<PAGE>
As filed with the Securities and Exchange Commission on December 3, 1997
REGISTRATION NO. 333-____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------------------
TELE-COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 5619 DTC Parkway 84-1260157
(State or other Englewood, Colorado 80111-3000 (I.R.S. Employer
jurisdiction of (303) 267-5500 Identification No.)
incorporation or (Address, including zip code, and
organization) telephone number, including area code,
of registrant's principal executive offices)
-----------------------------------
Stephen M. Brett, Esq.
Tele-Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
(303) 267-5500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------------------------
Copy to:
Robert W. Murray Jr., Esq.
Baker & Botts, L.L.P.
599 Lexington Avenue
New York, New York 10022
(212) 705-5000
---------------------------
Approximate date of commencement of proposed sale of the securities to the
public: From time to time after the effective date of the registration
statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [x]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE/(1)/ PRICE/(1)/ FEE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tele-Communications, Inc. Series A TCI Group Common Stock,
par value $1.00 per share............................... 10,090,000 shares $23
$349,818,125 $103,197
Tele-Communications, Inc. Series A TCI Ventures Group
Common Stock, par value $1.00 per share................. 5,190,000 shares $22.6875
=================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended, on the basis
of the average of the high and low sales prices reported on the Nasdaq National
Market on November 28, 1997.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
Subject to Completion, dated December 3, 1997
PROSPECTUS
TELE-COMMUNICATIONS, INC.
Tele-Communications, Inc. Series A TCI Group Common Stock ($1.00 par value)
Tele-Communications, Inc. Series A TCI Ventures Group Common Stock
($1.00 par value)
This Prospectus relates to (i) up to 10,090,000 shares of Tele-Communications,
Inc. Series A TCI Group Common Stock, par value $1.00 per share (the "Series A
TCI Group Common Stock"), of Tele-Communications, Inc., a Delaware corporation
(the "Company" or "TCI"), and (ii) up to 5,190,000 shares of Tele-
Communications, Inc. Series A TCI Ventures Group Common Stock, par value $1.00
per share (the "Series A TCI Ventures Group Common Stock"), of the Company, each
to be offered and sold by the holder or holders thereof (the "Selling
Stockholder(s)") from time to time (all such shares being hereinafter referred
to collectively as the "Shares"), which Shares may be acquired by the Selling
Stockholder(s) in connection with hedge positions established in connection with
swap transactions initiated under the Swap Facility (defined below) or from TCI
pursuant to the Master Agreement (defined below). See "Shares Being Offered and
Selling Stockholder(s)."
The Company's common stock, par value $1.00 per share (the "Common Stock"), is
comprised of six series: Series A TCI Group Common Stock, Tele-Communications,
Inc. Series B TCI Group Common Stock (the "Series B TCI Group Common Stock" and,
together with the Series A TCI Group Common Stock, the "TCI Group Common
Stock"), Tele-Communications, Inc. Series A Liberty Media Group Common Stock
(the "Series A Liberty Media Group Common Stock"), Tele-Communications, Inc.
Series B Liberty Media Group Common Stock (the "Series B Liberty Media Group
Common Stock" and, together with the Series A Liberty Media Group Common Stock,
the "Liberty Media Group Common Stock"), Series A TCI Ventures Group Common
Stock and Tele-Communications, Inc. Series B TCI Ventures Group Common Stock
(the "Series B TCI Ventures Group Common Stock" and, together with the Series A
TCI Ventures Group Common Stock, the "TCI Ventures Group Common Stock").
Both series of TCI Group Common Stock, both series of Liberty Media Group
Common Stock and both series of TCI Ventures Group Common Stock are,
respectively, identical in all respects, except (i) each share of Series B TCI
Group Common Stock, Series B Liberty Media Group Common Stock and Series B TCI
Ventures Group Common Stock has ten votes and each share of Series A TCI Group
Common Stock, Series A Liberty Media Group Common Stock and Series A TCI
Ventures Group Common Stock has one vote and (ii) each share of Series B TCI
Group Common Stock, Series B Liberty Media Group Common Stock and Series B TCI
Ventures Group Common Stock is convertible, at the option of the holder, into
one share of Series A TCI Group Common Stock, Series A Liberty Media Group
Common Stock and Series A TCI Ventures Group Common Stock, respectively. Shares
of Series A TCI Group Common Stock, Series A Liberty Media Group Common Stock
and Series A TCI Ventures Group Common Stock are not convertible into shares of
Series B TCI Group Common Stock, Series B Liberty Media Group Common Stock and
Series B TCI Ventures Group Common Stock, respectively. The TCI Group Common
Stock, the Liberty Media Group Common Stock and the TCI Ventures Group Common
Stock are intended to reflect the separate performances of the Company's TCI
Group, Liberty Media Group and TCI Ventures Group, respectively. See
"Description of Capital Stock."
