 shares are designated Tele-Communications,
Inc. Series A Liberty Media Group Common Stock, and 75,000,000 shares are
designated Tele-Communications, Inc. Series B Liberty Media Group Common Stock.
As of January 31, 1996, 571,692,645 shares of TCI Group Series A Common
Stock, 84,685,554 shares of TCI Group Series B Common Stock, 142,892,264 shares
of LMG Series A Common Stock and 21,196,868 shares of LMG Series B Common
Stock (in each case net of shares held by subsidiaries of TCI) had been issued
and were outstanding and 100,524,364 shares of TCI Group Series A Common Stock
were held by subsidiaries of TCI. As of that date, 83,088,963 shares of TCI
Group Series A Common Stock and 21,085,238 shares of LMG Series A Common Stock
were reserved for issuance upon conversion, exchange or exercise of outstanding
convertible or exchangeable securities and options. In addition, TCI has
reserved a number of shares of TCI Group Series A Common Stock equal to the
number of shares of TCI Group Series B Common Stock outstanding, and a number of
shares of LMG Series A Common Stock equal to the number of shares of LMG Series
B Common Stock outstanding, for issuance upon conversion, at the option of the
holder, of the TCI Group Series B Common Stock and LMG Series B Common Stock,
respectively.
The TCI Charter also authorizes 52,375,096 shares of preferred stock (the
"TCI Preferred Stock"), of which 700,000 shares are designated Class A Preferred
Stock, par value $0.01 per share (the "Class A Preferred Stock"), 1,675,096
shares are designated Class B 6% Cumulative Redeemable Exchangeable Junior
Preferred Stock, par value $.01 per share (the "Class B Preferred Stock"), and
50,000,000 shares are designated Series Preferred Stock, par value $.01 per
share (the "Series Preferred Stock"), issuable in series. All of the shares of
Class A Preferred Stock have previously been redeemed and retired and may not be
reissued, thereby reducing the number of authorized shares of TCI Preferred
Stock. Of the Series Preferred Stock, as of January 31, 1996, 80,000 shares are
designated Convertible Preferred Stock, Series C (the "Series C Preferred
Stock"), 1,000,000 shares are designated Convertible Preferred Stock, Series D
(the "Series D Preferred Stock"), 400,000 shares are designated Redeemable
Convertible Preferred Stock, Series E (the "Series E Preferred Stock"), 500,000
shares are designated Convertible Redeemable Participating Preferred Stock,
Series F (the "Series F Preferred Stock"), 7,259,380 shares are designated
Redeemable Convertible TCI Group Preferred Stock, Series G (the "Series G
Preferred Stock") and 7,259,380 shares are designated Redeemable Convertible
Liberty Media Group Preferred Stock, Series H (the "Series H Preferred Stock").
As of January 31, 1996, 1,675,096
9
<PAGE>
shares of Class B Preferred Stock (of which 55,070 shares are held by
subsidiaries of TCI), 70,575 shares of Series C Preferred Stock, 999,569 shares
of Series D Preferred Stock, 277,064 shares of Series F Preferred Stock,
7,259,380 shares of Series G Preferred Stock and 7,259,380 shares of Series H
Preferred Stock had been issued and were outstanding. All of the shares of
Series E Preferred Stock have previously been redeemed and retired with the
effect that such shares have been restored to the status of authorized and
unissued shares of Series Preferred Stock and may be reissued as shares of
another series of Series Preferred Stock, but not as Series E Preferred Stock.
All of the outstanding shares of Series F Preferred Stock are held by
subsidiaries of TCI. Approximately 33,901,240 shares of Series Preferred Stock
remain available for designation pursuant to the TCI Charter as of January 31,
1996. The rights evidenced by the TCI Common Stock are subject to the prior
preferences and rights of the TCI Preferred Stock.
CERTAIN DEFINITIONS
As used herein, the following terms have the meanings specified below:
"Committed Acquisition Shares" means (a) the shares of LMG Series A
Common Stock that TCI had, prior to the record date for the Distribution, agreed
to issue, but as of such record date had not issued, and (b) the shares of LMG
Series A Common Stock that are issuable upon conversion, exercise or exchange of
Convertible Securities that TCI had, prior to the record date for the
Distribution, agreed to issue, but as of such record date had not issued, in
each case including obligations of TCI to issue shares of TCI's Class A Common
Stock, par value $1.00 per share (which has been redesignated TCI Group Series A
Common Stock), which as a result of the Distribution, constitute obligations to
issue, among other securities, LMG Series A Common Stock or Convertible
Securities which are convertible into or exercisable or exchangeable for LMG
Series A Common Stock; provided, however that Committed Acquisition Shares will
not include any shares of Liberty Media Group Common Stock issuable upon
conversion, exercise or exchange of Pre-Distribution Convertible Securities. The
type and amount of Committed Acquisition Shares issuable will be appropriately
adjusted to reflect subdivisions and combinations of the LMG Series A Common
Stock and dividends or distributions of shares of LMG Series A Common Stock or
LMG Series B Common Stock to holders of LMG Series A Common Stock and other
reclassifications of the LMG Series A Common Stock, in each case occurring (or
the record date for which occurs) after the Distribution.
"Convertible Securities" means any securities of TCI (other than any
series of TCI Common Stock) that are convertible into, exchangeable for or
evidence the right to purchase any shares of any series of TCI Common Stock,
whether upon conversion, exercise, exchange, pursuant to antidilution provisions
of such securities or otherwise.
"DGCL" means the General Corporation Law of the State of Delaware.
The "Distribution" means the distribution paid by TCI on August 10, 1995
of one-fourth of one share of LMG Series A Common Stock on each outstanding
share of TCI Group Series A Common Stock and one-fourth of one share of LMG
Series B Common Stock on each outstanding share of TCI Group Series B Common
Stock to holders of record on August 4, 1995.
The "Inter-Group Interest" means any equity value of TCI attributable to
the Liberty Media Group that is not represented by outstanding shares of Liberty
Media Group Common Stock. The Inter-Group Interest is represented by the Number
of Shares Issuable with Respect to the Inter-Group Interest.
The "Inter-Group Interest Fraction" means a fraction the numerator of
which is the Number of Shares Issuable with Respect to the Inter-Group Interest
and the denominator of which is the sum of such Number of Shares Issuable with
Respect to the Inter-Group Interest and the aggregate number of shares of
Liberty Media Group Common Stock outstanding.
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The "Liberty Media Group" means:
(a) the interest of TCI or any of its subsidiaries in Liberty Media
Corporation or any of its subsidiaries (including any successor thereto by
merger, consolidation or sale of all or substantially all of its assets,
whether or not in connection with a Related Business Transaction (as
defined below under "--Conversion and Redemption--Mandatory Dividend,
Redemption or Conversion of Liberty Media Group Common Stock")) and their
respective properties and assets,
(b) all assets and liabilities of TCI or any of its subsidiaries to the
extent attributed to any of the properties or assets referred to in clause
(a) of this sentence, whether or not such assets or liabilities are assets
and liabilities of Liberty Media Corporation or any of its subsidiaries (or
a successor as described in clause (a) of this sentence),
(c) all assets and properties contributed or otherwise transferred to
the Liberty Media Group from the TCI Group, and
(d) the interest of TCI or any of its subsidiaries in the businesses,
assets and liabilities acquired by TCI or any of its subsidiaries for the
Liberty Media Group, as determined by the Board of Directors of TCI (the
"TCI Board of Directors");
provided that (i) from and after any dividend or other distribution with respect
to any shares of Liberty Media Group Common Stock (other than a dividend or
other distribution payable in shares of Liberty Media Group Common Stock, with
respect to which adjustment will be made as described in clause (a) of the
definition of "Number of Shares Issuable with Respect to the Inter-Group
Interest," or in other securities of TCI attributed to the Liberty Media Group
for which provision will be made as described in the penultimate sentence of
this definition), the Liberty Media Group will no longer include an amount of
assets or properties equal to the aggregate amount of such kind of assets or
properties so paid in respect of shares of Liberty Media Group Common Stock
multiplied by a fraction the numerator of which is equal to the Inter-Group
Interest Fraction in effect immediately prior to the record date for such
dividend or other distribution and the denominator of which is equal to the
Outstanding Interest Fraction in effect immediately prior to the record date for
such dividend or other distribution and (ii) from and after any transfer of
assets or properties from the Liberty Media Group to the TCI Group, the Liberty
Media Group will no longer include the assets or properties so transferred. If
TCI pays a dividend or makes any other distribution with respect to shares of
Liberty Media Group Common Stock payable in securities of TCI attributed to the
Liberty Media Group other than Liberty Media Group Common Stock, the TCI Group
will be deemed to hold an amount of such other securities equal to the amount so
distributed multiplied by the fraction specified in clause (i) of this
definition (determined as of a time immediately prior to the record date for
such dividend or other distribution), and to the extent interest or dividends
are paid or other distributions are made on such other securities so distributed
to the holders of Liberty Media Group Common Stock, the Liberty Media Group will
no longer include a corresponding ratable amount of the kind of assets paid as
such interest or dividends or other distributions in respect of such securities
so deemed to be held by the TCI Group. TCI may also, to the extent any such
other securities constitute Convertible Securities which are at the time
convertible, exercisable or exchangeable, cause such Convertible Securities
deemed to be held by the TCI Group to be deemed to be converted, exercised or
exchanged (and to the extent the terms of such Convertible Securities require
payment or delivery of consideration in order to effect such conversion,
exercise or exchange, the Liberty Media Group will in such case include an
amount of the kind of properties or assets required to be paid or delivered as
such consideration for the amount of the Convertible Securities deemed
converted, exercised or exchanged as if such Convertible Securities were
outstanding), in which case such Convertible Securities will no longer be deemed
to be held by the TCI Group or attributed to the Liberty Media Group.
