<PAGE>
FILED PURSUANT TO
RULE NO. 424(b)(3)
REGISTRATION NO. 33-65493
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 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 shares of 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 issued from time to time upon conversion of up to
approximately $30 million aggregate principal amount of certain convertible
notes (the "Notes") of TCI-UA, Inc. ("TCI-UA"), an indirect, wholly-owned
subsidiary of the Company, and the offering and sale of such shares by the
holders thereof (each a "Selling Stockholder") from time to time thereafter (all
such shares being hereinafter referred to collectively as the "Shares"). See
"Shares Being Offered" and "Selling Stockholders." As of the date of this
Prospectus, the approximately $30 million aggregate principal amount of Notes
are convertible at the current conversion rate into an aggregate of 5,038,600
shares of TCI Group Series A Common Stock and 1,259,650 shares of LMG Series A
Group Common Stock.
On August 3, 1995, the Company's Restated Certificate of Incorporation was
amended to, among other things, (i) redesignate the Company's Class A Common
Stock, par value $1.00 per share ("Class A Common Stock"), as TCI Group Series A
Common Stock and the Company's Class B Common Stock, par value $1.00 per share,
as Tele-Communications, Inc. Series B TCI Group Common Stock, par value $1.00
per share (the "TCI Group Series B Common Stock" and, together with the TCI
Group Series A Common Stock, the "TCI Group Common Stock"), and (ii) authorize
two additional series of the Company's common stock, designated as LMG Series A
Common Stock and the Tele-Communications, Inc. Series B Liberty Media Group
Common Stock, par value $1.00 per share (the "LMG Series B Common Stock" and,
together with the LMG Series A Common Stock, the "Liberty Media Group Common
Stock"). Thereafter, the Company distributed to holders of TCI Group Common
Stock one-fourth of a share of the corresponding series of Liberty Media Group
Common Stock in respect of each share of TCI Group Common Stock held of record
as of August 4, 1995, the record date for the distribution.
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 January 22, 1996
<PAGE>
Each of the shares of TCI Group Series A Common Stock and LMG Series A
Common Stock offered hereby may be offered for sale and sold by the Selling
Stockholders from time to time in varying amounts, including in block
transactions, 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, through an
underwritten offering, 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 series of Shares to be sold, the name of the Selling
Stockholders, the purchase price, the public offering price, if applicable, the
name of any such agent or broker-dealer, and any applicable commissions,
discounts or other items constituting compensation to such underwriters, 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 underwriters, 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
underwriter, 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
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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, 1994, as
amended by Form 10-K/A (Amendment No. 1), (ii) the Company's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1995, June 30, 1995 and
September 30, 1995 (as amended by Form 10-Q/A (Amendment No. 1)), (iii) the
Company's Current Reports on Form 8-K, dated January 23, 1995, February 3,
1995 (as amended by Form 8-K/A), February 13, 1995, February 15, 1995, April
6, 1995, April 20, 1995 (as amended by Form 8-K/A), May 4, 1995 (as amended
by Form 8-K/A), July 26, 1995, August 10, 1995 and December 18, 1995, and
(iv) the financial statements and notes thereto of TeleCable Corporation as
of December 31, 1993 and 1992 and for each of the two years in the period
ended December 31, 1993, included in the Company's Current Report on Form
8-K, dated August 26, 1994.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof
and prior to the termination of the offering of the Shares described in this
Prospectus shall be deemed to be incorporated herein by reference and to be a
part hereof from the respective dates of the filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference herein, other
than certain exhibits to such documents (unless such exhibits are
specifically incorporated by reference into the documents that this
Prospectus incorporates). Such requests should be addressed to Stephen M.
Brett, Esq., Executive Vice President and General Counsel, Tele-
Communications, Inc., Terrace Tower II, 5619 DTC Parkway, Englewood, Colorado
80111-3000; telephone (303) 267-5500.
3
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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 a 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.
SHARES BEING OFFERED
On July 9, 1986, the Company entered into a Stock Purchase Agreement
(the "Naify Agreement") with Marshall Naify, Robert A. Naify, a corporation
owned by them, certain members of their respective families and certain
trusts established for the benefit of such persons and certain other members
of their respective families (the "Naify Family"), pursuant to which the
Company acquired from the Naify Family in December of 1986 all of the shares
of common stock of United Artists Communications, Inc. ("UACI") owned by
them, which represented approximately 55% of the UACI shares then
outstanding. The consideration paid for each share of UACI common stock
acquired by the Company pursuant to the Naify Agreement was $18.498, of which
$6.64 was paid in cash and the balance of $11.858 per share was represented
by Notes.
