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FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION NO. 33-65311
PROSPECTUS
TELE-COMMUNICATIONS, INC.
REDEEMABLE CONVERTIBLE TCI GROUP PREFERRED STOCK,
SERIES G, PAR VALUE $.01 PER SHARE
REDEEMABLE CONVERTIBLE LIBERTY MEDIA GROUP PREFERRED STOCK,
SERIES H, PAR VALUE $.01 PER SHARE
This Prospectus relates to (i) an aggregate of 6,453,630 shares (the
"Series G Shares") of the Redeemable Convertible TCI Group Preferred Stock,
Series G, par value $.01 per share (the "TCI Group Preferred Stock"), of Tele-
Communications, Inc., a Delaware corporation (the "Company" or "TCI"), and
(ii) an aggregate of 6,453,630 shares (the "Series H Shares," and together
with the Series G Shares, the "Shares") of the Redeemable Convertible Liberty
Media Group Preferred Stock, Series H, par value $.01 per share (the "Liberty
Media Group Preferred Stock" and together with the TCI Group Preferred Stock,
the "TCI/LMG Preferred Stock"), of the Company to be offered and sold from
time to time by the holders thereof (the "Selling Stockholders"). See "The
Selling Stockholders and the Offered Shares."
The initial liquidation value for the TCI Group Preferred Stock and the
Liberty Media Group Preferred Stock is $21.60 per share and $5.40 per share,
respectively, subject in both cases to increase in an amount equal to
aggregate accrued but unpaid dividends. Dividends accrue on the TCI/LMG
Preferred Stock from January 25, 1997, and are payable semi-annually
commencing August 1, 1997, at the rate of 4% per annum. Dividends will be
payable on the TCI/LMG Preferred Stock, at TCI's election, in cash or shares
of Tele-Communications, Inc. Series A TCI Group Common Stock (the "TCI Group
Series A Common Stock"). Additional dividends will accrue on unpaid dividends
initially at a rate of 4% per annum. The dividend rate on dividends that
remain unpaid for six months will increase to 8.625% per annum. Each share of
TCI Group Preferred Stock is convertible at the option of the holder at any
time prior to the close of business on the last business day prior to
redemption into 1.190 shares of TCI Group Series A Common Stock. Each share
of Liberty Media Group Preferred Stock is convertible at any time prior to the
close of business on the last business day prior to redemption into .2625 of
one share of Tele-Communications, Inc. Series A Liberty Media Group Common
Stock (the "LMG Series A Common Stock"), and, upon conversion of shares of the
Liberty Media Group Preferred Stock each holder of Liberty Media Group
Preferred Stock is entitled to receive one additional share of LMG Series A
Common Stock for every two such shares received upon such conversion. The
TCI/LMG Preferred Stock is redeemable at TCI's option, in whole or in part, at
any time on or after February 1, 2001. The TCI/LMG Preferred Stock will be
redeemable in full on February 1, 2016, to the extent then outstanding. In
all cases, the redemption price per share will be the liquidation value
thereof, including the amount of any accrued but unpaid dividends thereon, to
and including the redemption date. The TCI/LMG Preferred Stock will vote in
any general election of directors of TCI and will have one vote per share for
such purposes and will vote as a single class with TCI's common stock, TCI's
Class B 6% Cumulative Redeemable Exchangeable Junior Preferred Stock and any
other class or series of TCI's preferred stock entitled to vote in any general
election of directors. The TCI/LMG Preferred Stock will have no other voting
rights except as required by the Delaware General Corporation Law. See
"Description of TCI Capital Stock -- TCI Preferred Stock."
The TCI/LMG Preferred Stock is not listed for trading on any exchange or
other market system, and the Company does not currently intend to list the
TCI/LMG Preferred Stock for trading on any exchange or other market system.
SEE "RISK FACTORS" ON PAGE 4 OF THIS PROSPECTUS FOR A DISCUSSION OF CERTAIN
RISKS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SHARES
OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is May 13, 1997.
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The Company's common stock, par value $1.00 per share (the "TCI Common
Stock"), is comprised of six series: TCI Group Series A Common Stock, Tele-
Communications, Inc. Series B TCI Group Common Stock (the "TCI Group Series B
Common Stock" and, together with the TCI Group Series A Common Stock, the "TCI
Group Common Stock"), LMG Series A Common Stock, Tele-Communications, Inc.
Series B Liberty Media Group Common Stock (the "LMG Series B Common Stock"
and, together with the LMG Series A Common Stock, the "Liberty Media Group
Common Stock"), Tele-Communications, Inc. Series A Telephony Group Common
Stock (the "Telephony Group Series A Common Stock") and Tele-Communications,
Inc. Series B Telephony Group Common Stock (the "Telephony Group Series B
Common Stock" and together with the Telephony Group Series A Common Stock, the
"Telephony Group Common Stock"). As of the date of this Prospectus no shares
of Telephony Group Series A Common Stock or Telephony Group Series B Common
Stock have been issued and are outstanding.
Both series of TCI Group Common Stock are identical in all respects, except
(i) each share of TCI Group Series B Common Stock has ten votes and each share
of TCI Group Series A Common Stock has one vote and (ii) each share of TCI
Group Series B Common Stock is convertible, at the option of the holder, into
one share of TCI Group Series A Common Stock. Similarly, both series of
Liberty Media Group Common Stock are identical in all respects, except (i)
each share of LMG Series B Common Stock has ten votes and each share of LMG
Series A Common Stock has one vote and (ii) each share of LMG Series B Common
Stock is convertible, at the option of the holder, into one share of LMG
Series A Common Stock. The shares of TCI Group Series A Common Stock and LMG
Series A Common Stock are not convertible into shares of TCI Group Series B
Common Stock and LMG Series B Common Stock, respectively. See "Description of
TCI Capital Stock -- TCI Common Stock."
Shares of the TCI Group Series A Common Stock, the TCI Group Series B
Common Stock, the LMG Series A Common Stock and the LMG Series B Common Stock
are traded on the Nasdaq National Market tier of The Nasdaq Stock Market under
the symbols "TCOMA," "TCOMB," "LBTYA" and "LBTYB," respectively.
The Shares may be offered for sale and sold by the Selling Stockholders
only as provided under the caption "Plan of Distribution" (subject to certain
other restrictions described under the caption "The Selling Stockholders and
the Offered Shares") from time to time in one or more public or private
transactions at prices and on terms to be determined at the time of sale. If
the TCI/LMG Preferred Stock is subsequently listed for trading on any exchange
or other market system, the Shares may also be sold by the Selling
Stockholders from time to time (subject to certain restrictions described
under the captions "Plan of Distribution" and "The Selling Stockholders and
the Offered Shares") on such exchange or other market system at prices and on
terms to be determined at the time of sale. The Shares may only be sold or
transferred by the Selling Stockholders pursuant to the registration statement
of which this Prospectus is a part during each fifteen day period commencing
on the fifth day following the dates upon which the Company files with the
Securities and Exchange Commission (the "Commission") its quarterly report on
Form 10-Q or its annual report on Form 10-K. The Shares may be sold by the
Selling Stockholders directly or through agents designated from time to time
or to or through broker-dealers designated from time to time. See "Plan of
Distribution." To the extent required, the number and type of Shares to be
sold, the purchase price, the name of any agent or broker-dealer, and any
applicable commissions, discounts or other items constituting compensation to
such agents or broker-dealers with respect to a particular offering will be
set forth in a supplement or supplements to this Prospectus (each, a
"Prospectus Supplement"). The aggregate proceeds to the Selling Stockholders
from the sale of the Shares so offered will be the purchase price of the
Shares sold less (i) the aggregate commissions, discounts and other
compensation, if any, paid by the Selling Stockholders to agents or broker-
dealers and (ii) certain other expenses of the offering and sale of the Shares
that will be the responsibility of the Selling Stockholders. See "The Selling
Stockholders and the Offered Shares." The Company will not receive any
proceeds from the sale of the Shares. The Company knows of no selling
arrangement between any agent or broker-dealer and the Selling Stockholders.
The Selling Stockholders and any broker-dealers or agents that participate
with the Selling Stockholders in the distribution of any of the Shares may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), and any discount or commission received by
them and any profit on the resale of the Shares purchased by them may be
deemed to be underwriting discounts or commissions under the Securities Act.
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AVAILABLE INFORMATION
The Company has filed with the Commission a registration statement with
respect to the Shares on Form S-4 under the Securities Act, as well as a post-
effective amendment on Form S-3 to such registration statement on Form S-4
under the Securities Act. That registration statement, as so amended,
together with all other amendments and all schedules and exhibits filed or
incorporated by reference as a part thereof, is referred to herein as the
"Registration Statement." This Prospectus does not contain all of the
information set forth in the Registration Statement, as permitted by the rules
and regulations of the Commission. The Registration Statement, including all
amendments, schedules and exhibits filed or incorporated by reference as a
part thereof, is available for inspection and copying as set forth below.
Please refer to the Registration Statement for further information pertaining
to the Shares and the Company. Statements contained herein or in any document
incorporated by reference herein concerning the provisions of any contract or
other document are not necessarily complete. Accordingly, reference is made
to the copy of each such contract or other document filed as an exhibit to the
Registration Statement (or filed as an exhibit to any other document
incorporated by reference herein) and 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, information statements and other
information with the Commission. Such reports, proxy statements, information
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: Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661-2511; and at Suite 1300, 7 World Trade Center, 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. The Commission maintains a site on the
World Wide Web 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 and are hereby incorporated into this Prospectus by
reference and made a part hereof (Commission File No. 0-20421): (i) the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, as
amended by Form 10-K/A (Amendment No. 1), (ii) the Company's Current Reports
on Form 8-K, dated January 22, 1997 and March 5, 1997 and (iii) the financial
statements and notes thereto of VII Cable which appear in the Current Report
on Form 8-K of the Company, dated June 19, 1996.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior
to the termination of the offering of the Shares described in this Prospectus
shall be deemed to be incorporated herein by reference and to be a part hereof
from the respective dates of the filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, upon the written or oral
request of such person, a copy of any and all of the documents incorporated by
reference herein, other than certain exhibits to such documents (unless such
exhibits are specifically incorporated by reference into the documents that
this Prospectus incorporates). Such requests should be addressed to Stephen
M. Brett, Esq., Executive Vice President and General Counsel, Tele-
Communications, Inc., Terrace Tower II, 5619 DTC Parkway, Englewood, Colorado
80111-3000; telephone (303) 267-5500.
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RISK FACTORS
Earnings and Losses. The Company had net earnings of $278 million and $62
million for the years ended December 31, 1996 and 1994, respectively. The
Company incurred a net loss of $171 million for the year ended December 31,
1995. 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, compensation relating to options and to stock appreciation
rights, adjustment to compensation relating to options and to stock
appreciation rights and restructuring charges) ($2,276 million, $1,988 million
and $1,798 million for the years ended December 31, 1996, 1995 and 1994,
respectively) has historically been sufficient to cover its interest expense
($1,096 million, $1,010 million and $785 million for the years ended December
31, 1996, 1995 and 1994, respectively). The Company's interest coverage
ratios for the years ended December 31, 1996, 1995 and 1994 were 208%, 197%
and 229%, 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 ($1,228 million, $957 million and $908
million for the years ended December 31, 1996, 1995 and 1994, 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.
Risk that TCI Earnings Will Not Cover Combined Fixed Charges and Preferred
Stock Dividends. The ratio of earnings to combined fixed charges and
preferred stock dividends of the Company was 1.44, 1.17, 1.22 and 1.00 for the
years ended December 31, 1996, 1994, 1993 and 1992, respectively. The ratio
of earnings to combined fixed charges and preferred stock dividends of the
Company was less than 1.00 for the year ended December 31, 1995; thus,
earnings available for combined fixed charges and preferred stock dividends
were inadequate to cover combined fixed charges and preferred stock dividends
for the period. The amount of the coverage deficiency was $246 million for
the year ended December 31, 1995. For the ratio calculations, earnings
available for combined fixed charges and preferred stock dividends consists of
earnings (losses) before income taxes plus fixed charges (minus capitalized
interest), distributions from and losses of less than 50%-owned affiliates
with debt not guaranteed by the Company (net of earnings not distributed of
less than 50%-owned affiliates), minority interests in earnings (losses) of
consolidated subsidiaries, the elimination of preferred stock dividend
requirements of consolidated subsidiaries to 50%-owned affiliates, and
preferred stock dividend requirements of 50%-owned affiliates, other than
dividends payable to the Company. Combined fixed charges and preferred stock
dividends consist of (i) interest (including capitalized interest) on debt,
including interest of less than 50%-owned affiliates with debt guaranteed by
the Company, (ii) the elimination of interest of consolidated subsidiaries to
50%-owned affiliates, (iii) the Company's proportionate share of interest of
50%-owned affiliates, (iv) that portion of rental expense the Company believes
to be representative of interest (one-third of rental expense), (v)
amortization of debt expense, (vi) that portion of minority interests in
earnings (losses) of consolidated subsidiaries that represent the amount of
pretax earnings that would be required to cover preferred stock dividend
requirements of consolidated subsidiaries, (vii) that portion of minority
interests in earnings (losses) of consolidated subsidiaries that represents
dividend requirements on Company-obligated mandatorily redeemable preferred
securities of subsidiary trusts holding solely subordinated debt securities of
a subsidiary, (viii) the amount of pretax earnings that would be required to
cover preferred stock dividend requirements of the Company, (ix) the
elimination of preferred stock dividend requirements of consolidated
subsidiaries to 50%-owned affiliates, and (x) the preferred stock dividend
requirements of 50%-owned affiliates, other than dividends payable to the
Company. The Company has guaranteed the debt of certain less than 50%-owned
affiliates and certain other entities in which it has an interest. Fixed
charges of $8 million, $8 million, $6 million, $14 million and $3 million
relating to such guarantees for the years ended December 31, 1996, 1995, 1994,
1993 and 1992, respectively, have not been included in fixed charges.
Risks of TCI Holding Company Structure; Restrictions on Dividends. TCI is
a holding company and its assets consist primarily of investments in its
subsidiaries. Substantially all of the consolidated liabilities of TCI have
been incurred by its subsidiaries. TCI's rights, and therefore the extent to
which the holders of the TCI/LMG Preferred Stock will be able to participate
in the distribution of assets of any subsidiary upon the latter's liquidation
or reorganization, will be subject to prior claims of the subsidiary's
creditors, including trade creditors, except to the extent that TCI may itself
be a creditor with
4
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recognized claims against such subsidiary (in which case the claims of TCI
would still be subject to the prior claims of any secured creditor of such
subsidiary and of any holder of indebtedness of such subsidiary that is senior
to that held by TCI).
TCI's ability to pay cash dividends on the TCI/LMG Preferred Stock, and on
any other classes and series of stock ranking on a parity with the TCI/LMG
Preferred Stock with respect to the payment of dividends, is dependent upon
the ability of TCI's subsidiaries to distribute amounts to TCI in the form of
dividends, loans or advances or in the form of repayment of loans and advances
from TCI. The subsidiaries are separate and distinct legal entities and have
no obligation, contingent or otherwise, to pay any dividends on the TCI/LMG
Preferred Stock or to make any funds available therefor, whether by dividends,
loans or other payments. The payment of dividends, loans or advances to TCI
by its subsidiaries may be subject to statutory or regulatory restrictions, is
contingent upon the cash flows generated by those subsidiaries and is subject
to various business considerations. Further, certain of TCI's subsidiaries
are subject to loan agreements that prohibit or limit the transfer of funds by
such subsidiaries to TCI in the form of dividends, loans, or advances and
require that such subsidiaries' indebtedness to TCI be subordinate to the
indebtedness under such loan agreements. TCI's subsidiaries currently have
the ability to transfer funds to TCI in amounts exceeding TCI's dividend
requirements on TCI's preferred stock. The amount of net assets of
subsidiaries subject to such restrictions exceed TCI's consolidated net
assets.
Lack of a Public Market for TCI/LMG Preferred Stock. Prior to the date of
this Prospectus, there has been no public market for the TCI/LMG Preferred
Stock. The Company does not intend to list the TCI/LMG Preferred Stock for
trading on a securities exchange or other market system and there can be no
assurance that an active public market for the TCI/LMG Preferred Stock will
develop. If a public market for the TCI/LMG Preferred Stock does not develop,
purchasers may experience difficulty in reselling the TCI/LMG Preferred Stock.
THE COMPANY
The Company, through its subsidiaries and affiliates, is principally
engaged in the construction, acquisition, ownership and operation of cable
television systems and the provision of satellite-delivered video
entertainment, information and home shopping programming services to various
video distribution media, principally cable television systems. The Company
is one of the largest providers of cable television services in the United
States. The Company also has investments in cable and telecommunications
operations and television programming in certain international markets, as
well as investments in companies and joint ventures involved in developing and
providing programming for new television and telecommunications technologies.
The Company is primarily organized into four principal business groups:
Domestic Tele-communications and Distribution; Programming; International
Cable and Programming; and Technology/Venture Capital. The Company is a
Delaware corporation and its principal executive offices are located at
Terrace Tower II, 5619 DTC Parkway, Englewood, Colorado 80111-3000; telephone
(303) 267-5500.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS OF TCI
For a discussion of the ratio of earnings to combined fixed charges and
preferred stock dividends of TCI see "Risk Factors -- Risk that TCI Earnings
Will Not Cover Combined Fixed Charges and Preferred Stock Dividends."
THE SELLING STOCKHOLDERS AND THE OFFERED SHARES
Background. The Shares were acquired by the Selling Stockholders pursuant
to an Agreement and Plan of Merger, dated as of July 10, 1995 and as amended
(the "Merger Agreement"), among United Video Satellite Group, Inc. ("UVSG"),
TCI, and TCI Merger Sub, Inc. ("Merger Sub"). Pursuant to the Merger
Agreement, Merger Sub was merged with and into UVSG, with UVSG being the
surviving corporation (the "Merger"). As a result of the Merger, TCI acquired
beneficial ownership of 9.1% of the outstanding Class A common stock of UVSG
and 100% of the outstanding Class B common stock of UVSG which in the
aggregate represents 85.5% of the total voting power of UVSG. Pursuant to the
terms of the Merger Agreement, the Selling Stockholders received the Shares
upon consummation of the Merger.
Shares Offered by the Selling Stockholders. The resale of the Shares
received by the Selling Stockholders is restricted by Rule 145 promulgated
under the Securities Act, and such securities cannot be transferred unless (i)
their resale is registered under the Securities Act, (ii) they are transferred
in accordance with Rule 145 or (iii) another exemption from registration is
available. In connection with the Merger, the Company and each Selling
Stockholder entered into a Registration
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Rights Agreement, dated as of January 25, 1996 (each, a "Registration Rights
Agreement"), pursuant to which the Company agreed, subject to certain
limitations, to file the Registration Statement of which this Prospectus forms
a part in order to permit the resale of the Shares from time to time by the
Selling Stockholders and to prepare and file such amendments and supplements
to the Registration Statement as may be necessary to keep the Registration
Statement effective until the earlier of January 25, 1998 or such time as all
of the Shares offered hereby have been sold. A copy of each Registration
Rights Agreement has been filed as an exhibit to the Registration Statement
and can be obtained in the manner described under "Available Information."
Under certain circumstances set forth in the Registration Rights Agreement,
the Company may, upon notice to the Selling Stockholders, require the
suspension by the Selling Stockholders of the distribution of any Shares until
the Company has determined, in its reasonable business judgment, that such
distribution may continue.
Pursuant to the Registration Rights Agreement, the Company has agreed to
pay all expenses in connection with the registration of the offer and sale of
the Shares (including, without limitation, all registration and filing fees
incurred in connection with the filing of this Registration Statement with the
Commission and state securities commissioners), other than (i) discounts and
commissions and transfer taxes attributable to the sale of any of the Shares
and (ii) fees and disbursements of counsel or of any advisors retained by the
Selling Stockholders in connection with the registration of the offer and sale
of the Shares.
The Company has agreed to indemnify the Selling Stockholders against
certain liabilities that may arise in connection with any offer and sale of
the Shares, including liabilities under the Securities Act, and to contribute
to payments that the Selling Stockholders may be required to make in respect
thereof.
No Selling Stockholder has held any position or office or had any material
relationship during the past three years with the Company or any of its
affiliates, except for UVSG which became an affiliate of the Company as a
result of the Merger. The Selling Stockholders currently hold the following
positions with UVSG: Lawrence Flinn, Jr. is Chairman of the Board of Directors
and Chief Executive Officer and Peter C. Boylan, III is Executive Vice
President and Chief Operating Officer. Prior to December 3, 1996 Roy L.
Bliss was President and Chief Operating Officer of UVSG. Prior to August 31,
1996 Jeffrey C. Treeman was Executive Vice President and President of UVSG's
UVTV division. Any additional material relationships between the Company or
any of its affiliates, on the one hand, and the Selling Stockholders, on the
other, within three years prior to the date of a sale by the Selling
Stockholders hereunder will be described in the Prospectus Supplement.
The table set forth below provides the following information: the names of
the Selling Stockholders who currently hold Shares, the number and type of
Shares owned as of the date of this Prospectus by each Selling Stockholder,
and (if one percent or more) the percentage of the outstanding shares of TCI
Group Preferred Stock and Liberty Media Group Preferred Stock owned by each
Selling Stockholder.
<TABLE>
<CAPTION>
No. of shares of No. of shares of
TCI Group Liberty Media
Preferred Percentage Group Percentage
Selling Stockholder Stock of class Preferred Stock of class
------------------- ---------------- ---------- ---------------- ----------
<S> <C> <C> <C> <C>
Lawrence Flinn, Jr. 6,186,647 85.22% 6,186,647 85.22%
Roy L. Bliss 234,544 3.23% 234,544 3.23%
Jeffrey C. Treeman 30,000 * 30,000 *
Peter C. Boylan, III 2,439 * 2,439 *
</TABLE>
- ----------
(* indicates less than 1% of the class)
The number of Shares sold by each Selling Stockholder and (if one percent or
more) the percentage of the outstanding shares of TCI Group Preferred Stock
and Liberty Media Group Preferred Stock owned by each Selling Stockholder
after completion of any offering hereunder will be specified in the Prospectus
Supplement relating to such sale.
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PLAN OF DISTRIBUTION
Pursuant to the terms of the Registration Rights Agreement, the Shares may
only be sold or transferred by the Selling Stockholders pursuant to the
Registration Statement of which this Prospectus is a part during each fifteen
day period commencing on the fifth day following the dates upon which the
Company files with the Commission its quarterly report on Form 10-Q or its
annual report on Form 10-K.
Subject to other restrictions described in the preceding paragraph and
under the caption "The Selling Stockholders and the Offered Shares," the
Shares may be offered for sale and sold by the Selling Stockholders from time
to time in one or more public or private transactions at a fixed price or
prices, which may be changed from time to time, at any market prices
prevailing at the time of sale, at prices related to any such prevailing
market prices or at prices determined on a negotiated or competitive bid
basis. The Shares may be sold by the Selling Stockholders directly or through
agents designated from time to time or to or through broker-dealers designated
from time to time. The Shares may be sold through a broker-dealer acting as
agent or broker for a Selling Stockholder, or to a broker-dealer acting as
principal. In the latter case, the broker-dealer may then resell such Shares
to the public at varying prices to be determined by such broker-dealer at the
time of resale.
The Company has been advised by the Selling Stockholders that they have
not, as of the date of this Prospectus, entered into any arrangement with any
agent or broker-dealer for the sale of the Shares.
The Selling Stockholders may also sell all or a portion of the Shares
pursuant to and in accordance with Rule 145(d) promulgated under the
Securities Act, to the extent that such sales may be made in compliance with
such Rule. The Selling Stockholders may from time to time make a private sale
of Shares directly to the purchaser thereof in a transaction that does not
involve any public offer or sale of Shares; provided that (i) in the case of
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any such private sale, the Shares so sold shall not thereafter be subject to
resale under the Registration Statement of which this Prospectus is a part and
(ii) the certificates representing such Shares may be required to bear an
appropriate legend.
The Selling Stockholder and any agents or broker-dealers that participate
with the Selling Stockholder in the distribution of any of the Shares may be
deemed to be "underwriters" within the meaning of the Securities Act, and any
discount or commission received by them and any profit on the resale of the
Shares purchased by them may be deemed to be underwriting discounts or
commissions under the Securities Act.
In connection with a sale of Shares, the following information will, to
the extent then required, be provided in the Prospectus Supplement relating to
such sale: the number and type of Shares to be sold, the purchase price, the
name of any agent or broker-dealer, and any applicable commissions, discounts
or other items constituting compensation to such agents or broker-dealers with
respect to the particular sale.
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DESCRIPTION OF TCI CAPITAL STOCK
The following description of certain terms of TCI's capital stock does not
purport to be complete and is qualified in its entirety by reference to the
Restated Certificate of Incorporation, as amended, of TCI (the "TCI Charter"),
which is an exhibit to the Registration Statement.