"Market Value" of any class or series of capital stock of TCI on any day
means the average of the high and low reported sale prices regular way of a
share of such class or series on such day (if such day is a trading day, and if
such day is not a trading day, on the trading day immediately preceding such
day) or in case no such reported sale takes place on such trading day the
average of the reported closing
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bid and asked prices regular way of a share of such class or series on such
trading day, in either case on the Nasdaq National Market, or if the shares of
such class or series are not quoted on such Nasdaq National Market on such
trading day, the average of the closing bid and asked prices of a share of such
class or series in the over-the-counter market on such trading day as furnished
by any New York Stock Exchange member firm selected from time to time by TCI, or
if such closing bid and asked prices are not made available by any such New York
Stock Exchange member firm on such trading day, the market value of a share of
such class or series as determined by the TCI Board of Directors; provided that
for purposes of determining the ratios described under "--Conversion and
Redemption--Conversion of Liberty Media Group Common Stock at the Option of TCI"
and "--Conversion and Redemption--Mandatory Dividend, Redemption or Conversion
of Liberty Media Group Common Stock" and "--Liquidation Rights," (a) the "Market
Value" of any share of any series of TCI Common Stock on any day prior to the
"ex" date or any similar date for any dividend or distribution paid or to be
paid with respect to such series of TCI Common Stock will be reduced by the fair
market value of the per share amount of such dividend or distribution as
determined by the TCI Board of Directors and (b) the "Market Value" of any share
of any series of TCI Common Stock on any day prior to (i) the effective date of
any subdivision (by stock split or otherwise) or combination (by reverse stock
split or otherwise) of outstanding shares of such series of TCI Common Stock or
(ii) the "ex" date or any similar date for any dividend or distribution with
respect to any such series of TCI Common Stock in shares of such series of TCI
Common Stock will be appropriately adjusted to reflect such subdivision,
combination, dividend or distribution.
The "Number of Shares Issuable with Respect to the Inter-Group Interest"
is currently zero and will from time to time be
(a) adjusted as appropriate to reflect subdivisions (by stock split or
otherwise) and combinations (by reverse stock split or otherwise) of the
LMG Series A Common Stock and dividends or distributions of shares of LMG
Series A Common Stock or LMG Series B Common Stock to holders of LMG Series
A Common Stock and other reclassifications of LMG Series A Common Stock,
(b) decreased (but not to less than zero) by (i) the aggregate number of
shares of LMG Series A Common Stock issued or sold by TCI after the
Distribution other than Committed Acquisition Shares, the proceeds of which
are attributed to the TCI Group, (ii) the aggregate number of shares of LMG
Series A Common Stock issued or delivered upon conversion, exercise or
exchange of Convertible Securities (other than Pre-Distribution Convertible
Securities and Convertible Securities which are convertible into or
exercisable or exchangeable for Committed Acquisition Shares), the proceeds
of which are attributed to the TCI Group, (iii) the aggregate number of
shares of LMG Series A Common Stock issued or delivered by TCI as a
dividend or distribution to holders of TCI Group Series A Common Stock and
TCI Group Series B Common Stock, (iv) the aggregate number of shares of LMG
Series A Common Stock issued or delivered upon the conversion, exercise or
exchange of any Convertible Securities (other than Pre-Distribution
Convertible Securities and Convertible Securities which are convertible
into or exercisable or exchangeable for Committed Acquisition Shares)
issued or delivered by TCI after the Distribution as a dividend or
distribution or by reclassification or exchange to holders of TCI Group
Series A Common Stock and TCI Group Series B Common Stock and (v) the
aggregate number of shares of LMG Series A Common Stock (rounded, if
necessary, to the nearest whole number), equal to the aggregate fair value
(as determined by the TCI Board of Directors) of assets or properties
attributed to the Liberty Media Group that are transferred from the Liberty
Media Group to the TCI Group in consideration of a reduction in the Number
of Shares Issuable with Respect to the Inter-Group Interest, divided by the
Market Value of one share of LMG Series A Common Stock as of the date of
such transfer, and
(c) increased by (i) the aggregate number of any shares of LMG Series A
Common Stock and LMG Series B Common Stock which are retired or otherwise
cease to be outstanding following their purchase with funds attributed to
the TCI Group, (ii) a number (rounded, if necessary, to the nearest whole
number), equal to the fair value (as determined by the TCI Board of
Directors) of assets or properties, theretofore attributed to the TCI Group
that are contributed to the Liberty Media
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Group in consideration of an increase in the Number of Shares Issuable with
Respect to the Inter-Group Interest, divided by the Market Value of one
share of LMG Series A Common Stock as of the date of such contribution and
(iii) the aggregate number of shares of LMG Series A Common Stock and LMG
Series B Common Stock into or for which Convertible Securities are deemed
to be converted, exercised or exchanged pursuant to the last sentence of
the definition of "TCI Group."
TCI will not issue or sell shares of LMG Series B Common Stock in respect of a
reduction in the Number of Shares Issuable with Respect to the Inter-Group
Interest. Whenever a change in the Number of Shares Issuable with Respect to the
Inter-Group Interest occurs, TCI will prepare and file a statement of such
change with the Secretary of TCI.
The "Outstanding Interest Fraction" means a fraction the numerator of
which is the aggregate number of shares of Liberty Media Group Common Stock
outstanding and the denominator of which is the sum of such aggregate number of
shares of Liberty Media Group Common Stock outstanding and the Number of Shares
Issuable with Respect to the Inter-Group Interest.
"Pre-Distribution Convertible Securities" means Convertible Securities
that were outstanding on the record date for the Distribution and were, prior to
such date, convertible into or exercisable or exchangeable for shares of TCI's
Class A Common Stock, par value $1.00 per share (which has been redesignated TCI
Group Series A Common Stock).
The "TCI Group" means as of any date of determination thereof:
(a) the interest of TCI or any of its subsidiaries in all of the
businesses in which TCI or any of its subsidiaries (or any of their
predecessors or successors) is or has been engaged, directly or indirectly,
and the respective assets and liabilities of TCI or any of its
subsidiaries, other than any businesses, assets or liabilities of the
Liberty Media Group;
(b) a proportionate interest in the businesses, assets and liabilities
of the Liberty Media Group equal to the Inter-Group Interest Fraction as of
such date;
(c) from and after any dividend or other distribution with respect to
shares of Liberty Media Group Common Stock (other than a dividend or other
distribution payable in shares of Liberty Media Group Common Stock, with
respect to which adjustment will be made as described in clause (a) of the
definition of "Number of Shares Issuable with Respect to the Inter-Group
Interest," or in other securities of TCI attributed to the Liberty Media
Group, for which provision will be made as described in the penultimate
sentence of this definition), an amount of assets or properties theretofore
included in the Liberty Media Group equal to the aggregate amount of such
kind of assets or properties so paid in respect of such dividend or other
distribution with respect to shares of Liberty Media Group Common Stock
multiplied by a fraction the numerator of which is equal to the Inter-Group
Interest Fraction in effect immediately prior to the record date for such
dividend or other distribution and the denominator of which is equal to the
Outstanding Interest Fraction in effect immediately prior to the record
date for such dividend or other distribution; and
(d) any assets or properties transferred from the Liberty Media Group to
the TCI Group;
provided that, from and after any contribution or transfer of any assets or
properties from the TCI Group to the Liberty Media Group, the TCI Group will no
longer include such assets or properties so contributed or transferred (other
than pursuant to its interest in the businesses, assets and liabilities of the
Liberty Media Group described in clause (b) above). If TCI pays a dividend or
makes any other distribution with respect to shares of Liberty Media Group
Common Stock payable in other securities of TCI attributed to the Liberty Media
Group, the TCI Group will be deemed to hold an amount of such other securities
equal to the amount so distributed multiplied by the fraction specified in
clause (c) of this definition (determined as of a time immediately prior to the
record date for such dividend or other distribution), and to the extent interest
or dividends are paid or other distributions are made on such other securities
so distributed to holders of Liberty Media Group Common Stock, the TCI Group
will include
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a corresponding ratable amount of the kind of assets paid as such interest or
dividends or other distributions in respect of such securities so deemed to be
held by the TCI Group. TCI may also, to the extent any such other securities
constitute Convertible Securities which are at the time convertible, exercisable
or exchangeable, cause such Convertible Securities deemed to be held by the TCI
Group to be deemed to be converted, exercised or exchanged (and to the extent
the terms of such Convertible Securities require payment or delivery of
consideration in order to effect such conversion, exercise or exchange, the TCI
Group will in such case no longer include an amount of the kind of properties or
assets required to be paid or delivered as such consideration for the amount of
the Convertible Securities deemed converted, exercised or exchanged as if such
Convertible Securities were outstanding), in which case such Convertible
Securities will no longer be deemed to be held by the TCI Group or attributed to
the Liberty Media Group.
VOTING RIGHTS
Holders of TCI Group Series A Common Stock are entitled to one vote for
each share of such stock held, holders of TCI Group Series B Common Stock are
entitled to ten votes for each share of such stock held, holders of LMG Series A
Common Stock are entitled to one vote for each share of such stock held and
holders of LMG Series B Common Stock are entitled to ten votes for each share of
such stock held, on all matters presented to such stockholders. Except as may
otherwise be required by the laws of the State of Delaware or, with respect to
any class or series of TCI Preferred Stock, in the TCI Charter (including any
resolution or resolutions providing for the establishment of such class or
series pursuant to authority vested in the TCI Board of Directors by the TCI
Charter), the holders of TCI Group Common Stock and the holders of Liberty Media
Group Common Stock and the holders of each class or series of TCI Preferred
Stock entitled to vote on a particular matter will vote as one class for all
purposes. See "--Other Matters."
Neither the holders of TCI Group Series A Common Stock or TCI Group
Series B Common Stock, nor the holders of LMG Series A Common Stock or LMG
Series B Common Stock, have any rights to vote as a separate class or series on
any matter coming before the stockholders of TCI, except with respect to certain
limited class and series voting rights provided under the DGCL. Under the DGCL,
the approval of the holders of a majority of the outstanding shares of any class
of capital stock of a corporation, voting separately as a class, is required to
approve any amendment to the charter that would alter or change the powers,
preferences or special rights of the shares of such class so as to affect them
adversely, provided that, if any amendment would alter or change the powers,
preferences or special rights of one or more series of the class so as to affect
them adversely, but would not so affect the entire class, then only the shares
of the series so affected by the amendment would be entitled to vote thereon
separately as a class.
DIVIDENDS
Subject to the prior payment of dividends on, and other rights of, any of
the outstanding shares of TCI Preferred Stock, dividends may be paid as
determined by the TCI Board of Directors (i) on the TCI Group Common Stock out
of the lesser of (x) the TCI Group Available Dividend Amount and (y) funds of
TCI legally available therefor under the DGCL and (ii) on the Liberty Media
Group Common Stock out of the lesser of (x) the Liberty Media Group Available
Dividend Amount and (y) funds of TCI legally available therefor under the DGCL.
Under the DGCL the amount of the funds of TCI legally available for the payment
of dividends on any series of TCI Common Stock is determined on the basis of the
entire corporation and not just the Liberty Media Group or the TCI Group.