Shares of the Series A TCI Group Common Stock and the Series A TCI Ventures
Group Common Stock trade on the Nasdaq National Market tier of The Nasdaq Stock
Market (the "Nasdaq National Market") under the symbols "TCOMA" and "TCIVA,"
respectively.
SEE "RISK FACTOR" ON PAGE 4 OF THIS PROSPECTUS FOR A DISCUSSION OF CERTAIN
RISKS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SHARES
OFFERED HEREBY.
Each of the Shares may be offered for sale and sold by the Selling
Stockholder(s) from time to time as described under the caption "Plan of
Distribution." To the extent required, the number and series of Shares to be
sold, the name of the Selling Stockholder(s), the purchase price, the public
offering price, if applicable, the name of any underwriter, agent or broker-
dealer, and any applicable commissions, discounts or other items constituting
compensation to such underwriters, agents or broker-dealers with respect to a
particular offering will be set forth in a supplement or supplements to this
Prospectus (each, a "Prospectus Supplement"). The aggregate proceeds to the
Selling Stockholder(s) from the sale of the Shares offered hereby will be the
purchase price of the Shares sold less (i) the aggregate commissions, discounts
and other compensation, if any, paid by the Selling Stockholder(s) to
underwriters, agents or broker-dealers (subject to certain exceptions) and (ii)
certain other expenses of the offering and sale of the Shares that will be the
responsibility of the Selling Stockholder(s). See "Shares Being Offered and
Selling Stockholder(s)." The Selling Stockholder(s) may also sell all or a
portion of the Shares pursuant to Rule 144 promulgated under the Securities Act
of 1933, as amended (the "Securities Act"), to the extent that such sales may be
made in compliance with such Rule. See "Plan of Distribution." The Company
will not receive any proceeds from the sale of the Shares by the Selling
Stockholder(s). The Company knows of no selling arrangement between any
underwriter, agent or broker-dealer and any Selling Stockholder(s).
The Selling Stockholder(s) and any broker-dealers or agents that participate
with any of the Selling Stockholder(s) 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.
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 ________________, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (together with all amendments
and exhibits, referred to as the "Registration Statement") under the Securities
Act, with respect to the Shares. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information pertaining to the Shares and the Company, reference is made
to the Registration Statement. The Registration Statement, including any
amendments, schedules and exhibits filed or incorporated by reference as a part
thereof, is available for inspection and copying as set forth below. Statements
contained herein or in any document incorporated herein by reference concerning
the provisions of any contract or other document are not necessarily complete
and, in each instance, reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement or such other
document. Each such statement is qualified in its entirety by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, 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 fiscal year ended December 31,
1996, as amended by Form 10-K/A (Amendment No. 1), (ii) the Company's Quarterly
Reports on Form 10-Q for the quarterly periods ended March 31, 1997, June 30,
1997 and September 30, 1997 (as amended by Form 10-Q/A (Amendment No. 1)),
respectively, (iii) the Company's Current Reports on Form 8-K, dated January 22,
1997, March 5, 1997, August 28, 1997 and September 9, 1997, respectively, and
(iv) 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
2
<PAGE>
the Shares described in this Prospectus shall be deemed to be incorporated
herein by reference and to be a part hereof from the respective dates of the
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, upon the written or oral
request of such person, a copy of any and all of the documents incorporated by
reference herein, other than certain exhibits to such documents (unless such
exhibits are specifically incorporated by reference into the documents that this
Prospectus incorporates). Such requests should be addressed to Stephen M.
Brett, Esq., Executive Vice President and General Counsel, Tele-Communications,
Inc., Terrace Tower II, 5619 DTC Parkway, Englewood, Colorado 80111-3000;
telephone (303) 267-5500.
3
<PAGE>
RISK FACTOR
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 $234 million and $446 million for the nine months ended September 30, 1997
and 1996, respectively, and $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, stock
compensation and restructuring charges) ($2,232 million and $1,695 million for
the nine months ended September 30, 1997 and 1996, respectively, and $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 ($883 million and $803 million for the nine months ended
September 30, 1997 and 1996, respectively, and $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 nine months ended
September 30, 1997 and 1996 and for the years ended December 31, 1996, 1995 and
1994 were 253%, 211%, 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 ($1,214 million and $841 million for the nine
months ended September 30, 1997 and 1996, respectively, and $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 exceeded net cash
provided by operating activities for the nine months ended September 30, 1996
and for the years ended December 31, 1996, 1995 and 1994. Net cash provided by
operating activities exceeded the amounts expended by the Company for its
investing activities for the nine months ended September 30, 1997.
