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Filed Pursuant to Rule 424(b)(3)
Registration Nos. 333-00265 and 333-06723
PROSPECTUS
TELE-COMMUNICATIONS, INC.
SERIES A TCI GROUP COMMON STOCK
($1.00 Par Value)
This Prospectus relates to shares of Tele-Communications, Inc. Series A TCI
Group Common Stock, par value $1.00 per share (the "Series A TCI Group Common
Stock"), of Tele-Communications, Inc., a Delaware corporation (the "Company"),
which may be delivered by Viacom International Inc. ("VII Cable"), a Delaware
corporation, pursuant to the terms of the Class A Senior Cumulative
Exchangeable Preferred Stock, par value $100 per share, of VII Cable (the "VII
Cable Preferred Stock"). See "Plan of Distribution." Simultaneously with the
issuance of the VII Cable Preferred Stock, VII Cable will be renamed "TCI
Pacific Communications, Inc." Immediately following the issuance of the VII
Cable Preferred Stock, TCI Communications, Inc., a Delaware corporation ("TCI
Cable") and a subsidiary of the Company, will own all of the outstanding
voting securities of VII Cable. The Company will not receive any proceeds from
the delivery of the shares of Series A TCI Group Common Stock covered hereby.
The VII Cable Preferred Stock is being offered by a separate Offering
Circular-Prospectus of Viacom, Inc., a Delaware corporation ("Viacom"), and
VII Cable (the "Viacom Prospectus"). This Prospectus relates only to the
Series A TCI Group Common Stock covered hereby and does not relate to the VII
Cable Preferred Stock or any other securities of VII Cable or Viacom. THE
COMPANY HAS NOT PARTICIPATED IN THE PREPARATION OF, AND TAKES NO
RESPONSIBILITY FOR ANY INFORMATION INCLUDED IN OR OMITTED FROM, THE VIACOM
PROSPECTUS. THE VIACOM PROSPECTUS DOES NOT CONSTITUTE A PART OF THIS
PROSPECTUS, NOR IS IT INCORPORATED BY REFERENCE HEREIN. THE COMPANY DISCLAIMS
ANY AND ALL LIABILITY FOR ANY UNTRUE STATEMENT OF A MATERIAL FACT IN THE
VIACOM PROSPECTUS OR OMISSION TO STATE A MATERIAL FACT NECESSARY IN ORDER TO
MAKE THE STATEMENTS THEREIN NOT MISLEADING, IN LIGHT OF THE CIRCUMSTANCES
UNDER WHICH THEY WERE MADE. See "Viacom Prospectus -- Explanatory Note." An
investment in the VII Cable Preferred Stock may have materially different
characteristics from an investment in the Series A TCI Group Common Stock.
SEE "RISK FACTOR" ON PAGE 4 OF THIS PROSPECTUS FOR A DISCUSSION OF CERTAIN
RISKS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SHARES
OF SERIES A TCI GROUP COMMON STOCK OFFERED HEREBY.
The Series A TCI Group Common Stock is one of four series of common stock of
the Company. See "Description of Common Stock." The Series A TCI Group Common
Stock is traded on the Nasdaq National Market under the trading symbol
"TCOMA." On June 21, 1996, the last reported sale price of the Series A TCI
Group Common Stock on the Nasdaq National Market was $18 5/8 per share.
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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.
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The date of this Prospectus is June 24, 1996.
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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 thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
shares of Series A TCI Group Common Stock offered hereby. 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
Series A TCI Group Common Stock and the Company, reference is made to the
Registration Statement. The Registration Statement, including any amendments,
schedules and exhibits filed or incorporated by reference as a part thereof,
is available for inspection and copying as set forth below. Statements
contained herein or in any document incorporated herein by reference
concerning the provisions of any document are not necessarily complete and, in
each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information (including
the Registration Statement) filed with the Commission 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, and at the following Regional Offices of the Commission: 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and Seven World
Trade Center, Suite 1300, New York, New York 10048. Copies of such material
can be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Reports,
proxy statements and other information concerning the Company can also be
inspected at the Nasdaq Stock Market at 1735 K Street, N.W., Washington, D.C.
20006. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants (including
the Company) that file electronically with the Commission. The address of the
Commission's Web site is http://www.sec.gov.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the Commission
under the Exchange Act (Commission File No. 0-20421) and are hereby
incorporated into this Prospectus by reference and made a part hereof: (i) the
Company's Annual Report on Form 10-K for the year ended December 31, 1995;
(ii) the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1996; (iii) the Company's Current Reports on Form 8-K dated February 9,
1996 and June 19, 1996; and (iv) the financial statements and notes thereto of
Cablevision (a combination of certain cable television assets of Cablevision
S.A., Televisora Belgrano S.A., Construred S.A. and Univent's S.A.) as of
December 31, 1994 and 1993, and for each of the years in the three-year period
ended December 31, 1994, which appear in the Current Report on Form 8-K of the
Company dated April 20, 1995 (as amended by Form 8-K/A (Amendment No. 1)).
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 Series A TCI Group Common Stock
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
previous 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.
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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 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.
VIACOM PROSPECTUS--EXPLANATORY NOTE
VII Cable has filed with the Commission a Registration Statement on Form S-4
(the "Viacom Registration Statement"), of which the Viacom Prospectus forms a
part, with respect to shares of Class A Common Stock, $100 par value per
share, of VII Cable (the "VII Cable Class A Common Stock") and with respect to
the VII Cable Preferred Stock into which the VII Cable Class A Common Stock
will automatically convert as described in the Viacom Prospectus. This
Prospectus is being mailed with the Viacom Prospectus because the Series A TCI
Group Common Stock offered hereby may be delivered by VII Cable upon optional
or mandatory redemption by VII Cable of, or upon exchange at the option of the
holder of, the VII Cable Preferred Stock in accordance with the terms thereof.
THIS PROSPECTUS RELATES ONLY TO THE SERIES A TCI GROUP COMMON STOCK OFFERED
HEREBY AND DOES NOT RELATE TO THE VII CABLE CLASS A COMMON STOCK, THE VII
CABLE PREFERRED STOCK OR ANY OTHER SECURITIES OF VII CABLE OR VIACOM. VIACOM
FILES PERIODIC AND OTHER REPORTS AND PROXY STATEMENTS WITH THE COMMISSION.