Consequently, the amount of legally available funds will be reduced by the
amount of any net losses of the Liberty Media Group or the TCI Group and any
dividends or distributions on, or repurchases of, the TCI Group Common Stock or
the Liberty Media Group Common Stock and dividends on, or certain repurchases
of, TCI Preferred Stock. Certain loan agreements to which certain subsidiaries
of TCI are parties or are subject contain restricted payment provisions that
limit the amount of dividends, other than stock dividends, that those companies
may pay. Future loan agreements may also contain similar restrictions and
limits.
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The "TCI Group Available Dividend Amount," as of any date, means either
(a) the excess of (i) an amount equal to the total assets of the TCI Group less
the total liabilities (not including preferred stock) of the TCI Group as of
such date over (ii) the aggregate par value of, or any greater amount determined
to be capital in respect of, all outstanding shares of TCI Group Common Stock
and each class or series of TCI Preferred Stock attributed to the TCI Group or
(b) in case there is no such excess, an amount equal to TCI Earnings (Loss)
Attributable to the TCI Group (if positive) for the fiscal year in which such
date occurs and/or the preceding fiscal year. "TCI Earnings (Loss) Attributable
to the TCI Group," for any period, means the net earnings or loss of the TCI
Group for such period determined on a basis consistent with the determination of
the net earnings or loss of the TCI Group for such period as presented in the
combined financial statements of the TCI Group for such period, including income
and expenses of TCI attributed to the operations of the TCI Group on a
substantially consistent basis, including without limitation, corporate
administrative costs, net interest and income taxes. The TCI Group Available
Dividend Amount is intended to be similar to the amount that would be legally
available for the payment of dividends on the TCI Group Common Stock under the
DGCL if the TCI Group were a separate Delaware corporation. There can be no
assurance that there will be a TCI Group Available Dividend Amount.
The "Liberty Media Group Available Dividend Amount," as of any date, means
the product of the Outstanding Interest Fraction and either (a) the excess of
(i) an amount equal to the total assets of the Liberty Media Group less the
total liabilities (not including preferred stock) of the Liberty Media Group as
of such date over (ii) the aggregate par value of, or any greater amount
determined to be capital in respect of, all outstanding shares of Liberty Media
Group Common Stock and each class or series of TCI Preferred Stock attributed to
the Liberty Media Group or (b) in case there is no such excess, an amount equal
to TCI Earnings (Loss) Attributable to the Liberty Media Group (if positive) for
the fiscal year in which such date occurs and/or the preceding fiscal year. "TCI
Earnings (Loss) Attributable to the Liberty Media Group," for any period, means
the net earnings or loss of the Liberty Media Group for such period determined
on a basis consistent with the determination of the net earnings or loss of the
Liberty Media Group for such period as presented in the combined financial
statements of the Liberty Media Group for such period, including income and
expenses of TCI attributed to the operations of the Liberty Media Group on a
substantially consistent basis, including, without limitation, corporate
administrative costs, net interest and income taxes. The Liberty Media Group
Available Dividend Amount is intended to be similar to the amount that would be
legally available for the payment of dividends on the Liberty Media Group Common
Stock under the DGCL if the Liberty Media Group were a separate Delaware
corporation. There can be no assurance that there will be a Liberty Media Group
Available Dividend Amount.
Except for dividends declared or paid as described below under "--Share
Distributions" and "--Conversion and Redemption--Mandatory Dividend, Redemption
or Conversion of Liberty Media Group Common Stock," any dividends paid on the
TCI Group Series A Common Stock or the TCI Group Series B Common Stock will be
paid only on both series, in equal amounts per share, and any dividends paid on
the LMG Series A Common Stock or the LMG Series B Common Stock will be paid only
on both series, in equal amounts per share.
The TCI Board of Directors, subject to the provisions described herein
under "--Dividends" and below under "--Share Distributions," has the authority
and discretion to declare and pay dividends on the TCI Group Common Stock or the
Liberty Media Group Common Stock in equal or unequal amounts, notwithstanding
the relationship between the TCI Group Available Dividend Amount and the Liberty
Media Group Available Dividend Amount, the respective amounts of prior dividends
declared on, or liquidation rights of, the TCI Group Common Stock or the Liberty
Media Group Common Stock or any other factor.
At the time of any dividend or other distribution on the outstanding shares
of Liberty Media Group Common Stock (including any dividend of Net Proceeds from
the Disposition of all or substantially all of the properties and assets of the
Liberty Media Group as described below under "--Conversion and Redemption--
Mandatory Dividend, Redemption or Conversion of Liberty Media Group Common
Stock"), the TCI Group will (if at such time there is an Inter-Group Interest)
be credited, and
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the Liberty Media Group will be charged (in addition to the charge for the
dividend or other distribution paid or distributed in respect of outstanding
shares of Liberty Media Group Common Stock), with an amount equal to the product
of (i) the aggregate amount of such dividend or distribution paid or distributed
in respect of outstanding shares of Liberty Media Group Common Stock times (ii)
a fraction the numerator of which is the Inter-Group Interest Fraction and the
denominator of which is the Outstanding Interest Fraction.
SHARE DISTRIBUTIONS
DISTRIBUTIONS ON TCI GROUP COMMON STOCK. If at any time after the
Distribution a distribution paid in TCI Group Common Stock, Liberty Media Group
Common Stock, or any other securities of TCI or any other person (a "share
distribution") is to be made with respect to the TCI Group Common Stock, such
share distribution will be declared and paid only as follows:
(i) a share distribution consisting of shares of TCI Group Series A
Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of TCI Group Series A
Common Stock) to holders of TCI Group Series A Common Stock and
TCI Group Series B Common Stock, on an equal per share basis; or
consisting of shares of TCI Group Series B Common Stock (or
Convertible Securities convertible into or exercisable or
exchangeable for shares of TCI Group Series B Common Stock) to
holders of TCI Group Series A Common Stock and TCI Group Series B
Common Stock, on an equal per share basis; or consisting of shares
of TCI Group Series A Common Stock (or Convertible Securities
convertible into or exercisable or exchangeable for shares of TCI
Group Series A Common Stock) to holders of TCI Group Series A
Common Stock and, on an equal per share basis, shares of TCI Group
Series B Common Stock (or like Convertible Securities convertible
into or exercisable or exchangeable for shares of TCI Group Series
B Common Stock) to holders of TCI Group Series B Common Stock;
(ii) a share distribution consisting of shares of LMG Series A Common
Stock (or Convertible Securities convertible into or exercisable
or exchangeable for shares of LMG Series A Common Stock) to
holders of TCI Group Series A Common Stock and TCI Group Series B
Common Stock, on an equal per share basis; provided that the sum
of (a) the aggregate number of shares of LMG Series A Common Stock
to be so issued (or the number of such shares which would be
issuable upon conversion, exercise or exchange of any Convertible
Securities to be so issued) and (b) the number of shares of such
series that are subject to issuance upon conversion, exercise or
exchange of any Convertible Securities then outstanding that are
attributed to the TCI Group (other than Pre-Distribution
Convertible Securities and other than Convertible Securities
convertible into or exercisable or exchangeable for Committed
Acquisition Shares) is less than or equal to the Number of Shares
Issuable with Respect to the Inter-Group Interest; and
(iii) a share distribution consisting of any class or series of
securities of TCI or any other person other than TCI Group Common
Stock or Liberty Media Group Common Stock (or Convertible
Securities convertible into or exercisable or exchangeable for
shares of TCI Group Common Stock or Liberty Media Group Common
Stock), either on the basis of a distribution of identical
securities, on an equal per share basis, to holders of TCI Group
Series A Common Stock and TCI Group Series B Common Stock or on
the basis of a distribution of one class or series of securities
to holders of TCI Group Series A Common Stock and another class or
series of securities to holders of TCI Group Series B Common
Stock, provided that the securities so distributed (and, if the
distribution consists of Convertible Securities, the securities
into which such Convertible Securities are convertible or for
which they are exercisable or exchangeable) do not differ in any
respect other than their relative voting rights and related
differences in designation, conversion, redemption and share
distribution provisions, with holders of shares of TCI Group
Series B Common Stock receiving the class or series having the
higher relative voting rights (without regard to whether such
rights differ to a greater or lesser extent
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than the corresponding differences in voting rights, designation,
conversion, redemption and share distribution provisions between
the TCI Group Series A Common Stock and the TCI Group Series B
Common Stock), provided that if the securities so distributed
constitute capital stock of a subsidiary of TCI, such rights will
not differ to a greater extent than the corresponding differences
in voting rights, designation, conversion, redemption and share
distribution provisions between the TCI Group Series A Common
Stock and the TCI Group Series B Common Stock, and provided in
each case that such distribution is otherwise made on an equal per
share basis.
TCI will not reclassify, subdivide or combine the TCI Group Series A
Common Stock without reclassifying, subdividing or combining the TCI Group
Series B Common Stock, on an equal per share basis, and TCI will not reclassify,
subdivide or combine the TCI Group Series B Common Stock without reclassifying,
subdividing or combining the TCI Group Series A Common Stock, on an equal per
share basis.
DISTRIBUTIONS ON LIBERTY MEDIA GROUP COMMON STOCK. If at any time a
share distribution is to be made with respect to the Liberty Media Group Common
Stock, such share distribution will be declared and paid only as follows (or as
described under "--Conversion and Redemption" with respect to the redemptions
and other distributions referred to therein):
(i) a share distribution consisting of shares of LMG Series A Common
Stock (or Convertible Securities convertible into or exercisable
or exchangeable for shares of LMG Series A Common Stock) to
holders of LMG Series A Common Stock and LMG Series B Common
Stock, on an equal per share basis; or consisting of shares of LMG
Series B Common Stock (or Convertible Securities convertible into
or exercisable or exchangeable for shares of LMG Series B Common
Stock) to holders of LMG Series A Common Stock and LMG Series B
Common Stock, on an equal per share basis; or consisting of shares
of LMG Series A Common Stock (or Convertible Securities
convertible into or exercisable or exchangeable for shares of LMG
Series A Common Stock) to holders of LMG Series A Common Stock
and, on an equal per share basis, shares of LMG Series B Common
Stock (or like Convertible Securities convertible into or
exercisable or exchangeable for shares of LMG Series B Common
Stock) to holders of LMG Series B Common Stock; and
(ii) a share distribution consisting of any class or series of
securities of TCI or any other person other than as described in
the immediately preceding clause (i) and other than TCI Group
Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of TCI Group Series A
Common Stock or TCI Group Series B Common Stock), either on the
basis of a distribution of identical securities, on an equal per
share basis, to holders of LMG Series A Common Stock and LMG
Series B Common Stock or on the basis of a distribution of one
class or series of securities to holders of LMG Series A Common
Stock and another class or series of securities to holders of LMG
Series B Common Stock, provided that the securities so distributed
(and, if the distribution consists of Convertible Securities, the
securities into which such Convertible Securities are convertible
or for which they are exercisable or exchangeable) do not differ
in any respect other than their relative voting rights and related
differences in designation, conversion, redemption and share
distribution provisions, with holders of shares of LMG Series B
Common Stock receiving the class or series having the higher
relative voting rights (without regard to whether such rights
differ to a greater or lesser extent than the corresponding
differences in voting rights, designation, conversion, redemption
and share distribution provisions between the LMG Series A Common
Stock and the LMG Series B Common Stock), provided that if the
securities so distributed constitute capital stock of a subsidiary
of TCI, such rights will not differ to a greater extent than the
corresponding differences in voting rights, designation,
conversion, redemption and share distribution provisions between
the LMG Series A Common Stock
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and the LMG Series B Common Stock, and provided in each case that
such distribution is otherwise made on an equal per share basis.