GENERAL
The TCI Charter currently provides, among other things, that TCI is
authorized to issue 3,602,375,096 shares of capital stock, including (i)
3,550,000,000 shares of common stock, par value $1.00 per share, of which
1,750,000,000 shares are designated TCI Group Series A Common Stock,
150,000,000 shares are designated TCI Group Series B Common Stock, 750,000,000
shares are designated LMG Series A Common Stock, 75,000,000 shares are
designated LMG Series B Common Stock, 750,000,000 shares are designated
Telephony Group Series A Common Stock and 75,000,000 shares are designated
Telephony Group Series B Common Stock and (ii) 52,375,096 shares of preferred
stock ("TCI Preferred Stock"), of which 700,000 shares are designated Class A
Preferred Stock, par value $.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 as Series Preferred Stock, par
value $.01 per share (the "Series Preferred Stock"), issuable in series. Of
the Series Preferred Stock, 80,000 shares are designated as Convertible
Preferred Stock, Series C (the "Series C Preferred Stock"), 1,000,000 shares
are designated as Convertible Preferred Stock, Series D (the "Series D
Preferred Stock"), 400,000 shares are designated as Redeemable Convertible
Preferred Stock, Series E (the "Series E Preferred Stock"), 500,000 shares are
designated Convertible Redeemable Participating Preferred Stock, Series F (the
"Series F Preferred Stock"), 7,259,380 shares are designated as Redeemable
Convertible TCI Group Preferred Stock, Series G (the "Series G Preferred
Stock"), and 7,259,380 shares are designated as Redeemable Convertible Liberty
Media Group Preferred Stock, Series H (the "Series H Preferred Stock").
No shares of the Telephony Group Common Stock have been issued and are
outstanding. As of March 31, 1997, 598,204,963 shares of TCI Group Series A
Common Stock, 84,647,065 shares of TCI Group Series B Common Stock,
228,749,797 shares of LMG Series A Common Stock and 21,187,969 shares of LMG
Series B Common Stock (in each case net of shares held by subsidiaries of TCI)
had been issued and were outstanding and 116,853,196 shares of TCI Group
Series A Common Stock were held by subsidiaries of TCI. As of that date,
126,384,805 shares of TCI Group Series A Common Stock and 30,616,358 shares of
LMG Series A Common Stock were reserved for issuance upon conversion, exchange
or exercise of outstanding convertible or exchangeable securities and options.
In addition, TCI has reserved a number of shares of TCI Group Series A Common
Stock equal to the number of shares of TCI Group Series B Common Stock
outstanding and a number of shares of LMG Series A Common Stock equal to the
number of shares of LMG Series B Common Stock outstanding, for issuance upon
conversion, at the option of the holder, of TCI Group Series B Common Stock
and LMG Series B Common Stock, respectively. Additionally, subsidiaries of
TCI own shares of Series F Preferred Stock, which are convertible into an
aggregate of 416,528,172 shares of TCI Group Series A Common Stock. As of
March 31, 1997, 1,620,026 shares of Class B Preferred Stock, 70,575 shares of
Series C Preferred Stock, 997,222 shares of Series D Preferred Stock, 278,307
shares of Series F Preferred Stock, 6,693,117 shares of Series G Preferred
Stock and 6,693,117 shares of Series H Preferred Stock had been issued and
were outstanding. All of the shares of Series E Preferred Stock have
previously been redeemed and retired with the effect that such shares have
been restored to the status of authorized and unissued shares of Series
Preferred Stock and may be reissued as shares of another series of Series
Preferred Stock, but not as Series E Preferred Stock. All of the outstanding
shares of Series F Preferred Stock are held by subsidiaries of TCI.
Approximately 33,901,240 shares of Series Preferred Stock remain available for
designation pursuant to the TCI Charter as of March 31, 1997. The rights
evidenced by the TCI Common Stock are subject to the prior preferences and
rights of the TCI Preferred Stock.
TCI COMMON STOCK
CERTAIN DEFINITIONS
As used herein, the following terms have the meanings specified below:
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"Appraisal Date" means, with respect to any determination of the Liberty
Media Group Private Market Value or the Telephony Group Private Market Value,
the last day of the calendar month preceding the month in which the Selection
Date occurs.
"Appraiser" means each of the First Appraiser, the Second Appraiser and the
Mutually Designated Appraiser.
"Committed Acquisition Shares" means (i) the shares of LMG Series A Common
Stock that TCI had, prior to the record date for the LMG Distribution, agreed
to issue, but as of such record date had not issued, and (ii) the shares of
LMG Series A Common Stock that are issuable upon conversion, exercise or
exchange of Convertible Securities that TCI had, prior to the record date for
the LMG Distribution, agreed to issue, but as of such record date had not
issued, in each case including obligations of TCI to issue shares of TCI's
Class A Common Stock, par value $1.00 per share (which has been redesignated
TCI Group Series A Common Stock), which as a result of the LMG Distribution,
constitute obligations to issue, among other securities, LMG Series A Common
Stock or Convertible Securities which are convertible into or exercisable or
exchangeable for LMG Series A Common Stock; provided, however, that Committed
Acquisition Shares will not include any shares of Liberty Media Group Common
Stock issuable upon conversion, exercise or exchange of Pre-Distribution
Convertible Securities. The type and amount of Committed Acquisition Shares
issuable will be appropriately adjusted to reflect subdivisions and
combinations of the LMG Series A Common Stock and dividends or distributions
of shares of LMG Series A Common Stock or LMG Series B Common Stock to holders
of LMG Series A Common Stock and other reclassifications of the LMG Series A
Common Stock, in each case occurring (or the record date for which occurs)
after the LMG Distribution. The shares of LMG Series A Common Stock issuable
upon conversion of the Series H Preferred Stock will constitute Committed
Acquisition Shares.
"Convertible Securities" means any securities of TCI (other than any series
of TCI Common Stock) that are convertible into, exchangeable for or evidence
the right to purchase any shares of any series of TCI Common Stock, whether
upon conversion, exercise, exchange, pursuant to antidilution provisions of
such securities or otherwise.
"Corporation Earnings (Loss) Attributable to the Liberty Media Group"
means, for any period, the net earnings or loss of the Liberty Media Group for
such period determined on a basis consistent with the determination of the net
earnings or loss of the Liberty Media Group for such period as presented in
the combined financial statements of the Liberty Media Group for such period,
including income and expenses of TCI attributed to the operations of the
Liberty Media Group on a substantially consistent basis, including without
limitation, corporate administrative costs, net interest and income taxes.
"Corporation Earnings (Loss) Attributable to the TCI Group" means, for any
period, the net earnings or loss of the TCI Group for such period determined
on a basis consistent with the determination of the net earnings or loss of
the TCI Group for such period as presented in the combined financial
statements of the TCI Group for such period, including income and expenses of
TCI attributed to the operations of the TCI Group on a substantially
consistent basis, including without limitation, corporate administrative
costs, net interest and income taxes.
"Corporation Earnings (Loss) Attributable to the Telephony Group" means,
for any period, the net earnings or loss of the Telephony Group for such
period determined on a basis consistent with the determination of the net
earnings or loss of the Telephony Group for such period as presented in the
combined financial statements of the Telephony Group for such period,
including income and expenses of TCI attributed to the operations of the
Telephony Group on a substantially consistent basis, including without
limitation, corporate administrative costs, net interest and income taxes.
"DGCL" means the General Corporation Law of the State of Delaware.
"Disposition" shall mean the sale, transfer, assignment or other
disposition (whether by merger, consolidation, sale or contribution of assets
or stock or otherwise) of properties or assets.
"First Appraiser" means, with respect to any determination of the Liberty
Media Group Private Market Value or the Telephony Group Private Market Value,
an investment banking firm of recognized national standing selected by TCI to
make such determination.
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"Higher Appraised Amount" means, with respect to any determination of the
Liberty Media Group Private Market Value or the Telephony Group Private Market
Value, the higher of the respective final views of the First Appraiser and the
Second Appraiser as to such private market value.
"Independent Committee" shall mean a committee of the TCI Board (defined
below) all members of which are independent directors as determined under the
rules of the Nasdaq National Market.
The "Inter-Group Interest" of the TCI Group in the Liberty Media Group or
the Telephony Group means any common stockholders' equity value of TCI
attributable to the Liberty Media Group or the Telephony Group, as the case
may be, that is not represented by outstanding shares of Liberty Media Group
Common Stock or Telephony Group Common Stock, as the case may be. The TCI
Group's Inter-Group Interest in the Liberty Media Group is represented by the
Number of Shares Issuable with Respect to the Liberty Media Group Inter-Group
Interest and the TCI Group's Inter-Group Interest in the Telephony Group is
represented by the Number of Shares Issuable with Respect to the Telephony
Group Inter-Group Interest.
The "Liberty Media Group" means as of any date of determination thereof:
(i) the interest of TCI or any of its subsidiaries in Liberty Media
Corporation or any of its subsidiaries (including any successor thereto
by merger, consolidation or sale of all or substantially all of its
assets, whether or not in connection with a Related Business Transaction)
and their respective properties and assets;
(ii) all assets and liabilities of TCI or any of its subsidiaries to
the extent attributed to any of the properties or assets referred to in
clause (i) 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 (i) of this
sentence);
(iii) all assets and properties contributed or otherwise transferred
to the Liberty Media Group from the TCI Group; and
(iv) the interest of TCI or any of its subsidiaries in the businesses,
assets and liabilities acquired by TCI or any of its subsidiaries for the
Liberty Media Group, as determined by the Board of Directors of TCI (the
"TCI Board");
provided that (a) 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
(i) of the definition of "Number of Shares Issuable with Respect to the
Liberty Media Group Inter-Group Interest," or in other securities of TCI
attributed to the Liberty Media Group for which provision will be made as
described in the penultimate sentence of this definition), the Liberty Media
Group will no longer include an amount of assets or properties equal to the
aggregate amount of such kind of assets or properties so paid in respect of
shares of Liberty Media Group Common Stock multiplied by a fraction the
numerator of which is equal to the Liberty Media Group 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 Liberty Media
Group Outstanding Interest Fraction in effect immediately prior to the record
date for such dividend or other distribution and (b) from and after any
transfer of assets or properties from the Liberty Media Group to the TCI
Group, the Liberty Media Group will no longer include the assets or properties
so transferred. If TCI pays a dividend or makes any other distribution with
respect to shares of Liberty Media Group Common Stock payable in securities of
TCI attributed to the Liberty Media Group other than Liberty Media Group
Common Stock, the TCI Group will be deemed to hold an amount of such other
securities equal to the amount so distributed multiplied by the fraction
specified in clause (a) of this definition (determined as of a time
immediately prior to the record date for such dividend or other distribution),
and to the extent interest or dividends are paid or other distributions are
made on such other securities so distributed to the holders of Liberty Media
Group Common Stock, the Liberty Media Group will no longer include a
corresponding ratable amount of the kind of assets paid as such interest or
dividends or other distributions in respect of such securities so deemed to be
held by the TCI Group. TCI may also, to the extent any such other securities
constitute Convertible Securities which are at the time convertible,
exercisable or exchangeable, cause such Convertible Securities deemed to be
held by the TCI Group to be deemed to be converted, exercised or exchanged
(and to the extent the terms of such Convertible Securities require payment or
delivery of consideration in order to effect such conversion, exercise or
exchange, the Liberty Media Group will in such case include an amount of the
kind of properties or assets required to be paid or delivered as such
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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.
The "Liberty Media Group Inter-Group Interest Fraction" means a fraction
the numerator of which is the Number of Shares Issuable with Respect to the
Liberty Media Group Inter-Group Interest and the denominator of which is the
sum of such Number of Shares Issuable with Respect to the Liberty Media Group
Inter-Group Interest and the aggregate number of shares of Liberty Media Group
Common Stock outstanding.
"Liberty Media Group Net Proceeds" shall mean, as of any date, with respect
to any Disposition of any of the properties and assets of the Liberty Media
Group, an amount, if any, equal to the gross proceeds of such Disposition
after any payment of, or reasonable provision for, (a) any taxes payable by
TCI in respect of such Disposition or in respect of any resulting dividend or
redemption pursuant to clause (i) or (ii), respectively, of the second
paragraph under "--Conversion and Redemption--Mandatory Dividend, Redemption
or Conversion of Liberty Media Group Common Stock" (or which would have been
payable but for the utilization of tax benefits attributable to the TCI Group
or the Telephony Group), (b) any transaction costs, including, without
limitation, any legal, investment banking and accounting fees and expenses and
(c) any liabilities and other obligations (contingent or otherwise) of, or
attributed to, the Liberty Media Group, including, without limitation, any
indemnity or guarantee obligations incurred in connection with the Disposition
or any liabilities for future purchase price adjustments and any preferential
amounts plus any accumulated and unpaid dividends and other obligations
(without duplication of amounts allocated for the satisfaction of TCI's
obligations with respect to Pre-Distribution Convertible Securities and
Committed Acquisition Shares issuable which are included in the determination
of the Adjusted Liberty Media Group Outstanding Interest Fraction) in respect
of TCI Preferred Stock attributed to the Liberty Media Group. For purposes of
this definition, any properties and assets of the Liberty Media Group
remaining after such Disposition shall constitute "reasonable provision" for
such amount of taxes, costs and liabilities (contingent or otherwise) as can
be supported by such properties and assets. To the extent the proceeds of any
Disposition include any securities or other property other than cash, the TCI
Board shall determine the value of such securities or property, including for
the purpose of determining the equivalent value thereof if the TCI Board
determines to pay a dividend or redemption price in cash or securities or
other property as provided in the penultimate paragraph under "--Conversion
and Redemption --Mandatory Dividend, Redemption or Conversion of Liberty Media
Group Common Stock."
The "Liberty Media Group 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 Liberty Media Group Inter-
Group Interest.
The "LMG Distribution" means the distribution paid by TCI on August 10,
1995 of one-fourth of one share of LMG Series A Common Stock on each
outstanding share of TCI Group Series A Common Stock and one-fourth of one
share of LMG Series B Common Stock on each outstanding share of TCI Group
Series B Common Stock to holders of record on August 4, 1995.
"Lower Appraised Amount" means, with respect to any determination of the
Liberty Media Group Private Market Value or the Telephony Group Private Market
Value, the lower of the respective final views of the First Appraiser and the
Second Appraiser as to such private market value.
"Market Capitalization" of any class or series of capital stock of TCI on
any trading day shall mean 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.
"Market Value" of any class or series of capital stock of TCI on any day
shall mean the average of the high and low reported sales 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
the 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
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to time by TCI, or if such closing bid and asked prices are not made available
by any such New York Stock Exchange member firm on such trading day, the
market value of a share of such class or series as determined by the TCI
Board; provided that for purposes of determining the ratios described under "-
-Conversion and Redemption--Conversion of Liberty Media Group Common Stock at
the Option of TCI," "--Conversion of Telephony Group Common Stock at the
Option of TCI," "--Mandatory Dividend, Redemption or Conversion of Liberty
Media Group Common Stock," and "--Mandatory Dividend, Redemption or Conversion
of Telephony Group Common Stock" and as described under "--Liquidation
Rights," (a) the "Market Value" of any share of any series of TCI Common Stock
on any day prior to the "ex" date or any similar date for any dividend or
distribution paid or to be paid with respect to such series of TCI Common
Stock shall be reduced by the fair market value of the per share amount of
such dividend or distribution as determined by the TCI Board and (b) the
"Market Value" of any share of any series of TCI Common Stock on any day prior
to (i) the effective date of any subdivision (by stock split or otherwise) or
combination (by reverse stock split or otherwise) of outstanding shares of
such series of TCI Common Stock or (ii) the "ex" date or any similar date for
any dividend or distribution with respect to any such series of TCI Common
Stock in shares of such series of TCI Common Stock shall be appropriately
adjusted to reflect such subdivision, combination, dividend or distribution;
and provided, further, that to the extent that any assets or properties of the
TCI Group are transferred to the Telephony Group prior to there being any
shares of Telephony Group Series A Common Stock or Telephony Group Series B
Common Stock issued and outstanding, the Market Value of a share of Telephony
Group Series A Common Stock shall be as determined in good faith by the TCI
Board for purposes of determining the increase in the Number of Shares
Issuable in Respect of the Telephony Group Inter-Group Interest.
"Mutually Appraised Amount" means, with respect to any determination of the
Liberty Media Group Private Market Value or the Telephony Group Private Market
Value, the determination by the Mutually Designated Appraiser of such private
market value.
"Mutually Designated Appraiser" shall mean, if required with respect to any
determination of the Liberty Media Group Private Market Value or the Telephony
Group Private Market Value, the investment banking firm of recognized national
standing jointly designated by the First Appraiser and the Second Appraiser to
make such determination.
The "Number of Shares Issuable with Respect to the Liberty Media Group
Inter-Group Interest" is currently zero and will from time to time be
(i) adjusted as appropriate to reflect subdivisions (by stock split or
otherwise) and combinations (by reverse stock split or otherwise) of the
LMG Series A Common Stock and dividends or distributions of shares of LMG
Series A Common Stock or LMG Series B Common Stock to holders of LMG
Series A Common Stock and other reclassifications of LMG Series A Common
Stock,
(ii) decreased (but not to less than zero) by (a) the aggregate number
of shares of LMG Series A Common Stock issued or sold by TCI after the
Distribution other than Committed Acquisition Shares, the proceeds of
which are attributed to the TCI Group, (b) the aggregate number of shares
of LMG Series A Common Stock issued or delivered upon conversion,
exercise or exchange of Convertible Securities (other than Pre-
Distribution Convertible Securities and Convertible Securities which are
convertible into or exercisable or exchangeable for Committed Acquisition
Shares), the proceeds of which are attributed to the TCI Group, (c) the
aggregate number of shares of Liberty Media Group Common Stock issued or
delivered by TCI as a dividend or distribution to holders of TCI Group
Series A Common Stock and TCI Group Series B Common Stock, (d) the
aggregate number of shares of Liberty Media Group Common Stock issued or
delivered upon the conversion, exercise or exchange of any Convertible
Securities (other than Pre-Distribution Convertible Securities and
Convertible Securities which are convertible into or exercisable or
exchangeable for Committed Acquisition Shares) issued or delivered by TCI
after the Distribution as a dividend or distribution or by
reclassification or exchange to holders of TCI Group Series A Common
Stock and TCI Group Series B Common Stock and (e) the aggregate number of
shares of LMG Series A Common Stock (rounded, if necessary, to the
nearest whole number), equal to the aggregate fair value (as determined
by the TCI Board) of 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 Liberty Media Group Inter-Group Interest, divided by the
Market Value of one share of LMG Series A Common Stock as of the date of
such transfer, and
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(iii) increased by (a) the aggregate number of any shares of LMG
Series A Common Stock and LMG Series B Common Stock which are retired or
otherwise cease to be outstanding following their purchase with funds
attributed to the TCI Group, (b) a number (rounded, if necessary, to the
nearest whole number), equal to the fair value (as determined by the TCI
Board) 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 Liberty
Media Group Inter-Group Interest, divided by the Market Value of one
share of LMG Series A Common Stock as of the date of such contribution
and (c) the aggregate number of shares of LMG Series A Common Stock and
LMG Series B Common Stock into or for which Convertible Securities are
deemed to be converted, exercised or exchanged pursuant to the last
sentence of the definition of "TCI Group."
TCI will not issue or sell shares of LMG Series B Common Stock in respect of a
reduction in the Number of Shares Issuable with Respect to the Liberty Media
Group Inter-Group Interest. Whenever a change in the Number of Shares
Issuable with Respect to the Liberty Media Group Inter-Group Interest occurs,
TCI will prepare and file a statement of such change with the Secretary of
TCI.
"Number of Shares Issuable with Respect to the Telephony Group Inter-Group
Interest" shall initially be that number of shares of Telephony Group Common
Stock which represents 100% of the common stockholders' equity value of TCI
attributable to the Telephony Group (which may be issued as shares of
Telephony Group Series A Common Stock or Telephony Group Series B Common
Stock), as determined by the TCI Board prior to the first issuance of shares
of Telephony Group Common Stock, and shall from time to time thereafter, as
applicable, be
(i) adjusted as appropriate to reflect subdivisions (by stock split or
otherwise) and combinations (by reverse stock split or otherwise) of the
Telephony Group Series A Common Stock and Telephony Group Series B Common
Stock and dividends or distributions of shares of Telephony Group Series
A Common Stock or Telephony Group Series B Common Stock to holders of
Telephony Group Series A Common Stock and Telephony Group Series B Common
Stock and other reclassifications of the Telephony Group Series A Common
Stock and Telephony Group Series B Common Stock,
(ii) decreased (but not to less than zero) by (a) the aggregate number
of shares of Telephony Group Series A Common Stock or Telephony Group
Series B Common Stock issued or sold by TCI the proceeds of which are
attributed to the TCI Group, (b) the aggregate number of shares of
Telephony Group Series A Common Stock or Telephony Group Series B Common
Stock issued or delivered upon conversion, exercise or exchange of
Convertible Securities, the proceeds of which are attributed to the TCI
Group, (c) the aggregate number of shares of Telephony Group Series A
Common Stock or Telephony Group Series B Common Stock issued or delivered
by TCI as a dividend or distribution to holders of TCI Group Series A
Common Stock and TCI Group Series B Common Stock, (d) the aggregate
number of shares of Telephony Group Series A Common Stock or Telephony
Group Series B Common Stock issued or delivered upon the conversion,
exercise or exchange of any Convertible Securities issued or delivered by
TCI as a dividend or distribution or by reclassification or exchange to
holders of TCI Group Series A Common Stock and TCI Group Series B Common
Stock and (e) the aggregate number of shares of Telephony Group Series A
Common Stock and Telephony Group Series B Common Stock (rounded, if
necessary, to the nearest whole number), equal to the aggregate fair
value (as determined by the TCI Board) of assets or properties attributed
to the Telephony Group that are transferred from the Telephony Group to
the TCI Group in consideration of a reduction in the Number of Shares
Issuable with Respect to the Telephony Group Inter-Group Interest,
divided by the Market Value of one share of Telephony Group Series A
Common Stock as of the date of such transfer, and
(iii) increased by (a) the aggregate number of any shares of
Telephony Group Series A Common Stock and Telephony Group Series B Common
Stock which are retired or otherwise cease to be outstanding following
their purchase with funds attributed to the TCI Group, (b) a number
(rounded, if necessary, to the nearest whole number), equal to the fair
value (as determined by the TCI Board) of assets or properties,
theretofore attributed to the TCI Group that are contributed to the
Telephony Group in consideration of an increase in the Number of Shares
Issuable with Respect to the Telephony Group Inter-Group Interest,
divided by the Market Value of one share of Telephony Group Series A
Common Stock as of the date of such contribution and (c) the aggregate
number of shares of Telephony Group Series A Common Stock and Telephony
Group Series B Common Stock into or for which Convertible Securities are
deemed to be converted, exercised or exchanged pursuant to the last
sentence of the definition of "TCI Group."
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Whenever a change in the Number of Shares Issuable with Respect to the
Telephony Group Inter-Group Interest occurs, TCI shall prepare and file a
statement of such change with the Secretary of TCI.
"Pre-Distribution Convertible Securities" means Convertible Securities that
were outstanding on the record date for the LMG Distribution and were, prior
to such date, convertible into or exercisable or exchangeable for shares of
TCI's Class A Common Stock, par value $1.00 per share (which has been
redesignated TCI Group Series A Common Stock).
"Qualifying Subsidiary" shall mean a subsidiary of TCI in which (x) TCI's
ownership and voting interest is sufficient to satisfy the requirements of the
Internal Revenue Service for a tax free distribution of TCI's interest in such
subsidiary to the holders of Telephony Group Series A Common Stock and
Telephony Group Series B Common Stock or (y) TCI owns, directly or indirectly,
all of the issued and outstanding capital stock.
"Related Business Transaction" shall mean any Disposition of all or
substantially all of the properties and assets of the Liberty Media Group or
the Telephony Group, as the case may be, in which TCI receives as proceeds of
such Disposition primarily equity securities (including, without limitation,
capital stock, convertible securities, partnership or limited partnership
interests and other types of equity securities, without regard to the voting
power or contractual or other management or governance rights related to such
equity securities) of the purchaser or acquiror of such assets and properties
of the Liberty Media Group or the Telephony Group, as the case may be, 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 the
Telephony Group, as the case may be, or a third party issuer, which purchaser,
acquiror or other issuer is engaged or proposes to engage primarily in one or
more businesses similar or complementary to the businesses conducted by the
Liberty Media Group or the Telephony Group, as the case may be, prior to such
Disposition, as determined in good faith by the TCI Board.
"Second Appraiser" means, with respect to any determination of the Liberty
Media Group Private Market Value or the Telephony Group Private Market Value,
an investment banking firm of recognized national standing selected by the
Independent Committee to make such determination.
"Selection Date" means, with respect to any determination of the Liberty
Media Group Private Market Value or the Telephony Group Private Market Value,
the date upon which the Second Appraiser for such determination is selected by
the Independent Committee.