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
4
<PAGE>
and providing programming for new television and telecommunications
technologies. The Company is organized into four principal business groups:
Domestic Cable and Communications; Programming; International Cable and
Programming; and Technology/Venture Capital. The Company is a Delaware
corporation and its principal executive offices are located at Terrace Tower II,
5619 DTC Parkway, Englewood, Colorado 80111-3000; telephone (303) 267-5500.
SHARES BEING OFFERED AND SELLING STOCKHOLDER(S)
On November 17, 1997, the Company entered into an ISDA Master Agreement
(together with the related schedule and confirmations, as amended from time to
time, the "Master Agreement") with Toronto Dominion (New York), Inc. ("TDNY").
Also on November 17, 1997, and in connection with the Master Agreement, the
Company entered into a letter agreement, dated November 17, 1997, with TD
Securities (USA) Inc., on its own behalf and as agent for TDNY (as amended from
time to time, the "Swap Facility"), providing for the initiation by TCI of swap
transactions for shares of Series A TCI Group Common Stock and/or Series A TCI
Ventures Group Common Stock having a maximum aggregate notional purchase price
of $300,000,000. Swap transactions initiated by TCI pursuant to the Swap
Facility will be accepted by TDNY subject to its ability to effect a hedge
position with respect to the proposed swap (by acquiring shares of Series A TCI
Group Common Stock or Series A TCI Ventures Group Common Stock, as the case may
be, from TCI, in private transactions, on the open market or otherwise).
Periodically during the term of the Swap Facility, swap transactions effected
pursuant to the Swap Facility will become subject to the Master Agreement and
will be detailed in a confirmation or restated confirmation to the Master
Agreement. The Swap Facility has a term that ends on October 30, 1998, and the
Master Agreement has a term that ends on September 30, 2000, in each case
subject to earlier termination upon the occurrence of certain events.
This Prospectus relates to up to 10,090,000 shares of Series A TCI Group
Common Stock and 5,190,000 shares of Series A TCI Ventures Group Common Stock
that may be acquired by the Selling Stockholder(s) (i) as a hedge in connection
with liability incurred pursuant to the Swap Facility or (ii) pursuant to the
terms of the Master Agreement.
The Company anticipates that equity swap transactions under the Master
Agreement will relate solely to shares of Series A TCI Group Common Stock and
shares of Series A TCI Ventures Group Common Stock as to which swap transactions
are originally initiated by the Company pursuant to the Swap Facility. Under the
Master Agreement, the Company may on the third business day (each an "Optional
Termination Date") after November 28, 1997, December 31, 1997, January 30, 1998,
February 27, 1998, March 31, 1998, April 30, 1998, May 29, 1998, June 30, 1998,
July 31, 1998, August 31, 1998, September 30, 1998, and October 30, 1998 and
each December 31, March 31, June 30, and September 30 thereafter (each, a "Reset
Date"), and shall on the third business day after September 30, 2000 (the
"Termination Date"), settle, in whole or part, with respect to the shares of
Series A TCI Group Common Stock and/or Series A TCI Ventures Group Common Stock
(as the case may be) then subject to the Master Agreement, except that
settlement on the Termination Date must be with respect to all shares of Series
A TCI Group Common Stock and/or Series A TCI Ventures Group Common Stock then
subject to the Master Agreement. TCI may elect any of three settlement methods
under the Master Agreement. The three methods consist of (i) physical
settlement ("Physical Settlement"), pursuant to which the Selling Stockholder(s)
will be required to deliver physical shares to TCI in return for cash in an
amount equal to the purchase price (the "Purchase Price") therefor determined
pursuant to the Master Agreement up to a maximum price per share with respect to
each series of stock; (ii) cash settlement ("Cash Settlement"), pursuant to
which TCI will be required to pay to the Selling Stockholder(s), or the Selling
Stockholder(s) will
5
<PAGE>
be required to pay to TCI, the difference between the market value (as
determined pursuant to the Master Agreement) of the shares subject to Cash
Settlement and the Purchase Price, and (iii) net share settlement ("Net Share
Settlement"), pursuant to which the Selling Stockholder(s) will be required to
deliver to TCI, or TCI will be required to deliver to the Selling
Stockholder(s), shares of the same series as that which are the subject of the
Net Share Settlement with a market value equal to the difference between the
market value of the shares subject to the Net Share Settlement and the Purchase
Price therefor. If the market value of shares of Series A TCI Group Common Stock
or Series A TCI Ventures Group Common Stock that are subject to settlement is
less than the Purchase Price therefor, and TCI elects Cash Settlement or Net
Share Settlement, then TCI will be required to pay the difference to the Selling
Stockholder(s) in cash or in shares of the same series with a market value equal
to such difference (a "Share Settlement Payment"), respectively. The Selling
Stockholder(s) will have the right to sell any shares received from TCI pursuant
to a Net Share Settlement within a period of 10 business days after receipt
thereof, and if the proceeds from any such sale are less than the amount that
the Selling Stockholder(s) would have received had TCI elected Cash Settlement
(appropriately prorated if less than all of the shares received are resold),
then TCI will be required to pay to the Selling Stockholder(s) such difference
in cash or in additional shares (with any additional shares subject to the same
resale provisions).