TCI will not reclassify, subdivide or combine the LMG Series A Common
Stock without reclassifying, subdividing or combining the LMG Series B Common
Stock, on an equal per share basis, and TCI will not reclassify, subdivide or
combine the LMG Series B Common Stock without reclassifying, subdividing or
combining the LMG Series A Common Stock, on an equal per share basis.
CONVERSION AND REDEMPTION
CONVERSION OF TCI GROUP SERIES B COMMON STOCK AND LMG SERIES B COMMON
STOCK AT THE OPTION OF THE HOLDER. Each share of TCI Group Series B Common Stock
is convertible, at the option of the holder thereof, into one share of TCI Group
Series A Common Stock. Each share of LMG Series B Common Stock is convertible,
at the option of the holder thereof, into one share of LMG Series A Common
Stock. Shares of TCI Group Series A Common Stock are not convertible into shares
of TCI Group Series B Common Stock, and shares of LMG Series A Common Stock are
not convertible into shares of LMG Series B Common Stock.
CONVERSION OF LIBERTY MEDIA GROUP COMMON STOCK AT THE OPTION OF TCI. The
TCI Board of Directors may at any time declare that (i) all of the outstanding
shares of LMG Series A Common Stock will be converted into a number (or
fraction) of fully paid and nonassessable shares of TCI Group Series A Common
Stock equal to the Optional Conversion Ratio, and (ii) all of the outstanding
shares of LMG Series B Common Stock will be converted into a number (or
fraction) of fully paid and nonassessable shares of TCI Group Series B Common
Stock equal to the Optional Conversion Ratio.
For these purposes, the "Optional Conversion Ratio" means the quotient
(calculated to the nearest five decimal places) obtained by dividing (x) the
Liberty Media Group Common Stock Per Share Value by (y) the average Market Value
of one share of TCI Group Series A Common Stock over the 20-trading day period
ending on the trading day preceding the Appraisal Date. The Liberty Media Group
Common Stock Per Share Value will equal the quotient obtained by dividing the
Liberty Media Group Private Market Value by the Adjusted Outstanding Shares of
Liberty Media Group Common Stock, which will be determined in the manner
described below.
The "Liberty Media Group Private Market Value" means an amount equal to
the private market value of the Liberty Media Group as of the last day of the
calendar month preceding the month in which the last of the two appraisers
referred to in the immediately following sentence are selected (the last day of
such calendar month is hereinafter referred to as the "Appraisal Date"). In the
event that TCI determines to establish the Liberty Media Group Private Market
Value, two investment banking firms of recognized national standing will be
designated to determine the private market value of the Liberty Media Group, one
designated by TCI (the "First Appraiser") and one designated by a committee of
the TCI Board of Directors all of whose members are independent directors as
determined under Nasdaq National Market rules (the "Second Appraiser"). The date
upon which the last of such appraisers is selected is hereinafter referred to as
the "Selection Date." Not later than 20 days after the Selection Date, the First
Appraiser and the Second Appraiser will each determine its initial view as to
the private market value of the Liberty Media Group as of the Appraisal Date and
will consult with one another with respect thereto. Not later than the 30th day
after the Selection Date, the First Appraiser and the Second Appraiser will each
have determined its final view as to such private market value. If the higher of
the respective final views of the First Appraiser and the Second Appraiser as to
such private market value (the "Higher Appraised Amount") is not more than 120%
of the lower of such respective final views (the "Lower Appraised Amount"), the
Liberty Media Group Private Market Value (subject to any adjustment described in
the second succeeding paragraph) will be the average of those two amounts. If
the Higher Appraised Amount is more than 120% of the Lower Appraised Amount, the
First Appraiser and the Second Appraiser will agree upon and jointly designate a
third investment banking firm of recognized national standing (the "Mutually
Designated Appraiser") to determine such private market value. The Mutually
Designated Appraiser will not be provided with any of the work of the First
Appraiser and Second Appraiser. The Mutually Designated Appraiser will, no later
than the 20th day after the date the
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Mutually Designated Appraiser is designated, determine such private market value
(the "Mutually Appraised Amount"), and the Liberty Media Group Private Market
Value (subject to any adjustment described in the second succeeding paragraph)
will be (i) if the Mutually Appraised Amount is between the Lower Appraised
Amount and the Higher Appraised Amount, (a) the average of (1) the Mutually
Appraised Amount and (2) the Lower Appraised Amount or the Higher Appraised
Amount, whichever is closer to the Mutually Appraised Amount, or (b) the
Mutually Appraised Amount, if neither the Lower Appraised Amount nor the Higher
Appraised Amount is closer to the Mutually Appraised Amount, or (ii) if the
Mutually Appraised Amount is greater than the Higher Appraised Amount or less
than the Lower Appraised Amount, the average of the Higher Appraised Amount and
the Lower Appraised Amount. For these purposes, if any such investment banking
firm expresses its final view of the private market value of the Liberty Media
Group as a range of values, such investment banking firm's final view of such
private market value will be deemed to be the midpoint of such range of values.
Each of the investment banking firms referred to in the immediately
preceding paragraph will be instructed to determine the private market value of
the Liberty Media Group as of the Appraisal Date based upon the amount a willing
purchaser would pay to a willing seller, in an arm's length transaction, if it
were acquiring the Liberty Media Group, as if the Liberty Media Group were a
publicly traded non-controlled corporation and the purchaser was acquiring all
of the capital stock of such corporation and without consideration of any
potential regulatory constraints limiting the potential purchasers of the
Liberty Media Group other than that which would have existed if the Liberty
Media Group were a publicly traded non-controlled entity.
Following the determination of the Liberty Media Group Private Market
Value, the investment banking firms whose final views of the private market
value of the Liberty Media Group were used in the calculation of the Liberty
Media Group Private Market Value will determine the Adjusted Outstanding Shares
of Liberty Media Group Common Stock together with any further appropriate
adjustments to the Liberty Media Group Private Market Value resulting from such
determination. The "Adjusted Outstanding Shares of Liberty Media Group Common
Stock" means a number, as determined by such investment banking firms as of the
Appraisal Date, equal to the sum of the number of shares of Liberty Media Group
Common Stock outstanding, the Number of Shares Issuable with Respect to the
Inter-Group Interest, the number of Committed Acquisition Shares issuable, the
number of shares of Liberty Media Group Common Stock issuable upon the
conversion, exercise or exchange of all Pre-Distribution Convertible Securities
and the number of shares of Liberty Media Group Common Stock issuable upon the
conversion, exercise or exchange of those Convertible Securities (other than
Pre-Distribution Convertible Securities and other than Convertible Securities
which are convertible into or exercisable or exchangeable for Committed
Acquisition Shares) the holders of which would derive an economic benefit from
conversion, exercise or exchange of such Convertible Securities which exceeds
the economic benefit of not converting, exercising or exchanging such
Convertible Securities. The "Liberty Media Group Common Stock Per Share Value"
means the quotient obtained by dividing the Liberty Media Group Private Market
Value by the Adjusted Outstanding Shares of Liberty Media Group Common Stock,
provided that if such investment banking firms do not agree on the
determinations provided for in this paragraph, the Liberty Media Group Common
Stock Per Share Value will be the average of the quotients so obtained on the
basis of the respective determinations of such firms.
If TCI determines to convert shares of LMG Series A Common Stock into
TCI Group Series A Common Stock and shares of LMG Series B Common Stock into TCI
Group Series B Common Stock at the Optional Conversion Ratio, such conversion
will occur on a conversion date on or prior to the 120th day following the
Appraisal Date. If TCI determines not to undertake such conversion, TCI may at
any time thereafter undertake to reestablish the Liberty Media Group Common
Stock Per Share Value as of a subsequent date.