The Notes are general unsecured obligations of TCI-UA, the principal
amount of which is payable on December 12, 2021 and bears interest at the
rate of 1.85% per annum until December 12, 2003 and no interest thereafter.
The Notes, when issued, were convertible at any time at the option of the
holder into shares of Class A Common Stock. As a result of the redesignation
of the Class A Common Stock into TCI Group Series A Common Stock and the
subsequent distribution to the holders of TCI Group Series A Common Stock of
shares of LMG Series A Common Stock, the Notes are presently convertible at
any time at the option of the holder into one share of TCI Group Series A
Common Stock and one-forth of a share of LMG Series A Common Stock for each
$5.95 principal amount of Notes, subject to adjustment under stated
circumstances. The shares of TCI Group Series A Common Stock and LMG Series
A Common Stock issuable upon the conversion of the Notes are hereinafter
referred to collectively as the "Conversion Shares."
As of the date of this Prospectus, Notes in the aggregate principal
amount of $230,310,150 are outstanding, which Notes are convertible at the
current conversion rate into an aggregate of approximately 38,707,574 shares
of TCI Group Series A Common Stock and 9,676,893 Shares of LMG Series A
Common Stock (excluding fractional shares issuable upon conversion of any
particular Note). The names of the members of the Naify Family who currently
hold the Notes, the aggregate principal amount of the Notes held by each such
holder and the number of whole shares of TCI Group Series A Common Stock and
LMG Series A Common Stock into which the Notes of such holder are convertible
at the current conversion rate are set forth under "Selling Stockholders"
below. In accordance with the terms of the Naify Agreement, neither the
Notes nor the Conversion Shares may be transferred unless they are registered
under the Securities Act or an exemption from registration is available. The
Notes have not been registered under the Securities Act and neither the
Company nor TCI-UA has any obligation to register the Notes. The Naify
Agreement provides the holders of the Notes with certain demand and
incidental or "piggyback" registration rights with respect to the Conversion
Shares. Specifically, the demand registration rights permit holders of the
Notes from time to time to require the Company to register Conversion Shares
under the Securities Act for sale in an underwritten public offering, except
that the Company is not obligated to effect such registration more than once
in any six month period or if, in order to comply with such request, the
Company could be required to undergo a special interim audit (unless the
parties requesting registration agree to pay all fees and expenses of such
special interim
4
<PAGE>
audit). The incidental registration rights permit the holders of the Notes
to have their Conversion Shares included in certain types of registration
statements proposed to be filed by the Company. The Company's agreement to
register the Shares covered by this Prospectus as described below is
contained in a letter agreement which has been filed as an Exhibit to the
Registration Statement and is separate from the Company's obligation to
register Conversion Shares under the Naify Agreement. The full text of the
Naify Agreement has been filed as an Exhibit to the Registration Statement of
which this Prospectus forms a part. See "Available Information."
The Company has agreed, for the benefit of the holders of the Notes, to
register the Conversion Shares to be issued from time to time upon conversion
of up to approximately $30 million aggregate principal amount of the Notes
and the resale of such shares from time to time by the holders thereof. The
Shares offered hereby represent the number of Conversion Shares issuable upon
conversion of such aggregate principal amount of Notes, as such number and
type of shares may be increased or decreased as a result of adjustments to
the conversion rate pursuant to the anti-dilution provisions of the Notes.
At the current conversion rate, 5,038,600 shares of TCI Group Series A Common
Stock and 1,259,650 Shares of LMG Series A Common Stock are issuable upon
conversion of approximately $30 million aggregate principal amount of the
Notes. The Conversion Shares will be included in the Shares covered by this
Prospectus on the basis of the order in which the Notes, up to an aggregate
principal amount of approximately $30 million, are converted.