On the third Business Day after each Reset Date, TCI may be obligated
pursuant to the Master Agreement to make a payment (a "Reset Payment") to the
Selling Stockholder(s) in an amount calculated pursuant to the Master Agreement
based upon the market value of shares of Series A TCI Group Common Stock or
Series A TCI Ventures Group Common Stock, as the case may be. TCI may satisfy
any such obligation by delivering to the Selling Stockholder(s) shares of Series
A TCI Group Common Stock or Series A TCI Ventures Group Common Stock, as the
case may be (a "Share Reset Payment"), with a market value equal to the amount
of the Reset Payment. The Selling Stockholder(s) may resell any shares received
by them pursuant to a Share Reset Payment, and the makewhole provisions
described above with respect to the sale of shares received in a Share
Settlement Payment will apply to any such resales.
In connection with the signing of the Master Agreement and the Swap
Facility, TDNY has agreed to vote or cause to be voted all shares of Series A
TCI Group Common Stock and Series A TCI Ventures Group Common Stock acquired by
it pursuant to the Master Agreement or in connection with hedges it establishes
pursuant to the Swap Facility on any matter submitted for a vote of holders
thereof in such proportion as is equal to the proportion of votes cast with
respect to each such series of stock in favor of and against such matter by all
other holders of such series of stock.
Shares of Series A TCI Group Common Stock and/or Series A TCI Ventures
Group Common Stock acquired by the Selling Stockholder(s) pursuant to a Net
Share Settlement, a Share Settlement Payment or a Share Reset Payment (including
pursuant to the makewhole provisions thereof) under the Master Agreement, and
any shares of Series A TCI Group Common Stock and Series A TCI Ventures Group
Common Stock acquired by the Selling Stockholder(s) from TCI or any of its
affiliates to hedge their liability under any swap transactions initiated
pursuant to the Swap Facility, will be "restricted securities" (as such term is
defined in Rule 144(a)(3) under the Securities Act) and may not be offered or
sold other than in a transaction that is registered under the Securities Act or
that is exempt from such registration. In addition, shares of Series A TCI Group
Common Stock and/or Series A TCI Ventures Group Common Stock
6
<PAGE>
acquired from non-affiliates of TCI by the Selling Stockholder(s) to hedge their
liability with respect to a swap transaction initiated by TCI under the Swap
Facility and subsequently offered and resold by the Selling Stockholder(s) in
connection with a Cash Settlement or Net Share Settlement by TCI under the
Master Agreement may be deemed "restricted securities," in which case such
shares may only be sold in a transaction that is registered under the Securities
Act or that is exempt from such registration. In order to afford the Selling
Stockholder(s) the ability to freely offer and sell any "restricted securities"
acquired by them pursuant to transactions effected by them in connection with
the Swap Facility or the Master Agreement, the Company has entered into a
Registration Rights Agreement, dated as of November 17, 1997 (the "Registration
Rights Agreement"), with TDNY, a copy of which is included as an exhibit to the
Registration Statement of which this Prospectus comprises a part. See
"Available Information." TDNY may transfer, in whole or in part, its rights
under the Registration Rights Agreement to any person that effects swap
transactions with TCI pursuant to the Swap Facility or acquires shares of Series
A TCI Group Common Stock and/or Series A TCI Ventures Group Common Stock
pursuant to any Net Share Settlement, Share Settlement Payment or Share Reset
Payment under the Master Agreement. See "--Selling Stockholder(s)" below.
Pursuant to the Registration Rights Agreement the Company has agreed to register
the offer and resale of up to 10,090,000 shares of Series A TCI Group Common
Stock and 5,190,000 shares of Series A TCI Ventures Group Common Stock by the
Selling Stockholder(s), which Shares may be acquired (and in certain cases
sold) by the Selling Stockholder(s) in a manner that causes such Shares to be
"restricted securities" within the meaning of Rule 144. Under the Registration
Rights Agreement, the Company has agreed to use its best efforts to keep the
Registration Statement of which this Prospectus comprises a part continuously
effective under the Securities Act until the later of (x) the final settlement
of all amounts due to the Selling Stockholder(s) from the Company under the
Master Agreement and (y) the earlier of (A) the sale of all Shares which are
Registrable Shares (as such term is defined in the Registration Rights
Agreement) and (B) such time as there are no longer any Registrable Shares.