MANDATORY DIVIDEND, REDEMPTION OR CONVERSION OF LIBERTY MEDIA GROUP COMMON
STOCK. Upon the sale, transfer, assignment or other disposition, whether by
merger, consolidation, sale or contribution of assets or stock or otherwise (a
"Disposition"), in one transaction or a series of related transactions by TCI
and its subsidiaries of all or substantially all of the properties and assets of
the Liberty Media Group to one or more persons, entities or groups (other than
(a) in connection with the Disposition by TCI of
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all of TCI's properties and assets in one transaction or a series of related
transactions in connection with the liquidation, dissolution or winding up of
TCI, (b) a dividend, other distribution or redemption in accordance with any
provision described under "--Dividends," "--Share Distributions," "--Redemption
in Exchange for Stock of Subsidiary" or "--Liquidation Rights," (c) to any
person, entity or group which TCI, directly or indirectly, after giving effect
to the Disposition, controls or (d) in connection with a Related Business
Transaction), TCI will on or prior to the 85th trading day following the
consummation of such Disposition, either:
(i) subject to the limitations described above under "--Dividends,"
declare and pay a dividend in cash and/or securities or other
property (other than a dividend or distribution of TCI Common
Stock) to the holders of the outstanding shares of Liberty Media
Group Common Stock equally on a share for share basis (subject to
the provisions described in the last sentence of the paragraph
herein which defines the term "Net Proceeds"), in an aggregate
amount equal to the product of the Outstanding Interest Fraction
as of the record date for determining the holders entitled to
receive such dividend and the Net Proceeds of such Disposition;
(ii) provided that there are funds of TCI legally available therefor
and the Liberty Media Group Available Dividend Amount would have
been sufficient to pay a dividend in lieu thereof as described in
clause (i) of this paragraph:
(a) if such Disposition involves all (not merely substantially
all) of the properties and assets of the Liberty Media Group,
redeem all outstanding shares of LMG Series A Common Stock and LMG
Series B Common Stock in exchange for cash and/or securities or
other property (other than TCI Common Stock) in an aggregate
amount equal to the product of the Adjusted Outstanding Interest
Fraction as of the date of such redemption and the Net Proceeds of
such Disposition, such aggregate amount to be allocated (subject
to the provisions described in the last sentence of the paragraph
herein which defines the term "Net Proceeds") to shares of LMG
Series A Common Stock and LMG Series B Common Stock in the ratio
of the number of shares of each such series outstanding (so that
the amount of consideration paid for the redemption of each share
of LMG Series A Common Stock and each share of LMG Series B Common
Stock is the same); or
(b) if such Disposition involves substantially all (but not
all) of the properties and assets of the Liberty Media Group,
apply an aggregate amount of cash and/or securities or other
property (other than TCI Common Stock) equal to the product of the
Outstanding Interest Fraction as of the date shares are selected
for redemption and the Net Proceeds of such Disposition to the
redemption of outstanding shares of LMG Series A Common Stock and
LMG Series B Common Stock, such aggregate amount to be allocated
(subject to the provisions described in the last sentence of the
paragraph herein which defines the term "Net Proceeds") to shares
of LMG Series A Common Stock and LMG Series B Common Stock in the
ratio of the number of shares of each such series outstanding, and
the number of shares of each such series to be redeemed to equal
the lesser of (x) the whole number nearest the number determined
by dividing the aggregate amount so allocated to the redemption of
such series by the average Market Value of one share of LMG Series
A Common Stock during the ten-trading day period beginning on the
16th trading day following the consummation of such Disposition
and (y) the number of shares of such series outstanding (so that
the amount of consideration paid for the redemption of each share
of LMG Series A Common Stock and each share of LMG Series B Common
Stock is the same); or
(iii) convert (a) each outstanding share of LMG Series A Common Stock
into a number (or fraction) of fully paid and nonassessable shares
of TCI Group Series A Common Stock and (b) each outstanding share
of LMG Series B Common Stock into a number (or fraction) of fully
paid and nonassessable shares of TCI Group Series B Common Stock,
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in each case equal to 110% of the average daily ratio (calculated
to the nearest five decimal places) of the Market Value of one
share of LMG Series A Common Stock to the Market Value of one
share of TCI Group Series A Common Stock during the ten-trading
day period referred to in clause (ii)(b) of this paragraph.
For these purposes, "substantially all of the properties and assets of the
Liberty Media Group" as of any date means a portion of such properties and
assets that represents at least 80% of the then-current market value (as
determined by the TCI Board of Directors) of the properties and assets of the
Liberty Media Group as of such date.
A "Related Business Transaction" means any Disposition of all or
substantially all of the properties and assets of the Liberty Media Group in
which TCI receives as proceeds of such Disposition primarily equity securities
(including, without limitation, capital stock, convertible securities,
partnership or limited partnership interests and other types of equity
securities, without regard to the voting power or contractual or other
management or governance rights related to such equity securities) of the
purchaser or acquiror of such assets and properties of the Liberty Media Group,
any entity which succeeds (by merger, formation of a joint venture enterprise or
otherwise) to such assets and properties of the Liberty Media Group or a third
party issuer, which purchaser, acquiror or other issuer is engaged or proposes
to engage primarily in one or more businesses similar or complementary to the
businesses conducted by the Liberty Media Group prior to such Disposition, as
determined in good faith by the TCI Board of Directors.
The "Adjusted Outstanding Interest Fraction" means a fraction the numerator
of which is the number of outstanding shares of Liberty Media Group Common Stock
and the denominator of which is the sum of (a) such number of outstanding
shares, (b) the Number of Shares Issuable with Respect to the Inter-Group
Interest, (c) the number of shares of Liberty Media Group Common Stock issuable
upon conversion, exercise or exchange of Pre-Distribution Convertible Securities
and (d) the number of Committed Acquisition Shares issuable.
The "Net Proceeds" with respect to any Disposition of any of the properties
and assets of the Liberty Media Group means an amount, if any, equal to the
gross proceeds of such Disposition after any payment of, or reasonable provision
for, (a) any taxes payable by TCI in respect of such Disposition or in respect
of any resulting dividend or redemption (or which would have been payable but
for the utilization of tax benefits attributable to the TCI Group), (b) any
transaction costs, including, without limitation, any legal, investment banking
and accounting fees and expenses and (c) any liabilities and other obligations
(contingent or otherwise) of, or attributed to, the Liberty Media Group,
including, without limitation, any indemnity or guarantee obligations incurred
in connection with the Disposition or any liabilities for future purchase price
adjustments and any preferential amounts plus any accumulated and unpaid
dividends and other obligations (without duplication of amounts allocated for
the satisfaction of TCI's obligations with respect to Pre-Distribution
Convertible Securities and Committed Acquisition Shares issuable which are
included in the determination of the Adjusted Outstanding Interest Fraction) in
respect of TCI Preferred Stock attributed to the Liberty Media Group. TCI may
elect to pay the dividend or redemption price referred to in clause (i) or (ii)
above either in the same form as the proceeds of the Disposition were received
or in any other combination of cash or securities or other property (other than
TCI Common Stock) that the TCI Board of Directors determines will have an
aggregate market value on a fully distributed basis, of not less than the amount
of the Net Proceeds. If the dividend or redemption price is paid in the form of
securities of an issuer other than TCI, the TCI Board of Directors may determine
either to (i) pay the dividend or redemption price in the form of separate
classes or series of securities, with one class or series of such securities to
holders of LMG Series A Common Stock and another class or series of securities
to holders of LMG Series B Common Stock, provided that such securities (and, if
such securities are convertible into or exercisable or exchangeable for shares
of another class or series of securities, the securities so issuable upon such
conversion, exercise or exchange) do not differ in any respect other than their
relative voting rights and related differences in designation, conversion,
redemption and share distribution provisions with holders of shares of LMG
Series B Common Stock receiving the class or series having the higher relative
voting rights (without regard to whether such rights differ to a greater or
lesser extent than the corresponding differences in voting rights,
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designation, conversion, redemption and share distribution provisions between
the LMG Series A Common Stock and the LMG Series B Common Stock), provided that
if such securities constitute capital stock of a subsidiary of TCI, such rights
will not differ to a greater extent than the corresponding differences in voting
rights, designation, conversion, redemption and share distribution provisions
between the LMG Series A Common Stock and LMG Series B Common Stock, and
otherwise such securities will be distributed on an equal per share basis, or
(ii) pay the dividend or redemption price in the form of a single class of
securities without distinction between the shares received by the holders of LMG
Series A Common Stock and LMG Series B Common Stock.
At the time of any dividend made as a result of a Disposition referred
to above, the TCI Group will be credited, and the Liberty Media Group will be
charged (in addition to the charge for the dividend paid in respect of
outstanding shares of Liberty Media Group Common Stock), with an amount equal to
the product of (i) the aggregate amount paid in respect of such dividend times
(ii) a fraction the numerator of which is the Inter-Group Interest Fraction and
the denominator of which is the Outstanding Interest Fraction.
REDEMPTION IN EXCHANGE FOR STOCK OF SUBSIDIARY. At any time at which
all of the assets and liabilities attributed to the Liberty Media Group are held
directly or indirectly by any one or more corporations all of the capital stock
of which is owned by TCI (the "Liberty Media Group Subsidiaries"), the TCI Board
of Directors may, subject to there being funds of TCI legally available
therefor, redeem on a pro rata basis, all of the outstanding shares of Liberty
Media Group Common Stock in exchange for an aggregate number of outstanding
fully paid and nonassessable shares of common stock of each Liberty Media Group
Subsidiary equal to the product of the Adjusted Outstanding Interest Fraction
and the number of all of the outstanding shares of common stock of such Liberty
Media Group Subsidiary.
In effecting such a redemption, the TCI Board of Directors may determine
either to (i) redeem shares of LMG Series A Common Stock and LMG Series B Common
Stock in exchange for shares of separate classes or series of common stock of
each Liberty Media Group Subsidiary with relative voting rights and related
differences in designation, conversion, redemption and share distribution
provisions not greater than the corresponding differences in voting rights,
designation, conversion, redemption and share distribution provisions between
the LMG Series A Common Stock and LMG Series B Common Stock, with holders of
shares of LMG Series B Common Stock receiving the class or series having the
higher relative voting rights, or (ii) redeem shares of LMG Series A Common
Stock and LMG Series B Common Stock in exchange for shares of a single class of
common stock of each Liberty Media Group Subsidiary without distinction between
the shares distributed to the holders of the two series of Liberty Media Group
Common Stock. If TCI determines to undertake a redemption as described in clause
(i) of the preceding sentence, the outstanding shares of common stock of each
Liberty Media Group Subsidiary not distributed to holders of Liberty Media Group
Common Stock would consist solely of the class or series having the lower
relative voting rights.
CERTAIN PROVISIONS RESPECTING CONVERTIBLE SECURITIES. Unless the
provisions of any class or series of Pre-Distribution Convertible Securities or
Convertible Securities which are convertible into or exercisable or exchangeable
for Committed Acquisition Shares provide specifically to the contrary, after any
conversion date or redemption date on which all outstanding shares of Liberty
Media Group Common Stock were converted or redeemed, any share of Liberty Media
Group Common Stock that is issued on conversion, exercise or exchange of any
Pre-Distribution Convertible Securities or any Convertible Securities which are
convertible into or exercisable or exchangeable for Committed Acquisition Shares
will, immediately upon issuance pursuant to such conversion, exercise or
exchange and without any notice or any other action on the part of TCI or the
TCI Board of Directors or the holder of such share of Liberty Media Group Common
Stock, be converted into or redeemed in exchange for, as applicable, the kind
and amount of shares of capital stock, cash and/or other securities or property
that a holder of such Pre-Distribution Convertible Securities or any Convertible
Securities which are convertible into or exercisable or exchangeable for
Committed Acquisition Shares would have been entitled to receive pursuant to the
terms of such securities had such terms provided that the conversion, exercise
or exchange privilege in effect immediately prior to any such conversion or
redemption of all outstanding shares of Liberty Media Group Common Stock would
be adjusted so that the holder of any such Pre-Distribution
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Convertible Securities or any Convertible Securities which are convertible into
or exercisable or exchangeable for Committed Acquisition Shares thereafter
surrendered for conversion, exercise or exchange would be entitled to receive
the kind and amount of shares of capital stock, cash and/or other securities or
property such holder would have received as a result of such action had such
securities been converted, exercised or exchanged immediately prior thereto.