SELLING STOCKHOLDERS
A member of the Naify Family, or any person to whom a member of the
Naify Family has transferred Notes in a transaction permitted by the Naify
Agreement, for whose account Shares are being offered hereby is referred to
herein as a "Selling Stockholder". It is anticipated that, from time to time
after the date hereof, record ownership of certain of the Notes that are
currently held in trust for the benefit of members of the Naify Family will
be transferred to the beneficiaries of the applicable trust and/or that
record ownership of certain of the Notes may be transferred to living trusts
of which the current record owner or (in the case of Notes currently held in
trust) beneficial owner would be a trustee with sole control and complete
discretion to revoke or amend such trust during such person's lifetime. The
table set forth below and the footnotes thereto provide the following
information: the names of the members of the Naify Family who currently hold
Notes, the aggregate principal amount of the Notes held by each such holder,
the number of whole shares of TCI Group Series A Common Stock and LMG Series
A Common Stock into which the Notes of such holder are convertible at the
current conversion rate and the number of shares of TCI Group Series A Common
Stock and LMG Series A Common Stock beneficially owned as of the date of this
Prospectus by each such holder. The Conversion Shares to be included in the
Shares covered by this Prospectus will be on the basis of the order in which
the Notes, up to an aggregate principal amount of approximately $30 million,
are converted; therefore no estimate can be given as to the number of shares
of TCI Group Series A Common Stock and LMG Series A Common Stock that will be
held by each Selling Stockholder upon the termination of this offering.
However, the name of the Selling Stockholder in connection with any
particular sale of Shares, the number of Shares to be sold and the 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 a Prospectus Supplement.
5
<PAGE>
<TABLE>
<CAPTION>
NO. OF
WHOLE
SHARES OF
NO. OF WHOLE LMG
SHARES OF TCI NO. OF WHOLE SERIES A
GROUP SERIES A SHARES OF TCI COMMON NO. OF WHOLE
AGGREGATE COMMON STOCK GROUP SERIES A STOCK SHARES OF LMG
PRINCIPAL INTO WHICH COMMON STOCK INTO WHICH SERIES A COMMON
AMOUNT OF NOTES ARE BENEFICIALLY NOTES ARE STOCK BENEFICIALLY
NOTEHOLDER NOTES HELD CONVERTIBLE OWNED (1) CONVERTIBLE OWNED (1)
- --------------------- --------------- --------------- ---------------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
Marshall Naify $ 73,924,889.75 12,424,351 12,944,918 (2) 3,106,087 3,236,229 (2)
Robert A. Naify 133,559,215.23 22,446,926 23,297,254 (3) 5,611,731 5,824,313 (3)
Valerie Naify 960,498.00 161,428 161,428 40,357 40,357
Leslie C. Naify 1,383,117.12 232,456 263,083 (4) 58,114 65,770 (4)
Christie M. Naify 1,383,117.12 232,456 263,083 (5) 58,114 65,770 (5)
Robert J. Naify 1,383,117.12 232,456 263,083 (6) 58,114 65,770 (6)
Marshall Naify, 2,032,556.06 341,606 341,606 85,401 85,401
Robert A. Naify and
Georgette N.
Rosekrans, Trustees of
the Michael N. Naify
testamentary trust for
the benefit of Marshall
Naify
John M. Sherwood, as 182,233.74 30,627 30,627 7,656 7,656
Trustee of the Leslie
C. Naify 1981 Trust
John M. Sherwood, as 182,233.74 30,627 30,627 7,656 7,656
Trustee of the Christie
M. Naify 1981 Trust
John M. Sherwood, as 182,233.74 30,627 30,627 7,656 7,656
Trustee of the Robert
J. Naify 1981 Trust
Christina C. Dierker 139,734.67 23,484 23,484 5,871 5,871
as Trustee of the
Christina C. Dierker
Trust Dated October
10, 1995
John M. Sherwood, as 139,734.67 23,484 23,484 5,871 5,871
Trustee of the Acela
Cortese 1983 Trust
John M. Sherwood, as 139,734.67 23,484 23,484 5,871 5,871
Trustee of the
Christina E. Naify
1985 Trust
John M. Sherwood, as 114,619.43 19,263 19,263 4,815 4,815
Trustee of the Drew
Michael Andrade 1986
Trust
John M. Sherwood, as 132,856.16 22,328 23,902 5,582 5,975
Trustee of the Marsha
J. Naify Living Trust
John M. Sherwood, as 650,506.16 109,328 112,264 27,332 28,066
Trustee of the Michael
S. Naify 1981 Trust
John M. Sherwood, as 472,006.16 79,328 82,264 19,832 20,566
Trustee of the
Christina E. Naify
1981 Trust
Michael S. Naify 973,335.44 163,585 505,845 (7) 40,896 126,461 (7)
Christina E. Naify 875,120.40 147,079 226,407 (8) 36,769 56,601 (8)
</TABLE>
6
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<TABLE>
<S> <C> <C> <C> <C> <C>
Marshall Naify, as 1,368,481.30 229,996 229,996 57,499 57,499
Trustee under the
Michael S. Naify 1963
Trust
Richard Naify 3,833,900.00 644,352 743,005 (9) 161,088 185,751 (9)
Josephine Naify 5,995,736.82 1,007,686 1,141,076 (9) 251,921 285,269 (9)
James Naify 301,172.93 50,617 60,317 12,654 15,079
</TABLE>
- --------------------
(1) The number of shares specified in this table as being beneficially owned by
each Selling Stockholder assumes the conversion of all Notes beneficially
owned by such Selling Stockholder, except as set forth in the footnotes.