The "TCI Group" means as of any date of determination thereof:
(i) the interest of TCI or any of its subsidiaries in all of the
businesses in which TCI or any of its subsidiaries (or any of their
predecessors or successors) is or has been engaged, directly or
indirectly, and the respective assets and liabilities of TCI or any of
its subsidiaries, other than any businesses, assets or liabilities of the
Liberty Media Group or the Telephony Group;
(ii) a proportionate interest in the businesses, assets and
liabilities of the Liberty Media Group equal to the Liberty Media Group
Inter-Group Interest Fraction as of such date and a proportionate
interest in the businesses, assets and liabilities of the Telephony Group
equal to the Telephony Group Inter-Group Interest Fraction as of such
date;
(iii) 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 (i)
of the definition of "Number of Shares Issuable with Respect to the
Liberty Media Group Inter-Group Interest," or in other securities of TCI
attributed to the Liberty Media Group, for which provision will be made
as described in the second 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 Liberty Media Group 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 Liberty Media Group Outstanding Interest Fraction in effect
immediately prior to the record date for such dividend or other
distribution;
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(iv) from and after any dividend or other distribution with respect to
shares of Telephony Group Common Stock (other than a dividend or other
distribution payable in shares of Telephony Group Common Stock, with
respect to which adjustment will be made as described in clause (i) of
the definition of "Number of Shares Issuable with Respect to the
Telephony Group Inter-Group Interest, or in other securities of TCI
attributed to the Telephony 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 Telephony Group equal to
the aggregate amount of such kind of assets or properties so paid in
respect of such dividend or distribution with respect to shares of
Telephony Group Common Stock multiplied by a fraction the numerator of
which is equal to the Telephony Group 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 Telephony Group
Outstanding Interest Fraction in effect immediately prior to the record
date for such dividend or other distribution; and
(v) any assets or properties transferred from the Liberty Media Group
or the Telephony 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 or the Telephony
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 or the Telephony
Group, as applicable, described in clause (ii) above). If TCI pays a dividend
or makes any other distribution with respect to shares of Liberty Media Group
Common Stock payable in other securities of TCI attributed to the Liberty
Media Group, the TCI Group will be deemed to hold an amount of such other
securities equal to the amount so distributed multiplied by the fraction
specified in clause (iii) 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. If
Telephony Group Common Stock is issued and TCI pays a dividend or makes any
other distribution with respect to shares of Telephony Group Common Stock
payable in other securities of TCI attributed to the Telephony 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 (iv) 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 Telephony 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 distribution in respect of such securities so
deemed to be held by the TCI Group. TCI may also, to the extent any such
other securities constitute Convertible Securities which are at the time
convertible, exercisable or exchangeable, cause such Convertible Securities
deemed to be held by the TCI Group to be deemed to be converted, exercised or
exchanged (and to the extent the terms of such Convertible Securities require
payment or delivery of consideration in order to effect such conversion,
exercise or exchange, the TCI Group will in such case no longer include an
amount of the kind of properties or assets required to be paid or delivered as
such consideration for the amount of the Convertible Securities deemed
converted, exercised or exchanged as if such Convertible Securities were
outstanding), in which case such Convertible Securities will no longer be
deemed to be held by the TCI Group or attributed to the Liberty Media Group or
Telephony Group, as applicable.
"Telephony Group" shall mean, as of any date that any shares of Telephony
Group Common Stock have been issued and continue to be outstanding:
(i) the interest of TCI or of any of its subsidiaries in TCI Telephony
Services, Inc., a Delaware corporation and an indirect wholly owned
subsidiary of TCI, 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) and their respective properties and assets;
(ii) all assets and liabilities of TCI or any of its subsidiaries to
the extent attributed to any of the properties or assets referred to in
clause (i) of this sentence, whether or not such assets or liabilities
are assets and liabilities of TCI Telephony Services, Inc. (together with
its consolidated subsidiaries) or any of its subsidiaries (or a successor
as described in clause (i) of this sentence);
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(iii) all assets and properties contributed or otherwise transferred
to the Telephony Group from the TCI Group; and
(iv) the interest of TCI or any of its subsidiaries in the businesses,
assets and liabilities acquired by TCI or any of its subsidiaries for the
Telephony Group, as determined by the TCI Board;
provided that (a) from and after any dividend or other distribution with
respect to any shares of Telephony Group Common Stock (other than a dividend
or other distribution payable in shares of Telephony Group Common Stock, with
respect to which adjustment shall be made as provided in clause (i) of the
definition of "Number of Shares Issuable with Respect to the Telephony Group
Inter-Group Interest," or in other securities of TCI attributed to the
Telephony Group for which provision shall be made as set forth in the
penultimate sentence of this definition), the Telephony Group shall 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 Telephony
Group Common Stock multiplied by a fraction the numerator of which is equal to
the Telephony Group 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 Telephony Group Outstanding Interest Fraction in
effect immediately prior to the record date for such dividend or other
distribution and (b) from and after any transfer of assets or properties from
the Telephony Group to the TCI Group, the Telephony Group shall no longer
include the assets or properties so transferred. If TCI shall pay a dividend
or make any other distribution with respect to shares of Telephony Group
Common Stock payable in securities of TCI attributed to the Telephony Group
other than Telephony Group Common Stock, the TCI Group shall 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 Telephony Group Common Stock, the Telephony Group shall no
longer include a corresponding ratable amount of the kind of assets paid as
such interest or dividends or other distributions in respect of such
securities so deemed to be held by the TCI Group. TCI may also, to the extent
any such other securities constitute Convertible Securities which are at the
time convertible, exercisable or exchangeable, cause such Convertible
Securities deemed to be held by the TCI Group to be deemed to be converted,
exercised or exchanged (and to the extent the terms of such Convertible
Securities require payment or delivery of consideration in order to effect
such conversion, exercise or exchange, the Telephony Group shall 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 shall no longer
be deemed to be held by the TCI Group or attributed to the Telephony Group.
"Telephony Group Inter-Group Interest Fraction" means, as of any date, a
fraction the numerator of which is the Number of Shares Issuable with Respect
to the Telephony Group Inter-Group Interest as of such date and the
denominator of which is the sum of (a) such Number of Shares Issuable with
Respect to the Telephony Group Inter-Group Interest as of such date and (b)
the aggregate number of shares of Telephony Group Common Stock outstanding as
of such date.
"Telephony Group Net Proceeds" shall mean, as of any date, with respect to
any Disposition of any of the properties and assets of the Telephony Group, an
amount, if any, equal to the gross proceeds of such Disposition after any
payment of, or reasonable provision for, (a) any taxes payable by TCI in
respect of such Disposition or in respect of any resulting dividend or
redemption pursuant to clause (i) or (ii), respectively, of the second
paragraph under "--Conversion and Redemption--Mandatory Dividend, Redemption
or Conversion of Telephony Group Common Stock" (or which would have been
payable but for the utilization of tax benefits attributable to the TCI Group
or the Liberty Media 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 Telephony 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 in
respect of TCI Preferred Stock attributed to the Telephony Group. For
purposes of this definition, any properties and assets of the Telephony Group
remaining after such Disposition shall constitute "reasonable provision" for
such amount of taxes, costs and liabilities (contingent or otherwise) as can
be supported by such properties and assets. To the extent the proceeds of any
Disposition include any securities or other property other than cash, the TCI
Board shall determine the value of such securities or property, including for
the purpose of determining the equivalent value thereof if the TCI Board
determines to pay a dividend or redemption price in cash or securities or
other property as provided in the third paragraph under "--Conversion and
Redemption--Mandatory Dividend, Redemption or Conversion of Telephony Group
Common Stock."
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"Telephony Group Outstanding Interest Fraction" means, as of any date, a
fraction the numerator of which is the aggregate number of shares of Telephony
Group Common Stock outstanding on such date and the denominator of which is
the sum of (a) such aggregate number of shares of Telephony Group Series A
Common Stock outstanding on such date and (b) the Number of Shares Issuable
with Respect to the Telephony Group Inter-Group Interest as of such date.
VOTING RIGHTS
Holders of TCI Group Series A Common Stock are entitled to one vote for
each share of such stock held, holders of TCI Group Series B Common Stock are
entitled to ten votes for each share of such stock held, holders of LMG Series
A Common Stock are entitled to one vote for each share of such stock held and
holders of LMG Series B Common Stock are entitled to ten votes for each share
of such stock held, on all matters presented to such stockholders. If the
Telephony Group Common Stock is issued, holders of Telephony Group Series A
Common Stock will be entitled to one vote for each share of such stock held
and holders of Telephony Group Series B Common Stock will be entitled to ten
votes for each share of such stock held, on all matters presented to such
stockholders. Except as may otherwise be required by the laws of the State of
Delaware or, with respect to any class of TCI Preferred Stock or any series of
such a class, in the TCI Charter (including any resolution or resolutions
providing for the establishment of such class or series pursuant to authority
vested in the TCI Board by the TCI Charter), the holders of TCI Group Common
Stock, the holders of Liberty Media Group Common Stock, the holders of
Telephony Group Common Stock, if any, and the holders of each class or series
of TCI Preferred Stock, if any, entitled to vote thereon will vote as one
class for all purposes. See " -- Anti-Takeover Considerations."
None of the holders of TCI Group Series A Common Stock, TCI Group Series B
Common Stock, LMG Series A Common Stock or LMG Series B Common Stock have,
and, if Telephony Group Common Stock is issued, none of the holders of
Telephony Group Series A Common Stock or Telephony Group Series B Common Stock
would have, any rights to vote as a separate class or series on any matter
coming before the stockholders of TCI, except with respect to certain limited
class and series voting rights provided under the DGCL. Under the DGCL, the
approval of the holders of a majority of the outstanding shares of any class
of capital stock of a corporation, voting separately as a class, is required
to approve any amendment to the charter that would alter or change the powers,
preferences or special rights of the shares of such class so as to affect them
adversely, provided that, if any amendment would alter or change the powers,
preferences or special rights of one or more series of the class so as to
affect them adversely, but would not so affect the entire class, then only the
shares of the series so affected by the amendment would be entitled to vote
thereon separately as a class.
DIVIDENDS
Subject to the prior payment of dividends on, and other rights of, any of
the outstanding shares of TCI Preferred Stock, dividends may be paid as
determined by the TCI Board (i) on the TCI Group Common Stock out of the
lesser of (x) the TCI Group Available Dividend Amount and (y) funds of TCI
legally available therefor under the DGCL, (ii) on the Liberty Media Group
Common Stock out of the lesser of (x) the Liberty Media Group Available
Dividend Amount and (y) funds of TCI legally available therefor under the
DGCL, and (iii) on the Telephony Group Common Stock, if issued, out of the
lesser of (x) the Telephony Group Available Dividend Amount and (y) funds of
TCI legally available therefor under the DGCL. Under the DGCL, the amount of
the funds of TCI legally available for the payment of dividends on any series
of TCI Common Stock is determined on the basis of the entire corporation and
not just the TCI Group, the Liberty Media Group or the Telephony Group.
Consequently, the amount of legally available funds will be reduced by the
amount of any net losses of the TCI Group, the Liberty Media Group or the
Telephony Group and any dividends or distributions on, or repurchases of, the
TCI Group Common Stock, the Liberty Media Group Common Stock or, if issued,
the Telephony Group Common Stock, if any, and any dividends or distributions
on, or repurchases of, the TCI Group Common Stock, the Liberty Media Group
Common Stock or, if issued, the Telephony Group Common Stock, if any, and
dividends on, or certain repurchases of, TCI Preferred Stock. Certain loan
agreements to which certain subsidiaries of TCI are parties or are subject
contain restricted payment provisions that limit the amount of dividends,
other than stock dividends, that those companies may pay. Future loan
agreements may also contain similar restrictions and limits.
The "TCI Group Available Dividend Amount" means, as of any date, either (i)
the excess of (a) 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 (b) the aggregate par value of, or any greater amount
determined to be capital in respect of, all outstanding shares of TCI Group
Common Stock and each class or series of TCI Preferred Stock attributed to the
TCI Group or (ii) in case there is no such excess, an amount equal to the
Corporation Earnings (Loss) Attributable to the TCI Group (if positive) for
the fiscal year
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in which such date occurs and/or the preceding fiscal year. The "Corporation
Earnings (Loss) Attributable to the TCI Group," for any period, means the net
earnings or loss of the TCI Group for such period, including income and
expenses of TCI attributed to the operations of the TCI Group on a
substantially consistent basis, including, without limitation, corporate
administrative costs, net interest and income taxes. The TCI Group Available
Dividend Amount is intended to be similar to the amount that would be legally
available for the payment of dividends on the TCI Group Common Stock under the
DGCL if the TCI Group were a separate Delaware corporation. There can be no
assurance that there will be a TCI Group Available Dividend Amount.
The "Telephony Group Available Dividend Amount" means, as of any date, the
product of the Telephony Group Outstanding Interest Fraction and either (i)
the excess of (a) an amount equal to the total assets of the Telephony Group
less the total liabilities (not including preferred stock) of the Telephony
Group as of such date over (b) the aggregate par value of, or any greater
amount determined to be capital in respect of, all outstanding shares of
Telephony Group Common Stock and each class or series of TCI Preferred Stock
attributed to the Telephony Group or (ii) in case there is no such excess, an
amount equal to the Corporation Earnings (Loss) Attributable to the Telephony
Group (if positive) for the fiscal year in which such date occurs and/or the
preceding fiscal year. The "Corporation Earnings (Loss) Attributable to the
Telephony Group," for any period, means the net earnings or loss of the
Telephony Group for such period determined on a basis consistent with the
determination of the net earnings or loss of the Telephony Group for such
period as presented in the combined financial statements of the Telephony
Group, including income and expenses of TCI attributed to the operations of
the Telephony Group on a substantially consistent basis, including, without
limitation, corporate administrative costs, net interest and income taxes.
The Telephony Group Available Dividend Amount is intended to be similar to the
amount that would be legally available for the payment of dividends on the
Telephony Group Common Stock under the DGCL if the Telephony Group were a
separate Delaware corporation. There can be no assurance that there will be a
Telephony Group Available Dividend Amount.
The "Liberty Media Group Available Dividend Amount" means, as of any date,
the product of the Liberty Media Group Outstanding Interest Fraction and
either (i) the excess of (a) 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 (b) the aggregate par value
of, or any greater amount determined to be capital in respect of, all
outstanding shares of Liberty Media Group Common Stock and each class or
series of TCI Preferred Stock attributed to the Liberty Media Group or (ii) in
case there is no such excess, an amount equal to the Corporation 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
"Corporation 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, including income
and expenses of TCI attributed to the operations of the Liberty Media Group on
a substantially consistent basis, including, without limitation, corporate
administrative costs, net interest and income taxes. The Liberty Media Group
Available Dividend Amount is intended to be similar to the amount that would
be legally available for the payment of dividends on the Liberty Media Group
Common Stock under the DGCL if the Liberty Media Group were a separate
Delaware corporation. There is no assurance that there will be a Liberty
Media Group Available Dividend Amount.
Except for dividends declared or paid as described below under "--Share
Distributions" and "--Conversion and Redemption--Mandatory Dividend,
Redemption or Conversion of Liberty Media Group Common Stock," any dividends
paid on the TCI Group Series A Common Stock or the TCI Group Series B Common
Stock will be paid only on both series, in equal amounts per share; any
dividends paid on the LMG Series A Common Stock or the LMG Series B Common
Stock will be paid only on both series, in equal amounts per share; and, if
Telephony Group Common Stock is issued, any dividends paid on the Telephony
Group Series A Common Stock or the Telephony Group Series B Common Stock will
be paid only on both series, in equal amounts per share.
The TCI Board, subject to the provisions described above and under "--Share
Distributions" below, has the authority and discretion to declare and pay
dividends on the TCI Group Common Stock, the Liberty Media Group Common Stock
or, if issued, the Telephony Group Common Stock, in equal or unequal amounts,
notwithstanding the relationship between the TCI Group Available Dividend
Amount, the Liberty Media Group Available Dividend Amount and the Telephony
Group Available Dividend Amount , the respective amounts of prior dividends
declared on, or liquidation rights of, the TCI Group Common Stock, the Liberty
Media Group Common Stock or, if issued, the Telephony Group Common Stock or
any other factor.
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At the time of any dividend or other distribution on the outstanding shares
of Liberty Media Group Common Stock (including any dividend of Liberty Media
Group 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 in the Liberty Media Group) 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 Liberty Media Group
Inter-Group Interest Fraction and the denominator of which is the Liberty
Media Group Outstanding Interest Fraction.
If Telephony Group Common Stock is issued, at the time of any dividend or
other distribution on the outstanding shares of Telephony Group Common Stock
(including any dividend of Telephony Group Net Proceeds from the Disposition
of all or substantially all of the properties and assets of the Telephony
Group as described under "--Conversion and Redemption--Mandatory Dividend,
Redemption or Conversion of Telephony Group Common Stock"), the TCI Group will
(if at such time there is an Inter-Group Interest in the Telephony Group) be
credited, and the Telephony Group will be charged (in addition to the charge
for the dividend or other distribution paid or distributed in respect of
outstanding shares of Telephony 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 Telephony Group Common
Stock times (ii) a fraction the numerator of which is the Telephony Group
Inter-Group Interest Fraction and the denominator of which is the Telephony
Group Outstanding Interest Fraction.
SHARE DISTRIBUTIONS
DISTRIBUTIONS ON TCI GROUP COMMON STOCK. If at any time after the LMG
Distribution and the initial issuance of shares of Telephony Group Common
Stock a distribution is to be made with respect to the TCI Group Common Stock
in TCI Group Common Stock, Liberty Media Group Common Stock, Telephony Group
Common Stock, or any other securities of TCI or any other person (a "share
distribution"), such share distribution will be declared and paid only as
follows:
(i) a share distribution consisting of shares of TCI Group Series A
Common Stock (or Convertible Securities convertible into or exercisable
or exchangeable for shares of TCI Group Series A Common Stock) to holders
of TCI Group Series A Common Stock and TCI Group Series B Common Stock,
on an equal per share basis; or consisting of shares of TCI Group Series
B Common Stock (or Convertible Securities convertible into or exercisable
or exchangeable for shares of TCI Group Series B Common Stock) to holders
of TCI Group Series A Common Stock and TCI Group Series B Common Stock,
on an equal per share basis; or consisting of shares of TCI Group Series
A Common Stock (or Convertible Securities convertible into or exercisable
or exchangeable for shares of TCI Group Series A Common Stock) to holders
of TCI Group Series A Common Stock and, on an equal per share basis,
shares of TCI Group Series B Common Stock (or like Convertible Securities
convertible into or exercisable or exchangeable for shares of TCI Group
Series B Common Stock) to holders of TCI Group Series B Common Stock;
(ii) a share distribution consisting of shares of LMG Series A Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of LMG Series A Common Stock) to holders of TCI
Group Series A Common Stock and TCI Group Series B Common Stock, on an
equal per share basis; provided that the sum of (A) the aggregate number
of shares of LMG Series A Common Stock to be so issued (or the number of
such shares which would be issuable upon conversion, exercise or exchange
of any Convertible Securities to be so issued) and (B) the number of
shares of such series that are subject to issuance upon conversion,
exercise or exchange of any Convertible Securities then outstanding that
are attributed to the TCI Group (other than Pre-Distribution Convertible
Securities and other than Convertible Securities convertible into or
exercisable or exchangeable for Committed Acquisition Shares) is less
than or equal to the Number of Shares Issuable with Respect to the
Liberty Media Group Inter-Group Interest;
(iii) a share distribution consisting of shares of Telephony Group
Series A Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Telephony Group Series A Common
Stock) to holders of TCI Group Series A Common Stock and TCI Group Series
B Common Stock, on an equal per share basis; or consisting of shares of
Telephony Group Series B Common Stock (or Convertible Securities
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convertible into or exercisable or exchangeable for shares of Telephony
Group Series B Common Stock) to holders of TCI Group Series A Common
Stock and TCI Group Series B Common Stock, on an equal per share basis;
or consisting of shares of Telephony Group Series A Common Stock (or
Convertible Securities convertible into or exercisable or exchangeable
for shares of Telephony Group Series A Common Stock) to holders of TCI
Group Series A Common Stock and, on an equal per share basis, shares of
Telephony Group Series B Common Stock (or like Convertible Securities
convertible into or exercisable or exchangeable for shares of Telephony
Group Series B Common Stock) to holders of TCI Group Series B Common
Stock; provided that the sum of (A) the aggregate number of shares of
Telephony Group Series A Common Stock and Telephony Group Series B Common
Stock to be so issued (or the number of such shares which would be
issuable upon conversion, exercise or exchange of any Convertible
Securities to be so issued) and (B) the number of shares of Telephony
Group Series A Common Stock that are subject to issuance upon conversion,
exercise or exchange of any Convertible Securities then outstanding that
are attributed to the TCI Group is less than or equal to the Number of
Shares Issuable with Respect to the Telephony Group Inter-Group Interest;
and
(iv) a share distribution consisting of any class or series of
securities of TCI or any other person other than TCI Group Common Stock,
Liberty Media Group Common Stock or Telephony Group Common Stock (or
Convertible Securities convertible into or exercisable or exchangeable
for shares of TCI Group Common Stock, Liberty Media Group Common Stock or
Telephony Group Common Stock), either on the basis of a distribution of
identical securities, on an equal per share basis, to holders of TCI
Group Series A Common Stock and TCI Group Series B Common Stock or on the
basis of a distribution of one class or series of securities to holders
of TCI Group Series A Common Stock and another class or series of
securities to holders of TCI Group Series B Common Stock, provided that
the securities so distributed (and, if the distribution consists of
Convertible Securities, the securities into which such Convertible
Securities are convertible or for which they are exercisable or
exchangeable) do not differ in any respect other than their relative
voting rights and related differences in designation, conversion,
redemption and share distribution provisions, with holders of shares of
TCI Group Series B Common Stock receiving the class or series having the
higher relative voting rights (without regard to whether such rights
differ to a greater or lesser extent than the corresponding differences
in voting rights, designation, conversion, redemption and share
distribution provisions between the TCI Group Series A Common Stock and
the TCI Group Series B Common Stock), provided that if the securities so
distributed constitute capital stock of a subsidiary of TCI, such rights
will not differ to a greater extent than the corresponding differences in
voting rights, designation, conversion, redemption and share distribution
provisions between the TCI Group Series A Common Stock and the TCI Group
Series B Common Stock, and provided in each case that such distribution
is otherwise made on an equal per share basis.
TCI will not reclassify, subdivide or combine the TCI Group Series A Common
Stock without reclassifying, subdividing or combining the TCI Group Series B
Common Stock, on an equal per share basis, and TCI will not reclassify,
subdivide or combine the TCI Group Series B Common Stock without
reclassifying, subdividing or combining the TCI Group Series A Common Stock,
on an equal per share basis.
DISTRIBUTIONS ON LIBERTY MEDIA GROUP COMMON STOCK. If at any time a share
distribution is to be made with respect to the Liberty Media Group Common
Stock, such share distribution will be declared and paid only as follows (or
as described under the caption "--Conversion and Redemption" with respect to
the redemptions and other distributions referred to therein):
(i) a share distribution consisting of shares of LMG Series A Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of LMG Series A Common Stock) to holders of LMG
Series A Common Stock and LMG Series B Common Stock, on an equal per
share basis; or consisting of shares of LMG Series B Common Stock (or
Convertible Securities convertible into or exercisable or exchangeable
for shares of LMG Series B Common Stock) to holders of LMG Series A
Common Stock and LMG Series B Common Stock, on an equal per share basis;
or consisting of shares of LMG Series A Common Stock (or Convertible
Securities convertible into or exercisable or exchangeable for shares of
LMG Series A Common Stock) to holders of LMG Series A Common Stock and,
on an equal per share basis, shares of LMG Series B Common Stock (or like
Convertible Securities convertible into or exercisable or exchangeable
for shares of LMG Series B Common Stock) to holders of LMG Series B
Common Stock; and
(ii) a share distribution consisting of any class or series of
securities of TCI or any other person other than as described in the
immediately preceding clause (i) and other than TCI Group Common Stock or
Telephony
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Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of TCI Group Series A Common
Stock, TCI Group Series B Common Stock, Telephony Group Series A Common
Stock or Telephony Group Series B Common Stock), either on the basis of a
distribution of identical securities, on an equal per share basis, to
holders of LMG Series A Common Stock and LMG Series B Common Stock or on
the basis of a distribution of one class or series of securities to
holders of LMG Series A Common Stock and another class or series of
securities to holders of LMG Series B Common Stock, provided that the
securities so distributed (and, if the distribution consists of
Convertible Securities, the securities into which such Convertible
Securities are convertible or for which they are exercisable or
exchangeable) do not differ in any respect other than their relative
voting rights and related differences in designation, conversion,
redemption and share distribution provisions, with holders of shares of
LMG Series B Common Stock receiving the class or series having the higher
relative voting rights (without regard to whether such rights differ to a
greater or lesser extent than the corresponding differences in voting
rights, designation, conversion, redemption and share distribution
provisions between the LMG Series A Common Stock and the LMG Series B
Common Stock), provided that if the securities so distributed constitute
capital stock of a subsidiary of TCI, such rights will not differ to a
greater extent than the corresponding differences in voting rights,
designation, conversion, redemption and share distribution provisions
between the LMG Series A Common Stock and the LMG Series B Common Stock,
and provided in each case that such distribution is otherwise made on an
equal per share basis.
TCI will not reclassify, subdivide or combine the LMG Series A Common Stock
without reclassifying, subdividing or combining the LMG Series B Common Stock,
on an equal per share basis, and TCI will not reclassify, subdivide or combine
the LMG Series B Common Stock without reclassifying, subdividing or combining
the LMG Series A Common Stock, on an equal per share basis.