PROSPECTIVE INVESTORS ARE DIRECTED TO SUCH PUBLICLY AVAILABLE DOCUMENTS AS
WELL AS TO THE VIACOM PROSPECTUS FOR INFORMATION CONCERNING VIACOM, VII CABLE,
THE VII CABLE CLASS A COMMON STOCK AND THE VII CABLE PREFERRED STOCK. THE
COMPANY HAS NOT PARTICIPATED IN THE PREPARATION OF THE VIACOM PROSPECTUS NOR
MADE ANY DUE DILIGENCE INQUIRY WITH RESPECT THERETO. THE COMPANY MAKES NO
REPRESENTATION THAT THE VIACOM PROSPECTUS IS ACCURATE OR COMPLETE. THE COMPANY
DISCLAIMS ANY AND ALL LIABILITY FOR ANY UNTRUE STATEMENT OF A MATERIAL FACT IN
THE VIACOM PROSPECTUS OR OMISSION TO STATE A MATERIAL FACT NECESSARY IN ORDER
TO MAKE THE STATEMENTS THEREIN NOT MISLEADING, IN LIGHT OF THE CIRCUMSTANCES
UNDER WHICH THEY WERE MADE.
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RISK FACTOR
The Company incurred net losses of $171 million and $5 million for the years
ended December 31, 1995 and 1993, respectively, and a net loss of $86 million
for the three months ended March 31, 1996. The Company had net earnings of $62
million for the year ended December 31, 1994, and a net loss of $45 million
for the three months ended March 31, 1995. Notwithstanding the losses it has
incurred, the Company has been able to, and expects to continue to be able to,
satisfy its debt service and other obligations as and when they become due.
The Company's operating cash flow (operating income before depreciation,
amortization and other non-cash credits or charges) ($1,975 million, $1,798
million and $1,858 million for the years ended December 31, 1995, 1994 and
1993, respectively, and $537 million and $464 million for the three months
ended March 31, 1996 and 1995, respectively) has historically been sufficient
to cover its interest expense ($1,010 million, $785 million and $731 million
for the years ended December 31, 1995, 1994 and 1993, respectively, and $261
million and $240 million for the three months ended March 31, 1996 and 1995,
respectively). The Company's interest coverage ratios for the years ended
December 31, 1995, 1994 and 1993 were 196%, 229% and 254%, respectively, and
for the three months ended March 31, 1996 and 1995 were 206% and 193%,
respectively. Operating cash flow is a measure of value and borrowing capacity
within the cable television industry and is not intended to be a substitute
for cash flows provided by operating activities, a measure of performance
prepared in accordance with generally accepted accounting principles, and
should not be relied upon as such. Operating cash flow, as defined, does not
take into consideration substantial costs of doing business, such as interest
expense, and should not be considered in isolation to other measures of
performance.
Another measure of liquidity is net cash provided by operating activities as
reflected in the Company's consolidated statements of cash flows. Net cash
provided by operating activities ($957 million, $908 million and $1,247
million for the years ended December 31, 1995, 1994 and 1993, respectively,
and $317 million and $151 million for the three months ended March 31, 1996
and 1995, respectively) reflects net cash from the operations of the Company
available for the Company's liquidity needs after taking into consideration
the aforementioned substantial costs of doing business not reflected in
operating cash flow. Amounts expended by the Company for its investing
activities exceed net cash provided by operating activities.
THE COMPANY
The Company, through its subsidiaries and affiliates, is principally engaged
in the construction, acquisition, ownership and operation of cable television
systems and in the provision of satellite-delivered video entertainment,
information and home shopping programming services to various video
distribution media, principally cable television systems. The Company is one
of the largest providers of cable television services in the United States.
The Company also has interests in cable and telecommunications operations and
television programming in certain international markets, as well as
investments in companies and joint ventures involved in developing and
providing programming for new television and telecommunications technologies.
The Company is organized into four principal business groups: Domestic Cable
and Communications; Programming; International Cable and Programming; and
Technology/Venture Capital. The Company is a Delaware corporation and its
executive offices are located at Terrace Tower II, 5619 DTC Parkway,
Englewood, Colorado 80111-3000; telephone (303) 267-5500.
PLAN OF DISTRIBUTION
The terms of the VII Cable Preferred Stock provide that each holder of VII
Cable Preferred Stock may, at its option, at any time after the fifth
anniversary of the date of issuance thereof (unless earlier redeemed),
exchange such holder's shares of VII Cable Preferred Stock, in whole or in
part, for shares of Series A TCI Group Common Stock at an exchange rate set
forth in the VII Cable Preferred Stock. The terms of the VII Cable Preferred
Stock further provide that VII Cable may, at its option, deliver to the
holders of the VII Cable Preferred Stock shares of Series A TCI Group Common
Stock (i) in payment, in whole or in part, of VII Cable's dividend obligations
on the VII Cable Preferred Stock or (ii) in payment, in whole or in part, of
VII Cable's obligations to redeem shares of VII Cable Preferred Stock pursuant
to the optional or mandatory redemption provisions of the VII Cable Preferred
Stock.
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The Company, TCI Cable and VII Cable have entered into a Subscription
Agreement, dated as of July 24, 1995 (the "Subscription Agreement"), pursuant
to which TCI Cable has agreed, subject to the terms and conditions contained
therein, to purchase 100 shares of Class B Common Stock, $0.01 par value per
share, of VII Cable (the "VII Cable Class B Common Stock"), for a purchase
price of $350 million. Upon the issuance of the VII Cable Class B Common Stock
to TCI Cable, each outstanding share of VII Cable Class A Common Stock will
automatically convert into one share of VII Cable Preferred Stock. Immediately
following such issuance of VII Cable Class B Common Stock and the conversion
of the outstanding shares of VII Cable Class A Common Stock, TCI Cable will
own all of the outstanding voting securities of VII Cable.
The Company has no obligations with respect to the VII Cable Preferred
Stock, which are securities of VII Cable and are not securities of the
Company. However, under the terms of the Subscription Agreement, the Company
has agreed (i) to contribute to VII Cable or otherwise cause VII Cable to have
available sufficient shares of Series A TCI Group Common Stock to enable VII
Cable to deliver such shares to holders of VII Cable Preferred Stock upon
exercise by such holders of their exchange rights under the terms of the VII
Cable Preferred Stock and (ii) to reserve out of its authorized capital stock
sufficient shares of Series A TCI Group Common Stock to satisfy its
obligations to VII Cable in connection with such exchange. In addition, if the
VII Cable Board of Directors elects to pay a dividend in shares of Series A
TCI Group Common Stock at a time when VII Cable is prohibited from paying cash
dividends under its existing loan agreements (or any refinancing thereof), TCI
Cable has agreed to make available to VII Cable shares of Series A TCI Group
Common Stock to pay such dividends.