The Company has also agreed with the Selling Stockholder(s) to register
additional shares of Series A TCI Group Common Stock and/or Series A TCI
Ventures Group Common Stock for offer and resale by the Selling Stockholder(s)
to the extent the Company and the Selling Stockholder(s) agree such additional
shares are (i) not covered by the Registration Rights Agreement or the
Registration Statement of which this Prospectus comprises a part and (ii)
required to be registered under the Securities Act to permit the offer and the
resale thereof by the Selling Stockholder(s).
The Company has agreed to indemnify the Selling Stockholder(s) 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
payments that the Selling Stockholder(s) may be required to make in respect
thereof.
Selling Stockholder(s). As of November 18, 1997, TDNY, which at that date
constituted the sole Selling Stockholder, held the shares of Series A TCI Group
Common Stock and Series A TCI Ventures Group Common Stock set forth in the table
below, which table also sets forth the
7
<PAGE>
percentage of the outstanding shares of Series A TCI Group Common Stock and
Series A TCI Ventures Group Common Stock which such number of shares represented
at that date and the maximum number of Shares to be offered by such Selling
Stockholder pursuant to this Prospectus. The Selling Stockholder(s) may also
include assignees of TDNY under the Swap Facility and/or the Master Agreement
that (i) acquire shares of Series A TCI Group Common Stock and/or Series A TCI
Ventures Group Common Stock pursuant to the Master Agreement or from TCI or
affiliates of TCI when establishing hedge positions in connection with the
initiation of swap transactions by TCI under the Swap Facility, or (ii) acquire
shares of Series A TCI Group Common Stock and/or Series A TCI Ventures Group
Common Stock from non-affiliates of TCI to hedge their liability with respect to
a swap transaction initiated by TCI under the Swap Facility, which shares are
then offered and resold by such assignees in connection with a Cash Settlement
or Net Share Settlement by TCI under the Master Agreement. To the extent
required, the name of the Selling Stockholder(s) in connection with any
particular sale of Shares, the number of Shares to be sold and the number and
(if one percent or more) the percentage of the outstanding shares of Series A
TCI Group Common Stock and Series A TCI Ventures Group Common Stock to be owned
by the Selling Stockholder(s) after completion of any offering hereunder will be
specified in a Prospectus Supplement.
<TABLE>
<CAPTION>
Maximum
Number of Number of
Maximum Shares of Shares of Percent of
Number Percent of Series A TCI Series A TCI Class of
Number of Shares of Shares of Class of Ventures Ventures Series A TCI
of Series A TCI Series A TCI Group Group Ventures
Series A TCI Group Group Common Group Common Stock Common Stock Group
Name of Selling Common Stock Stock to be Common Beneficially to be Offered Common
Stockholder(s) Beneficially Owned Offered Hereby Stock /(1)/ Owned Hereby Stock /(2)/
-------------- ------------------ -------------- ----------- ----- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Toronto Dominion 4,112,124/(3)/ 10,090,000/(4)/ */(4)/ 4,412,036/(3)/ 5,190,000/(4)/ 2.3%/(4)/
(New York), Inc.
</TABLE>
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* Less than 1%.
/(1)/ Based on 468,643,708 shares of Series A TCI Group Common Stock outstanding
as of October 31, 1997 (which number does not include shares of Series A
TCI Group Common Stock held in treasury or by subsidiaries of TCI).
/(2)/ Based on 188,661,300 shares of Series A TCI Ventures Group Common Stock
outstanding as of October 31, 1997 (which number does not include shares
of Series A TCI Ventures Group Common Stock held in treasury or by
subsidiaries of TCI).
/(3)/ Includes shares held by affiliates of the Selling Stockholder(s).
/(4)/ TDNY may offer and sell pursuant to this Prospectus an undetermined number
of Shares, if any, acquired pursuant to the Master Agreement or in
connection with hedges established in connection with swap transactions
initiated by TCI pursuant to the Swap Facility, but in no event may the
aggregate number of Shares so sold by TDNY (together with any other
Selling Stockholder(s)) pursuant to this Prospectus exceed 10,090,000
shares of Series A TCI Group Common Stock and 5,190,000 shares of Series A
TCI Ventures Group Common Stock (as such number may be adjusted by stock
splits, stock dividends or similar transactions).
TDNY, other Selling Stockholder(s) and their respective affiliates may
from time to time offer and sell shares of Series A TCI Group Common Stock and
Series A TCI Ventures Group Common Stock acquired by them in transactions not
involving the Swap Facility or the Master Agreement or which are beneficially
owned by their clients. The Registration Statement of which this Prospectus
forms a part does not apply to those shares, and covers solely shares that are
acquired by the Selling Stockholder(s) (i) under the Master Agreement
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<PAGE>
or (ii) in connection with hedges established in connection with swap
transactions initiated by TCI under the Swap Facility and which are subsequently
offered and resold in connection with TCI's election to settle under the Master
Agreement through Cash Settlement or Net Share Settlement.