DISTRIBUTIONS ON TELEPHONY GROUP COMMON STOCK. If Telephony Group Common
Stock is issued, and if at any time a share distribution is to be made with
respect to the Telephony Group Common Stock, such share distribution will be
declared and paid only as follows (or as described under the caption "--
Conversion and Redemption" with respect to the redemptions and other
distributions referred to therein):
(i) a share distribution consisting of shares of Telephony Group
Series A Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Telephony Group Series A Common
Stock) to holders of Telephony Group Series A Common Stock and Telephony
Group Series B Common Stock, on an equal per share basis; or consisting
of shares of Telephony Group Series B Common Stock (or Convertible
Securities convertible into or exercisable or exchangeable for shares of
Telephony Group Series B Common Stock) to holders of Telephony Group
Series A Common Stock and Telephony Group Series B Common Stock, on an
equal per share basis; or consisting of shares of Telephony Group Series
A Common Stock (or Convertible Securities convertible into or exercisable
or exchangeable for shares of Telephony Group Series A Common Stock) to
holders of Telephony Group Series A Common Stock and, on an equal per
share basis, shares of Telephony Group Series B Common Stock (or like
Convertible Securities convertible into or exercisable or exchangeable
for shares of Telephony Group Series B Common Stock) to holders of
Telephony Group Series B Common Stock; and
(ii) a share distribution consisting of any class or series of
securities of TCI or any other person other than as described in the
immediately preceding clause (i) and other than TCI Group Common Stock or
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 Telephony Group Series A Common Stock and Telephony Group
Series B Common Stock or on the basis of a distribution of one class or
series of securities to holders of Telephony Group Series A Common Stock
and another class or series of securities to holders of Telephony Group
Series B Common Stock, provided that the securities so distributed (and,
if the distribution consists of Convertible Securities, the securities
into which such Convertible Securities are convertible or for which they
are exercisable or exchangeable) do not differ in any respect other than
their relative voting rights and related differences in designation,
conversion, redemption and share distribution provisions, with holders of
shares of Telephony Group Series B Common Stock receiving the class or
series having the higher relative voting rights (without regard to
whether such rights differ to a greater or lesser extent than the
corresponding differences in voting rights, designation, conversion,
redemption and share distribution provisions between the Telephony Group
Series A
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Common Stock and the Telephony Group Series B Common Stock), provided
that if the securities so distributed constitute capital stock of a
subsidiary of TCI, such rights will not differ to a greater extent than
the corresponding differences in voting rights, designation, conversion,
redemption and share distribution provisions between the Telephony Group
Series A Common Stock and the Telephony Group Series B Common Stock, and
provided in each case that such distribution is otherwise made on an
equal per share basis.
Because under the TCI Charter the Telephony Group is not permitted to have
an Inter-Group Interest in either the TCI Group or the Liberty Media Group, no
distributions on the Telephony Group Common Stock of shares of TCI Group
Common Stock (or related Convertible Securities) or Liberty Media Group Common
Stock (or related Convertible Securities) are permitted.
TCI will not reclassify, subdivide or combine the Telephony Group Series A
Common Stock without reclassifying, subdividing or combining the Telephony
Group Series B Common Stock, on an equal per share basis, and TCI will not
reclassify, subdivide or combine the Telephony Group Series B Common Stock
without reclassifying, subdividing or combining the Telephony Group Series A
Common Stock, on an equal per share basis.
CONVERSION AND REDEMPTION
CONVERSION AT THE OPTION OF THE HOLDER. Each share of TCI Group Series B
Common Stock is convertible, at the option of the holder thereof, into one
share of TCI Group Series A Common Stock. Each share of LMG Series B Common
Stock is convertible, at the option of the holder thereof, into one share of
LMG Series A Common Stock. If Telephony Group Common Stock is issued, each
share of Telephony Group Series B Common Stock would be convertible, at the
option of the holder thereof, into one share of Telephony Group Series A
Common Stock. Shares of TCI Group Series A Common Stock are not convertible
into shares of TCI Group Series B Common Stock; shares of LMG Series A Common
Stock are not convertible into shares of LMG Series B Common Stock; and, if
Telephony Group Common Stock is issued, shares of Telephony Group Series A
Common Stock would not be convertible into shares of Telephony Group Series B
Common Stock.
CONVERSION OF LIBERTY MEDIA GROUP COMMON STOCK AT THE OPTION OF TCI. The
TCI Board may at any time declare that (i) all of the outstanding shares of
LMG Series A Common Stock will be converted into a number (or fraction) of
fully paid and nonassessable shares of TCI Group Series A Common Stock equal
to the Liberty Media Group Optional Conversion Ratio, and (ii) all of the
outstanding shares of LMG Series B Common Stock will be converted into a
number (or fraction) of fully paid and nonassessable shares of TCI Group
Series B Common Stock equal to the Liberty Media Group Optional Conversion
Ratio. As more fully described below, the Liberty Media Group Optional
Conversion Ratio is the ratio of the private market value of a share of
Liberty Media Group Common Stock determined by appraisal to the public trading
price of a share of TCI Group Common Stock.
Under the TCI Charter, the "Liberty Media Group Optional Conversion Ratio"
means the quotient (calculated to the nearest five decimal places) obtained by
dividing (x) the Liberty Media Group Common Stock Per Share Value by (y) the
average Market Value of one share of TCI Group Series A Common Stock over the
20-trading day period ending on the trading day preceding the Appraisal Date.
The Liberty Media Group Common Stock Per Share Value will equal the quotient
obtained by dividing the Liberty Media Group Private Market Value by the
Adjusted Outstanding Shares of Liberty Media Group Common Stock, which will be
determined in the manner described below.
The "Liberty Media Group Private Market Value" means an amount equal to the
private market value of the Liberty Media Group as of the Appraisal Date. In
the event that TCI determines to establish the Liberty Media Group Private
Market Value, TCI shall designate the First Appraiser and the Independent
Committee shall designate the Second Appraiser. 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 Appraised Amount is not more than
120% of 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 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
the Second Appraiser. The Mutually Designated Appraiser will, no later than
the
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<PAGE>
20th day after the date the Mutually Designated Appraiser is designated,
determine 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 Liberty Media Group Inter-Group
Interest, the number of Committed Acquisition Shares issuable, the number of
shares of Liberty Media Group Common Stock issuable upon the conversion,
exercise or exchange of all Pre-Distribution Convertible Securities and the
number of shares of Liberty Media Group Common Stock issuable upon the
conversion, exercise or exchange of those Convertible Securities (other than
Pre-Distribution Convertible Securities and other than Convertible Securities
which are convertible into or exercisable or exchangeable for Committed
Acquisition Shares) the holders of which would derive an economic benefit from
conversion, exercise or exchange of such Convertible Securities which exceeds
the economic benefit of not converting, exercising or exchanging such
Convertible Securities. The "Liberty Media Group Common Stock Per Share
Value" means the quotient obtained by dividing the Liberty Media Group Private
Market Value by the Adjusted Outstanding Shares of Liberty Media Group Common
Stock, provided that if such investment banking firms do not agree on the
determinations provided for in this paragraph, the Liberty Media Group Common
Stock Per Share Value will be the average of the quotients so obtained on the
basis of the respective determinations of such firms.
If TCI determines to convert shares of LMG Series A Common Stock into TCI
Group Series A Common Stock and shares of LMG Series B Common Stock into TCI
Group Series B Common Stock at the Liberty Media Group Optional Conversion
Ratio, such conversion will occur on a conversion date on or prior to the
120th day following the Appraisal Date. If TCI determines not to undertake
such conversion, TCI may at any time thereafter undertake to reestablish the
Liberty Media Group Common Stock Per Share Value as of a subsequent date.
CONVERSION OF TELEPHONY GROUP COMMON STOCK AT THE OPTION OF TCI. If
Telephony Group Common Stock is issued, the TCI Board may at any time declare
that (i) all of the outstanding shares of Telephony Group Series A Common
Stock will be converted into a number (or fraction) of fully paid and
nonassessable shares of TCI Group Series A Common Stock equal to the Telephony
Group Optional Conversion Ratio, and (ii) all of the outstanding shares of
Telephony Group Series B Common Stock will be converted into a number (or
fraction) of fully paid and nonassessable shares of TCI Group Series B Common
Stock equal to the Telephony Group Optional Conversion Ratio. As more fully
described below, the Telephony Group Optional Conversion Ratio is the ratio of
the private market value of a share of Telephony Group Common Stock determined
by appraisal to the public trading price of a share of TCI Group Common Stock.
Under the TCI Charter, the "Telephony Group Optional Conversion Ratio"
means the quotient (calculated to the nearest five decimal places) obtained by
dividing (x) the Telephony Group Common Stock Per Share Value by (y) the
average
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Market Value of one share of TCI Group Series A Common Stock over the 20-
trading day period ending on the trading day preceding the Appraisal Date.
The Telephony Group Common Stock Per Share Value will equal the quotient
obtained by dividing the Telephony Group Private Market Value by the Adjusted
Outstanding Shares of Telephony Group Common Stock, which will be determined
in the manner provided below.
The "Telephony Group Private Market Value" means an amount equal to the
private market value of the Telephony Group as of the Appraisal Date. In the
event that TCI determines to establish the Telephony Group Private Market
Value, TCI shall designate the First Appraiser and the Independent Committee
shall designate the Second Appraiser. 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 Telephony
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 Appraised Amount is not more than
120% of the Lower Appraised Amount, the Telephony 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 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
the Second Appraiser. The Mutually Designated Appraiser will, no later than
the 20th day after the date the Mutually Designated Appraiser is designated,
determine the Mutually Appraised Amount, and the Telephony 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 Telephony 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 Telephony 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 Telephony Group, as if the Telephony
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 Telephony Group other than that which would have existed if
the Telephony Group were a publicly traded non-controlled entity.
Following the determination of the Telephony Group Private Market Value,
the investment banking firms whose final views of the private market value of
the Telephony Group were used in the calculation of the Telephony Group
Private Market Value will determine the Adjusted Outstanding Shares of
Telephony Group Common Stock together with any further appropriate adjustments
to the Telephony Group Private Market Value resulting from such determination.
The "Adjusted Outstanding Shares of Telephony 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 Telephony Group Common Stock
outstanding, the Number of Shares Issuable with Respect to the Telephony Group
Inter-Group Interest, and the number of shares of Telephony Group Common Stock
issuable upon the conversion, exercise or exchange of those Convertible
Securities 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 "Telephony Group Common Stock Per Share Value"
means the quotient obtained by dividing the Telephony Group Private Market
Value by the Adjusted Outstanding Shares of Telephony Group Common Stock,
provided that if such investment banking firms do not agree on the
determinations provided for in this paragraph, the Telephony Group Common
Stock Per Share Value will be the average of the quotients so obtained on the
basis of the respective determinations of such firms.
If TCI determines to convert shares of Telephony Group Series A Common
Stock into TCI Group Series A Common Stock and shares of Telephony Group
Series B Common Stock into TCI Group Series B Common Stock at the Telephony
Group Optional Conversion Ratio, such conversion will occur on a conversion
date on or prior to the 120th day following the
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Appraisal Date. If TCI determines not to undertake such conversion, TCI may
at any time thereafter undertake to reestablish the Telephony Group Common
Stock Per Share Value as of a subsequent date.
Any such conversion would dilute the interests of holders of TCI Group
Common Stock and would preclude holders of Telephony Group Common Stock from
retaining their interest in a security reflecting separately the business of
the Telephony Group.
MANDATORY DIVIDEND, REDEMPTION OR CONVERSION OF LIBERTY MEDIA GROUP COMMON
STOCK. Upon the Disposition, in one transaction or a series of related
transactions by TCI and its subsidiaries of all or substantially all of the
properties and assets of the Liberty Media Group to one or more persons,
entities or groups TCI is required, on or prior to the 85th trading day
following the consummation of such Disposition, to take one of the actions
listed in the following paragraph. This requirement does not apply to a
Disposition (a) in connection with the Disposition by TCI of all of TCI's
properties and assets in one transaction or a series of related transactions
in connection with the liquidation, dissolution or winding up of TCI, (b) by
dividend, other distribution or redemption in accordance with any provision
described under "--Redemption of Liberty Media Group Common Stock in Exchange
for Stock of Subsidiary," "--Dividends," "--Share Distributions,"
or "--Liquidation Rights," (c) to any person, entity or group which TCI,
directly or indirectly, after giving effect to the Disposition, controls or
(d) in connection with a Related Business Transaction. For these purposes,
"substantially all of the properties and assets of the Liberty Media Group"
means a portion of such properties and assets that represents at least 80% of
the then-current market value (as determined by the TCI Board) of the
properties and assets of the Liberty Media Group as of such date.
The action TCI is required to take is to either:
(i) subject to the limitations described under "--Dividends," declare
and pay a dividend in cash and/or securities or other property (other
than a dividend or distribution of TCI Common Stock) to the holders of
the outstanding shares of Liberty Media Group Common Stock equally on a
share for share basis (subject to the provisions described in the last
sentence of the penultimate paragraph under this caption "--Mandatory
Dividend, Redemption or Conversion of Liberty Media Group Common Stock"),
in an aggregate amount equal to the product of the Liberty Media Group
Outstanding Interest Fraction as of the record date for determining the
holders entitled to receive such dividend and the Liberty Media Group Net
Proceeds;
(ii) provided that there are assets of TCI legally available therefor
and the Liberty Media Group Available Dividend Amount would have been
sufficient to pay a dividend in lieu thereof as described in clause (i)
of this paragraph, then:
(A) if such Disposition involves all (not merely substantially
all) of the properties and assets of the Liberty Media Group,
redeem all outstanding shares of LMG Series A Common Stock and LMG
Series B Common Stock in exchange for cash and/or securities or
other property (other than TCI Common Stock) in an aggregate amount
equal to the product of the Adjusted Liberty Media Group
Outstanding Interest Fraction as of the date of such redemption and
the Liberty Media Group Net Proceeds, such aggregate amount to be
allocated (subject to the provisions described in the last sentence
of the penultimate paragraph under this caption) to shares of LMG
Series A Common Stock and LMG Series B Common Stock in the ratio of
the number of shares of each such series outstanding (so that the
amount of consideration paid for the redemption of each share of
LMG Series A Common Stock and each share of LMG Series B Common
Stock is the same); or
(B) if such Disposition involves substantially all (but not all)
of the properties and assets of the Liberty Media Group, apply an
aggregate amount of cash and/or securities or other property (other
than TCI Common Stock) equal to the product of the Liberty Media
Group Outstanding Interest Fraction as of the date shares are
selected for redemption and the Liberty Media Group Net Proceeds of
such Disposition to the redemption of outstanding shares of LMG
Series A Common Stock and LMG Series B Common Stock, such aggregate
amount to be allocated (subject to the provisions described in the
last sentence of the penultimate paragraph under this caption) to
shares of LMG Series A Common Stock and LMG Series B Common Stock
in the ratio of the number of shares of each such series
outstanding, and the number of shares of each such series to be
redeemed to equal the lesser of (x) the whole number nearest the
number determined by dividing the aggregate amount so allocated to
the redemption of such series by the average Market Value of one
share
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of LMG Series A Common Stock during the ten-trading day period
beginning on the 16th trading day following the consummation of
such Disposition and (y) the number of shares of such series
outstanding (so that the amount of consideration paid for the
redemption of each share of LMG Series A Common Stock and each
share of LMG Series B Common Stock is the same); or
(iii) convert (A) each outstanding share of LMG Series A Common Stock
into a number (or fraction) of fully paid and nonassessable shares of TCI
Group Series A Common Stock and (B) each outstanding share of LMG Series
B Common Stock into a number (or fraction) of fully paid and
nonassessable shares of TCI Group Series B Common Stock, in each case
equal to 110% of the average daily ratio (calculated to the nearest five
decimal places) of the Market Value of one share of LMG Series A Common
Stock to the Market Value of one share of TCI Group Series A Common Stock
during the ten-trading day period referred to in clause (ii)(B) of this
paragraph.
The "Adjusted Liberty Media Group 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 Liberty Media Group 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.
TCI may elect to pay the dividend or redemption price referred to in clause
(i) or (ii) of the second paragraph under this caption "--Mandatory Dividend,
Redemption or Conversion or Liberty Media Group Common Stock" 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 Common Stock)
that the TCI Board determines will have an aggregate market value on a fully
distributed basis, of not less than the amount of the Liberty Media Group Net
Proceeds. If the dividend or redemption price is paid in the form of
securities of an issuer other than TCI, the TCI Board may determine either to
(i) pay the dividend or redemption price in the form of separate classes or
series of securities, with one class or series of such securities to holders
of LMG Series A Common Stock and another class or series of securities to
holders of LMG Series B Common Stock, provided that such securities (and, if
such securities are convertible into or exercisable or exchangeable for shares
of another class or series of securities, the securities so issuable upon such
conversion, exercise or exchange) do not differ in any respect other than
their relative voting rights and related differences in designation,
conversion, redemption and share distribution provisions with holders of
shares of LMG Series B Common Stock receiving the class or series having the
higher relative voting rights (without regard to whether such rights differ to
a greater or lesser extent than the corresponding differences in voting
rights, designation, conversion, redemption and share distribution provisions
between the LMG Series A Common Stock and the LMG Series B Common Stock),
provided that if such securities constitute capital stock of a subsidiary of
TCI, such rights will not differ to a greater extent than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the LMG Series A Common Stock and the LMG
Series B Common Stock, and otherwise such securities will be distributed on an
equal per share basis, or (ii) pay the dividend or redemption price in the
form of a single class of securities without distinction between the shares
received by the holders of LMG Series A Common Stock and LMG Series B Common
Stock.
At the time of any dividend made as a result of a Disposition referred to
above, the TCI Group will be credited, and the Liberty Media Group will be
charged (in addition to the charge for the dividend paid in respect of
outstanding shares of Liberty Media Group Common Stock), with an amount equal
to the product of (i) the aggregate amount paid in respect of such dividend
times (ii) a fraction the numerator of which is the Liberty Media Group Inter-
Group Interest Fraction and the denominator of which is the Liberty Media
Group Outstanding Interest Fraction.
MANDATORY DIVIDEND, REDEMPTION OR CONVERSION OF TELEPHONY GROUP COMMON
STOCK. If Telephony Group Common Stock is issued, upon the Disposition in one
transaction or a series of related transactions by TCI and its subsidiaries of
all or substantially all of the properties and assets of the Telephony Group
to any one or more persons, entities or groups, TCI is required, on or prior
to the 85th trading day following the consummation of such Disposition, to
take one of the actions listed in the following paragraph. This requirement
does not apply to a Disposition (a) in connection with the Disposition by TCI
of all of TCI's properties and assets in one transaction or a series of
related transactions in connection with the liquidation, dissolution or
winding up of TCI, (b) by dividend, other distribution or redemption in
accordance with any provision described under "--Redemption of Telephony Group
Common Stock in Exchange for Stock of Subsidiary" "--Dividends," "--Share
Distributions," or "--Liquidation Rights," (c) to any person, entity or group
which TCI, directly or indirectly, after giving
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effect to the Disposition, controls or (d) in connection with a Related
Business Transaction. For these purposes, "substantially all of the
properties and assets of the Telephony Group" means a portion of such
properties and assets that represents at least 80% of the then-current market
value (as determined by the TCI Board) of the properties and assets of the
Telephony Group as of such date.
The action TCI is required to take is to either:
(i) subject to the limitations described above under "--Dividends,"
declare and pay a dividend in cash and/or securities or other property
(other than a dividend or distribution of TCI Common Stock) to the
holders of the outstanding shares of Telephony Group Common Stock equally
on a share for share basis (subject to the provisions described in the
last sentence of the third paragraph under this caption "--Mandatory
Dividends, Redemption or Conversion of Telephony Group Common Stock," in
an aggregate amount equal to the product of the Telephony Group
Outstanding Interest Fraction as of the record date for determining the
holders entitled to receive such dividend and the Telephony Group Net
Proceeds;
(ii) provided that there are assets of TCI legally available therefor
and the Telephony Group Available Dividend Amount would have been
sufficient to pay a dividend in lieu thereof as described in clause (i)
of this paragraph, then:
(A) if such Disposition involves all (not merely substantially
all) of the properties and assets of the Telephony Group, redeem
all outstanding shares of Telephony Group Series A Common Stock and
Telephony Group Series B Common Stock in exchange for cash and/or
securities or other property (other than TCI Common Stock) in an
aggregate amount equal to the product of the Telephony Group
Outstanding Interest Fraction as of the date of such redemption and
the Telephony Group Net Proceeds, such aggregate amount to be
allocated (subject to the provisions described in the last sentence
of the following paragraph) to shares of Telephony Group Series A
Common Stock and Telephony Group Series B Common Stock in the ratio
of the number of shares of each such series outstanding (so that
the amount of consideration paid for the redemption of each share
of Telephony Group Series A Common Stock and each share of
Telephony Group Series B Common Stock is the same); or
(B) if such Disposition involves substantially all (but not all)
of the properties and assets of the Telephony Group, apply an
aggregate amount of cash and/or securities or other property (other
than TCI Common Stock) equal to the product of the Telephony Group
Outstanding Interest Fraction as of the date shares are selected
for redemption and the Telephony Group Net Proceeds of such
Disposition to the redemption of outstanding shares of Telephony
Group Series A Common Stock and Telephony Group Series B Common
Stock, such aggregate amount to be allocated (subject to the
provisions described in the last sentence of the following
paragraph) to shares of Telephony Group Series A Common Stock and
Telephony Group Series B Common Stock in the ratio of the number of
shares of each such series outstanding, and the number of shares of
each such series to be redeemed to equal the lesser of (x) the
whole number nearest the number determined by dividing the
aggregate amount so allocated to the redemption of such series by
the average Market Value of one share of Telephony Group Series A
Common Stock during the ten-trading day period beginning on the
16th trading day following the consummation of such Disposition and
(y) the number of shares of such series outstanding (so that the
amount of consideration paid for the redemption of each share of
Telephony Group Series A Common Stock and each share of Telephony
Group Series B Common Stock is the same); or
(iii) convert (A) each outstanding share of Telephony Group Series A
Common Stock into a number (or fraction) of fully paid and nonassessable
shares of TCI Group Series A Common Stock and (B) each outstanding share
of Telephony Group Series B Common Stock into a number (or fraction) of
fully paid and nonassessable shares of TCI Group Series B Common Stock,
in each case equal to 110% of the average daily ratio (calculated to the
nearest five decimal places) of the Market Value of one share of
Telephony Group Series A Common Stock to the Market Value of one share of
TCI Group Series A Common Stock during the ten-trading day period
referred to in clause (ii)(B) of this paragraph.
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TCI may elect to pay the dividend or redemption price referred to in clause
(i) or (ii) of the second paragraph under this caption "--Mandatory Dividend,
Redemption or Conversion of Telephony Group Common Stock" 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 Common Stock)
that the TCI Board determines will have an aggregate market value on a fully
distributed basis, of not less than the amount of the Telephony Group Net
Proceeds. If the dividend or redemption price is paid in the form of
securities of an issuer other than TCI, the TCI Board 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 Telephony Group Series A Common Stock and another class or series of
securities to holders of Telephony Group Series B Common Stock, provided that
such securities (and, if such securities are convertible into or exercisable
or exchangeable for shares of another class or series of securities, the
securities so issuable upon such conversion, exercise or exchange) do not
differ in any respect other than their relative voting rights and related
differences in designation, conversion, redemption and share distribution
provisions with holders of shares of Telephony Group Series B Common Stock
receiving the class or series having the higher relative voting rights
(without regard to whether such rights differ to a greater or lesser extent
than the corresponding differences in voting rights, designation, conversion,
redemption and share distribution provisions between the Telephony Group
Series A Common Stock and the Telephony Group Series B Common Stock), provided
that if such securities constitute capital stock of a subsidiary of TCI, such
rights will not differ to a greater extent than the corresponding differences
in voting rights, designation, conversion, redemption and share distribution
provisions between the Telephony Group Series A Common Stock and the Telephony
Group Series B Common Stock, and otherwise such securities will be distributed
on an equal per share basis, or (ii) pay the dividend or redemption price in
the form of a single class of securities without distinction between the
shares received by the holders of Telephony Group Series A Common Stock and
Telephony Group Series B Common Stock. The Related Business Transaction
exception would enable TCI to enter into transactions in which the properties
or assets of the Telephony Group may be considered to be "disposed of" in
exchange for equity securities of an entity engaged or proposing to engage in
similar or complementary business areas to those of the Telephony Group while
maintaining the capital structure and delineation of business groups of the
Telephony Group.
At the time of any dividend made as a result of a Disposition referred to
above, the TCI Group will be credited, and the Telephony Group will be charged
(in addition to the charge for the dividend paid in respect of outstanding
shares of Telephony 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 Telephony Group Inter-Group Interest
Fraction and the denominator of which is the Telephony Group Outstanding
Interest Fraction.
The option to convert the Telephony Group Common Stock into TCI Group
Common Stock in the event of a Disposition provides TCI with additional
flexibility by allowing TCI to deliver consideration in the form of shares of
TCI Group Common Stock rather than cash or securities or other properties.
This alternative could be used, for example, in circumstances when TCI did not
have sufficient legally available assets under the DGCL to pay the full amount
of an otherwise required dividend or redemption or when TCI desired to retain
such proceeds.
If less than substantially all of the properties and assets of the
Telephony Group were disposed of by TCI in one transaction, TCI would not be
required to pay a dividend on, redeem or convert the outstanding shares of
Telephony Group Common Stock, even if an additional transaction were
consummated at a later time in which additional properties and assets of the
Telephony Group were disposed of by TCI, which, together with the properties
and assets disposed of in the first transaction, would have constituted
substantially all of the properties and assets of the Telephony Group at the
time of the first transaction, unless such transactions constituted a series
of related transactions. The second transaction, however, could trigger such
a requirement if, at the time of the second transaction, the properties and
assets disposed of in such transaction constituted at least substantially all
of the properties and assets of the Telephony Group at such time. If less
than substantially all of the properties and assets of the Telephony Group
were disposed of by TCI, the holders of the Telephony Group Common Stock would
not be entitled to receive any dividend or have their shares redeemed or
converted for TCI Group Common Stock, although the TCI Board could determine,
in its sole discretion, to pay a dividend on the Telephony Group Common Stock
in an amount related to the proceeds of such Disposition.