With respect to any Convertible Securities which are created, established or
otherwise first authorized for issuance subsequent to the record date for the
Distribution (other than Pre-Distribution Convertible Securities and Convertible
Securities which are convertible into or exercisable or exchangeable for
Committed Acquisition Shares), the terms and provisions of which do not provide
for adjustments specifying the kind and amount of capital stock, cash and/or
securities or other property that such holder would be entitled to receive upon
the conversion, exercise or exchange of such Convertible Securities following
any conversion date or redemption date on which all outstanding shares of
Liberty Media Group Common Stock were converted or redeemed, then upon such
conversion, exercise or exchange of such Convertible Securities, any share of
Liberty Media Group Common Stock that is issued on conversion, exercise or
exchange of any such Convertible Securities will, immediately upon issuance
pursuant to such conversion, exercise or exchange and without any notice or any
other action on the part of TCI or the TCI Board of Directors or the holder of
such share of Liberty Media Group Common Stock, be redeemed in exchange for, to
the extent assets of TCI are legally available therefor, the amount of $.01 per
share in cash.
GENERAL CONVERSION AND REDEMPTION PROVISIONS. Not later than the 10th
trading day following the consummation of a Disposition referred to above under
"--Mandatory Dividend, Redemption or Conversion of Liberty Media Group Common
Stock," TCI will announce publicly by press release (i) the Net Proceeds of such
Disposition, (ii) the number of outstanding shares of LMG Series A Common Stock
and LMG Series B Common Stock, (iii) the number of shares of LMG Series A Common
Stock and LMG Series B Common Stock into or for which Convertible Securities are
then convertible, exercisable or exchangeable and the conversion, exercise or
exchange prices thereof (and stating which, if any, of such Convertible
Securities constitute Pre-Distribution Convertible Securities or Convertible
Securities which are convertible into or exercisable or exchangeable for
Committed Acquisition Shares) and the number of Committed Acquisition Shares
issuable, (iv) the Outstanding Interest Fraction as of a recent date preceding
the date of such notice and (v) the Adjusted Outstanding Interest Fraction as of
a recent date preceding the date of such notice. Not earlier than the 26th
trading day and not later than the 30th trading day following the consummation
of such Disposition, TCI will announce publicly by press release which of the
actions described in clauses (i), (ii) or (iii) of the first paragraph under "--
Mandatory Dividend, Redemption or Conversion of Liberty Media Group Common
Stock" it has irrevocably determined to take.
TCI also will cause to be given to each holder of outstanding shares of
LMG Series A Common Stock and LMG Series B Common Stock and to each holder of
Convertible Securities convertible into or exercisable or exchangeable for
shares of either such series (unless provision for notice is otherwise made
pursuant to the terms of such Convertible Securities) a notice setting forth (i)
if TCI has determined to pay a dividend described in clause (i) of the first
paragraph under "--Mandatory Dividend, Redemption or Conversion of Liberty Media
Group Common Stock" (a "Dividend Election"), (x) the record date for determining
holders entitled to receive such dividend, which will not be earlier than the
40th trading day, nor later than the 50th trading day, following the
consummation of such Disposition and (y) the anticipated payment date of such
dividend (which will not be more than 85 trading days following the consummation
of such Disposition), (ii) if TCI has determined to redeem shares of Liberty
Media Group Common Stock following a Disposition of all (and not merely
substantially all) of the properties and assets of the Liberty Media Group as
described in clause (ii)(a) of the first paragraph under "--Mandatory Dividend,
Redemption or Conversion of Liberty Media Group Common Stock" (a "Full
Redemption Election"), (x) the redemption date (which will not be more than 85
trading days following the consummation of such Disposition) and (y) a statement
that all shares of Liberty Media Group Common Stock outstanding on the
redemption date will be redeemed, (iii) if TCI has determined to redeem shares
of Liberty Media Group Common Stock following a Disposition of substantially all
(but not all) of the properties and assets of the Liberty Media Group as
described in clause (ii)(b) of the first paragraph under "--Mandatory Dividend,
Redemption or Conversion of Liberty Media Group Common Stock" (a "Partial
Redemption Election"), (x) a date not earlier than the 40th trading day and not
later than the 50th trading
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day following the consummation of such Disposition on which shares of Liberty
Media Group Common Stock then outstanding will be selected for redemption and
(y) the anticipated redemption date (which will not be more than 85 trading days
following the consummation of such Disposition) and (iv) in the event of any
conversion as described above under "--Conversion of Liberty Media Group Common
Stock at the Option of TCI" or as described in clause (iii) of the first
paragraph under "--Mandatory Dividend, Redemption or Conversion of Liberty Media
Group Common Stock" (a "Conversion Election"), (x) a statement that all
outstanding shares of Liberty Media Group Common Stock will be converted and (y)
the conversion date (which will not be more than 85 trading days following the
consummation of the Disposition in the event of conversion pursuant to the
provisions described under "--Mandatory Dividend, Redemption or Conversion of
Liberty Media Group Common Stock" and which will not be more than 120 days after
the Appraisal Date in the event of conversion pursuant to the provisions
described under "--Conversion of Liberty Media Group Common Stock at the Option
of TCI"). Each notice of a Dividend Election, a Full Redemption Election or a
Partial Redemption Election also will state, as applicable, (i) the kind of
shares of capital stock, cash and/or other securities or property to be
distributed in respect of shares of Liberty Media Group Common Stock (in the
case of a Dividend Election) or paid as the redemption price with respect to
shares of Liberty Media Group Common Stock outstanding on the redemption date
(in the case of a Full Redemption Election) or selected for redemption (in the
case of a Partial Redemption Election); (ii) the Net Proceeds of such
Disposition; (iii) in the case of a Dividend Election and a Partial Redemption
Election, the Outstanding Interest Fraction as of a recent date preceding the
date of such notice, and in the case of a Full Redemption Election, the Adjusted
Outstanding Interest Fraction as of a recent date preceding the date of such
notice; (iv) the number of outstanding shares of LMG Series A Common Stock and
LMG Series B Common Stock and the number of shares of LMG Series A Common Stock
and LMG Series B Common Stock into or for which outstanding Convertible
Securities are then convertible, exercisable or exchangeable and the conversion,
exercise or exchange price thereof (and, in the case of a Full Redemption
Election, stating which, if any, of such Convertible Securities constitute Pre-
Distribution Convertible Securities or Convertible Securities which are
convertible into or exercisable or exchangeable for Committed Acquisition Shares
and the number of Committed Acquisition Shares issuable); (v) in the case of a
Full Redemption Election, the place or places where certificates for shares of
Liberty Media Group Common Stock properly endorsed or assigned for transfer
(unless TCI waives such requirement), are to be surrendered for delivery of
certificates for shares of such capital stock, cash and/or other securities or
property; (vi) in the case of notice to holders of Convertible Securities, a
statement to the effect that holders of such Convertible Securities will be
entitled to receive such dividend (in the case of a Dividend Election) or
participate in such redemption (in the case of a Full Redemption Election) or in
the selection of shares for redemption (in the case of a Partial Redemption
Election) only if such holders appropriately convert, exercise or exchange such
Convertible Securities on or prior to the record date for determining holders
entitled to receive such dividend, the redemption date, or the date fixed for
the selection of shares to be redeemed, respectively, and a statement as to
what, if anything, such holder will be entitled to receive pursuant to the terms
of such Convertible Securities or, if applicable, the provisions described under
"--Certain Provisions Respecting Convertible Securities" if such holder
converts, exercises or exchanges such Convertible Securities following such
redemption date or date for selection of shares to be redeemed, as applicable,
and (vii) in the case of a Partial Redemption Election, a statement that TCI
will not be required to register a transfer of any shares of Liberty Media Group
Common Stock for a period of 15 trading days next preceding the date fixed for
selection of shares to be redeemed. In the case of a Partial Redemption
Election, TCI also will cause to be given to each holder of shares of Liberty
Media Group Common Stock selected for redemption, a notice setting forth (i) the
number of shares of LMG Series A Common Stock and LMG Series B Common Stock held
by such holder to be redeemed, (ii) a statement that such shares of LMG Series A
Common Stock and LMG Series B Common Stock will be redeemed, (iii) the
redemption date (which will not be more than 85 trading days following the
consummation of such Disposition), (iv) the kind and per share amount of shares
of capital stock, cash and/or other securities or property to be received by
such holder with respect to each share of such Liberty Media Group Common Stock
to be redeemed, including details as to the calculation thereof, and (v) the
place or places where certificates for shares of such Liberty Media Group Common
Stock, properly endorsed or assigned for transfer (unless TCI waives such
requirement), are to be surrendered for delivery of certificates for shares of
such capital stock, cash and/or other securities or property. The outstanding
shares of Liberty Media Group Common Stock to be redeemed will be redeemed by
TCI pro
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<PAGE>
rata among the holders of Liberty Media Group Common Stock or by such other
method as may be determined by the TCI Board of Directors to be equitable.
In the case of a Conversion Election, TCI's notice also will state (i)
the per share number of shares of TCI Group Series A Common Stock or TCI Group
Series B Common Stock, as applicable, to be received with respect to each share
of LMG Series A Common Stock or LMG Series B Common Stock, including details as
to the calculation thereof, (ii) the place or places where certificates for
shares of Liberty Media Group Common Stock, properly endorsed or assigned for
transfer (unless TCI waives such requirement), are to be surrendered, (iii) the
number of outstanding shares of LMG Series A Common Stock and LMG Series B
Common Stock, the number of Committed Acquisition Shares issuable and the number
of shares of LMG Series A Common Stock and LMG Series B Common Stock into or for
which outstanding Convertible Securities are then convertible, exercisable or
exchangeable and the conversion, exercise or exchange prices thereof and (iv) in
the case of a notice to holders of Convertible Securities, a statement to the
effect that holders of such Convertible Securities will be entitled to
participate in such conversion only if such holders appropriately convert,
exercise or exchange such Convertible Securities on or prior to the conversion
date and a statement as to what, if anything, such holders will be entitled to
receive pursuant to the terms of such Convertible Securities or, if applicable,
the provision described under "--Certain Provisions Respecting Convertible
Securities" if such holders convert, exercise or exchange such Convertible
Securities following such conversion date.
Notice of a Dividend Election will be given not later than the 30th
trading day following the consummation of the Disposition; notice of a Full
Redemption Election will be given not less than 35 trading days nor more than 45
trading days prior to the redemption date; notice of a Partial Redemption
Election will be given not later than the 30th trading day following the
consummation of the Disposition and the notice to holders of shares selected for
redemption will be given promptly following such selection, but not earlier than
the 40th trading day and not later than the 50th trading day following the
consummation of the Disposition; and notice of a Conversion Election will be
given not less than 35 trading days nor more than 45 trading days prior to the
conversion date. All such notices will be sent by first-class mail, postage
prepaid, to a holder at such holder's address as the same appears on the
transfer books of TCI.