Except as described below or elsewhere in this Prospectus or in any
Prospectus Supplement, neither the Company nor any of its affiliates has had any
material relationship with the Selling Stockholder(s) within the past three
years. The Selling Stockholder(s) and/or affiliates thereof have (i)
established existing credit facilities for the Company and its affiliates having
an aggregate amount of approximately $529 million and (ii) entered into
derivative transactions (including various swap transactions) with the Company
and its subsidiaries having an aggregate notional amount of approximately $579
million. Additionally, within the past three years, the Selling Stockholder(s)
and/or affiliates thereof had established credit facilities for the Company's
affiliates having an aggregate amount of approximately $161 million, which
facilities have since terminated. Any other material relationship between the
Company or any of its affiliates, on the one hand, and the Selling
Stockholder(s), on the other, within three years prior to the date of a sale by
the Selling Stockholder(s) hereunder will be described in the Prospectus
Supplement relating to such sale. The Company has agreed to bear all costs and
expenses of registering the Shares under the Securities Act and state securities
laws, including registration fees, its legal and accounting fees and expenses
and costs relating to the printing and distribution of this Prospectus. The
Selling Stockholder(s) will be responsible for any underwriting discounts,
selling commissions or other compensation payable to underwriters, agents, or
broker-dealers, except that the Company has agreed to pay a commission of $0.02
per share for Shares sold in the Nasdaq National Market pursuant to the Master
Agreement.
PLAN OF DISTRIBUTION
Any sales of the Shares by the Selling Stockholder(s) may be effected from
time to time in one or more of the following transactions: (a) through brokers,
acting as agent in transactions (which may involve block transactions), in
special offerings, in the over-the-counter market, or otherwise, at market
prices obtainable at the time of sale, at prices related to such prevailing
market prices, at negotiated prices or at fixed prices; (b) to underwriters who
will acquire the Shares for their own account and resell them in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale (any public offering
price and any discount or concessions allowed or reallowed or paid to dealers
may be changed from time to time); (c) directly or through brokers or agents in
private sales at negotiated prices; (d) to lenders pledged as collateral to
secure loans, credit or other financing arrangements and any subsequent
foreclosure, if any, thereunder; (e) through short sales, option exercises or
other derivative transactions; or (f) by any other legally available means.
Also, offers to purchase Shares may be solicited by agents designated by the
Selling Stockholder(s) from time to time. Underwriters or other agents
participating in an offering made pursuant to this Prospectus and the
Registration Statement of which this Prospectus comprises a part (as each may be
amended or supplemented from time to time) may receive underwriting discounts or
commissions under the Securities Act and
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<PAGE>
discounts or concessions may be allowed or reallowed or paid to dealers, and
brokers or agents participating in such transactions may receive brokerage or
agent's commissions or fees.
The Company has been advised by TDNY, which as of the date of this
Prospectus is the sole Selling Stockholder, that it has not entered into any
arrangement with an underwriter, agent or broker-dealer for the sale of the
Shares.
The Selling Stockholder(s) may also sell all or a portion of the Shares
pursuant to Rule 144 promulgated under the Securities Act, to the extent that
such sales may be made in compliance with such Rule.
The Selling Stockholder(s) and any agents or broker-dealers that
participate with the Selling Stockholder(s) 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 of Shares to be sold, the purchase price, the public
offering price, if applicable, the name of any underwriter, agent or broker-
dealer, and any applicable commissions, discounts or other items constituting
compensation to such underwriters, agents or broker-dealers with respect to the
particular sale.
DESCRIPTION OF CAPITAL STOCK
The following description of certain terms of the Common Stock and the
Preferred Stock (defined below) does not purport to be complete and is qualified
in its entirety by reference to the Restated Certificate of Incorporation, as
amended, of TCI (including the Certificate of Designations with respect to each
outstanding Series Preferred Stock (defined below)) (the "Charter"), each of
which is incorporated herein by reference.
GENERAL
The Charter currently provides that the Company is authorized to issue
3,602,375,096 shares of capital stock, including (i) 3,550,000,000 shares of
Common Stock, of which 1,750,000,000 shares are designated Series A TCI Group
Common Stock, 150,000,000 shares are designated Series B TCI Group Common Stock,
750,000,000 shares are designated Series A Liberty Media Group Common Stock,
75,000,000 shares are designated Series B Liberty Media Group Common Stock,
750,000,000 shares are designated Series A TCI Ventures Group Common Stock and
75,000,000 shares are designated Series B TCI Ventures Group Common Stock and
(ii) 52,375,096 shares of preferred stock (the "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
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<PAGE>
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"). All of the shares of Class A Preferred Stock have previously
been redeemed and retired and may not be reissued, thereby reducing the number
of authorized shares of Preferred Stock. 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 may not be reissued as Series E Preferred Stock.