DESCRIPTION OF COMMON STOCK
The Series A TCI Group Common Stock is one of four series of common stock,
par value $1.00 per share ("Company Common Stock"), of the Company. The other
three series of the Company Common Stock consist of the following: (i) the
Tele-Communications, Inc. Series B TCI Group Common Stock (the "Series B TCI
Group Common Stock", and together with the Series A TCI Group Common Stock,
the "TCI Group Common Stock"), (ii) the Tele-Communications, Inc. Series A
Liberty Media Group Common Stock (the "Series A LMG Common Stock") and (iii)
the Tele-Communications, Inc. Series B Liberty Media Group Common Stock (the
"Series B LMG Common Stock", and together with the Series A LMG Common Stock,
the "Liberty Media Group Common Stock"). Each series of Company Common Stock
has powers and rights that may affect the powers and rights of each other
series of Company Common Stock. Accordingly, a description of all four series
of Company Common Stock is set forth below. However, as of the date hereof,
the Series A TCI Group Common Stock is the only series of Company Common Stock
for which the VII Cable Preferred Stock is exchangeable, or which VII Cable
may deliver upon optional or mandatory redemption of, or as a dividend on, the
VII Cable Preferred Stock. See "Plan of Distribution."
The following description of the Company Common Stock does not purport to be
complete and is qualified in its entirety be reference to the Restated
Certificate of Incorporation, as amended, of the Company (the "Company
Charter"), which is an exhibit to the Registration Statement. See "Available
Information."
GENERAL
The Company Charter provides, among other things, that the Company is
authorized to issue 2,725,000,000 shares of Company 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 April 30, 1996, 583,361,905 shares of Series A TCI Group Common Stock,
84,682,729 shares of Series B TCI Group Common Stock, 145,815,385 shares of
Series A LMG Common Stock and 21,192,387 shares of Series B LMG Common Stock
(in each case net of shares held by subsidiaries of the Company) had
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been issued and were outstanding and 100,524,364 shares of Series A TCI Group
Common Stock were held by subsidiaries of the Company. As of that date,
90,809,696 shares of Series A TCI Group Common Stock and 20,880,824 shares of
Series A LMG Common Stock were reserved for issuance upon conversion, exchange
or exercise of outstanding convertible or exchangeable securities and options.
In addition, the Company has reserved a number of shares of Series A TCI Group
Common Stock equal to the number of shares of Series B TCI Group Common Stock
outstanding, and a number of shares of Series A LMG Common Stock equal to the
number of shares of Series B LMG Common Stock outstanding, for issuance upon
conversion, at the option of the holder, of the Series B TCI Group Common
Stock and Series B LMG Common Stock, respectively. Additionally, subsidiaries
of TCI own shares of the Company's Convertible Redeemable Participating
Preferred Stock, Series F (the "Series F Preferred Stock") which is
convertible into 357,565,989 shares of Series A TCI Group Common Stock.
The Company Charter also authorizes 52,375,096 shares of preferred stock
(the "Company Preferred Stock"), of which 700,000 shares are designated Class
A Preferred Stock, par value $0.01 per share (the "Class A Preferred Stock"),
1,675,096 shares are designated Class B 6% Cumulative Redeemable Exchangeable
Junior Preferred Stock, par value $.01 per share (the "Class B Preferred
Stock"), and 50,000,000 shares are designated Series Preferred Stock, par
value $.01 per share (the "Series Preferred Stock"), issuable in series. All
of the shares of Class A Preferred Stock have previously been redeemed and
retired and may not be reissued, thereby reducing the number of authorized
shares of Company Preferred Stock. Of the Series Preferred Stock, as of March
31, 1996, 80,000 shares are designated Convertible Preferred Stock, Series C
(the "Series C Preferred Stock"), 1,000,000 shares are designated Convertible
Preferred Stock, Series D (the "Series D Preferred Stock"), 400,000 shares are
designated Redeemable Convertible Preferred Stock, Series E (the "Series E
Preferred Stock"), 500,000 shares are designated Series F Preferred Stock,
7,259,380 shares are designated Redeemable Convertible TCI Group Preferred
Stock, Series G (the "Series G Preferred Stock") and 7,259,380 shares are
designated Redeemable Convertible Liberty Media Group Preferred Stock, Series
H (the "Series H Preferred Stock"). As of March 31, 1996, 1,620,026 shares of
Class B Preferred Stock, 70,575 shares of Series C Preferred Stock, 999,569
shares of Series D Preferred Stock, 277,719 shares of Series F Preferred
Stock, 7,259,380 shares of Series G Preferred Stock and 7,259,380 shares of
Series H Preferred Stock had been issued and were outstanding. All of the
shares of Series E Preferred Stock have previously been redeemed and retired
with the effect that such shares have been restored to the status of
authorized and unissued shares of Series Preferred Stock and may be reissued
as shares of another series of Series Preferred Stock, but not as Series E
Preferred Stock. All of the outstanding shares of Series F Preferred Stock are
held by subsidiaries of the Company. Approximately 33,901,240 shares of Series
Preferred Stock remain available for designation pursuant to the Company
Charter as of March 31, 1996. The rights evidenced by the Company Common Stock
(including the Series A TCI Group Common Stock) are subject to the prior
preferences and rights of the Company Preferred Stock.
TCI GROUP COMMON STOCK AND LIBERTY MEDIA GROUP COMMON STOCK
Certain Definitions
As used herein, the following terms have the meanings specified below:
"Committed Acquisition Shares" means (a) the shares of Series A LMG Common
Stock that the Company 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 Series A LMG Common Stock that are issuable upon conversion, exercise or
exchange of Convertible Securities that the Company 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 the Company to issue shares of
the Company's Class A Common Stock, par value $1.00 per share (which has been
redesignated Series A TCI Group Common Stock), which as a result of the
Distribution constitute obligations to issue, among other securities, Series A
LMG Common Stock or Convertible Securities which are convertible into or
exercisable or exchangeable for Series A LMG 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
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Pre-Distribution Convertible Securities. The type and amount of Committed
Acquisition Shares issuable will be appropriately adjusted to reflect
subdivisions and combinations of the Series A LMG Common Stock and dividends
or distributions of shares of Series A LMG Common Stock or Series B LMG Common
Stock to holders of Series A LMG Common Stock and other reclassifications of
the Series A LMG Common Stock, in each case occurring (or the record date for
which occurs) after the Distribution.