(2) This number includes the number of shares issuable upon conversion of Notes
owned by record by Marshall Naify, Robert A. Naify and Georgette N.
Rosekrans, as Trustees of the Michael N. Naify testamentary trust for the
benefit of Marshall Naify (341,606 shares of TCI Group Series A Common
Stock and 85,401 shares of LMG Series A Common Stock). This number does
not include, although Marshall Naify may be deemed to beneficially own, the
number of shares issuable upon conversion of Notes owned by record by
Marshall Naify as sole trustee under the Michael S. Naify 1963 Trust
(229,996 shares of TCI Group Series A Common Stock and 57,499 shares of LMG
Series A Common Stock).
(3) This number does not include, although Robert A. Naify may be deemed to
beneficially own, the number of shares issuable upon conversion of Notes
owned of record by Robert A. Naify as co-trustee under the Michael N. Naify
testamentary trust for the benefit of Marshall Naify.
(4) This number includes the number of shares issuable upon conversion of Notes
owned of record by the Leslie C. Naify 1981 Trust (30,627 shares of TCI
Group Series A Common Stock and 7,656 shares of LMG Series A Common Stock)
of which Leslie C. Naify is the sole beneficiary.
(5) This number includes the number of shares issuable upon conversion of Notes
owned of record by the Christie M. Naify 1981 Trust (30,627 shares of TCI
Group Series A Common Stock and 7,656 shares of LMG Series A Common Stock)
of which Christie M. Naify is the sole beneficiary.
(6) This number includes the number of shares issuable upon conversion of Notes
owned of record by the Robert J. Naify 1981 Trust (30,627 shares of TCI
Group Series A Common Stock and 7,656 shares of LMG Series A Common Stock)
of which Robert J. Naify is the sole beneficiary.
(7) This number includes the number of shares issuable upon conversion of Notes
owned of record by two trusts separately identified above of which Michael
S. Naify is sole beneficiary (the Michael S. Naify 1981 Trust and the
Michael S. Naify 1963 Trust)
(8) This number includes the number of shares issuable upon conversion of Notes
owned of record by the Christina E. Naify 1981 Trust (79,328 shares of TCI
Group Series A Common Stock and 19,832 shares of LMG Series A Common Stock)
of which Christina E. Naify is sole beneficiary.
(9) This number includes 66,070 shares of TCI Group Series A Common Stock and
16,517 shares of LMG Series A Common Stock owned jointly by Josephine Naify
and Richard Naify.
Neither the Company nor any of its affiliates has had any material
relationship with any member of the Naify Family within the past three years,
except that Robert A. Naify has been a director of the Company since June 12,
1987. Any other material relationship between the Company or any of its
affiliates, on the one hand, and a Selling Stockholder, on the other, within
three years prior to the date of a sale by such Selling Stockholder hereunder
will be described in the Prospectus Supplement relating to such sale. The
Company has agreed to bear all costs and expenses of registering the Shares
under the Securities Act and certain state securities laws, including
registration fees, its legal and accounting fees and expenses and
photocopying costs. The Selling Stockholders will bear all other expenses of
the offering and sale of the Shares, including any underwriting discounts,
selling commissions or other compensation to agents, broker-dealers or
underwriters, transfer fees or taxes, if any, and fees and expenses of
counsel and other advisers, if any, to the Selling Stockholders. The Company
has agreed to indemnify the Selling Stockholders against certain liabilities,
including civil liabilities under the Securities Act.
7
<PAGE>
PLAN OF DISTRIBUTION
The Shares may be offered for sale and sold by the Selling Stockholders in
one or more transactions, including block 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. The Shares may be sold
by the Selling Stockholders directly, through an underwritten offering,
through agents designated from time to time or to or through broker-dealers
designated from time to time.
If any Shares are sold in an underwritten offering, such Shares may be
acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time
of sale. Unless otherwise indicated in the applicable Prospectus Supplement,
the obligations of any underwriters to purchase Shares will be subject to
certain conditions precedent, and the underwriters will be obligated to
purchase all of the Shares specified in such Prospectus Supplement if any are
purchased.