REDEMPTION OF LIBERTY MEDIA GROUP COMMON STOCK IN EXCHANGE FOR STOCK OF
SUBSIDIARY. At any time at which all of the assets and liabilities attributed
to the Liberty Media Group are and continue to be held directly or indirectly
by any one or more corporations all of the capital stock of which is owned by
TCI (the "Liberty Media Group Subsidiaries"), the TCI Board may, subject to
the availability of assets of TCI legally available therefor, redeem on a pro
rata basis, all of the outstanding shares of Liberty Media Group Common Stock
in exchange for an aggregate number of outstanding fully paid and
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nonassessable shares of common stock of each Liberty Media Group Subsidiary
equal to the product of the Adjusted Liberty Media Group Outstanding Interest
Fraction and the number of all of the outstanding shares of common stock of
such Liberty Media Group Subsidiary.
In effecting such a redemption, the TCI Board may determine either to (i)
redeem shares of LMG Series A Common Stock and LMG Series B Common Stock in
exchange for shares of separate classes or series of common stock of each
Liberty Media Group Subsidiary with relative voting rights and related
differences in designation, conversion, redemption and share distribution
provisions not greater than the corresponding differences in voting rights,
designation, conversion, redemption and share distribution provisions between
the LMG Series A Common Stock and LMG Series B Common Stock, with holders of
shares of LMG Series B Common Stock receiving the class or series having the
higher relative voting rights, or (ii) redeem shares of LMG Series A Common
Stock and LMG Series B Common Stock in exchange for shares of a single class
of common stock of each Liberty Media Group Subsidiary without distinction
between the shares distributed to the holders of the two series of Liberty
Media Group Common Stock. If TCI determines to undertake a redemption as
described in clause (i) of the preceding sentence, the outstanding shares of
common stock of each Liberty Media Group Subsidiary not distributed to holders
of Liberty Media Group Common Stock would consist solely of the class or
series having the lower relative voting rights.
REDEMPTION OF TELEPHONY GROUP COMMON STOCK IN EXCHANGE FOR STOCK OF
SUBSIDIARY. If Telephony Group Common Stock is issued, at any time at which
all of the assets and liabilities attributed to the Telephony Group have
become and continue to be held directly or indirectly by any one or more
corporations that are Qualifying Subsidiaries (the "Telephony Group
Subsidiaries"), the TCI Board may, subject to the availability of assets of
TCI legally available therefor, redeem on a pro rata basis, all of the
outstanding shares of Telephony Group Common Stock in exchange for an
aggregate number of outstanding, fully paid and nonassessable shares of common
stock of each Telephony Group Subsidiary equal to the product of the Telephony
Group Outstanding Interest Fraction and the number of outstanding shares of
common stock of each Telephony Group Subsidiary that is owned by TCI.
In effecting such a redemption, the TCI Board may determine either to (i)
redeem shares of Telephony Group Series A Common Stock and Telephony Group
Series B Common Stock in exchange for shares of separate classes or series of
common stock of each Telephony 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 Telephony Group Series A Common Stock and Telephony
Group Series B Common Stock, with holders of shares of Telephony Group Series
B Common Stock receiving the class or series having the higher relative voting
rights, or (ii) redeem shares of Telephony Group Series A Common Stock and
Telephony Group Series B Common Stock in exchange for shares of a single class
of common stock of each Telephony Group Subsidiary without distinction between
the shares distributed to the holders of the two series of Telephony Group
Common Stock.
CERTAIN PROVISIONS RESPECTING CONVERTIBLE SECURITIES. Unless the
provisions of any class or series of Convertible Securities which are
convertible into or exercisable or exchangeable for shares of Telephony Group
Common Stock provide specifically to the contrary, after any conversion date
or redemption date on which all outstanding shares of Telephony Group Common
Stock were converted or redeemed, any share of Telephony Group Common Stock
that is issued on conversion, exercise or exchange of any such Convertible
Securities will, immediately upon issuance pursuant to such conversion,
exercise or exchange and without any notice or any other action on the part of
TCI or the TCI Board or the holder of such share of Telephony Group Common
Stock, be redeemed in exchange for, to the extent assets of TCI are legally
available therefor, the amount of $.01 per share in cash.
Unless the provisions of any class or series of Pre-Distribution
Convertible Securities or Convertible Securities which are convertible into or
exercisable or exchangeable for Committed Acquisition Shares provide
specifically to the contrary, after any conversion date or redemption date on
which all outstanding shares of Liberty Media Group Common Stock were
converted or redeemed, any share of Liberty Media Group Common Stock that is
issued on conversion, exercise or exchange of any Pre-Distribution Convertible
Securities or any Convertible Securities which are convertible into or
exercisable or exchangeable for Committed Acquisition Shares will, immediately
upon issuance pursuant to such conversion, exercise or exchange and without
any notice or any other action on the part of TCI or the TCI Board 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
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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 that are convertible into or exercisable or exchangeable for shares
of Liberty Media Group Common Stock and which are created, established or
otherwise first authorized for issuance subsequent to the record date for the
LMG 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 and without any notice or any other action on
the part of TCI or the TCI Board or the holder of such share of Liberty Media
Group Common Stock, be redeemed in exchange for, to the extent assets of TCI
are legally available therefor, the amount of $.01 per share in cash.
GENERAL CONVERSION AND REDEMPTION PROVISIONS. Not later than the 10th
trading day following the consummation of a Disposition referred to above
under "--Mandatory Dividend, Redemption or Conversion of Liberty Media Group
Common Stock," TCI will announce publicly by press release (i) the Liberty
Media Group Net Proceeds, (ii) the number of outstanding shares of LMG Series
A Common Stock and LMG Series B Common Stock, (iii) the number of shares of
LMG Series A Common Stock and LMG Series B Common Stock into or for which
Convertible Securities are then convertible, exercisable or exchangeable and
the conversion, exercise or exchange prices thereof (and stating which, if
any, of such Convertible Securities constitute Pre-Distribution Convertible
Securities or Convertible Securities which are convertible into or exercisable
or exchangeable for Committed Acquisition Shares) and the number of Committed
Acquisition Shares issuable, (iv) the Liberty Media Group Outstanding Interest
Fraction as of a recent date preceding the date of such notice and (v) the
Adjusted Liberty Media Group Outstanding Interest Fraction as of a recent date
preceding the date of such notice. Not earlier than the 26th trading day and
not later than the 30th trading day following the consummation of such
Disposition, TCI will announce publicly by press release which of the actions
described in clause (i), (ii) or (iii) of the second paragraph under
"--Mandatory Dividend, Redemption or Conversion of Liberty Media Group Common
Stock" it has irrevocably determined to take.
If TCI determines to pay a dividend described in clause (i) of the second
paragraph under the caption "--Mandatory Dividend, Redemption or Conversion
of Liberty Media Group Common Stock," TCI will, not later than the 30th
trading day following the consummation of such Disposition, cause to be given
to each holder of outstanding shares of LMG Series A Common Stock and LMG
Series B Common Stock, a notice setting forth (i) the record date for
determining holders entitled to receive such dividend, which will be not
earlier than the 40th trading day and not later than the 50th trading day
following the consummation of such Disposition, (ii) the anticipated payment
date of such dividend (which will not be more than 85 trading days following
the consummation of such Disposition), (iii) 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, (iv) the Liberty Media Group
Net Proceeds, (v) the Liberty Media Group Outstanding Interest Fraction as of
a recent date preceding the date of such notice, and (vi) the number of
outstanding shares of LMG Series A Common Stock and LMG Series B Common Stock
and the number of shares of LMG Series A Common Stock and LMG Series B Common
Stock into or for which outstanding Convertible Securities are then
convertible, exercisable or exchangeable and the conversion, exercise or
exchange prices thereof.
If TCI determines to undertake a redemption of shares of Liberty Media
Group Common Stock following a Disposition of all (not merely substantially
all) of the properties and assets of the Liberty Media Group as described in
clause (ii)(A) of the second paragraph under the caption "--Mandatory
Dividend, Redemption or Conversion of Liberty Media Group Common Stock," TCI
will cause to be given to each holder of outstanding shares of LMG Series A
Common Stock and LMG Series B Common Stock, a notice setting forth (i) a
statement that all shares of Liberty Media Group Common Stock outstanding on
the redemption date will be redeemed, (ii) the redemption date (which will not
be more than 85 trading days following the consummation of such Disposition),
(iii) the kind of shares of capital stock, cash and/or other securities or
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property to be paid as a redemption price in respect of shares of Liberty
Media Group Common Stock outstanding on the redemption date, (iv) the Liberty
Media Group Net Proceeds, (v) the Adjusted Liberty Media Group Outstanding
Interest Fraction as of a recent date preceding the date of such notice, (vi)
the place or places where certificates for shares of Liberty Media Group
Common Stock, properly endorsed or assigned for transfer (unless TCI waives
such requirement), are to be surrendered for delivery of certificates for
shares of such capital stock, cash and/or other securities or property, and
(vii) the number of outstanding shares of LMG Series A Common Stock and LMG
Series B Common Stock and the number of shares of LMG Series A Common Stock
and LMG Series B Common Stock into or for which outstanding Convertible
Securities are then convertible, exercisable or exchangeable and the
conversion, exercise or exchange prices thereof (and, stating which, if any,
of such Convertible Securities constitute Pre-Distribution Convertible
Securities or Convertible Securities which are convertible into or exercisable
or exchangeable for Committed Acquisition Shares and the number of Committed
Acquisition Shares issuable). Such notice will be sent not less than 35
trading days nor more than 45 trading days prior to the redemption date.
If TCI determines to undertake a redemption of 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 second paragraph under the caption "--Mandatory Dividend,
Redemption or Conversion of Liberty Media Group Common Stock," TCI will, not
later than the 30th trading day following the consummation of such
Disposition, cause to be given to each holder of record of outstanding shares
of LMG Series A Common Stock and LMG Series B Common Stock a notice setting
forth (i) a date not earlier than the 40th trading day and not later than the
50th trading day following the consummation of such Disposition which will be
the date on which shares of the Liberty Media Group Common Stock then
outstanding will be selected for redemption, (ii) the anticipated redemption
date (which will not be more than 85 trading days following the consummation
of such Disposition), (iii) the kind of shares of capital stock, cash and/or
other securities or property to be paid as a redemption price in respect of
shares of Liberty Media Group Common Stock selected for redemption, (iv) the
Liberty Media Group Net Proceeds, (v) the Liberty Media Group Outstanding
Interest Fraction as of a recent date preceding the date of such notice, (vi)
the number of outstanding shares of LMG Series A Common Stock and LMG Series B
Common Stock and the number of shares of LMG Series A Common Stock and LMG
Series B Common Stock into or for which outstanding Convertible Securities are
then convertible, exercisable or exchangeable and the conversion, exercise or
exchange prices thereof and (vii) a statement that TCI will not be required to
register a transfer of any shares of Liberty Media Group Common Stock for a
period of 15 trading days next preceding the date referred to in clause (i) of
this sentence. Promptly following the date referred to in clause (i) of the
preceding sentence, but not earlier than the 40th trading day and not later
than the 50th trading day following the consummation of such Disposition, TCI
will cause to be given to each holder of shares of LMG Series A Common Stock
and LMG Series B Common Stock to be redeemed, a notice setting forth (i) the
number of shares of LMG Series A Common Stock and LMG Series B Common Stock
held by such holder to be redeemed, (ii) a statement that such shares of LMG
Series A Common Stock and LMG Series B Common Stock will be redeemed, (iii)
the redemption date (which will not be more than 85 trading days following the
consummation of such Disposition), (iv) the kind and per share amount of
shares of capital stock, cash and/or other securities or property to be
received by such holder with respect to each share of such Liberty Media Group
Common Stock to be redeemed, including details as to the calculation thereof,
and (v) the place or places where certificates for shares of such Liberty
Media Group Common Stock, properly endorsed or assigned for transfer (unless
TCI waives such requirement), are to be surrendered for delivery of
certificates for shares of such capital stock, cash and/or other securities or
property. The outstanding shares of Liberty Media Group Common Stock to be
redeemed will be redeemed by TCI pro rata among the holders of Liberty Media
Group Common Stock or by such other method as may be determined by the TCI
Board to be equitable.
In the event of any conversion as described above under the caption
"--Conversion of Liberty Media Group Common Stock at the Option of TCI" or as
described in clause (iii) of the second paragraph under "--Mandatory Dividend,
Redemption or Conversion of Liberty Media Group Common Stock," TCI will cause
to be given to each holder of outstanding shares of LMG Series A Common Stock
and LMG Series B Common Stock a notice setting forth (i) a statement that all
outstanding shares of Liberty Media Group Common Stock will be converted, (ii)
the conversion date (which will not be more than 85 trading days following the
consummation of such Disposition in the event of a 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 a conversion pursuant to the
provisions described under "--Conversion of Liberty Media Group Common Stock
at the Option of TCI"), (iii) the per share number (or fraction) of shares of
TCI Group Series A Common Stock or TCI Group Series B Common Stock, as
applicable, to be received with respect to each share of LMG Series A Common
Stock or LMG Series B Common Stock, including details as to the calculation
thereof, (iv) the place or places where certificates for shares of Liberty
Media Group Common Stock, properly endorsed or assigned for
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transfer (unless TCI waives such requirement), are to be surrendered, and (v)
the number of outstanding shares of LMG Series A Common Stock and LMG Series B
Common Stock, the number of Committed Acquisition Shares issuable and the
number of shares of LMG Series A Common Stock and LMG Series B Common Stock
into or for which outstanding Convertible Securities are then convertible,
exercisable or exchangeable and the conversion, exercise or exchange prices
thereof. Such notice will be sent not less than 35 trading days nor more than
45 trading days prior to the conversion date.
If TCI determines to redeem shares of LMG Series A Common Stock and LMG
Series B Common Stock as described above under the caption "--Redemption of
Liberty Media Group Common Stock in Exchange for Stock of Subsidiary," TCI
will promptly cause to be given to each holder of LMG Series A Common Stock
and LMG Series B Common Stock 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 Liberty Media Group Outstanding
Interest Fraction as of a recent date preceding the date of such notice, (iv)
the place or places where certificates for shares of Liberty Media Group
Common Stock, properly endorsed or assigned for transfer (unless TCI waives
such requirement), are to be surrendered for delivery of certificates for
shares of common stock of the Liberty Media Group Subsidiaries, and (v) the
number of outstanding shares of LMG Series A Common Stock and LMG Series B
Common Stock and the number of shares of LMG Series A Common Stock and LMG
Series B Common Stock into or for which outstanding Convertible Securities are
then convertible, exercisable or exchangeable and the conversion, exercise or
exchange prices thereof. Such notice will be sent not less than 35 trading
days nor more than 45 trading days prior to the redemption date.
In each case in which a notice is required to be given to holders of
outstanding shares of LMG Series A Common Stock and LMG Series B Common Stock
in accordance with the preceding five paragraphs (other than a notice to
holders of shares selected for redemption), notice shall also be given, within
the required time period, to each holder of Convertible Securities that are
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), which notice shall include, in addition
to all of the information set forth in the corresponding notice to holders of
Liberty Media Group Common Stock, a statement to the effect that the holders
of such Convertible Securities will be entitled to receive the dividend,
participate in the redemption of shares following a Disposition or in the
selection of shares for redemption, participate in the conversion of shares or
participate in the redemption of shares in exchange for stock of the Liberty
Media Group Subsidiaries only if such holder appropriately converts, exercises
or exchanges such Convertible Securities on or prior to the record date for
the dividend, redemption date, date fixed for selection of shares to be
redeemed or conversion date, as applicable, set forth in such notice. In the
case of a redemption or conversion of shares of Liberty Media Group Common
Stock, the notice to holders of Convertible Securities shall also state 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
"--Conversion and Redemption--Certain Provisions Respecting Convertible
Securities" if such holders convert, exercise or exchange such Convertible
Securities following the redemption date or conversion date, as applicable.
All notices required to be given in accordance with the preceding
paragraphs will be sent to a holder by first-class mail, postage prepaid, at
the holder's address as the same appears on the transfer books of TCI.
Neither the failure to mail any notice to any particular holder of Liberty
Media Group Common Stock or of Convertible Securities nor any defect therein
will affect the sufficiency thereof with respect to any other holder of
outstanding shares of Liberty Media Group Common Stock or of Convertible
Securities, or the validity of any conversion or redemption.
TCI will not be required to issue or deliver fractional shares of any class
of capital stock or any fractional securities to any holder of Liberty Media
Group Common Stock upon any conversion, redemption, dividend or other
distribution described above. In connection with the determination of the
number of shares of any class of capital stock that is issuable or the amount
of securities that is deliverable to any holder of record upon any such
conversion, redemption, dividend or other distribution (including any
fractions of shares or securities), TCI may aggregate the number of shares of
Liberty Media Group Common Stock held at the relevant time by such holder of
record. If the number of shares of any class of capital stock or the amount
of securities remaining to be issued or delivered to any holder of Liberty
Media Group Common Stock is a fraction, TCI will, if such fraction is not
issued or delivered to such holder, pay a cash adjustment in respect of such
fraction in an amount equal to the fair market value of such fraction on the
fifth trading day prior to the date such payment is to be made (without
interest). For purposes of the preceding sentence, "fair market value" of any
fraction will be (i) in the case of any fraction of a share of capital stock
of TCI, the product of such fraction and the Market Value of one share of such
capital stock and (ii) in the case of any other fractional security, such
value as is determined by the TCI Board.
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No adjustments in respect of dividends will be made upon the conversion or
redemption of any shares of Liberty Media Group Common Stock; provided,
however, that if the conversion date or the redemption date with respect to
the Liberty Media Group Common Stock is subsequent to the record date for the
payment of a dividend or other distribution thereon or with respect thereto,
the holders of shares of Liberty Media Group Common Stock at the close of
business on such record date will be entitled to receive the dividend or other
distribution payable on or with respect to such shares on the date set for
payment of such dividend or other distribution, notwithstanding the conversion
or redemption of such shares or TCI's default in payment of the dividend or
distribution due on such date.
Before any holder of shares of Liberty Media Group Common Stock will be
entitled to receive certificates representing shares of any kind of capital
stock or cash and/or securities or other property to be received by such
holder with respect to any conversion or redemption of shares of Liberty Media
Group Common Stock, such holder is required to surrender at such place as TCI
will specify certificates for such shares, properly endorsed or assigned for
transfer (unless TCI waives such requirement). TCI will as soon as
practicable after surrender of certificates representing shares of Liberty
Media Group Common Stock deliver to the person for whose account such shares
were so surrendered, or to the nominee or nominees of such person,
certificates representing the number of whole shares of the kind of capital
stock or cash and/or securities or other property to which such person is
entitled, together with any payment for fractional securities referred to
above. If less than all of the shares of Liberty Media Group Common Stock
represented by any one certificate are to be redeemed, TCI will issue and
deliver a new certificate for the shares of Liberty Media Group Common Stock
not redeemed. TCI will not be required to register a transfer of (i) any
shares of Liberty Media Group Common Stock for a period of 15 trading days
next preceding any selection of shares of Liberty Media Group Common Stock to
be redeemed or (ii) any shares of Liberty Media Group Common Stock selected or
called for redemption. Shares selected for redemption may not thereafter be
converted pursuant to the provisions described under the caption "--Conversion
at the Option of the Holder."
From and after any applicable conversion date or redemption date, all
rights of a holder of shares of Liberty Media Group Common Stock that were
converted or redeemed will cease except for the right, upon surrender of the
certificates representing shares of Liberty Media Group Common Stock, to
receive certificates representing shares of the kind and amount of capital
stock or cash and/or securities or other property for which such shares were
converted or redeemed, together with any payment for fractional securities,
and such holder will have no other or further rights in respect of the shares
of Liberty Media Group Common Stock so converted or redeemed, including, but
not limited to, any rights with respect to any cash, securities or other
property which are reserved or otherwise designated by TCI as being held for
the satisfaction of TCI's obligations to pay or deliver any cash, securities
or other property upon the conversion, exercise or exchange of any Convertible
Securities outstanding as of the date of such conversion or redemption or any
Committed Acquisition Shares which may then be issuable. No holder of a
certificate that, immediately prior to the applicable conversion date or
redemption date for the Liberty Media Group Common Stock, represented shares
of Liberty Media Group Common Stock will be entitled to receive any dividend
or other distribution with respect to shares of any kind of capital stock into
or in exchange for which the Liberty Media Group Common Stock was converted or
redeemed until surrender of such holder's certificate for a certificate or
certificates representing shares of such kind of capital stock. Upon such
surrender, there will be paid to the holder the amount of any dividends or
other distributions (without interest) which theretofore became payable with
respect to a record date after the conversion date or redemption date, as the
case may be, but that were not paid by reason of the foregoing, with respect
to the number of whole shares of the kind of capital stock represented by the
certificate or certificates issued upon such surrender. From and after a
conversion date or redemption date, as the case may be, of Liberty Media Group
Common Stock, TCI will, however, be entitled to treat the certificates for
shares of Liberty Media Group Common Stock that have not yet been surrendered
for conversion or redemption as evidencing the ownership of the number of
whole shares of the kind or kinds of capital stock for which the shares of
Liberty Media Group Common Stock represented by such certificates have been
converted or redeemed, notwithstanding the failure to surrender such
certificates.
TCI will pay any and all documentary, stamp or similar issue or transfer
taxes that may be payable in respect of the issue or delivery of any shares of
capital stock and/or other securities on conversion or redemption of shares of
Liberty Media Group Common Stock. TCI will not, however, be required to pay
any tax that may be payable in respect of any transfer involved in the issue
and delivery of any shares of capital stock in a name other than that in which
the shares of Liberty Media Group Common Stock so converted or redeemed were
registered and no such issue or delivery will be made unless and until the
person requesting such issue has paid to TCI the amount of any such tax, or
has established to the satisfaction of TCI that such tax has been paid.
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Provisions substantially the same as those described under this caption
"--General Conversion and Redemption Provisions," apply in the event of a
Disposition of all or substantially all of the properties and assets of the
Telephony Group and a determination of TCI to pay a dividend on or undertake a
partial or complete redemption of the Telephony Group Common Stock following
such Disposition, in the event of any conversion of the Telephony Group Common
Stock as described under the caption "--Conversion of Telephony Group Common
Stock at the Option of TCI" or "--Mandatory Dividend, Redemption or Conversion
of Telephony Group Common Stock," and in the event of a redemption of the
Telephony Group Common Stock in exchange for stock of one or more subsidiaries
as described under the caption "--Redemption of Telephony Group Common Stock
in Exchange for Stock of Subsidiary."
LIQUIDATION RIGHTS
In the event of a liquidation, dissolution or winding up of TCI, whether
voluntary or involuntary, after payment or provision for payment of the debts
and other liabilities of TCI and subject to the prior payment in full of the
preferential amounts to which any class or series of TCI Preferred Stock is
entitled, (i) the holders of the shares of TCI Group Common Stock will share
equally, on a share for share basis, in a percentage of the funds of TCI
remaining for distribution to its common stockholders equal to 100% multiplied
by the average daily ratio (expressed as a decimal) of W/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, (ii) the holders
of the shares of Liberty Media Group Common Stock will share equally, on a
share for share basis, in a percentage of the funds of TCI remaining for
distribution to its common stockholders equal to 100% multiplied by the
average daily ratio (expressed as a decimal) of X/Z for such 20-trading day
period and (iii) if Telephony Group Common Stock is issued, the holders of the
shares of Telephony Group Common Stock will share equally, on a share for
share basis, in a percentage of the funds of TCI remaining for distribution to
its common stockholders equal to 100% multiplied by the average daily ratio
(expressed as a decimal) of Y/Z for such 20-trading day period, where W is the
aggregate Market Capitalization of the TCI Group Series A Common Stock and the
TCI Group Series B Common Stock, X is the aggregate Market Capitalization of
the LMG Series A Common Stock and the LMG Series B Common Stock, Y is the
aggregate Market Capitalization of the Telephony Group Series A Common Stock
and the Telephony Group Series B Common Stock, and Z is the aggregate Market
Capitalization of the TCI Group Series A Common Stock, the TCI Group Series B
Common Stock, the LMG Series A Common Stock, the LMG Series B Common Stock,
the Telephony Group Series A Common Stock and the Telephony Group Series B
Common Stock. Neither a consolidation, merger nor sale of assets will be
construed to be a "liquidation," "dissolution" or "winding up" of TCI.
No holder of Liberty Media Group Common Stock or, if issued, Telephony
Group Common Stock will have any special right to receive specific assets of
the Liberty Media Group or the Telephony Group, as the case may be, in the
case of any dissolution, liquidation or winding up of TCI.
DETERMINATIONS BY THE TCI BOARD
The TCI Charter provides that any determinations made by the TCI Board
under any provision described under "Description of TCI Common Stock" will be
final and binding on all stockholders of TCI, except as may otherwise be
required by law. Such a determination would not be binding if it were
established that the determination was made in breach of a fiduciary duty of
the TCI Board. TCI will prepare a statement of any such determination by the
TCI Board respecting the fair market value of any properties, assets or
securities and will file such statement with the Secretary of TCI.