"Convertible Securities" means any securities of the Company (other than any
series of Company Common Stock) that are convertible into, exchangeable for or
evidence the right to purchase any shares of any series of Company Common
Stock, whether upon conversion, exercise, exchange, pursuant to antidilution
provisions of such securities or otherwise.
The "Distribution" means the distribution paid by the Company on August 10,
1995 of one-fourth of one share of Series A LMG Common Stock on each
outstanding share of Series A TCI Group Common Stock and one-fourth of one
share of Series B LMG Common Stock on each outstanding share of Series B TCI
Group Common Stock to holders of record on August 4, 1995.
The "Inter-Group Interest" means any equity value of the Company
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 the Company 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 the Company 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 the Company or any of its subsidiaries in the
businesses, assets and liabilities acquired by the Company or any of its
subsidiaries for the Liberty Media Group, as determined by the Board of
Directors of the Company (the "Company 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 the Company 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
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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 the
Company pays a dividend or makes any other distribution with respect to shares
of Liberty Media Group Common Stock payable in securities of the Company
attributed to the Liberty Media Group other than Liberty Media Group Common
Stock, the TCI Group will be deemed to hold an amount of such other securities
equal to the amount so distributed multiplied by the fraction specified in
clause (i) of this definition (determined as of a time immediately prior to
the record date for such dividend or other distribution), and to the extent
interest or dividends are paid or other distributions are made on such other
securities so distributed to the holders of Liberty Media Group Common Stock,
the Liberty Media Group will no longer include a corresponding ratable amount
of the kind of assets paid as such interest or dividends or other
distributions in respect of such securities so deemed to be held by the TCI
Group. The Company 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 the Company 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 the Company, 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 Company 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 the
Company" and "--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 Company 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 the Company Common Stock will be reduced by the fair
market value of the per share amount of such dividend or distribution as
determined by the Company Board of Directors and (b) the "Market Value" of any
share of any series of Company 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
Company Common Stock or (ii) the "ex" date or any similar date for any
dividend or distribution with respect to any such series of Company Common
Stock in shares of such series of Company 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
Series A LMG Common Stock and dividends or distributions of shares of
Series A LMG Common Stock or Series B LMG Common Stock to holders of Series
A LMG Common Stock and other reclassifications of Series A LMG Common
Stock,
(b) decreased (but not to less than zero) by (i) the aggregate number of
shares of Series A LMG Common Stock issued or sold by the Company after the
Distribution other than Committed Acquisition
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Shares, the proceeds of which are attributed to the TCI Group, (ii) the
aggregate number of shares of Series A LMG 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 Series A LMG Common Stock issued or
delivered by the Company as a dividend or distribution to holders of Series
A TCI Group Common Stock and Series B TCI Group Common Stock, (iv) the
aggregate number of shares of Series A LMG 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 the Company after the
Distribution as a dividend or distribution or by reclassification or
exchange to holders of Series A TCI Group Common Stock and Series B TCI
Group Common Stock and (v) the aggregate number of shares of Series A LMG
Common Stock (rounded, if necessary, to the nearest whole number), equal to
the aggregate fair value (as determined by the Company 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 Series A LMG
Common Stock as of the date of such transfer, and
(c) increased by (i) the aggregate number of any shares of Series A LMG
Common Stock and Series B LMG 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 Company 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 Series A LMG Common
Stock as of the date of such contribution and (iii) the aggregate number of
shares of Series A LMG Common Stock and Series B LMG 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."
The Company will not issue or sell shares of Series B LMG 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, the Company will prepare and file
a statement of such change with the Secretary of the Company.
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 the
Company's Class A Common Stock, par value $1.00 per share (which has been
redesignated Series A TCI Group Common Stock).
The "TCI Group" means as of any date of determination thereof:
(a) the interest of the Company or any of its subsidiaries in all of the
businesses in which the Company 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 the Company 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;
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(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 the Company 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 the Company pays
a dividend or makes any other distribution with respect to shares of Liberty
Media Group Common Stock payable in other securities of the Company 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. The Company
may also, to the extent any such other securities constitute Convertible
Securities which are at the time convertible, exercisable or exchangeable,
cause such Convertible Securities deemed to be held by the TCI Group to be
deemed to be converted, exercised or exchanged (and to the extent the terms of
such Convertible Securities require payment or delivery of consideration in
order to effect such conversion, exercise or exchange, the TCI Group will in
such case no longer include an amount of the kind of properties or assets
required to be paid or delivered as such consideration for the amount of the
Convertible Securities deemed converted, exercised or exchanged as if such
Convertible Securities were outstanding), in which case such Convertible
Securities will no longer be deemed to be held by the TCI Group or attributed
to the Liberty Media Group.
Voting Rights
Holders of Series A TCI Group Common Stock are entitled to one vote for each
share of such stock held, holders of Series B TCI Group Common Stock are
entitled to ten votes for each share of such stock held, holders of Series A
LMG Common Stock are entitled to one vote for each share of such stock held
and holders of Series B LMG Common Stock are entitled to ten votes for each
share of such stock held, on all matters presented to such stockholders.
Except as may otherwise be required by the laws of the State of Delaware or,
with respect to any class or series of Company Preferred Stock, in the Company
Charter (including any resolution or resolutions providing for the
establishment of any such series pursuant to authority vested in the Company
Board of Directors by the Company 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 Company Preferred Stock entitled to vote on the
particular matter will vote as one class for all purposes. See "--Other
Matters."
Neither the holders of Series A TCI Group Common Stock or Series B TCI Group
Common Stock, nor the holders of Series A LMG Common Stock or Series B LMG
Common Stock, have any rights to vote as a separate class or series on any
matter coming before the stockholders of the Company, except with respect to
certain limited class and series voting rights provided under the General
Corporation Law of the State of Delaware (the "DGCL"). Under the DGCL, the
approval of the holders of a majority of the outstanding shares of any class
of
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capital stock of a corporation, voting separately as a class, is required to
approve any amendment to the charter that would alter or change the powers,
preferences or special rights of the shares of such class so as to affect them
adversely, provided that, if any amendment would alter or change the powers,
preferences or special rights of one or more series of the class so as to
affect them adversely, but would not so affect the entire class, then only the
shares of the series so affected by the amendment would be entitled to vote
thereon separately as a class.