If TCI determines to redeem shares of LMG Series A Common Stock and LMG
Series B Common Stock as described above under "--Redemption in Exchange for
Stock of Subsidiary," TCI will promptly cause to be given to each holder of LMG
Series A Common Stock and LMG Series B Common Stock and to each holder of
Convertible Securities convertible into or exercisable or exchangeable for
shares of either such series (unless provision for such notice is otherwise made
pursuant to the terms of such Convertible Securities), a notice setting forth
(i) a statement that all outstanding shares of Liberty Media Group Common Stock
will be redeemed in exchange for shares of common stock of the Liberty Media
Group Subsidiaries, (ii) the redemption date, (iii) the Adjusted Outstanding
Interest Fraction as of a recent date preceding the date of such notice, (iv)
the place or places where certificates for shares of Liberty Media Group Common
Stock, properly endorsed or assigned for transfer (unless TCI waives such
requirement), are to be surrendered for delivery of certificates for shares of
common stock of the Liberty Media Group Subsidiaries, (v) the number of
outstanding shares of LMG Series A Common Stock and LMG Series B Common Stock
and the number of shares of LMG Series A Common Stock and LMG Series B Common
Stock into or for which outstanding Convertible Securities are then convertible,
exercisable or exchangeable and the conversion, exercise or exchange prices
thereof (and stating which, if any, of such Convertible Securities constitute
Pre-Distribution Convertible Securities or Convertible Securities which are
convertible into or exercisable or exchangeable for Committed Acquisition
Shares) and the number of Committed Acquisition Shares issuable, and (vi) in the
case of a notice to holders of Convertible Securities, a statement to the effect
that holders of such Convertible Securities will be entitled to receive shares
of common stock of the Liberty Media Group Subsidiaries upon redemption only if
such holders appropriately convert, exercise or exchange such Convertible
Securities on or prior to the redemption date referred to in clause (ii) of this
sentence and a statement as to what, if anything, such holders will be entitled
to receive pursuant to the terms of such Convertible Securities or, if
applicable, the provisions described under "--Certain Provisions Respecting
Convertible Securities" if such holders convert, exercise or exchange such
Convertible Securities following the redemption date. Such notice
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<PAGE>
will be sent by first-class mail, postage prepaid, not less than 35 trading days
nor more than 45 trading days prior to the redemption date, at such holder's
address as the same appears on the transfer books of TCI.
Neither the failure to mail any notice to any particular holder of Liberty
Media Group Common Stock or of Convertible Securities nor any defect therein
will affect the sufficiency thereof with respect to any other holder of
outstanding shares of Liberty Media Group Common Stock or of Convertible
Securities, or the validity of any conversion or redemption.
TCI will not be required to issue or deliver fractional shares of any class
of capital stock or any fractional securities to any holder of Liberty Media
Group Common Stock upon any conversion, redemption, dividend or other
distribution described above. In connection with the determination of the number
of shares of any class of capital stock that is issuable or the amount of
securities that is deliverable to any holder of record upon any such conversion,
redemption, dividend or other distribution (including any fractions of shares or
securities), TCI may aggregate the number of shares of Liberty Media Group
Common Stock held at the relevant time by such holder of record. If the number
of shares of any class of capital stock or the amount of securities remaining to
be issued or delivered to any holder of Liberty Media Group Common Stock is a
fraction, TCI will, if such fraction is not issued or delivered to such holder,
pay a cash adjustment in respect of such fraction in an amount equal to the fair
market value of such fraction on the fifth trading day prior to the date such
payment is to be made (without interest). For purposes of the preceding
sentence, "fair market value" of any fraction will be (i) in the case of any
fraction of a share of capital stock of TCI, the product of such fraction and
the Market Value of one share of such capital stock and (ii) in the case of any
other fractional security, such value as is determined by the TCI Board of
Directors.
No adjustments in respect of dividends will be made upon the conversion
or redemption of any shares of Liberty Media Group Common Stock; provided,
however, that if the conversion date or the redemption date with respect to the
Liberty Media Group Common Stock is subsequent to the record date for the
payment of a dividend or other distribution thereon or with respect thereto, the
holders of shares of Liberty Media Group Common Stock at the close of business
on such record date will be entitled to receive the dividend or other
distribution payable on or with respect to such shares on the date set for
payment of such dividend or other distribution, notwithstanding the conversion
or redemption of such shares or TCI's default in payment of the dividend or
distribution due on such date.
Before any holder of shares of Liberty Media Group Common Stock will be
entitled to receive certificates representing shares of any kind of capital
stock or cash and/or securities or other property to be received by such holder
with respect to any conversion or redemption of shares of Liberty Media Group
Common Stock, such holder is required to surrender at such place as TCI will
specify certificates for such shares, properly endorsed or assigned for transfer
(unless TCI waives such requirement). TCI will as soon as practicable after such
surrender of certificates representing shares of Liberty Media Group Common
Stock deliver to the person for whose account such shares were so surrendered,
or to the nominee or nominees of such person, certificates representing the
number of whole shares of the kind of capital stock or cash and/or securities or
other property to which such person is entitled, together with any payment for
fractional securities referred to above. If less than all of the shares of
Liberty Media Group Common Stock represented by any one certificate are to be
redeemed, TCI will issue and deliver a new certificate for the shares of Liberty
Media Group Common Stock not redeemed. TCI will not be required to register a
transfer of (i) any shares of Liberty Media Group Common Stock for a period of
15 trading days next preceding any selection of shares of Liberty Media Group
Common Stock to be redeemed or (ii) any shares of Liberty Media Group Common
Stock selected or called for redemption. Shares selected for redemption may not
thereafter be converted pursuant to the provisions described under "--Conversion
of TCI Group Series B Common Stock and LMG Series B Common Stock at the Option
of the Holder."
From and after any applicable conversion date or redemption date, all
rights of a holder of shares of Liberty Media Group Common Stock that were
converted or redeemed will cease except for the right, upon surrender of the
certificates representing shares of Liberty Media Group Common Stock, to receive
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<PAGE>
certificates representing shares of the kind and amount of capital stock or cash
and/or securities or other property for which such shares were converted or
redeemed, together with any payment for fractional securities and such holder
will have no other or further rights in respect of the shares of Liberty Media
Group Common Stock so converted or redeemed, including, but not limited to, any
rights with respect to any cash, securities or other property which are reserved
or otherwise designated by TCI as being held for the satisfaction of TCI's
obligations to pay or deliver any cash, securities or other property upon the
conversion, exercise or exchange of any Convertible Securities outstanding as of
the date of such conversion or redemption or any Committed Acquisition Shares
which may then be issuable. No holder of a certificate that, immediately prior
to the applicable conversion date or redemption date for the Liberty Media Group
Common Stock, represented shares of Liberty Media Group Common Stock will be
entitled to receive any dividend or other distribution with respect to shares of
any kind of capital stock into or in exchange for which the Liberty Media Group
Common Stock was converted or redeemed until surrender of such holder's
certificate for a certificate or certificates representing shares of such kind
of capital stock. Upon such surrender, there will be paid to the holder the
amount of any dividends or other distributions (without interest) which
theretofore became payable with respect to a record date after the conversion
date or redemption date, as the case may be, but that were not paid by reason of
the foregoing, with respect to the number of whole shares of the kind of capital
stock represented by the certificate or certificates issued upon such surrender.
From and after a conversion date or redemption date, as the case may be, for any
shares of Liberty Media Group Common Stock, TCI will, however, be entitled to
treat the certificates for shares of Liberty Media Group Common Stock that have
not yet been surrendered for conversion or redemption as evidencing the
ownership of the number of whole shares of the kind or kinds of capital stock
for which the shares of Liberty Media Group Common Stock represented by such
certificates have been converted or redeemed, notwithstanding the failure to
surrender such certificates.
TCI will pay any and all documentary, stamp or similar issue or transfer
taxes that may be payable in respect of the issue or delivery of any shares of
capital stock and/or other securities on conversion or redemption of shares of
Liberty Media Group Common Stock. TCI will not, however, be required to pay any
tax that may be payable in respect of any transfer involved in the issue and
delivery of any shares of capital stock in a name other than that in which the
shares of Liberty Media Group Common Stock so converted or redeemed were
registered and no such issue or delivery will be made unless and until the
person requesting such issue has paid to TCI the amount of any such tax, or has
established to the satisfaction of TCI that such tax has been paid.
LIQUIDATION RIGHTS
In the event of a liquidation, dissolution or winding up of TCI, whether
voluntary or involuntary, after payment or provision for payment of the debts
and other liabilities of TCI and subject to the prior payment in full of the
preferential amounts to which any class or series of TCI Preferred Stock is
entitled, (i) the holders of the shares of TCI Group Common Stock will share
equally, on a share for share basis, in a percentage of the funds of TCI
remaining for distribution to its common stockholders equal to 100% multiplied
by the average daily ratio (expressed as a decimal) of X/Z for the 20-trading
day period ending on the trading day prior to the date of the public
announcement of such liquidation, dissolution or winding up, and (ii) the
holders of the shares of Liberty Media Group Common Stock will share equally, on
a share for share basis, in a percentage of the funds of TCI remaining for
distribution to its common stockholders equal to 100% multiplied by the average
daily ratio (expressed as a decimal) of Y/Z for such 20-trading day period,
where X is the aggregate Market Capitalization of the TCI Group Series A Common
Stock and the TCI Group Series B Common Stock, Y is the aggregate Market
Capitalization of the LMG Series A Common Stock and the LMG Series B Common
Stock, and Z is the aggregate Market Capitalization of the TCI Group Series A
Common Stock, the TCI Group Series B Common Stock, the LMG Series A Common Stock
and the LMG Series B Common Stock. Neither a consolidation, merger nor sale of
assets will be construed to be a "liquidation," "dissolution" or "winding up" of
TCI. The "Market Capitalization" of any class or series of capital stock of TCI
on any trading day means the product of (i) the Market Value of one share of
such class or series on such trading day and (ii) the number of shares of such
class or series outstanding on such trading day.
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<PAGE>
No holder of Liberty Media Group Common Stock will have any special
right to receive specific assets of the Liberty Media Group in the case of any
dissolution, liquidation or winding up of TCI.
DETERMINATIONS BY THE TCI BOARD OF DIRECTORS
The TCI Charter provides that any determinations made by the TCI Board
of Directors under any provision described under this section will be final and
binding on all stockholders of TCI, except as may otherwise be required by law.