PREEMPTIVE RIGHTS
Holders of the TCI Group Common Stock and the Liberty Media Group Common
Stock do not have, and if the Telephony Group Common Stock is issued, holders
of the Telephony Group Common Stock would not have, any preemptive rights to
subscribe for any additional shares of capital stock or other obligations
convertible into or exercisable for shares of capital stock that may hereafter
be issued by TCI.
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TCI PREFERRED STOCK
CLASS B 6% CUMULATIVE REDEEMABLE EXCHANGEABLE JUNIOR PREFERRED STOCK
Subject to the prior preferences and other rights of any class or series of
TCI Preferred Stock ranking prior to the Class B Preferred Stock with respect
to the payment of dividends, the holders of Class B Preferred Stock are
entitled to receive cumulative dividends, when and as declared by the TCI
Board of Directors out of unrestricted funds legally available therefor, in
preference to dividends on TCI Common Stock. Dividends accrue cumulatively
(but without compounding) at an annual rate of 6% of the stated liquidation
value of $100 per share (the "Stated Liquidation Value"), whether or not such
dividends are declared or funds are legally available for payment of
dividends. Accrued dividends are payable annually and, in the sole discretion
of the TCI Board of Directors, may be declared and paid in cash, in shares of
TCI Group Series A Common Stock or in any combination of the foregoing.
Accrued dividends not paid as provided above on any dividend payment date
accumulate and such accumulated unpaid dividends may be declared and paid in
cash, shares of TCI Group Series A Common Stock or any combination thereof at
any time without reference to any regular dividend payment date, to holders of
record of Class B Preferred Stock as of a special record date fixed by the TCI
Board of Directors. No interest or additional dividends will accrue or be
payable with respect to any dividend payment on the Class B Preferred Stock
that may be in arrears or with respect to that portion of any other payment on
the Class B Preferred Stock that is in arrears which consists of accumulated
or accrued and unpaid dividends.
Upon the liquidation, dissolution or winding up of TCI, the holders of
Class B Preferred Stock will be entitled, after payment of preferential
amounts on any class or series of TCI Preferred Stock ranking prior to the
Class B Preferred Stock with respect to liquidating distributions, to receive
from the assets of TCI available for distribution to stockholders an amount in
cash or property or a combination thereof, per share, equal to the Stated
Liquidation Value thereof, plus all accumulated and accrued but unpaid
dividends thereon to the date of payment.
Subject to the rights of any class or series of TCI Preferred Stock ranking
prior to or on a parity with the Class B Preferred Stock, the Class B
Preferred Stock is redeemable at the option of TCI, in whole at any time or in
part from time to time, for a redemption price per share payable in cash equal
to the Stated Liquidation Value thereof, plus all accumulated and accrued but
unpaid dividends thereon to and including the redemption date. TCI does not
have any mandatory obligation to redeem the Class B Preferred Stock as of any
fixed date, at the option of the holders or otherwise.
The Class B Preferred Stock is exchangeable at the option of TCI in whole
but not in part at any time for junior subordinated debt securities of TCI
("Junior Exchange Notes"). If TCI exercises its optional exchange right, each
holder of outstanding shares of Class B Preferred Stock will be entitled to
receive in exchange therefor newly issued Junior Exchange Notes of a series
authorized and established for the purpose of such exchange, the aggregate
principal amount of which will be equal to the aggregate Stated Liquidation
Value of the shares of Class B Preferred Stock so exchanged by such holder,
plus all accumulated and accrued but unpaid dividends thereon to and including
the exchange date. The Junior Exchange Notes will mature on the 15th
anniversary of the date of issuance and will be subject to earlier redemption
at the option of TCI, in whole or in part, for a redemption price equal to the
principal amount thereof plus accrued but unpaid interest. Interest will
accrue, and be payable annually, on the principal amount of the Junior
Exchange Notes at a rate per annum to be determined prior to issuance by
adding a spread of 215 basis points to the "Fifteen Year Treasury Rate" (as
defined in the Indenture pursuant to which the Junior Exchange Notes will be
issued). Interest will accrue on overdue principal at the same rate, but will
not accrue on overdue interest.
The Class B Preferred Stock ranks senior to the TCI Group Common Stock and
the Liberty Media Group Common Stock, ranks junior to the Series C Preferred
Stock, the Series D Preferred Stock and the Series F Preferred Stock and will
rank junior to the TCI/LMG Preferred Stock as to dividend rights, rights to
redemption and rights on liquidation.
For so long as any dividends are in arrears on the Class B Preferred Stock
or any class or series of TCI Preferred Stock ranking pari passu with the
Class B Preferred Stock which is entitled to payment of cumulative dividends
prior to the redemption, exchange, purchase, or other acquisition of the Class
B Preferred Stock, and until all dividends accrued up to the immediately
preceding dividend payment date on the Class B Preferred Stock and such parity
stock have been paid or declared and set apart so as to be available for
payment in full thereof and for no other purpose, neither TCI nor any
subsidiary thereof may redeem, exchange, purchase, or otherwise acquire any
shares of Class B Preferred Stock, any such parity stock or any class or
series of its capital stock ranking junior to the Class B Preferred Stock, or
set aside any money or assets for such
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purpose, unless all of the outstanding shares of Class B Preferred Stock and
such parity stock are redeemed. For so long as any dividends are in arrears on
the Class B Preferred Stock and until all dividends accrued up to the
immediately preceding dividend payment date on the Class B Preferred Stock
have been paid or declared and set apart so as to be available for payment in
full thereof and for no other purpose, TCI may not declare or pay any dividend
on or make any distribution with respect to any junior stock or parity stock
or set aside any money or assets for any such purpose, except for dividends
declared and paid on parity stock contemporaneously and on a pro rata basis
with dividends declared and paid on the Class B Preferred Stock. If TCI fails
to redeem or exchange shares of Class B Preferred Stock on a date fixed for
redemption or exchange, and until such shares are redeemed or exchanged in
full, TCI may not redeem or exchange any parity stock or junior stock, declare
or pay any dividend on or make any distribution with respect to any junior
stock, or set aside money or assets for such purpose and neither TCI nor any
subsidiary thereof may purchase or otherwise acquire any Class B Preferred
Stock, parity stock or junior stock or set aside any money or assets for any
such purpose. The failure of TCI to pay any dividends on any class or series
of parity stock or to redeem or exchange on any date fixed for redemption or
exchange any shares of Class B Preferred Stock will not prevent TCI from (i)
paying any dividends on junior stock solely in shares of junior stock or the
redemption, purchase or other acquisition of junior stock solely in exchange
for (together with a cash adjustment for fractional shares, if any), or (but
only in the case of a failure to pay dividends on any parity stock) through
the application of the proceeds from the sale of, shares of junior stock; or
(ii) the payment of dividends on any parity stock solely in shares of parity
stock and/or junior stock or the redemption, exchange, purchase, or other
acquisition of Class B Preferred Stock or parity stock solely in exchange for
(together with a cash adjustment for fractional shares, if any), or (but only
in the case of a failure to pay dividends on any parity stock) through the
application of the proceeds from the sale of, parity stock and/or junior
stock.
The Class B Preferred Stock has no voting rights, except as required by the
DGCL, and except that the holders of Class B Preferred Stock have the right to
vote with the TCI Group Common Stock and the Liberty Media Group Common Stock,
on the basis of one vote per share, in any general election of directors of
TCI.
SERIES PREFERRED STOCK
The Series Preferred Stock is issuable, from time to time, in one or more
series, with such powers, designations, preferences and relative
participating, optional or other rights, and qualifications, limitations or
restrictions thereof, as is stated and expressed in a resolution or
resolutions providing for the issue of each such series adopted by the TCI
Board of Directors.
All shares of any one series of the Series Preferred Stock are required to
be alike in every particular. Except to the extent otherwise provided in the
resolution or resolutions providing for the issue of any series of Series
Preferred Stock, the holders of shares of such series will have no voting
rights except as may be required by Delaware law.
SERIES C CONVERTIBLE PREFERRED STOCK
Each share of Series C Preferred Stock is currently convertible, at the
option of the holder, into 116.24 shares of TCI Group Series A Common Stock
and 25 shares of LMG Series A Common Stock, subject to anti-dilution
adjustments, and, upon conversion of shares of the Series C Preferred Stock
each holder of Series C Preferred Stock is entitled to receive one additional
share of LMG Series A Common Stock for every two such shares received upon
conversion. The dividend, liquidation and redemption features of the Series C
Preferred Stock, each of which is discussed in greater detail below, are
determined by reference to the liquidation value of the Series C Preferred
Stock, which as of any date of determination is equal, on a per share basis,
to the sum of (i) $2,375, plus (ii) all dividends accrued on such share
through the dividend payment date on or immediately preceding such date of
determination to the extent not paid on or before such date, plus (iii) for
purposes of determining liquidation and redemption payments, all unpaid
dividends accrued on the sums of clauses (i) and (ii) above, to such date of
determination.
Subject to the prior preferences and other rights of any class or series of
preferred stock ranking senior to or on a parity with the Series C Preferred
Stock, the holders of Series C Preferred Stock are entitled to receive
preferential cumulative cash dividends out of funds legally available
therefor. Dividends accrue cumulatively at an annual rate of 5 1/2% of the
liquidation value per share, whether or not such dividends are declared or
funds are legally or contractually available for payment of dividends, except
that if TCI fails to redeem shares of Series C Preferred Stock required to be
redeemed on a redemption date, dividends will thereafter accrue cumulatively
at an annual rate of 15% of the liquidation value per share. Dividends not
paid on any dividend payment date will be added to the liquidation value on
such date and remain a part thereof until such dividends and all dividends
accrued thereon are paid in full. Dividends will accrue on unpaid dividends at
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the rate of 5 1/2% per annum (15% under the circumstances described above),
unless such dividends remain unpaid for two consecutive quarters in which
event such rate will increase to 15% per annum until such dividends and all
dividends, accrued thereon, are paid in full.
Upon the dissolution, liquidation or winding up of TCI, holders of the
Series C Preferred Stock will be entitled to receive from the assets of TCI
available for distribution to stockholders an amount in cash, per share, equal
to the liquidation value of the Series C Preferred Stock.
The Series C Preferred Stock is subject to optional redemption by TCI at
any time after August 8, 2001, in whole or in part, at a redemption price, per
share, equal to the then liquidation value of the Series C Preferred Stock.
Subject to the prior preferences and other rights of any other class or series
of TCI Preferred Stock ranking senior to or on a parity with the Series C
Preferred Stock and subject to any prohibition or restriction contained in any
instrument evidencing indebtedness of TCI, the Series C Preferred Stock is
required to be redeemed by TCI at any time on or after August 8, 2001 at the
option of the holder, in whole or in part (provided that the aggregate
liquidation value of the shares to be redeemed is in excess of $1 million), in
each case at a redemption price, per share, equal to the then liquidation
value.
The Series C Preferred Stock ranks senior to the TCI Group Common Stock,
the Liberty Media Group Common Stock and the Class B Preferred Stock, ranks on
a parity basis with the Series D Preferred Stock and the Series F Preferred
Stock and will rank on a parity basis with the TCI/LMG Preferred Stock as to
dividend rights, rights to redemption and rights on liquidation.
For so long as any dividends are in arrears on the Series C Preferred Stock
and until all dividends accrued up to the immediately preceding dividend
payment date on the Series C Preferred Stock have been paid or declared and
set apart so as to be available for payment in full thereof and for no other
purpose, TCI may not redeem or otherwise acquire any shares of Series C
Preferred Stock or any shares of any class or series of its capital stock
ranking junior to the Series C Preferred Stock, unless all of the outstanding
shares of Series C Preferred Stock are redeemed. For so long as any dividends
are in arrears on the Series C Preferred Stock and until all dividends accrued
up to the immediately preceding dividend payment date on the Series C
Preferred Stock have been paid or declared and set apart so as to be available
for payment in full thereof and for no other purpose, TCI may not declare or
pay any dividend on or make any other distribution with respect to any junior
stock or set aside any money or assets for such purpose, except that TCI may
pay a dividend on any class or series of junior stock solely in shares of
capital stock ranking junior to the Series C Preferred Stock. If TCI fails to
redeem shares of Series C Preferred Stock required to be redeemed on a
redemption date, and until all then outstanding shares of Series C Preferred
Stock are redeemed in full, TCI may not redeem any junior stock, or otherwise
acquire any shares of such stock or Series C Preferred Stock, except that TCI
may acquire shares of Series C Preferred Stock pursuant to a purchase or
exchange offer made to holders of all outstanding shares of Series C Preferred
Stock, if as to holders of all outstanding shares of Series C Preferred Stock,
the terms of the purchase or exchange offer for all such shares are identical.
The holders of Series C Preferred Stock are entitled to vote on an as
converted basis on all matters submitted to a vote of holders of TCI Group
Common Stock and Liberty Media Group Common Stock and any other class of
capital stock of TCI entitled to vote generally on the election of directors.
Holders of Series C Preferred Stock are not entitled to vote as a separate
class except as otherwise may be required by the DGCL.
SERIES D CONVERTIBLE PREFERRED STOCK
The certificate of designation for the Series D Preferred Stock provides
that each share of Series D Preferred Stock is convertible, at the option of
the holder, into 10 shares of TCI's former Class A Common Stock ("Class A
Common Stock"), subject to anti-dilution adjustments. After giving effect to
the Distribution and related redesignation of the Class A Common Stock as TCI
Group Series A Common Stock, each share of Series D Preferred Stock is
convertible, at the option of the holder, into 10 shares of TCI Group Series A
Common Stock and two and one-half shares of LMG Series A Common Stock, subject
to anti-dilution adjustments. The certificate of designation for the Series D
Preferred Stock further provides that if TCI distributes to all holders of
Class A Common Stock rights or warrants to subscribe for or purchase shares of
capital stock of TCI (other than shares of Class A or Class B Common Stock) or
a subsidiary of TCI, which capital stock (a) is common stock of its issuer or
(b) participates in one or more business operations of the issuer thereof in
such a manner that if such operations were owned by a corporation and such
capital stock were issued thereby such capital stock would be common stock of
such corporation ("Special Securities"), each holder of Series D Preferred
Stock will have the option, in
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lieu of any anti-dilution adjustment that would otherwise apply to the
conversion rate of the Series D Preferred Stock, to exchange a specified
portion of its shares of Series D Preferred Stock for shares of a new series
of convertible preferred stock of the issuer of the Special Securities having
terms similar to the Series D Preferred Stock but convertible into Special
Securities.
The dividend, liquidation and redemption features of the Series D Preferred
Stock, each of which is discussed below, are determined by reference to the
liquidation value of the Series D Preferred Stock, which as of any date of
determination is equal, on a per share basis, to the sum of (i) $300, plus
(ii) all dividends accrued on such share through the dividend payment date on
or immediately preceding such date of determination to the extent not paid on
or before such date, plus (iii) for purposes of determining liquidation and
redemption payments, an amount equal to all unpaid dividends accrued on the
sum of clauses (i) and (ii) above, to such date of determination.
Subject to the prior preferences and other rights of any class or series of
preferred stock ranking senior to or on a parity with the Series D Preferred
Stock with respect to the payment or declaration of dividends, the holders of
Series D Preferred Stock are entitled to receive preferential cumulative cash
dividends out of funds legally available therefor. Dividends accrue on a daily
basis at an annual rate of 5 1/2% of the liquidation value per share, whether
or not such dividends are declared or funds are legally or contractually
available for payment of dividends, except that if TCI fails to redeem shares
of Series D Preferred Stock required to be redeemed on a redemption date,
dividends thereafter will accrue cumulatively at an annual rate of 10% of the
liquidation value per share until such shares are redeemed. To the extent any
cash dividends are not paid on any dividend payment date, the amount of such
dividends will be automatically converted, to the extent permissible under the
DGCL, into shares of Class A Common Stock at a conversion rate equal to 95% of
the then "current market price" (as defined in the certificate of designation
establishing the Series D Preferred Stock) of the Class A Common Stock, and
upon issuance of shares of Class A Common Stock to holders of Series D
Preferred Stock in respect of such conversion such dividend will be deemed
paid for all purposes. Dividends not so paid or deemed paid on any dividend
payment date are added to the liquidation value on such date and remain a part
thereof until such dividends and all dividends accrued thereon are paid in
full. Dividends will accrue on such unpaid dividends at the rate of 5 1/2%
per annum (10% under the circumstances described above), unless such dividends
remain unpaid for two consecutive quarters, in which event such rate will
increase to 10% per annum until such dividends and all dividends accrued
thereon are paid in full.
Upon the dissolution, liquidation or winding up of TCI, holders of the
Series D Preferred Stock will be entitled to receive from the assets of TCI
available for distribution to stockholders an amount in cash, per share, equal
to the liquidation value of the Series D Preferred Stock.
The Series D Preferred Stock is subject to optional redemption by TCI at
any time after the fifth anniversary of its issuance, in whole or from time to
time in part, at a redemption price, per share, equal to the then liquidation
value of the Series D Preferred Stock. Shares of Series D Preferred Stock may
also be redeemed at the option of TCI after the third anniversary of the issue
date, in whole or from time to time part, at a redemption price per share
equal to the then liquidation value of the Series D Preferred Stock, if the
market value per share of the Class A Common Stock has exceeded $37.50 for the
period specified in the certificate of designation establishing the Series D
Preferred Stock. Subject to the prior preferences and other rights of any
other class or series of TCI Preferred Stock ranking senior to or on a parity
basis with the Series D Preferred Stock and subject to any prohibition or
restriction contained in any instrument evidencing indebtedness of TCI, any
holder of Series D Preferred Stock, at such holder's option, may require TCI,
at any time after the tenth anniversary of the issuance of such Series D
Preferred Stock, to redeem all or a portion of such holder's shares of Series
D Preferred Stock, provided that the aggregate liquidation value of the shares
to be redeemed is in excess of $50,000 (or, if all of the shares of Series D
Preferred Stock held by such holder have an aggregate liquidation value of
less than $50,000, all but not less than all of such shares of Series D
Preferred Stock), in each case at a redemption price, per share, equal to the
then liquidation value of the Series D Preferred Stock. If TCI fails to effect
any redemption of Series D Preferred Stock called for redemption or which a
holder has validly requested be redeemed, the holders thereof will have the
option to convert their shares of Series D Preferred Stock into Class A Common
Stock at a conversion rate equal to the quotient obtained by dividing the
redemption price by 95% of the "current market price" of the Class A Common
Stock on the redemption date, provided that in the case of a failure by TCI to
redeem shares at the request of a holder, the exercise of the foregoing
conversion right will be delayed for one year.
The Series D Preferred Stock ranks senior to the TCI Group Common Stock,
the Liberty Media Group Common Stock, the Class B Preferred Stock, ranks on a
parity basis with the Series C Preferred Stock and the Series F Preferred
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Stock and will rank on a parity basis with the TCI/LMG Preferred Stock as to
dividend rights, rights to redemption and rights on liquidation.
For so long as any dividends are in arrears on the Series D Preferred Stock
and until all dividends accrued up to the immediately preceding dividend
payment date on the Series D Preferred Stock have been paid or declared and
set apart so as to be available for payment in full thereof and for no other
purpose, TCI may not redeem or otherwise acquire any shares of Series D
Preferred Stock or any shares of any class or series of its capital stock
ranking pari passu with or junior to the Series D Preferred Stock, unless all
of the outstanding shares of Series D Preferred Stock are redeemed. For so
long as any dividends are in arrears on the Series D Preferred Stock and until
all dividends accrued up to the immediately preceding dividend payment date on
the Series D Preferred Stock have been paid or declared and set apart so as to
be available for payment in full thereof and for no other purpose, TCI may not
declare or pay any dividend on or make any other distribution with respect to
any junior stock or set aside any money or assets for such purpose, except
that TCI may pay a dividend on any class or series of junior stock solely in
shares of capital stock ranking junior to the Series D Preferred Stock. If TCI
fails to redeem shares of Series D Preferred Stock required to be redeemed on
a redemption date, and until all then outstanding shares of Series D Preferred
Stock are redeemed in full, TCI may not redeem any junior stock, or otherwise
acquire any shares of such stock or Series D Preferred Stock, except that TCI
may acquire shares of Series D Preferred Stock pursuant to a purchase or
exchange offer made to holders of all outstanding shares of Series D Preferred
Stock, if as to holders of all outstanding shares of Series D Preferred Stock
the terms of the purchase or exchange offer for all such shares are identical.
The Series D Preferred Stock has no voting rights, except as required by
the DGCL and except that without the consent of the holders of 66 2/3% in
liquidation value of the Series D Preferred Stock, TCI may not create any
series of TCI Preferred Stock that is senior as to dividend rights, rights to
redemption, or rights on liquidation to the Series D Preferred Stock.
SERIES F CONVERTIBLE REDEEMABLE PARTICIPATING PREFERRED STOCK
Shares of Series F Preferred Stock are currently convertible, at the option
of the holder, into TCI Group Series A Common Stock at a rate of 1,496.65
shares of TCI Group Series A Common Stock for each share of Series F Preferred
Stock, subject to anti-dilution adjustments. In addition, any shares of Series
F Preferred Stock which cease to be held by TCI or a subsidiary of TCI will
automatically be converted into shares of TCI Group Series A Common Stock. The
anti-dilution provisions of the Series F Preferred Stock provide that the
conversion rate of the Series F Preferred Stock will be adjusted (i) in the
event of a dividend or distribution on the outstanding shares of TCI Group
Series A Common Stock in shares of TCI Group Series A Common Stock, by
adjusting the then-current conversion rate such that the holder of Series F
Preferred Stock thereafter surrendered for conversion would receive the number
of shares of TCI Group Series A Common Stock which it would have been entitled
to receive had such shares of Series F Preferred Stock been converted prior to
the record date for such dividend or distribution and (ii) in the event of a
dividend or distribution to holders of TCI Group Series A Common Stock of any
securities, evidences of indebtedness or other assets (other than cash
dividends or shares of TCI Group Series A Common Stock), then the conversion
rate will be adjusted by multiplying the then-current conversion rate by a
fraction, the numerator of which is the current market price of a share of TCI
Group Series A Common Stock and the denominator of which is such current
market price less the fair market value (as determined by the Board of
Directors) of the securities, evidences of indebtedness or assets so
distributed.
The holders of the Series F Preferred Stock are entitled to participate, on
an as-converted basis, with the holders of the TCI Group Series A Common
Stock, with respect to any cash dividends or distributions declared and paid
on the TCI Group Series A Common Stock. Dividends or distributions on the TCI
Group Series A Common Stock which are not paid in cash would result in the
adjustment of the applicable conversion rate as described above.
Upon the dissolution, liquidation or winding up of TCI, holders of the
Series F Preferred Stock are entitled to receive from the assets of TCI
available for distribution to stockholders an amount in cash or property or a
combination thereof, per share of Series F Preferred Stock, equal to the sum
of (x) $.01 and (y) the amount to be distributed per share of TCI Group Series
A Common Stock in such liquidation, dissolution or winding up multiplied by
the applicable conversion rate of a share of Series F Preferred Stock.
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The Series F Preferred Stock is subject to optional redemption by TCI at
any time after the 30th business day following issuance, in whole or in part,
at a redemption price, per share, equal to $24,875 (as adjusted in respect of
stock splits, reverse splits and other events affecting the shares of Series F
Preferred Stock), plus any dividends which have been declared but are unpaid
as of the date fixed for such redemption. TCI will pay the redemption price
(or designated portion thereof) of the shares of Series F Preferred Stock
called for redemption by issuing to the holder thereof, in respect of its
shares to be redeemed, a number of shares of TCI Group Series A Common Stock
equal to the aggregate redemption price (or designated portion thereof) of
such shares divided by the average market price of the TCI Group Series A
Common Stock for a period specified, and subject to the adjustments described,
in the certificate of designations establishing the Series F Preferred Stock.
The Series F Preferred Stock ranks senior to the TCI Group Common Stock,
the Liberty Media Group Common Stock and the Class B Preferred Stock, ranks on
a parity basis with the Series C Preferred Stock and the Series D Preferred
Stock and will rank on a parity basis with the TCI/LMG Preferred Stock as to
dividend rights, rights to redemption and rights on liquidation.
If at any time TCI has declared a dividend on the Series F Preferred Stock
and failed to pay or set aside consideration sufficient to pay such dividend,
or if TCI declares a cash dividend on the shares of TCI Group Series A Common
Stock and fails to pay or set aside the participating dividend required to be
paid to the holders of the Series F Preferred Stock, then (i) TCI may not
declare or pay any dividend on or make any distribution with respect to any
parity stock or junior stock or set aside any money or assets for any such
purpose until such dividend payable to the holders of Series F Preferred Stock
has been paid or consideration sufficient to pay such dividend has been set
aside for such purpose, and (ii) neither TCI nor any subsidiary thereof may
redeem, exchange, purchase or otherwise acquire any shares of Series F
Preferred Stock, parity stock or junior stock, or set aside any money or
assets for any such purpose, unless all then outstanding shares of such parity
stock required to be redeemed under such circumstances are redeemed. If TCI
fails to redeem shares of Series F Preferred Stock required to be redeemed on
a redemption date, TCI may not declare or pay any dividend on or make any
distribution with respect to any junior stock or set aside money or assets for
any such purpose, and neither TCI nor any subsidiary may redeem any parity
stock or junior stock, or purchase or otherwise acquire any Series F Preferred
Stock, parity stock or junior stock, or set aside any money or assets for any
such purpose, until such shares of Series F Preferred Stock are redeemed. The
failure of TCI to pay any dividends on any class or series of parity stock or
to redeem on any date fixed for redemption any shares of Series F Preferred
Stock will not prevent TCI from (i) paying any dividends on junior stock
solely in shares of junior stock or the redemption or other acquisition of
junior stock solely in exchange for (together with a cash adjustment for
fractional shares, if any) shares of junior stock; or (ii) the payment of
dividends on any parity stock solely in shares of parity stock and/or junior
stock or the redemption or other acquisition of parity stock solely in
exchange for (together with a cash adjustment for fractional shares, if any),
or through the application of the proceeds from the sale of, shares of parity
stock and/or junior stock.