Dividends
Subject to the prior payment of dividends on, and other rights of, any
outstanding shares of Company Preferred Stock, dividends may be paid as
determined by the Company 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 the Company 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 the Company legally available
therefor under the DGCL. Under the DGCL the amount of the funds of the Company
legally available for the payment of dividends on any series of the Company
Common Stock is determined on the basis of the entire corporation and not just
the TCI Group or the Liberty Media 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, Company Preferred Stock.
Certain loan agreements to which certain subsidiaries of the Company 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 or series of Company 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 the Company 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 Company 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. The "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 the Company attributed
to the operations of the Liberty Media Group on a substantially consistent
basis,
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<PAGE>
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
Series A TCI Group Common Stock or the Series B TCI Group Common Stock will be
paid only on both series, in equal amounts per share, and any dividends paid
on the Series A LMG Common Stock or the Series B LMG Common Stock will be paid
only on both series, in equal amounts per share.
The Company Board of Directors, subject to the provisions described herein
under "--Dividends" and below under "--Share Distributions," has the authority
and discretion to declare and pay dividends on the TCI Group Common Stock or
the Liberty Media Group Common Stock in equal or unequal amounts,
notwithstanding the relationship between the TCI Group Available Dividend
Amount and the Liberty Media Group Available Dividend Amount, the respective
amounts of prior dividends declared on, or liquidation rights of, the TCI
Group Common Stock or the Liberty Media Group Common Stock or any other
factor.
At the time of any dividend or other distribution on the outstanding shares
of Liberty Media Group Common Stock (including any dividend of Net Proceeds
from the Disposition of all or substantially all of the properties and assets
of the Liberty Media Group as described below under "--Conversion and
Redemption-Mandatory Dividend, Redemption or Conversion of Liberty Media Group
Common Stock"), the TCI Group will (if at such time there is an Inter-Group
Interest) be credited, and 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 the Company 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 Series A TCI Group
Common Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A TCI Group Common Stock) to holders of
Series A TCI Group Common Stock and Series B TCI Group Common Stock, on an
equal per share basis; or consisting of shares of Series B TCI Group Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series B TCI Group Common Stock) to holders of
Series A TCI Group Common Stock and Series B TCI Group Common Stock, on an
equal per share basis; or consisting of shares of Series A TCI Group Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A TCI Group Common Stock) to holders of
Series A TCI Group Common Stock and, on an equal per share basis, shares of
Series B TCI Group Common Stock (or like Convertible Securities convertible
into or exercisable or exchangeable for shares of Series B TCI Group Common
Stock) to holders of Series B TCI Group Common Stock;
(ii) a share distribution consisting of shares of Series A LMG Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A LMG Common Stock) to holders of Series
A TCI Group Common Stock and Series B TCI Group Common Stock, on an equal
per share basis; provided that the sum of (a) the aggregate number of
shares of Series A LMG Common Stock to be so
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<PAGE>
issued (or the number of such shares which would be issuable upon
conversion, exercise or exchange of any Convertible Securities to be so
issued) and (b) the number of shares of such series that are subject to
issuance upon conversion, exercise or exchange of any Convertible
Securities then outstanding that are attributed to the TCI Group (other
than Pre-Distribution Convertible Securities and other than Convertible
Securities convertible into or exercisable or exchangeable for Committed
Acquisition Shares) is less than or equal to the Number of Shares Issuable
with Respect to the Inter-Group Interest; and
(iii) a share distribution consisting of any class or series of
securities of the Company 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 Series A TCI Group Common Stock and Series B TCI Group Common
Stock or on the basis of a distribution of one class or series of
securities to holders of Series A TCI Group Common Stock and another class
or series of securities to holders of Series B TCI Group 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 Series B TCI Group
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 Series A TCI Group Common Stock and the Series B TCI Group
Common Stock), provided that if the securities so distributed constitute
capital stock of a subsidiary of the Company, 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 Series A TCI Group Common Stock and the Series B TCI Group
Common Stock, and provided in each case that such distribution is otherwise
made on an equal per share basis.
The Company will not reclassify, subdivide or combine the Series A TCI Group
Common Stock without reclassifying, subdividing or combining the Series B TCI
Group Common Stock, on an equal per share basis, and the Company will not
reclassify, subdivide or combine the Series B TCI Group Common Stock without
reclassifying, subdividing or combining the Series A TCI Group 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 Series A LMG Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A LMG Common Stock) to holders of Series
A LMG Common Stock and Series B LMG Common Stock, on an equal per share
basis; or consisting of shares of Series B LMG Common Stock (or Convertible
Securities convertible into or exercisable or exchangeable for shares of
Series B LMG Common Stock) to holders of Series A LMG Common Stock and
Series B LMG Common Stock, on an equal per share basis; or consisting of
shares of Series A LMG Common Stock (or Convertible Securities convertible
into or exercisable or exchangeable for shares of Series A LMG Common
Stock) to holders of Series A LMG Common Stock and, on an equal per share
basis, shares of Series B LMG Common Stock (or like Convertible Securities
convertible into or exercisable or exchangeable for shares of Series B LMG
Common Stock) to holders of Series B LMG Common Stock; and
(ii) a share distribution consisting of any class or series of securities
of the Company 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 Series A TCI Group Common Stock or Series B TCI Group Common
Stock), either on the basis of a distribution of
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<PAGE>
identical securities, on an equal per share basis, to holders of Series A
LMG Common Stock and Series B LMG Common Stock or on the basis of a
distribution of one class or series of securities to holders of Series A
LMG Common Stock and another class or series of securities to holders of
Series B LMG 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 Series B LMG 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 Series A LMG Common Stock and the
Series B LMG Common Stock), provided that if the securities so distributed
constitute capital stock of a subsidiary of the Company, 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 Series A LMG Common Stock and the Series B LMG
Common Stock, and provided in each case that such distribution is otherwise
made on an equal per share basis.
The Company will not reclassify, subdivide or combine the Series A LMG
Common Stock without reclassifying, subdividing or combining the Series B LMG
Common Stock, on an equal per share basis, and the Company will not
reclassify, subdivide or combine the Series B LMG Common Stock without
reclassifying, subdividing or combining the Series A LMG Common Stock, on an
equal per share basis.