COMMON STOCK
As of September 30, 1997, 472,480,384 shares of Series A TCI Group Common
Stock (net of treasury stock and shares held by subsidiaries of the Company),
38,544,680 shares of Series B TCI Group Common Stock (net of treasury stock and
shares held by subsidiaries of the Company), 223,203,786 shares of Series A
Liberty Media Group Common Stock (net of treasury stock and shares held by
subsidiaries of the Company), 21,175,465 shares of Series B Liberty Media Group
Common Stock (net of shares held by subsidiaries of the Company), 188,661,300
shares of Series A TCI Ventures Group Common Stock and 16,266,400 shares of
Series B TCI Ventures Group Common Stock had been issued and were outstanding;
and 125,645,656 shares of Series A TCI Group Common Stock, 9,112,500 shares of
Series B TCI Group Common Stock, 4,436,245 shares of Series A Liberty Media
Group Common Stock and 2,278,125 shares of Series B Liberty Media Group Common
Stock were held by subsidiaries of the Company. In addition, as of September
30, 1997, 7,296,324 shares of Series A TCI Group Common Stock, 30,545,864 shares
of Series B TCI Group Common Stock and 3,035,750 shares of Series A Liberty
Media Group Common Stock were held in treasury. As of that date, 114,611,215
shares of Series A TCI Group Common Stock, 31,584,184 shares of Series A Liberty
Media Group Common Stock and 18,547,213 shares of Series A TCI Ventures Group
Common Stock were reserved for issuance upon conversion, exchange or exercise of
outstanding convertible or exchangeable securities (other than the Series B TCI
Group Common Stock, the Series B Liberty Media Group Common Stock and the Series
B TCI Ventures Group Common Stock, and other than the Series F Preferred Stock
held by subsidiaries of the Company) and options. In addition, the Company has
reserved a number of shares of Series A TCI Group Common Stock equal to the
number of shares of Series B TCI Group Common Stock outstanding, a number of
shares of Series A Liberty Media Group Common Stock equal to the number of
shares of Series B Liberty Media Group Common Stock outstanding and a number of
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shares of Series A TCI Ventures Group Common Stock equal to the number of shares
of Series B TCI Ventures Group Common Stock outstanding, in either case for
issuance upon conversion, at the option of the holder, of the Series B TCI Group
Common Stock, the Series B Liberty Media Group Common Stock and the Series B TCI
Ventures Group Common Stock, respectively. Additionally, subsidiaries of the
Company own shares of Series F Preferred Stock, which are convertible into an
aggregate of 416,528,172 shares of Series A TCI Group Common Stock.
CERTAIN DEFINITIONS
As used herein, the following terms have the meanings specified below:
"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.
"Adjusted TCI Ventures Group Outstanding Interest Fraction" means a
fraction the numerator of which is the number of outstanding shares of TCI
Ventures 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 TCI Ventures Group Inter-Group Interest and (c) the number of shares of TCI
Ventures Group Common Stock issuable upon conversion, exercise or exchange of
Pre-Exchange Offer Securities.
"Appraisal Date," with respect to any determination of the Liberty Media
Group Private Market Value or the TCI Ventures Group Private Market Value, shall
mean 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 Series A Liberty
Media Group Common Stock that the Company had, prior to the record date for the
Liberty Media Group Distribution on August 10, 1995, agreed to issue, but as of
such record date had not issued, and (ii) the shares of Series A Liberty Media
Group Common Stock that are issuable upon conversion, exercise or exchange of
Convertible Securities that the Company had, prior to the record date for the
Liberty Media Group Distribution, agreed to issue, but as of such record date
had not issued, in each case including obligations of the Company to issue
shares of the Company's Class A Common Stock, par value $1.00 per share (which
has been redesignated Series A TCI Group Common Stock), which as a result of the
Liberty Media Group Distribution, constitute obligations to issue, among other
securities, Series A Liberty Media Group Common Stock or Convertible Securities
which are
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<PAGE>
convertible into or exercisable or exchangeable for Series A Liberty Media Group
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 Series A Liberty Media Group
Common Stock and dividends or distributions of shares of Series A Liberty Media
Group Common Stock or Series B Liberty Media Group Common Stock to holders of
Series A Liberty Media Group Common Stock and other reclassifications of the
Series A Liberty Media Group Common Stock, in each case occurring (or the record
date for which occurs) after the Liberty Media Group Distribution. The shares of
Series A Liberty Media Group Common Stock issuable upon conversion of the Series
H Preferred Stock constitute Committed Acquisition Shares.