The Series F Preferred Stock has no voting rights, except as required by
the DGCL, and except that such shares will vote with the TCI Group Common
Stock and the Liberty Media Group Common Stock and any class or series of
Preferred Stock entitled to vote thereon, on the basis of one vote per share,
in any general election of directors of TCI.
SERIES G REDEEMABLE CONVERTIBLE TCI GROUP PREFERRED STOCK
Subject to the prior preferences and other rights of any class or series of
TCI Preferred Stock ranking prior to the TCI Group Preferred Stock with
respect to the payment of dividends, the holders of TCI Group Preferred Stock
will be entitled to receive cumulative dividends, when and as declared by the
TCI Board of Directors out of unrestricted funds legally available therefor,
in preference to dividends on TCI Common Stock and the Class B Preferred
Stock. Dividends accrue on the TCI Group Preferred Stock from and after
January 25, 1997, on a daily basis at the rate of 4% per annum of the
Liquidation Preference per share, whether or not such dividends are declared
or funds are available for payment of dividends. The "Liquidation Preference"
of a share of TCI Group Preferred Stock as of any date in question means an
amount equal to the sum of (i) the stated liquidation value of $21.60 per
share, plus (ii) an amount equal to all dividends accrued on such share which
have been added to and remain a part of the Liquidation Preference as of such
date, plus (iii) for purposes of determining liquidation and redemption
payments, an amount equal to all unpaid dividends accrued on the sum of the
amounts specified in clauses (i) and (ii) above during the period from the
immediately preceding dividend payment date through and including the date in
question. Dividends not paid on any dividend payment date are added to the
Liquidation Preference on such date and remain a part thereof until such
dividends are paid. The rate per annum at which
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dividends will accrue on that portion of the Liquidation Preference that
consists of unpaid dividends that were added to the Liquidation Preference on
a dividend payment date and that remain unpaid on the next succeeding dividend
payment date will increase to 8.625% per annum from and after such next
succeeding dividend payment date. Accrued dividends are payable semiannually
on each February 1 and August 1 to holders of record of the shares on the
preceding January 15 and July 15, respectively, and, in the sole discretion of
the TCI Board of Directors, may be declared and paid in cash, in shares of TCI
Group Series A Common Stock or in any combination of the foregoing. Accrued
dividends not paid as provided above on any dividend payment date accumulate
and such accumulated unpaid dividends may be declared and paid in cash, shares
of TCI Group Series A Common Stock or any combination thereof at any time
without reference to any regular dividend payment, to holders of record of TCI
Group Preferred Stock as of a special record date fixed by the TCI Board of
Directors.
Upon the liquidation, dissolution or winding up of TCI, the holders of TCI
Group Preferred Stock will be entitled, after payment of preferential amounts
on any class or series of TCI Preferred Stock ranking prior to the TCI Group
Preferred Stock with respect to liquidating distributions, to receive from the
assets of TCI available for distribution to stockholders an amount in cash or
property or a combination thereof, per share, equal to the Liquidation
Preference thereof as of the date of payment or distribution.
Subject to the rights of any class or series of TCI Preferred Stock ranking
prior to or on a parity with TCI Group Preferred Stock, the TCI Group
Preferred Stock is redeemable at the option of TCI, in whole at any time or in
part from time to time on or after February 1, 2001 for a redemption price per
share payable in cash equal to the Liquidation Preference thereof on such
redemption date. Subject to the rights of any class or series of TCI Preferred
Stock ranking prior to or on a parity with the TCI Group Preferred Stock, TCI
shall redeem the TCI Group Preferred Stock out of funds legally available
therefor on February 1, 2016, for a redemption price per share payable in cash
equal to the Liquidation Preference thereof on such redemption date.
The TCI Group Preferred Stock ranks senior to the TCI Group Common Stock
and Liberty Media Group Common Stock and the TCI Class B Preferred Stock and
on a parity with all other currently outstanding classes and series of TCI
Preferred Stock as to dividend rights, rights to redemption and rights on
liquidation.
Each share of TCI Group Preferred Stock is currently convertible, at the
option of the holder, at any time prior to the close of business on the
business day immediately prior to the redemption thereof, into 1.190 shares of
TCI Group Series A Common Stock, subject to adjustment upon the occurrence of
certain events described below. The kind and amount of securities, assets or
other property that as of any date are issuable or deliverable upon conversion
of a share of TCI Group Preferred Stock are referred to herein as the
"Conversion Rate." No fractional shares of TCI Group Series A Common Stock or
scrip will be issued upon conversion of the TCI Group Preferred Stock. A
holder otherwise entitled to a fractional share shall receive cash, which may
be paid by check, in an amount equal to the same fraction of the last reported
sale price of a share of TCI Group Series A Common Stock on the last full
trading day prior to the conversion date. Upon conversion of shares of TCI
Group Preferred Stock, the rights of the holder of the shares so converted, as
a holder thereof, will cease.
To convert a share of TCI Group Preferred Stock, a holder must surrender
the certificate(s) representing the shares to be converted at the office of
TCI or any transfer agent for the TCI Group Preferred Stock, which
certificate(s) shall be duly endorsed to TCI or accompanied by duly executed
instruments of transfer to TCI, with signatures guaranteed (such endorsements
or instruments of transfer to be in form satisfactory to TCI), together with a
written notice to TCI at such office of the election to convert the same,
specifying the number of shares to be converted and the name(s) (with
addresses) in which the certificate(s) for shares of TCI Group Series A Common
Stock are to be issued. If any transfer is involved in the issuance or
delivery of any certificate(s) for shares of TCI Group Series A Common Stock
in a name other than that of the registered holder of the shares of TCI Group
Preferred Stock surrendered for conversion, such holder shall also deliver to
TCI a sum sufficient to pay all transfer or similar taxes (or evidence
satisfactory to TCI of payment thereof). The date on which the foregoing
requirements are satisfied is the conversion date.
The Conversion Rate of the TCI Group Preferred Stock is subject to
adjustment upon the occurrence of certain events, including (i) the payment of
a dividend or the making of a distribution in shares of TCI Group Series A
Common Stock to holders of TCI Group Series A Common Stock, (ii) the payment
of a dividend or the making of a distribution to holders of TCI Group Series A
Common Stock payable in shares of TCI's capital stock (other than TCI Group
Series A Common Stock or rights, warrants or options for its capital stock),
(iii) the subdivision of the outstanding shares of TCI
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Group Series A Common Stock into a greater number of shares, (iv) the
combination of the outstanding shares of TCI Group Series A Common Stock into
a smaller number of shares, (v) the issuance by reclassification of the shares
of TCI Group Series A Common Stock of any shares of TCI's capital stock (other
than rights, warrants or options for its capital stock), (vi) the distribution
to all holders of TCI Group Series A Common Stock of rights, warrants or
options entitling them (for a period expiring within 45 days after the record
date for the determination of stockholders entitled to receive such
distribution) to purchase shares of TCI Group Series A Common Stock or
securities convertible into TCI Group Series A Common Stock (other than the
TCI Group Series B Common Stock) at a price per share (or, in the case of such
convertible securities, having a conversion price per share after adding
thereto an allocable portion of the exercise price of the right, warrant or
option to purchase such convertible securities) less than the Current Market
Price on the Determination Date (each as defined in the certificate of
designations for the TCI Group Preferred Stock) per share of TCI Group Series
A Common Stock, (vii) the distribution to all holders of TCI Group Series A
Common Stock of assets or debt securities or rights, warrants or options to
purchase securities (excluding cash dividends or distributions other than any
Extraordinary Cash Dividend (as defined in the certificate of designations for
the TCI Group Preferred Stock) and excluding dividends and distributions
referred to in the preceding clauses of this sentence) and (viii) certain
mergers, consolidations, sales of assets or binding share exchanges. In the
case of any such dividend or distribution on the TCI Group Series A Common
Stock of shares of capital stock, subdivision, combination or reclassification
(other than a dividend, distribution or reclassification in which the TCI
Group Preferred Stock becomes convertible into shares of more than one class
or series of TCI capital stock, any one of which is redeemable or exchangeable
at the election of TCI ("Redeemable Capital Stock"), if TCI elects to treat
such dividend, distribution or reclassification as a distribution of assets by
TCI), the holder of each outstanding share of TCI Group Preferred Stock will
have the right to convert such share of TCI Group Preferred Stock into the
kind and amount of securities which such holder would have owned immediately
after such event if such share of TCI Group Preferred Stock had been converted
immediately before the record date for or effective date of, as the case may
be, such event. In the case of any such merger, consolidation, binding share
exchange or sale of assets, the holder of each outstanding share of TCI Group
Preferred Stock will have the right to convert such share of TCI Group
Preferred Stock into the kind and amount of securities, cash or other assets
receivable upon such transaction by a holder of the number of shares of TCI
Group Series A Common Stock into which such share of TCI Group Preferred Stock
could have been converted immediately before the effective date of such
transaction (assuming, if applicable, such holder failed to exercise any
rights of election and received per share of TCI Group Series A Common Stock
the kind and amount of securities, cash or other assets received per share by
a plurality of the non-electing shares of the TCI Group Series A Common
Stock). In the case of any such issuance of rights, warrants or options which
expire within 45 days after the record date for the determination of
stockholders entitled to receive the rights, warrants or options, or any such
distribution of assets, debt securities or certain rights, warrants or options
to purchase securities (or, in the case of any dividend, distribution or
reclassification in which the TCI Group Preferred Stock becomes convertible
into shares of more than one class or series of TCI capital stock, any one of
which is Redeemable Capital Stock, if TCI elects to treat such dividend,
distribution or reclassification as a distribution of assets by TCI), the
Conversion Rate will be adjusted pursuant to formulas contained in the
certificate of designations for the TCI Group Preferred Stock. In certain
cases of distributions of assets, debt securities or certain rights, warrants
or options to purchase securities to holders of TCI Group Series A Common
Stock, rather than being entitled to an adjustment in the Conversion Rate, the
holder of a share of TCI Group Preferred Stock upon conversion thereof will be
entitled to receive, in addition to the shares of TCI Group Series A Common
Stock into which such share of TCI Group Preferred Stock is convertible, the
kind and amount of assets, debt securities, rights, warrants or options
comprising the distribution that such holder would have received if such
holder had converted such share of TCI Group Preferred Stock immediately prior
to the record date for determining the holders of TCI Group Series A Common
Stock entitled to receive the distribution.
Subject to the provisions described in the immediately following paragraph,
if the holders of TCI Group Preferred Stock would be entitled to receive upon
conversion thereof any Redeemable Capital Stock, and such Redeemable Capital
Stock is redeemed, exchanged or otherwise acquired in full, then, from and
after such event (a "Redemption Event"), the holders of TCI Group Preferred
Stock then outstanding shall be entitled to receive upon conversion of such
shares, in lieu of shares of such Redeemable Capital Stock, the kind and
amount of securities, cash or other assets receivable upon such Redemption
Event by a holder of the number of shares of Redeemable Capital Stock into
which such shares of TCI Group Preferred Stock could have been converted
immediately prior to the effectiveness of such Redemption Event (assuming that
such holder failed to exercise any applicable right of election with respect
thereto and received per share of such Redeemable Capital Stock the kind and
amount of securities, cash or other assets received per share by the holders
of a plurality of the non-electing shares thereof) and, thereafter, the
holders of the TCI Group Preferred Stock shall have no other conversion rights
with respect to such Redeemable Capital Stock.
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Notwithstanding the foregoing, the provisions described in the immediately
preceding paragraph shall not apply, and the holders of any shares of TCI
Group Preferred Stock that are not exchanged as described in the second
sentence of this paragraph shall not have any conversion rights with respect
to Redeemable Capital Stock so redeemed, exchanged or otherwise acquired,
after the Redemption Event relating thereto, if (i) the redemption price for
the shares of such Redeemable Capital Stock is paid in whole or in part in
securities ("Redemption Securities") of an issuer other than TCI (the "Other
Issuer") and (ii) in connection with such Redemption Event, the "Mirror
Preferred Stock Condition" is met, as such term is defined in the certificate
of designations for the TCI Group Preferred Stock. Generally, the Mirror
Preferred Stock Condition shall be satisfied if TCI makes appropriate
provisions so that holders of TCI Group Preferred Stock shall have the right,
exercisable on the effective date of the Redemption Event, to exchange their
shares of TCI Group Preferred Stock for convertible preferred stock of TCI and
convertible preferred stock of the Other Issuer that together have an
aggregate liquidation preference equal to the liquidation preference of the
TCI Group Preferred Stock to be so exchanged (as in effect on the effective
date of the Redemption Event) and that otherwise each have terms, conditions,
designations, dividend rights, voting powers, rights on liquidation and other
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions applicable to such convertible
preferred stock that are identical, or as nearly so as is practicable in the
good faith judgment of the Board of Directors of TCI, to those of the TCI
Group Preferred Stock for which such convertible preferred stock is to be
exchanged, except that applicable time periods under the TCI Group Preferred
Stock will be tacked to corresponding time periods under such convertible
preferred stock, and except that (x) the convertible preferred stock of the
Other Issuer will be convertible into the kind and amount of Redemption
Securities, cash and other assets that the holder of a share of TCI Group
Preferred Stock in respect of which such convertible preferred stock is issued
would have received in the Redemption Event, had such shares of TCI Group
Preferred Stock been converted prior to the Redemption Event, and (y) the
convertible preferred stock of TCI will not be convertible into, and the
holders thereof will have no conversion rights thereunder with respect to, the
Redeemable Capital Stock subject to the Redemption Event. The Mirror Preferred
Stock Condition shall be deemed to have been satisfied in connection with any
Redemption Event only if the Board of Directors of TCI determines (i) that
receipt of such convertible preferred stock of TCI and/or the Other Issuer in
exchange for the TCI Group Preferred Stock in connection with such Redemption
Event would not result in the recognition of gain or loss by the holders of
such TCI Group Preferred Stock for United States federal income tax purposes;
(ii) that an adjustment made in the Conversion Rate of the TCI Group Preferred
Stock with respect to such Redemption Event, as described in the immediately
preceding paragraph, would result in the recognition of gain or loss by the
holders of TCI Group Preferred Stock for United States federal income tax
purposes; or (iii) that receipt of Redemption Securities in redemption of the
Redeemable Capital Stock to be redeemed in such Redemption Event would result
in the recognition of gain or loss by the holders of such Redeemable Capital
Stock.
No adjustment in the Conversion Rate need be made unless the adjustment
would require an increase or decrease of at least 1% in the Conversion Rate;
but any such adjustment which is not made shall be carried forward and taken
into account in any subsequent adjustment. No adjustment to the Conversion
Rate need be made if the holders of TCI Group Preferred Stock may participate
in the transaction or in certain other cases.
For so long as any dividends are in arrears on the TCI Group Preferred
Stock or any class or series of TCI Preferred Stock ranking on a parity with
the TCI Group Preferred Stock which is entitled to payment of cumulative
dividends prior to the redemption, exchange, purchase, or other acquisition of
the TCI Group Preferred Stock, and until all dividends accrued up to the
immediately preceding dividend payment date on the TCI Group Preferred Stock
and such parity stock have been paid or declared and set apart so as to be
available for payment in full thereof and for no other purpose, neither TCI
nor any subsidiary thereof may redeem, exchange, purchase, or otherwise
acquire any shares of TCI Group Preferred Stock, any parity stock or any class
or series of its capital stock ranking junior to the TCI Group Preferred
Stock, or set aside any money or assets for such purpose, unless all of the
then outstanding shares of TCI Group Preferred Stock and such parity stock and
any other parity stock that by its terms is required to be redeemed under such
circumstances are redeemed. For so long as any dividends are in arrears on the
TCI Group Preferred Stock and until all dividends accrued up to the
immediately preceding dividend payment date on the TCI Group Preferred Stock
have been paid or declared and set apart so as to be available for payment in
full thereof and for no other purpose, TCI may not declare or pay any dividend
on or make any distribution with respect to any junior stock or parity stock
or set aside any money or assets for any such purpose, except for dividends
declared and paid on parity stock contemporaneously and on a pro rata basis
with dividends declared and paid on the TCI Group Preferred Stock. If TCI
fails to redeem shares of TCI Group Preferred Stock on a date fixed for
redemption, and until such shares are redeemed in full, TCI may not redeem any
junior stock or, except for contemporaneous pro rata redemptions, any parity
stock, declare or pay any dividend on or make any distribution with respect to
any junior stock, or, except as provided above, parity stock or set aside
money or assets for such purpose and
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neither TCI nor any subsidiary thereof may purchase or otherwise acquire any
TCI Group Preferred Stock, parity stock or junior stock or set aside any money
or assets for any such purpose. The failure of TCI to pay any dividends on any
class or series of parity stock or to redeem on any date fixed for redemption
any shares of TCI Group Preferred Stock will not prevent (i) the payment of
dividends on junior stock solely in shares of junior stock or the redemption,
purchase or other acquisition of junior stock solely in exchange for (together
with a cash adjustment for fractional shares, if any), or (but only in the
case of a failure to pay dividends on any parity stock) through the
application of the proceeds from the sale of, shares of junior stock; (ii) the
payment of dividends on any parity stock solely in shares of parity stock
and/or junior stock or the redemption, exchange, purchase, or other
acquisition of TCI Group Preferred Stock or parity stock solely in exchange
for (together with a cash adjustment for fractional shares, if any), or (but
only in the case of a failure to pay dividends on any parity stock) through
the application of the proceeds from the sale of, parity stock and/or junior
stock; or (iii) the purchase or acquisition of shares of TCI Group Preferred
Stock pursuant to a purchase or exchange offer made to all holders of
outstanding shares of TCI Group Preferred Stock, provided that the terms of
the purchase or exchange offer shall be identical for all shares of TCI Group
Preferred Stock and all accrued dividends on such shares shall have been paid
or shall have been declared and irrevocably set apart in trust for the benefit
of the holders of shares of TCI Group Preferred Stock and for no other
purpose.
The TCI Group Preferred Stock has no voting rights, except (i) as required
by the DGCL, and (ii) that the holders of TCI Group Preferred Stock have the
right to vote with the TCI Group Common Stock, the Liberty Media Group Common
Stock, the Class B Preferred Stock and any other class or series of TCI
Preferred Stock entitled to vote in any general election of directors, on the
basis of one vote per share, in any general election of directors of TCI. The
number of authorized shares of TCI Group Preferred Stock may be increased or
decreased (but not below the number of shares of TCI Group Preferred Stock
then outstanding) by the affirmative vote of the holders of at least 66 2/3%
of the then outstanding Voting Securities (as defined in the TCI Charter)
voting together as a single class.
SERIES H REDEEMABLE CONVERTIBLE LIBERTY MEDIA GROUP PREFERRED STOCK
Subject to the prior preferences and other rights of any class or series of
TCI Preferred Stock ranking prior to the Liberty Media Group Preferred Stock
with respect to the payment of dividends, the holders of Liberty Media Group
Preferred Stock will be entitled to receive cumulative dividends, when and as
declared by the TCI Board of Directors out of unrestricted funds legally
available therefor, in preference to dividends on TCI Common Stock and the
Class B Preferred Stock. Dividends accrue on the Liberty Media Group Preferred
Stock from and after January 25, 1997, on a daily basis at the rate of 4% per
annum of the Liquidation Preference per share, whether or not such dividends
are declared or funds are available for payment of dividends. The "Liquidation
Preference" of a share of Liberty Media Group Preferred Stock as of any date
in question means an amount equal to the sum of (i) the stated liquidation
value of $5.40 per share, plus (ii) an amount equal to all dividends accrued
on such share which have been added to and remain a part of the Liquidation
Preference as of such date, plus (iii) for purposes of determining liquidation
and redemption payments, an amount equal to all unpaid dividends accrued on
the sum of the amounts specified in clauses (i) and (ii) above during the
period from the immediately preceding dividend payment date through and
including the date in question. Dividends not paid on any dividend payment
date are added to the Liquidation Preference on such date and remain a part
thereof until such dividends are paid. The rate per annum at which dividends
will accrue on that portion of the Liquidation Preference that consists of
unpaid dividends that were added to the Liquidation Preference on a dividend
payment date and that remain unpaid on the next succeeding dividend payment
date will increase to 8.625% per annum from and after such next succeeding
dividend payment date. Accrued dividends are payable semiannually on each
February 1 and August 1 to holders of record of the shares on the preceding
January 15 and July 15, respectively, and, in the sole discretion of the TCI
Board of Directors, may be declared and paid in cash, in shares of TCI Group
Series A Common Stock or in any combination of the foregoing. Accrued
dividends not paid as provided above on any dividend payment date accumulate
and such accumulated unpaid dividends may be declared and paid in cash, shares
of TCI Group Series A Common Stock or any combination thereof at any time
without reference to any regular dividend payment, to holders of record of
Liberty Media Group Preferred Stock as of a special record date fixed by the
TCI Board of Directors.
Upon the liquidation, dissolution or winding up of TCI, the holders of
Liberty Media Group Preferred Stock will be entitled, after payment of
preferential amounts on any class or series of TCI Preferred Stock ranking
prior to the Liberty Media Group Preferred Stock with respect to liquidating
distributions, to receive from the assets of TCI available for distribution to
stockholders an amount in cash or property or a combination thereof, per
share, equal to the Liquidation Preference thereof as of the date of payment
or distribution.
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Subject to the rights of any class or series of TCI Preferred Stock ranking
prior to or on a parity with Liberty Media Group Preferred Stock, the Liberty
Media Group Preferred Stock is redeemable at the option of TCI, in whole at
any time or in part from time to time on or after February 1, 2001, for a
redemption price per share payable in cash equal to the Liquidation Preference
thereof on such redemption date. Subject to the rights of any class or series
of TCI Preferred Stock ranking prior to or on a parity with the Liberty Media
Group Preferred Stock, TCI shall redeem the Liberty Media Group Preferred
Stock out of funds legally available therefor on February 1, 2016, for a
redemption price per share payable in cash equal to the Liquidation Preference
thereof on such redemption date.
The Liberty Media Group Preferred Stock ranks senior to the TCI Group
Common Stock and Liberty Media Group Common Stock and the TCI Class B
Preferred Stock and on a parity with all other currently outstanding classes
and series of TCI Preferred Stock as to dividend rights, rights to redemption
and rights on liquidation.
Each share of Liberty Media Group Preferred Stock is currently convertible,
at the option of the holder, at any time prior to the close of business on the
business day immediately prior to the redemption thereof, into .2625 of one
share of LMG Series A Common Stock, subject to adjustment upon the occurrence
of certain events described below, and, upon conversion of shares of the
Liberty Media Group Preferred Stock each holder of Liberty Media Group
Preferred Stock is entitled to receive one additional share of LMG Series A
Common Stock for every two such shares received upon such conversion. The kind
and amount of securities, assets or other property that as of any date are
issuable or deliverable upon conversion of a share of Liberty Media Group
Preferred Stock are referred to hereafter as the "Conversion Rate." No
fractional shares of LMG Series A Common Stock or scrip will be issued upon
conversion of the Liberty Media Group Preferred Stock. A holder otherwise
entitled to a fractional share shall receive cash, which may be paid by check,
in an amount equal to the same fraction of the last reported sale price of a
share of LMG Series A Common Stock on the last full trading day prior to the
conversion date. Upon conversion of shares of Liberty Media Group Preferred
Stock, the rights of the holder of the shares so converted, as a holder
thereof, will cease.
To convert a share of Liberty Media Group Preferred Stock, a holder must
surrender the certificate(s) representing the shares to be converted at the
office of TCI or any transfer agent for the Liberty Media Group Preferred
Stock, which certificate(s) shall be duly endorsed to TCI or accompanied by
duly executed instruments of transfer to TCI, with signatures guaranteed (such
endorsements or instruments of transfer to be in form satisfactory to TCI),
together with a written notice to TCI at such office of the election to
convert the same, specifying the number of shares to be converted and the
name(s) (with addresses) in which the certificate(s) for shares of LMG Series
A Common Stock are to be issued. If any transfer is involved in the issuance
or delivery of any certificate(s) for shares of LMG Series A Common Stock in a
name other than that of the registered holder of the shares of Liberty Media
Group Preferred Stock surrendered for conversion, such holder shall also
deliver to TCI a sum sufficient to pay all transfer or similar taxes (or
evidence satisfactory to TCI of payment thereof). The date on which the
foregoing requirements are satisfied is the conversion date.