Conversion and Redemption
Conversion of Series B TCI Group Common Stock and Series B LMG Common Stock
at the Option of the Holder. Each share of Series B TCI Group Common Stock is
convertible, at the option of the holder thereof, into one share of Series A
TCI Group Common Stock. Each share of Series B LMG Common Stock is
convertible, at the option of the holder thereof, into one share of Series A
LMG Common Stock. Shares of Series A TCI Group Common Stock are not
convertible into shares of Series B TCI Group Common Stock, and shares of
Series A LMG Common Stock are not convertible into shares of Series B LMG
Common Stock.
Conversion of Liberty Media Group Common Stock at the Option of the
Company. The Company Board of Directors may at any time declare that (i) all
of the outstanding shares of Series A LMG Common Stock will be converted into
a number (or fraction) of fully paid and nonassessable shares of Series A TCI
Group Common Stock equal to the Optional Conversion Ratio and (ii) all of the
outstanding shares of Series B LMG Common Stock will be converted into a
number (or fraction) of fully paid and nonassessable shares of Series B TCI
Group 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 Series A TCI Group Common Stock over the 20-trading day
period ending on the trading day preceding the Appraisal Date. The Liberty
Media Group Common Stock Per Share Value will equal the quotient obtained by
dividing the Liberty Media Group Private Market Value by the Adjusted
Outstanding Shares of Liberty Media Group Common Stock, which will be
determined in the manner described below.
The "Liberty Media Group Private Market Value" means an amount equal to the
private market value of the Liberty Media Group as of the last day of the
calendar month preceding the month in which the last of the two appraisers
referred to in the immediately following sentence are selected (the last day
of such calendar month is hereinafter referred to as the "Appraisal Date"). In
the event that the Company 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 the Company (the "First Appraiser") and
one designated by a committee of the Company 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
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<PAGE>
"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, 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
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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 the Company determines to convert shares of Series A LMG Common Stock
into Series A TCI Group Common Stock and shares of Series B LMG Common Stock
into Series B TCI Group 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 the Company determines not to undertake such
conversion, the Company 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 the
Company 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 the Company of all of
the Company's properties and assets in one transaction or a series of related
transactions in connection with the liquidation, dissolution or winding up of
the Company, (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 the Company, directly or indirectly,
after giving effect to the Disposition, controls or (d) in connection with a
Related Business Transaction), the Company will on or prior to the 85th
trading day following the consummation of such Disposition, either:
(i) subject to the limitations described above under "--Dividends,"
declare and pay a dividend in cash and/or securities or other property
(other than a dividend or distribution of Company 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 the Company 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 Series A LMG Common Stock and Series B LMG Common
Stock in exchange for cash and/or securities or other property (other
than Company 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 Series A LMG Common Stock and Series B LMG 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 Series A LMG Common Stock and each share of Series B LMG 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 Company 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 Series A LMG Common Stock and Series B LMG 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 Series A LMG Common Stock and Series B LMG
Common Stock in the ratio of the number of shares of each such series
outstanding,
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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 Series A LMG 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 Series A LMG
Common Stock and each share of Series B LMG Common Stock is the same);
or
(iii) convert (a) each outstanding share of Series A LMG Common Stock
into a number (or fraction) of fully paid and nonassessable shares of
Series A TCI Group Common Stock and (b) each outstanding share of
Series B LMG Common Stock into a number (or fraction) of fully paid and
nonassessable shares of Series B TCI Group 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 Series A LMG
Common Stock to the Market Value of one share of Series A TCI Group
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 Company 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 the Company 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 acquirer 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, acquirer 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 Company 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 the Company 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 the Company'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 Company Preferred
Stock attributed to the Liberty Media Group. The Company 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 Company Common
Stock) that the Company Board of Directors determines will have an aggregate
market value on a fully distributed basis, of not less than the amount of the
Net Proceeds. If the dividend or redemption price is paid in the form of
securities of an issuer
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other than the Company, the Company 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 Series A LMG Common Stock and another class or series of securities to
holders of Series B LMG 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 Series B LMG 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 Series A LMG Common Stock and the Series B LMG Common Stock),
provided that if such securities constitute capital stock of a subsidiary of
the Company, 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 Series A LMG Common
Stock and Series B LMG 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 Series A LMG Common
Stock and Series B LMG 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 the Company (the "Liberty Media Group
Subsidiaries"), the Company Board of Directors may, subject to there being
funds of the Company 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 Company Board of Directors may determine
either to (i) redeem shares of Series A LMG Common Stock and Series B LMG
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 Series A LMG Common Stock and Series B LMG Common
Stock, with holders of shares of Series B LMG Common Stock receiving the class
or series having the higher relative voting rights, or (ii) redeem shares of
Series A LMG Common Stock and Series B LMG 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 the Company determines to
undertake a redemption as described in clause (i) of the preceding sentence,
the outstanding shares of common stock of each Liberty Media Group Subsidiary
not distributed to holders of Liberty Media Group Common Stock would consist
solely of the class or series having the lower relative voting rights.
Certain Provisions Respecting Convertible Securities. Unless the provisions
of any class or series of Pre-Distribution Convertible Securities or
Convertible Securities which are convertible into or exercisable or
exchangeable for Committed Acquisition Shares provide specifically to the
contrary, after any conversion date or redemption date on which all
outstanding shares of Liberty Media Group Common Stock were converted or
redeemed, any share of Liberty Media Group Common Stock that is issued on
conversion, exercise or exchange of any Pre-Distribution Convertible
Securities or any Convertible Securities which are convertible into or
exercisable or exchangeable for Committed Acquisition Shares will, immediately
upon issuance pursuant to such
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<PAGE>
conversion, exercise or exchange and without any notice or any other action on
the part of the Company or the Company 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 the Company
or the Company 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 the
Company 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," the Company will announce publicly by press release (i) the Net
Proceeds of such Disposition, (ii) the number of outstanding shares of Series
A LMG Common Stock and Series B LMG Common Stock, (iii) the number of shares
of Series A LMG Common Stock and Series B LMG Common Stock into or for which
Convertible Securities are then convertible, exercisable or exchangeable and
the conversion, exercise or exchange prices thereof (and stating which, if
any, of such Convertible Securities constitute Pre-Distribution Convertible
Securities or Convertible Securities which are convertible into or exercisable
or exchangeable for Committed Acquisition Shares) and the number of Committed
Acquisition Shares issuable, (iv) the Outstanding Interest Fraction as of a
recent date preceding the date of such notice and (v) the Adjusted Outstanding
Interest Fraction as of a recent date preceding the date of such notice. Not
earlier than the 26th trading day and not later than the 30th trading day
following the consummation of such Disposition, the Company 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.