Such a determination would not be binding if it were established that the
determination was made in breach of a fiduciary duty of the TCI Board of
Directors. TCI will prepare a statement of any such determination by the TCI
Board of Directors respecting the fair market value of any properties, assets or
securities and will file such statement with the Secretary of TCI.
PREEMPTIVE RIGHTS
Holders of the TCI Group Common Stock and Liberty Media Group Common Stock
do not have any preemptive rights to subscribe for any additional shares of
capital stock or other obligations convertible into or exercisable for shares of
capital stock that may hereafter be issued by TCI.
OTHER MATTERS
The DGCL, the TCI Charter and TCI's Bylaws contain provisions which may
serve to discourage or make more difficult a change in control of TCI without
the support of the TCI Board of Directors or without meeting various other
conditions. The principal provisions of the DGCL and the aforementioned
corporate governance documents are outlined below.
DGCL Section 203, in general, prohibits a "business combination" between a
corporation and an "interested stockholder" within three years of the date such
stockholder became an "interested stockholder," unless (i) prior to such date
the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder, (ii) upon consummation of the transaction which resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, exclusive of shares owned by
directors who are also officers and by certain employee stock plans or (iii) on
or after such date, the business combination is approved by the board of
directors and authorized by the affirmative vote at a stockholders' meeting of
at least 66 2/3% of the outstanding voting stock which is not owned by the
interested stockholder. The term "business combination" is defined to include,
among other transactions between the interested stockholder and the corporation
or any direct or indirect majority-owned subsidiary thereof, a merger or
consolidation; a sale, pledge, transfer or other disposition (including as part
of a dissolution) of assets having an aggregate market value equal to 10% or
more of either the aggregate market value of all assets of the corporation on a
consolidated basis or the aggregate market value of all the outstanding stock of
the corporation; certain transactions that would increase the interested
stockholder's proportionate share ownership of the stock of any class or series
of the corporation or such subsidiary; and any receipt by the interested
stockholder of the benefit of any loans, advances, guarantees, pledges or other
financial benefits provided by or through the corporation or any such
subsidiary. In general, and subject to certain exceptions, an "interested
stockholder" is any person who is the owner of 15% or more of the outstanding
voting stock (or, in the case of a corporation with classes of voting stock with
disparate voting power, 15% or more of the voting power of the outstanding
voting stock) of the corporation, and the affiliates and associates of such
person. The term "owner" is broadly defined to include any person that
individually or with or through his or its affiliates or associates, among other
things, beneficially owns such stock, or has the right to acquire such stock
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement or understanding or upon the exercise of
warrants or options or otherwise or has the right to vote such stock pursuant to
any agreement or understanding, or has an agreement or understanding with the
beneficial owner of such stock for the purpose of acquiring, holding, voting or
disposing of such stock. The restrictions of DGCL Section 203 do not apply to
corporations that have elected, in the manner provided therein, not to be
subject to such section or, with certain exceptions, which do not have a class
of voting stock that is listed
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on a national securities exchange or authorized for quotation on an interdealer
quotation system of a registered national securities association or held of
record by more than 2,000 stockholders. The TCI Charter does not contain any
provision "opting out" of the application of DGCL Section 203 and TCI has not
taken any of the actions necessary for it to "opt out" of such provision. As a
result, the provisions of Section 203 will remain applicable to transactions
between TCI and any of its "interested stockholders."
The TCI Charter also contains certain provisions which could make a
change in control of TCI more difficult. For example, the TCI Charter requires,
subject to the rights, if any, of any class or series of TCI Preferred Stock,
the affirmative vote of 66% of the total voting power of the outstanding shares
of Voting Securities, voting together as a single class, to approve (i) a merger
or consolidation of TCI with, or into, another corporation, other than a merger
or consolidation which does not require the consent of stockholders under the
DGCL or a merger or consolidation which has been approved by 75% of the members
of the TCI Board of Directors (in which case, in accordance with the DGCL, the
affirmative vote of a majority of the total voting power of the outstanding
Voting Securities would, with certain exceptions, be required for approval),
(ii) the sale, lease or exchange of all or substantially all of the property and
assets of TCI or (iii) the dissolution of TCI. "Voting Securities" is currently
defined as the TCI Group Common Stock, the Liberty Media Group Common Stock and
any class or series of TCI Preferred Stock entitled to vote generally with the
holders of TCI Common Stock on matters submitted to stockholders for a vote. The
TCI Charter also provides for a TCI Board of Directors of not less than three
members, divided into three classes of approximately equal size, with each class
to be elected for a three-year term at each annual meeting of stockholders. The
exact number of directors, currently nine, is fixed by the TCI Board of
Directors. The holders of TCI Group Common Stock, Liberty Media Group Common
Stock, Class B Preferred Stock and certain series of Series Preferred Stock,
voting together as a single class, vote in elections for directors. (TCI's
Convertible Redeemable Participating Preferred Stock, Series F has voting
rights, but outstanding shares are not entitled to vote because they are held by
subsidiaries of TCI.) Stockholders of TCI do not have cumulative voting rights.
The TCI Charter authorizes the issuance of 50,000,000 shares of Series
Preferred Stock of which 33,901,240 shares remain available for designation as
of January 31, 1996. Under the TCI Charter, the TCI Board of Directors is
authorized, without further action by the stockholders of TCI, to establish the
preferences, limitations and relative rights of the Series Preferred Stock. In
addition, 1,900,000,000 shares of the TCI Group Common Stock and 825,000,000
shares of Liberty Media Group Common Stock are currently authorized by the TCI
Charter, of which 1,143,097,437 and 660,906,868 respectively, remained available
for issuance as of January 31, 1996 (before giving effect to reservations of
shares for issuance upon conversion, exchange or exercise of outstanding
convertible or exchangeable securities and options). The issue and sale of
shares of TCI Group Common Stock, Liberty Media Group Common Stock and/or Series
Preferred Stock could occur in connection with an attempt to acquire control of
TCI, and the terms of such shares of Series Preferred Stock could be designed in
part to impede the acquisition of such control.
The TCI Charter requires the affirmative vote of 66 2/3% of the total
voting power of the outstanding shares of Voting Securities, voting together as
a single class, to approve any amendment, alteration or repeal of any provision
of the TCI Charter or the addition or insertion of other provisions therein.
The TCI Charter and TCI's Bylaws provide that a special meeting of
stockholders will be held at any time, subject to the rights of the holders of
any class or series of TCI Preferred Stock, upon the call of the Secretary of
TCI upon (i) the written request of the holders of not less than 66% of the
total voting power of the outstanding shares of Voting Securities or (ii) at the
request of not less than 75% of the members of the TCI Board of Directors.
Subject to the rights of any class or series of TCI Preferred Stock, TCI's
Bylaws require that written notice of the intent to make a nomination at a
meeting of stockholders must be received by the Secretary of TCI, at TCI's
principal executive offices, not later than (a) with respect to an election of
directors to be held at an annual meeting of stockholders, 90 days in advance of
such meeting, and (b) with respect to an election of directors to be held at a
special meeting of stockholders, the close of business on the seventh day
following the day on which notice of such
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<PAGE>
meeting is first given to stockholders. The notice must contain: (1) the name
and address of the stockholder who intends to make the nomination and of the
person or persons to be nominated; (2) a representation that the stockholder is
a holder of record of TCI's Voting Securities entitled to vote at the meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (3) a description of all arrangements
or understandings between the stockholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (4) such other information
regarding each nominee proposed by such stockholder as would have been required
to be included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had each proposed nominee been nominated, or
intended to be nominated, by the TCI Board of Directors; and (5) the consent of
each nominee to serve as a director of TCI if so elected. Any actions to remove
directors is required to be for "cause" (as defined in the TCI Charter) and be
approved by the holders of 66 2/3% of the total voting power of the outstanding
shares entitled to vote in the election of directors.
LEGAL MATTERS
Certain legal matters with respect to the Shares will be passed upon for
the Company by Stephen M. Brett, Esq., Executive Vice President and General
Counsel of the Company.
EXPERTS
The consolidated balance sheets of Tele-Communications, Inc. and
subsidiaries as of December 31, 1995 and 1994, 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, 1995, and all related
financial statement schedules, which appear in Tele-Communications, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1995, have been
incorporated by reference herein in reliance upon the reports, dated March 18,
1996, 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 consolidated balance sheet of TeleWest plc and subsidiaries as of
December 31, 1995 and 1994, and the related consolidated statements of
operations and cash flows for each of the years in the three year period ended
December 31, 1995, which appear in the December 31, 1995 Annual Report on Form
10-K of Tele-Communications, Inc., have been incorporated by reference herein in
reliance upon the report of KPMG, independent chartered accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The combined balance sheets of Cablevision (a combination of certain cable
television assets of Cablevision S.A., Televisora Belgrano S.A., Construred S.A.
and Univent's S.A.) as of December 31, 1994 and 1993, and the related combined
statements of operations and deficit and cash flows for each of the years in the
three-year period ended December 31, 1994, which appear in the Current Report on
Form 8-K of Tele-Communications, Inc. dated April 20, 1995, as amended, have
been incorporated by reference herein in reliance upon the report of KPMG
Finsterbusch Pickenhayn Sibille, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The combined balance sheets of TCI Group as of December 31, 1995 and 1994,
and the related combined statements of operations, equity, and cash flows for
each of the years in the three-year period ended December 31, 1995, which appear
in Tele-Communications, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1995 have been incorporated by reference herein in reliance upon
the report, dated March 18, 1996, 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.
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<PAGE>
The combined balance sheets of Liberty Media Group as of December 31,
1995 and 1994, and the related combined statements of operations, equity, and
cash flows for each of the years in the three-year period ended December 31,
1995, which appear in Tele-Communications, Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1995 have been incorporated by reference herein in
reliance upon the report, dated March 18, 1996, 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.
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================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN 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 ANY
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 ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE
SPECIFICALLY OFFERED HEREBY OR OF ANY SECURITIES OFFERED HEREBY 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
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<S> <C>
AVAILABLE INFORMATION............ 3
INCORPORATION OF DOCUMENTS BY
REFERENCE..................... 3
THE COMPANY...................... 4
SELLING STOCKHOLDERS............. 4
PLAN OF DISTRIBUTION............. 8
DESCRIPTION OF TCI COMMON STOCK.. 9
LEGAL MATTERS.................... 30
EXPERTS.......................... 30
</TABLE>
TELE-COMMUNICATIONS, INC.
Tele-Communications, Inc. Series A TCI Group
Common Stock ($1.00 par value)
Tele-Communications, Inc.
Series A Liberty Media Group
Common Stock ($1.00 par value)
-----------------------------------------
PROSPECTUS
-----------------------------------------
April 16, 1996
================================================================================