The Conversion Rate of the Liberty Media Group Preferred Stock is subject
to adjustment upon the occurrence of certain events, including (i) the payment
of a dividend or the making of a distribution in shares of LMG Series A Common
Stock to holders of LMG Series A Common Stock, (ii) the payment of a dividend
or the making of a distribution to holders of LMG Series A Common Stock
payable in shares of TCI's capital stock (other than LMG Series A Common Stock
or rights, warrants or options for its capital stock), (iii) the subdivision
of the outstanding shares of LMG Series A Common Stock into a greater number
of shares, (iv) the combination of the outstanding shares of LMG Series A
Common Stock into a smaller number of shares, (v) the issuance by
reclassification of the shares of LMG Series A Common Stock of any shares of
TCI's capital stock (other than rights, warrants or options for its capital
stock), (vi) the distribution to all holders of LMG Series A Common Stock of
rights, warrants or options entitling them (for a period expiring within 45
days after the record date for the determination of stockholders entitled to
receive such distribution) to purchase shares of LMG Series A Common Stock or
securities convertible into LMG Series A Common Stock (other than the LMG
Series B Common Stock) at a price per share (or, in the case of such
convertible securities, having a conversion price per share after adding
thereto an allocable portion of the exercise price of the right, warrant or
option to purchase such convertible securities) less than the Current Market
Price on the Determination Date (each as defined in the certificate of
designations for the Liberty Media Group Preferred Stock) per share of LMG
Series A Common Stock, (vii) the distribution to all holders of LMG Series A
Common Stock of assets or debt securities or rights, warrants or options to
purchase securities (excluding cash dividends or distributions other than any
Extraordinary Cash Dividend (as defined in the certificate of designations for
the Liberty Media Group Preferred Stock) and excluding dividends and
distributions referred to in the preceding clauses of this sentence), and
(viii) certain mergers, consolidations, sales of assets or binding share
exchanges. In the case of any such dividend or
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distribution on the LMG Series A Common Stock of shares of capital stock,
subdivision, combination or reclassification (other than a dividend,
distribution or reclassification in which the Liberty Media Group Preferred
Stock becomes convertible into shares of more than one class or series of TCI
capital stock, any of which is Redeemable Capital Stock, if TCI elects to
treat such dividend, distribution or reclassification as a distribution of
assets by TCI), the holder of each outstanding share of Liberty Media Group
Preferred Stock will have the right to convert such share of Liberty Media
Group Preferred Stock into the kind and amount of securities which such holder
would have owned immediately after such event if such share of Liberty Media
Group Preferred Stock had been converted immediately before the record date
for or effective date of, as the case may be, such event. In the case of any
such merger, consolidation, binding share exchange or sale of assets, the
holder of each outstanding share of Liberty Media Group Preferred Stock will
have the right to convert such share of Liberty Media Group Preferred Stock
into the kind and amount of securities, cash or other assets receivable upon
such transaction by a holder of the number of shares of LMG Series A Common
Stock into which such share of Liberty Media Group Preferred Stock could have
been converted immediately before the effective date of such transaction
(assuming, if applicable, such holder failed to exercise any rights of
election and received per share of LMG Series A Common Stock the kind and
amount of securities, cash or other assets received per share by a plurality
of the non-electing shares of the LMG Series A Common Stock). In the case of
any such issuance of rights, warrants or options which expire within 45 days
after the record date for the determination of stockholders entitled to
receive the rights, warrants or options, or any such distribution of assets,
debt securities or certain rights, warrants or options to purchase securities
(or, in the case of any dividend, distribution or reclassification in which
the Liberty Media Group Preferred Stock becomes convertible into shares of
more than one class or series of TCI capital stock, any of which is Redeemable
Capital Stock, if TCI elects to treat such dividend, distribution or
reclassification as a distribution of assets by TCI), the Conversion Rate will
be adjusted pursuant to formulas contained in the certificate of designations
for the Liberty Media Group Preferred Stock. In certain cases of distributions
of assets, debt securities or certain rights, warrants or options to purchase
securities to holders of LMG Series A Common Stock, rather than being entitled
to an adjustment in the Conversion Rate, the holder of a share of Liberty
Media Group Preferred Stock upon conversion thereof will be entitled to
receive, in addition to the shares of LMG Series A Common Stock into which
such share of Liberty Media Group Preferred Stock is convertible, the kind and
amount of assets, debt securities, rights, warrants or options comprising the
distribution that such holder would have received if such holder had converted
such share of Liberty Media Group Preferred Stock immediately prior to the
record date for determining the holders of LMG Series A Common Stock entitled
to receive the distribution.
Subject to the provisions described in the immediately following paragraph,
if (i) TCI redeems all the outstanding shares of LMG Series A Common Stock in
accordance with the terms thereof, or (ii) the holders of Liberty Media Group
Preferred Stock would be entitled to receive upon conversion thereof any other
Redeemable Capital Stock, and such Redeemable Capital Stock is redeemed,
exchanged or otherwise acquired in full, then, from and after either such
event (a "Redemption Event"), the holders of Liberty Media Group Preferred
Stock then outstanding shall be entitled to receive upon conversion of such
shares of Liberty Media Group Preferred Stock, in lieu of shares of LMG Series
A Common Stock or such Redeemable Capital Stock, as the case may be, the kind
and amount of securities, cash or other assets receivable upon such Redemption
Event by a holder of the number of shares of LMG Series A Common Stock or such
Redeemable Capital Stock, as the case may be, into which such shares of
Liberty Media Group Preferred Stock could have been converted immediately
prior to the effectiveness of such Redemption Event (assuming that such holder
failed to exercise any applicable right of election with respect thereto and
received per share of LMG Series A Common Stock or per share of such
Redeemable Capital Stock, as the case may be, the kind and amount of
securities, cash or other assets received per share by the holders of a
plurality of the non-electing shares thereof) and, thereafter, the holders of
the Liberty Media Group Preferred Stock shall have no other conversion rights
with respect to the LMG Series A Common Stock or such Redeemable Capital
Stock, as the case may be.
Notwithstanding the foregoing, the provisions described in the immediately
preceding paragraph shall not apply, and the holders of any shares of Liberty
Media Group Preferred Stock that are not exchanged as described in the second
sentence of this paragraph shall not have any conversion rights with respect
to the LMG Series A Common Stock or such Redeemable Capital Stock, as the case
may be, after the Redemption Event relating thereto, if (i) the redemption
price for the shares of LMG Series A Common Stock or such Redeemable Capital
Stock, as the case may be, is paid in whole or in part in securities
("Redemption Securities") of an issuer other than TCI (the "Other Issuer") and
(ii) in connection with such Redemption Event, the "Mirror Preferred Stock
Condition" is met, as such term is defined in the certificate of designations
for the Liberty Media Group Preferred Stock. Generally, the Mirror Preferred
Stock Condition shall be satisfied if TCI makes appropriate provisions so that
holders of Liberty Media Group Preferred Stock shall have the right,
exercisable on the effective date of the Redemption Event, to exchange their
shares of Liberty Media Group Preferred Stock for (A) if the
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Liberty Media Group Preferred Stock is not then convertible into any security,
cash or assets other than the stock that is the subject of the Redemption
Event (i.e., LMG Series A Common Stock or such Redeemable Capital Stock, as
the case may be), convertible preferred stock of the Other Issuer having a
liquidation preference equal to the liquidation preference of the Liberty
Group Preferred Stock to be so exchanged, as in effect on the effective date
of the Redemption Event, or (B) if the Liberty Media Group Preferred Stock is
then convertible into any security, cash or assets in addition to the stock
that is the subject of the Redemption Event (any such additional securities,
cash or assets, collectively, the "Additional Conversion Property"),
convertible preferred stock of TCI and convertible preferred stock of the
Other Issuer having an aggregate liquidation preference equal to the
liquidation preference of the Liberty Group Preferred Stock to be so
exchanged, as in effect on the effective date of the Redemption Event;
provided, however, that in either case, the convertible preferred stock into
which shares of Liberty Media Group Preferred Stock may be exchanged shall
otherwise have terms, conditions, designations, dividend rights, voting
powers, rights on liquidation and other preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions applicable to such convertible preferred stock
that are identical, or as nearly so as is practicable in the good faith
judgment of the Board of Directors of TCI, to those of the Liberty Media Group
Preferred Stock for which such convertible preferred stock is to be exchanged,
except that applicable time periods under the Liberty Media Group Preferred
Stock will be tacked to corresponding time periods under such convertible
preferred stock, and except that (x) the convertible preferred stock of the
Other Issuer will be convertible into the kind and amount of Redemption
Securities, cash and other assets that the holders of shares of Liberty Media
Group Preferred Stock in respect of which such convertible preferred stock is
issued would have received in the Redemption Event had such shares of Liberty
Media Group Preferred Stock been converted in full prior to the Redemption
Event, and (y) any convertible preferred stock of TCI will be convertible into
the Additional Conversion Property, and will not be convertible into, and the
holders thereof will have no conversion rights thereunder with respect to, the
LMG Series A Common Stock or Redeemable Capital Stock, as the case may be,
subject to the Redemption Event. The Mirror Preferred Stock Condition shall be
deemed to have been satisfied in connection with any Redemption Event only if
the Board of Directors of TCI determines (i) that receipt of such convertible
preferred stock of TCI and/or the Other Issuer in exchange for Liberty Media
Group Preferred Stock in connection with such Redemption Event would not
result in the recognition of gain or loss by the holders of such Liberty Media
Group Preferred Stock for United States federal income tax purposes; (ii) that
an adjustment made in the Conversion Rate of the Liberty Media Group Preferred
Stock with respect to such Redemption Event, as described in the immediately
preceding paragraph, would result in the recognition of gain or loss by the
holders of Liberty Media Group Preferred Stock for United States federal
income tax purposes; or (iii) that receipt of Redemption Securities in
redemption of the LMG Series A Common Stock or Redeemable Capital Stock to be
redeemed in such Redemption Event would result in the recognition of gain or
loss by the holders of such LMG Series A Common Stock or Redeemable Capital
Stock, as the case may be.
No adjustment in the Conversion Rate need be made unless the adjustment
would require an increase or decrease of at least 1% in the Conversion Rate;
but any such adjustment which is not made shall be carried forward and taken
into account in any subsequent adjustment. No adjustment to the Conversion
Rate need be made if the holders of Liberty Media Group Preferred Stock may
participate in the transaction or in certain other cases.
For so long as any dividends are in arrears on the Liberty Media Group
Preferred Stock or any class or series of TCI Preferred Stock ranking on a
parity with the Liberty Media Group Preferred Stock which is entitled to
payment of cumulative dividends prior to the redemption, exchange, purchase,
or other acquisition of the Liberty Media Group Preferred Stock, and until all
dividends accrued up to the immediately preceding dividend payment date on the
Liberty Media Group Preferred Stock and such parity stock have been paid or
declared and set apart so as to be available for payment in full thereof and
for no other purpose, neither TCI nor any subsidiary thereof may redeem,
exchange, purchase, or otherwise acquire any shares of Liberty Media Group
Preferred Stock, any parity stock or any class or series of its capital stock
ranking junior to the Liberty Media Group Preferred Stock, or set aside any
money or assets for such purpose, unless all of the then outstanding shares of
Liberty Media Group Preferred Stock and such parity stock and any other parity
stock that by its terms is required to be redeemed under such circumstances
are redeemed. For so long as any dividends are in arrears on the Liberty Media
Group Preferred Stock and until all dividends accrued up to the immediately
preceding dividend payment date on the Liberty Media Group Preferred Stock
have been paid or declared and set apart so as to be available for payment in
full thereof and for no other purpose, TCI may not declare or pay any dividend
on or make any distribution with respect to any junior stock or parity stock
or set aside any money or assets for any such purpose, except for dividends
declared and paid on parity stock contemporaneously and on a pro rata basis
with dividends declared and paid on the Liberty Media Group Preferred Stock.
If TCI fails to redeem shares of Liberty Media Group Preferred Stock on a date
fixed for redemption, and until such shares are redeemed in full, TCI may not
redeem any junior stock or, except for
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contemporaneous pro rata redemptions, any parity stock, declare or pay any
dividend on or make any distribution with respect to any junior stock or,
except as provided above, parity stock, or set aside money or assets for such
purpose and neither TCI nor any subsidiary thereof may purchase or otherwise
acquire any Liberty Media Group Preferred Stock, parity stock or junior stock
or set aside any money or assets for any such purpose. The failure of TCI to
pay any dividends on any class or series of parity stock or to redeem on any
date fixed for redemption any shares of Liberty Media Group Preferred Stock
will not prevent (i) the payment of dividends on junior stock solely in shares
of junior stock or the redemption, purchase or other acquisition of junior
stock solely in exchange for (together with a cash adjustment for fractional
shares, if any), or (but only in the case of a failure to pay dividends on any
parity stock) through the application of the proceeds from the sale of, shares
of junior stock; (ii) the payment of dividends on any parity stock solely in
shares of parity stock and/or junior stock or the redemption, exchange,
purchase, or other acquisition of Liberty Media Group Preferred Stock or
parity stock solely in exchange for (together with a cash adjustment for
fractional shares, if any), or (but only in the case of a failure to pay
dividends on any parity stock) through the application of the proceeds from
the sale of, parity stock and/or junior stock; or (iii) the purchase or
acquisition of shares of Liberty Media Group Preferred Stock pursuant to a
purchase or exchange offer made to all holders of outstanding shares of
Liberty Media Group Preferred Stock, provided that the terms of the purchase
or exchange offer shall be identical for all shares of Liberty Media Group
Preferred Stock and all accrued dividends on such shares shall have been paid
or shall have been declared and irrevocably set apart in trust for the benefit
of the holders of shares of Liberty Media Group Preferred Stock and for no
other purpose.
The Liberty Media Group Preferred Stock has no voting rights, except (i) as
required by the DGCL, and (ii) that the holders of Liberty Media Group
Preferred Stock have the right to vote with the TCI Group Common Stock, the
Liberty Media Group Common Stock, the Class B Preferred Stock and any other
class or series of TCI Preferred Stock entitled to vote in any general
election of directors, on the basis of one vote per share, in any general
election of directors of TCI. The number of authorized shares of Liberty Media
Group Preferred Stock may be increased or decreased (but not below the number
of shares of Liberty Media Group Preferred Stock then outstanding) by the
affirmative vote of the holders of at least 66 2/3% of the then outstanding
Voting Securities (as defined in the TCI Charter) voting together as a single
class.
ANTI-TAKEOVER CONSIDERATIONS
The DGCL, the TCI Charter and TCI's Bylaws contain provisions which may
serve to discourage or make more difficult a change in control of TCI without
the support of the TCI Board or without meeting various other conditions. The
principal provisions of the DGCL and the aforementioned corporate governance
documents are outlined below.
DGCL Section 203, in general, prohibits a "business combination" between a
corporation and an "interested stockholder" within three years of the date
such stockholder became an "interested stockholder," unless (i) prior to such
date the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder, (ii) upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, exclusive of shares owned
by directors who are also officers and by certain employee stock plans or
(iii) on or after such date, the business combination is approved by the board
of directors and authorized by the affirmative vote at a stockholders' meeting
of at least 66 2/3% of the outstanding voting stock which is not owned by the
interested stockholder. The term "business combination" is defined to
include, among other transactions between the interested stockholder and the
corporation or any direct or indirect majority-owned subsidiary thereof, a
merger or consolidation; a sale, pledge, transfer or other disposition
(including as part of a dissolution) of assets having an aggregate market
value equal to 10% or more of either the aggregate market value of all assets
of the corporation on a consolidated basis or the aggregate market value of
all the outstanding stock of the corporation; certain transactions that would
increase the interested stockholder's proportionate share ownership of the
stock of any class or series of the corporation or such subsidiary; and any
receipt by the interested stockholder of the benefit of any loans, advances,
guarantees, pledges or other financial benefits provided by or through the
corporation or any such subsidiary. In general, and subject to certain
exceptions, an "interested stockholder" is any person who is the owner of 15%
or more of the outstanding voting stock (or, in the case of a corporation with
classes of voting stock with disparate voting power, 15% or more of the voting
power of the outstanding voting stock) of the corporation, and the affiliates
and associates of such person. The term "owner" is broadly defined to include
any person that individually or with or through his or its affiliates or
associates, among other things, beneficially owns such stock, or has the right
to acquire such stock (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement or understanding or upon
the exercise of warrants or options or otherwise or has the right to vote such
stock pursuant to any agreement or understanding, or has an agreement or
understanding with the beneficial owner
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of such stock for the purpose of acquiring, holding, voting or disposing of
such stock. The restrictions of DGCL Section 203 do not apply to corporations
that have elected, in the manner provided therein, not to be subject to such
section or, with certain exceptions, which do not have a class of voting stock
that is listed on a national securities exchange or authorized for quotation
on an interdealer quotation system of a registered national securities
association or held of record by more than 2,000 stockholders. The TCI
Charter does not contain any provision "opting out" of the application of DGCL
Section 203 and TCI has not taken any of the actions necessary for it to "opt
out" of such provision. As a result, the provisions of Section 203 will
remain applicable to transactions between TCI and any of its "interested
stockholders."
The TCI Charter also contains certain provisions which could make a change
in control of TCI more difficult. For example, the TCI Charter requires,
subject to the rights, if any, of any class or series of TCI Preferred Stock,
the affirmative vote of 66 2/3% of the total voting power of the outstanding
shares of Voting Securities, voting together as a single class, to approve (i)
a merger or consolidation of TCI with, or into, another corporation, other
than a merger or consolidation which does not require the consent of
stockholders under the DGCL or a merger or consolidation which has been
approved by 75% of the members of the TCI Board (in which case, in accordance
with the DGCL, the affirmative vote of a majority of the total voting power of
the outstanding Voting Securities would, with certain exceptions, be required
for approval), (ii) the sale, lease or exchange of all or substantially all of
the property and assets of TCI or (iii) the dissolution of TCI. "Voting
Securities" is currently defined as the TCI Group Common Stock, the Liberty
Media Group Common Stock, the Telephony Group Common Stock, if issued, and any
class or series of TCI Preferred Stock entitled to vote generally with the
holders of TCI Common Stock on matters submitted to stockholders for a vote.
The TCI Charter also provides for a TCI Board of not less than three members,
divided into three classes of approximately equal size, with each class to be
elected for a three-year term at each annual meeting of stockholders. The
exact number of directors, currently nine, is fixed by the TCI Board. The
holders of TCI Group Common Stock, Liberty Media Group Common Stock, Telephony
Group Common Stock, if issued, Class B Preferred Stock, Series C Preferred
Stock, Series G Preferred Stock and Series H Preferred Stock, voting together
as a single class, vote in elections for directors. (The holders of TCI's
Series F Preferred Stock are by the terms thereof entitled to vote in the
election of directors; however, the DGCL prohibits the voting of such shares
because such shares are held by subsidiaries of TCI.) Stockholders of TCI do
not have cumulative voting rights.
The TCI Charter authorizes the issuance of 50,000,000 shares of Series
Preferred Stock, of which 33,901,240 remain available for issuance as of March
31, 1997. Under the TCI Charter, the TCI Board is authorized, without further
action by the stockholders of TCI, to establish the preferences, limitations
and relative rights of the Series Preferred Stock. In addition, 1,900,000,000
shares of TCI Group Common Stock, 825,000,000 shares of Liberty Media Group
Common Stock and 825,000,000 shares of Telephony Group Common Stock are
currently authorized by the TCI Charter, of which 1,100,294,776 shares of the
TCI Group Common Stock (as of March 31, 1997), 575,062,234 shares of the
Liberty Media Group Common Stock (as of March 31, 1997) and all 825,000,000
shares of Telephony Group Common Stock remain available for issuance (without
taking into consideration shares to be reserved 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, Telephony Group Common Stock and/or Series Preferred
Stock could occur in connection with an attempt to acquire control of TCI, and
the terms of such shares of Series Preferred Stock could be designed in part
to impede the acquisition of such control.
The TCI Charter requires the affirmative vote of 66 2/3% of the total
voting power of the outstanding shares of Voting Securities, voting together
as a single class, to approve any amendment, alteration or repeal of any
provision of the TCI Charter or the addition or insertion of other provisions
therein.
The TCI Charter and TCI's Bylaws provide that a special meeting of
stockholders will be held at any time, subject to the rights of the holders of
any class or series of TCI Preferred Stock, upon the call of the Secretary of
TCI upon (i) the written request of the holders of not less than 66 2/3% of
the total voting power of the outstanding shares of Voting Securities or (ii)
at the request of not less than 75% of the members of the TCI Board. Subject
to the rights of any class or series of TCI Preferred Stock, TCI's Bylaws
require that written notice of the intent to make a nomination at a meeting of
stockholders must be received by the Secretary of TCI, at TCI's principal
executive offices, not later than (a) with respect to an election of directors
to be held at an annual meeting of stockholders, 90 days in advance of such
meeting, and (b) with respect to an election of directors to be held at a
special meeting of stockholders, the close of business on the seventh day
following the day on which notice of such meeting is first given to
stockholders. The notice must contain: (1) the name and address of the
stockholder who intends to make the nomination and of the person or persons to
be nominated; (2) a representation that the stockholder is a holder of record
of TCI's Voting Securities entitled to vote at the meeting and intends to
appear in person or by proxy at the
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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 Commission had each
proposed nominee been nominated, or intended to be nominated, by the TCI
Board; and (5) the consent of each nominee to serve as a director of TCI if so
elected. Any actions to remove directors is required to be for "cause" (as
defined in the TCI Charter) and be approved by the holders of 66 2/3% of the
total voting power of the outstanding shares entitled to vote in the election
of directors.
LEGAL MATTERS
The validity of the Shares will be passed upon for the Company by Baker &
Botts, L.L.P., 599 Lexington Avenue, New York, New York 10022. Jerome H.
Kern, special counsel to Baker & Botts, L.L.P., is a director of the Company
and holds options to purchase shares of TCI Group Series A Common Stock and
LMG Series A Common Stock. Another partner of Baker & Botts, L.L.P. holds
restricted shares of LMG Series A Common Stock.
EXPERTS
The consolidated balance sheets of Tele-Communications, Inc. and
subsidiaries as of December 31, 1996 and 1995, 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, 1996, and all related
financial statement schedules, which appear in the December 31, 1996 Annual
Report on Form 10-K of Tele-Communications, Inc., have been incorporated by
reference herein and in the Registration Statement in reliance upon the
reports, dated March 24, 1997, 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, 1996 and 1995,
and the related combined statements of operations, equity, and cash flows for
each of the years in the three-year period ended December 31, 1996, which
appear in the December 31, 1996 Annual Report on Form 10-K of Tele-
Communications, Inc., have been incorporated by reference herein and in the
Registration Statement in reliance upon the report, dated March 24, 1997, 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
combined financial statements above refers to the effects of not consolidating
TCI Group's interest in Liberty Media Group for all periods that TCI Group has
an interest in Liberty Media Group.
The combined balance sheets of Liberty Media Group as of December 31, 1996
and 1995, and the related combined statements of operations, equity, and cash
flows for each of the years in the three-year period ended December 31, 1996,
which appear in the December 31, 1996 Annual Report on Form 10-K of Tele-
Communications, Inc., have been incorporated by reference herein and in the
Registration Statement in reliance upon the report, dated March 24, 1997, of
KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.
The consolidated balance sheet of Telewest Communications plc and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of operations and cash flows for each of the years in the three-
year period ended December 31, 1996, which appear in the December 31, 1996
Annual Report on Form 10-K of Tele-Communications, Inc., have been
incorporated by reference herein and in the Registration Statement in reliance
upon the report, dated March 11, 1997, of KPMG Audit Plc, chartered
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The consolidated balance sheets of Sprint Spectrum Holding Company, L.P.
and subsidiaries, development stage enterprises, as of December 31, 1996 and
1995 and the related consolidated statements of operations, changes in
partners' capital and cash flows for each of the two years in the period ended
December 31, 1996, for the period from October 24, 1994 (date of inception) to
December 31, 1994 and for the cumulative period from October 24, 1994 (date of
inception) to December 31, 1996, incorporated in this prospectus by reference
from Tele-Communications, Inc. Annual Report on Form 10-K for the year ended
December 31, 1996 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their
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report (which expresses an unqualified opinion and includes an explanatory
paragraph referring to the developmental stage of Sprint Spectrum Holding
Company, L.P. and subsidiaries), which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
The financial statements of American PCS, L.P., not separately presented in
this Prospectus, have been audited by Price Waterhouse LLP, independent
accountants, whose report thereon has been incorporated by reference herein.
Such financial statements, to the extent they have been included in the
financial statements of Sprint Spectrum Holding Company, L.P., have been so
included in the Annual Report on Form 10-K of Tele-Communications, Inc. in
reliance on their report given on the authority of said firm as experts in
auditing and accounting.
The combined financial statements of VII Cable which appear in TCI's
Current Report on Form 8-K dated June 19, 1996, have been incorporated by
reference herein 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 OR ANY PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH
DATE. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE
SPECIFICALLY OFFERED HEREBY OR OF ANY SECURITIES OFFERED HEREBY IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
Page
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Available Information.................................................. 3
Incorporation of Documents by Reference................................ 3
Risk Factors........................................................... 4
The Company............................................................ 5
Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends of TCI...................................................... 5
The Selling Stockholders and the Offered Shares........................ 5
Plan of Distribution................................................... 7
Description of TCI Capital Stock....................................... 8
TCI Common Stock..................................................... 8
TCI Preferred Stock.................................................. 35
Legal Matters.......................................................... 50
Experts................................................................ 50
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TELE-COMMUNICATIONS, INC.
Redeemable Convertible
TCI Group Preferred Stock,
Series G, par value $.01 per share
Redeemable Convertible
Liberty Media Group Preferred Stock,
Series H, par value $.01 per share
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PROSPECTUS
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May 13, 1997
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