The Company also will cause to be given to each holder of outstanding shares
of Series A LMG Common Stock and Series B LMG 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 the Company 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 the Company has determined to
redeem shares of Liberty Media Group Common Stock
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<PAGE>
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 the Company 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
the Company" 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 the
Company"). Each notice of a Dividend Election, a Full Redemption Election or a
Partial Redemption Election also will state, as applicable, (i) the kind of
shares of capital stock, cash and/or other securities or property to be
distributed in respect of shares of Liberty Media Group Common Stock (in the
case of a Dividend Election) or paid as the redemption price with respect to
shares of Liberty Media Group Common Stock outstanding on the redemption date
(in the case of a Full Redemption Election) or selected for redemption (in the
case of a Partial Redemption Election); (ii) the Net Proceeds of such
Disposition; (iii) in the case of a Dividend Election and a Partial Redemption
Election, the Outstanding Interest Fraction as of a recent date preceding the
date of such notice, and in the case of a Full Redemption Election, the
Adjusted Outstanding Interest Fraction as of a recent date preceding the date
of such notice; (iv) the number of outstanding shares of Series A LMG Common
Stock and Series B LMG Common Stock and the number of shares of Series A LMG
Common Stock and Series B LMG 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 the Company 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 the Company 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, the
Company also will cause to be given to each holder of shares of Liberty Media
Group Common
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<PAGE>
Stock selected for redemption, a notice setting forth (i) the number of shares
of Series A LMG Common Stock and Series B LMG Common Stock held by such holder
to be redeemed, (ii) a statement that such shares of Series A LMG Common Stock
and Series B LMG 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 the Company 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 the Company pro rata among the holders of Liberty Media Group
Common Stock or by such other method as may be determined by the Company Board
of Directors to be equitable.
In the case of a Conversion Election, the Company's notice also will state
(i) the per share number of shares of Series A TCI Group Common Stock or
Series B TCI Group Common Stock, as applicable, to be received with respect to
each share of Series A LMG Common Stock or Series B LMG 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 the Company waives such
requirement), are to be surrendered, (iii) the number of outstanding shares of
Series A LMG Common Stock and Series B LMG Common Stock, the number of
Committed Acquisition Shares issuable and the number of shares of Series A LMG
Common Stock and Series B LMG 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
the Company.
If the Company determines to redeem shares of Series A LMG Common Stock and
Series B LMG Common Stock as described above under "--Redemption in Exchange
for Stock of Subsidiary," the Company will promptly cause to be given to each
holder of Series A LMG Common Stock and Series B LMG 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 the Company 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
Series A LMG Common Stock and Series B LMG Common Stock and the number of
shares of Series A LMG Common Stock and Series B LMG Common Stock into or for
which outstanding
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<PAGE>
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 days prior to the redemption date, at such holder's address as the
same appears on the transfer books of the Company.
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.
The Company 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), the Company 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, the Company 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 the Company, 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 Company 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 the Company'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 the
Company will specify certificates for such shares, properly endorsed or
assigned for transfer (unless the Company waives such requirement). The
Company 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
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<PAGE>
are to be redeemed, the Company will issue and deliver a new certificate for
the shares of Liberty Media Group Common Stock not redeemed. The Company will
not be required to register a transfer of (i) any shares of Liberty Media
Group Common Stock for a period of 15 trading days next preceding any
selection of shares of Liberty Media Group Common Stock to be redeemed or (ii)
any shares of Liberty Media Group Common Stock selected or called for
redemption. Shares selected for redemption may not thereafter be converted
pursuant to the provisions described under "--Conversion of Series B TCI Group
Common Stock and Series B LMG Group 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 the Company as being held for
the satisfaction of the Company'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, the Company 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.
The Company 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. The Company 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 the Company
the amount of any such tax, or has established to the satisfaction of the
Company that such tax has been paid.
Liquidation Rights
In the event of a liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, after payment or provision for payment of
the debts and other liabilities of the Company and subject to the prior
payment in full of the preferential amounts to which any class or series of
Company Preferred Stock is entitled, (i) the holders of the shares of TCI
Group Common Stock will share equally, on a share for share basis, in a
percentage of the funds of the Company 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)
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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 the
Company 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
Series A TCI Group Common Stock and the Series B TCI Group Common Stock, y is
the aggregate Market Capitalization of the Series A LMG Common Stock and the
Series B LMG Common Stock, and z is the aggregate Market Capitalization of the
Series A TCI Group Common Stock, the Series B TCI Group Common Stock, the
Series A LMG Common Stock and the Series B LMG Common Stock. Neither a
consolidation, merger nor sale of assets will be construed to be a
"liquidation," "dissolution" or "winding up" of the Company. The "Market
Capitalization" of any class or series of capital stock of the Company 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 the Company.
Determinations by the Company Board of Directors
The Company Charter provides that any determinations made by the Company
Board of Directors under any provision described under this section will be
final and binding on all stockholders of the Company, 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 Company Board of Directors. The Company will prepare a statement of any
such determination by the Company Board of Directors respecting the fair
market value of any properties, assets or securities and will file such
statement with the Secretary of the Company.
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 the Company.
OTHER MATTERS
The DGCL, the Company Charter and the Company's Bylaws contain provisions
which may serve to discourage or make more difficult a change in control of
Company without the support of the Company Board of Directors or without
meeting various other conditions. The principal provisions of the DGCL and the
aforementioned corporate governance documents are outlined below.
DGCL Section 203, in general, prohibits a "business combination" between a
corporation and an "interested stockholder" within three years of the date
such stockholder became an "interested stockholder," unless (i) prior to such
date the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder, (ii) upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, exclusive of shares owned
by directors who are also officers and by certain employee stock plans or
(iii) on or after such date, the business combination is approved by the board
of directors and authorized by the affirmative vote at a stockholders' meeting
of at least 66% 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
24
<PAGE>
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 Company Charter does
not contain any provision "opting out" of the application of DGCL Section 203
and the Company 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 the Company and any of its "interested
stockholders."