Shares may be sold through a broker-dealer acting as agent or broker 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 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
underwriter, 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.
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.
To the extent required, the number of Shares to be sold, the purchase
price, the public offering price, if applicable, the name of any underwriter,
agent or broker-dealer, and any applicable commissions, discounts or other
items constituting compensation to such underwriters, agents or broker-
dealers with respect to a particular offering will be set forth in an
accompanying Prospectus Supplement.
DESCRIPTION OF COMMON STOCK
The following description of certain terms of the common stock of TCI 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") which has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part.
8
<PAGE>
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 (the
"TCI Common Stock"), 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 November 1, 1995, 571,576,645 shares of TCI Group Series A Common
Stock, 84,801,554 shares of TCI Group Series B Common Stock, 142,892,796
shares of LMG Series A Common Stock and 21,200,336 shares of LMG Series B
Common Stock (in each case net of shares held in treasury) have been issued
and are outstanding.
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.
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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.
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
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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 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,
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(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 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).
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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 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.
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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 of TCI's preferred stock or any series of such a
class, 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's preferred stock, if any, entitled to
vote thereon 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 outstanding shares of TCI's
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's 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.
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
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or series of TCI's 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's
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.
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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 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, 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
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(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 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
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<PAGE>
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 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
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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 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
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,
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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 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:
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(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
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fraction) of fully paid and nonassessable shares of TCI Group
Series B Common Stock, 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's 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
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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, 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
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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 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)
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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 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
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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 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
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<PAGE>
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 will be sent by first-class mail, postage prepaid, not less than 35
trading days nor more than 45 trading
27
<PAGE>
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
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<PAGE>
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 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's preferred stock is
29
<PAGE>
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.
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 "Description of Common
Stock" 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
30
<PAGE>
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 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's
preferred stock, 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 (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's 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
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<PAGE>
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, TCI's Class B 6% Cumulative Redeemable
Exchangeable Junior Preferred Stock, par value $.01 per share, and certain
series of TCI's Series Preferred Stock, par value $.01 per share ("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 48,429,425 shares remain available for designation
as of January 2, 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 1,175,326,387 and 643,826,638,
respectively, remain available for issuance as of November 1, 1995 (not
including shares held by TCI in treasury). 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 66-2/3%
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's 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 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
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<PAGE>
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, 1994 and 1993, 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, 1994, and all related
schedules which appear in Tele-Communications, Inc.'s Annual Report on Form
10-K for the year ended December 31, 1994, as amended, have been incorporated
by reference herein in reliance upon the reports, dated March 27, 1995, of
KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing. The reports of KPMG Peat Marwick LLP covering the
December 31, 1994 consolidated financial statements refer to the adoption of
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," in 1994.
The consolidated balance sheets of TeleWest Communications plc and
subsidiaries as of 31 December 1994 and 1993, and the related consolidated
statements of operations and cash flows for each of the years in the three
year period ended 31 December 1994, which appear in the 31 December 1994
Annual Report on Form 10-K of Tele-Communications, Inc., as amended, have
been incorporated by reference herein in reliance upon the report of KPMG,
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 Cablevision (a combination of certain
cable television assets of Cablevision S.A., Televisora Belgrano S.A.,
Construed 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 consolidated balance sheets of QVC, Inc. and subsidiaries as of
January 31, 1994 and 1993, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the years in the
three-year period ended January 31, 1994, which appear in the Current Report
on Form 8-K of Tele-Communications, Inc. dated February 3, 1995, as amended,
have been incorporated by reference herein in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
33
<PAGE>
accounting and auditing. The report of KPMG Peat Marwick LLP covering the
January 31, 1994 consolidated financial statements refers to a change in the
method of accounting for income taxes.
The financial statements of TeleCable Corporation as of December 31,
1993 and 1992 and for each of the two years in the period ended December 31,
1993, incorporated in this Prospectus by reference to the Company's Current
Report on Form 8-K dated August 26, 1994, have been so incorporated in
reliance on the report of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
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================================================================================
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
SHARES BEING OFFERED........... 4
SELLING STOCKHOLDERS........... 5
PLAN OF DISTRIBUTION........... 8
DESCRIPTION OF COMMON STOCK.... 8
LEGAL MATTERS.................. 32
EXPERTS........................ 32
</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
-----------------------------------------
January 22, 1996
================================================================================