The Company Charter also contains certain provisions which could make a
change in control of Company more difficult. For example, the Company Charter
requires, subject to the rights, if any, of any class or series of Company
Preferred Stock, the affirmative vote of 66% of the total voting power of the
outstanding shares of Voting Securities, voting together as a single class, to
approve (i) a merger or consolidation of the Company 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 Company 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 the Company
or (iii) the dissolution of the Company. "Voting Securities" is currently
defined as the TCI Group Common Stock, the Liberty Media Group Common Stock
and any class or series of Company Preferred Stock entitled to vote generally
with the holders of Company Common Stock on matters submitted to stockholders
for a vote. The Company Charter also provides for a Company Board of Directors
of not less than three members, divided into three classes of approximately
equal size, with each class to be elected for a three-year term at each annual
meeting of stockholders. The exact number of directors, currently nine, is
fixed by the Company Board of Directors. The holders of TCI Group Common
Stock, Liberty Media Group Common Stock, Class B Preferred Stock and certain
series of the Series Preferred Stock, voting together as a single class, vote
in elections for directors. (The Company's Series F Preferred Stock has voting
rights, but outstanding shares of such series are not entitled to vote because
they are held by subsidiaries of the Company.) Stockholders of the Company do
not have cumulative voting rights.
The Company Charter authorizes the issuance of 50,000,000 shares of Series
Preferred Stock, of which 33,901,240 shares remain available for designation
as of March 31, 1996. Under the Company Charter, the Company Board of
Directors is authorized, without further action by the stockholders of the
Company, 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 Company Charter, of which 1,131,431,002 and
657,992,228, respectively, remained available for issuance as of April 30,
1996 (before giving effect to reservations of shares for issuance upon
conversion, exchange or exercise of outstanding convertible or exchangeable
securities and options). The issue and sale of shares of TCI Group Common
Stock, Liberty Media Group Common Stock and/or Series Preferred Stock could
occur in connection with an attempt to acquire control of the Company, and the
terms of such shares of Series Preferred Stock could be designed in part to
impede the acquisition of such control.
25
<PAGE>
The Company Charter requires the affirmative vote of 66% of the total voting
power of the outstanding shares of Voting Securities, voting together as a
single class, to approve any amendment, alteration or repeal of any provision
of the Company Charter or the addition or insertion of other provisions
therein.
The Company Charter and the Company'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 Company Preferred Stock, upon the call of the
Secretary of the Company upon (i) the written request of the holders of not
less than 66% of the total voting power of the outstanding shares of Voting
Securities or (ii) at the request of not less than 75% of the members of the
Company Board of Directors. Subject to the rights of any class or series of
Company Preferred Stock, the Company'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 the Company, at the Company'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 the Company'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 Company Board of Directors; and (5) the consent of each
nominee to serve as a director of the Company if so elected. Any actions to
remove directors is required to be for "cause" (as defined in the Company
Charter) and be approved by the holders of 66% of the total voting power of
the outstanding shares entitled to vote in the election of directors.
LEGAL MATTERS
The legality of the shares of Series A TCI Group Common Stock offered hereby
will be passed upon for the Company by Baker & Botts, L.L.P., 599 Lexington
Avenue, New York, New York 10022-6030. Jerome H. Kern, a partner of Baker &
Botts, L.L.P. is a director of the Company. Certain partners of Baker & Botts,
L.L.P. hold options to purchase shares of Series A TCI Group Common Stock and
options to purchase or restricted shares of Series A LMG Common Stock.
EXPERTS
The consolidated balance sheets of Tele-Communications, Inc. and
subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1995, and all related
financial statement schedules, which appear in the December 31, 1995 Annual
Report on Form 10-K of Tele-Communications, Inc., have been incorporated by
reference herein in reliance upon the reports, dated March 18, 1996, of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The combined balance sheets of TCI Group as of December 31, 1995 and 1994,
and the related combined statements of operations, equity, and cash flows for
each of the years in the three-year period ended December 31, 1995, which
appear in the December 31, 1995 Annual Report on Form 10-K of Tele-
Communications, Inc., have been incorporated by reference herein in reliance
upon the report, dated March 18, 1996, of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing. The report of
KPMG Peat Marwick LLP covering the
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December 31, 1995 combined financial statements refers to the effects of not
consolidating TCI Group's interest in Liberty Media Group for the periods
subsequent to the mergers of TCI Communications, Inc. and Liberty Media
Corporation on August 4, 1994.
The combined balance sheets of Liberty Media Group as of December 31, 1995
and 1994, and the related combined statements of operations, equity, and cash
flows for each of the years in the three-year period ended December 31, 1995,
which appear in the December 31, 1995 Annual Report on Form 10-K of Tele-
Communications, Inc., have been incorporated by reference herein in reliance
upon the report, dated March 18, 1996, of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The statements of operations, stockholders' equity, and cash flows of
Liberty Media Corporation and subsidiaries for the year ended December 31,
1993, which appear in the December 31, 1995 Annual Report on Form 10-K of
Tele-Communications, Inc., have been incorporated by reference herein in
reliance upon the report, dated March 18, 1994, of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing. The
report of KPMG Peat Marwick LLP covering the December 31, 1993 financial
statements refers to a change in method of accounting for income taxes.
The consolidated balance sheet of TeleWest plc and subsidiaries as of
December 31, 1995 and 1994, and the related consolidated statements of
operations and cash flows for each of the years in the three year period ended
December 31, 1995, which appear in the December 31, 1995 Annual Report on Form
10-K of Tele-Communications, Inc., have been incorporated by reference herein
in reliance upon the report, dated March 6, 1996, of KPMG, independent
chartered accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The combined balance sheets of Cablevision (a combination of certain cable
television assets of Cablevision S.A., Televisora Belgrano S.A., Construred
S.A. and Univent's S.A.) as of December 31, 1994 and 1993, and the related
combined statements of operations and deficit and cash flows for each of the
years in the three-year period ended December 31, 1994, which appear in the
Current Report on Form 8-K of Tele-Communications, Inc. dated April 20, 1995,
as amended, have been incorporated by reference herein in reliance upon the
report, dated March 24, 1995, of KPMG Finsterbusch Pickenhayn Sibille,
independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
The combined financial statements of VII Cable which appear in the Current
Report on Form 8-K of Tele-Communications, Inc. dated June 19, 1996, have been
so incorporated in reliance on the report dated February 14, 1996 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 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 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 does 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.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information...................................................... 2
Incorporation of Documents by Reference.................................... 2
Viacom Prospectus -- Explanatory Note...................................... 3
Risk Factor................................................................ 4
The Company................................................................ 4
Plan of Distribution....................................................... 4
Description of Common Stock................................................ 5
Legal Matters.............................................................. 26
Experts.................................................................... 26
</TABLE>
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TELE-COMMUNICATIONS, INC.
Tele-Communications, Inc. Series A
TCI Group Common Stock
($1.00 par value)
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PROSPECTUS
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June 24, 1996
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