"Convertible Securities" means any securities of the Company (other than
any series of Common Stock) or any Subsidiary thereof that are convertible into,
exchangeable for or evidence the right to purchase any shares of any series of
Common Stock, whether upon conversion, exercise, exchange, pursuant to
antidilution provisions of such securities or otherwise.
"Disposition" means the sale, transfer, assignment or other disposition
(whether by merger, consolidation, sale or contribution of assets or stock or
otherwise) of properties or assets.
"DGCL" means the General Corporation Law of the State of Delaware.
"Exchange Offers" means those certain offers made by the Company to
exchange (i) one share of Series A TCI Ventures Group Common Stock for each
share of Series A TCI Group Common Stock properly tendered and not validly
withdrawn, up to 188,661,300 shares of Series A TCI Group Common Stock (the
"Series A Maximum"), and (ii) one share of Series B TCI Ventures Group Common
Stock for each share of Series B TCI Group Common Stock properly tendered and
not validly withdrawn, up to 16,266,400 shares of Series B TCI Group Common
Stock (the "Series B Maximum"), upon the terms and subject to the conditions set
forth in the Offering Circular of the Company, dated August 7, 1997, and the
related letters of transmittal.
"First Appraiser" means, with respect to any determination of the Liberty
Media Group Private Market Value or the TCI Ventures Group Private Market Value,
an investment banking firm of recognized national standing selected by the
Company to make such determination.
"Higher Appraised Amount" means, with respect to any determination of the
Liberty Media Group Private Market Value or the TCI Ventures 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.
"Initial Ventures Options" means those certain options to purchase shares
of Series A TCI Ventures Group Common Stock that were issued effective upon the
consummation of the Exchange Offers, in connection with the adjustment of the
Adjustable Options. For purposes of this definition,
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<PAGE>
the term "Adjustable Options" means those options to purchase shares of Series A
TCI Group Common Stock that were outstanding immediately prior to the
consummation of the Exchange Offers under any Existing Stock Plan (as defined
below), which options the Board of Directors and, if applicable, the committee
of the Board of Directors charged with the administration of such Existing Stock
Plan, determined to adjust for the effects of the Exchange Offers by the
issuance, in substitution for and in cancellation of each such Adjustable Option
effective upon the consummation of the Exchange Offers, of an Initial Ventures
Option to purchase a number of shares of Series A TCI Ventures Group Common
Stock initially equal to 30% (rounded up to the next whole number) of the number
of shares of Series A TCI Group Common Stock that would have been issuable upon
exercise of such Adjustable Option immediately prior to the consummation of the
Exchange Offers, and an option to purchase a number of shares of Series A TCI
Group Common Stock equal to 70% (rounded down to the next whole number) of the
number of shares of Series A TCI Group Common Stock that would have been
issuable upon exercise of such Adjustable Option immediately prior to the
consummation of the Exchange Offers, together with such other securities as were
then issuable upon exercise of such Adjustable Option (and, in each case, having
such other terms consistent with the terms of the Adjustable Option for which
they are exchanged as the Board of Directors or the committee, as applicable,
determines). The term "Existing Stock Plans" means each of the following: the
Tele-Communications, Inc. 1994 Stock Incentive Plan, the Tele-Communications,
Inc. 1995 Employee Stock Incentive Plan and the Tele-Communications, Inc. 1996
Incentive Plan.
"Inter-Group Interest" of the TCI Group in the Liberty Media Group or the
TCI Ventures Group means any common stockholders' equity value of the Company
attributable to the Liberty Media Group or the TCI Ventures Group, as the case
may be, that is not represented by outstanding shares of Liberty Media Group
Common Stock or TCI Ventures 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 TCI Ventures Group is
represented by the Number of Shares Issuable with Respect to the TCI Ventures
Group Inter-Group Interest.
"Liberty Media Group" means as of any date of determination thereof:
(i) the interest of the Company or any of its subsidiaries in
Liberty Media Corporation or any of its subsidiaries (including any
successor thereto by merger, consolidation or sale of all or substantially
all of its assets, whether or not in connection with a Related Business
Transaction) and their respective properties and assets,
(ii) all assets and liabilities of the Company or any of its
subsidiaries to the extent attributed to any of the properties or assets
referred to in clause (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
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(iv) the interest of the Company or any of its subsidiaries in the
businesses, assets and liabilities acquired by the Company or any of its
subsidiaries for the Liberty Media Group, as determined by the Board of
Directors;
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 the Company attributed to the
Liberty Media Group for which provision will be made as described in the
penultimate sentence of this definition), the Liberty Media Group will no longer
include an amount of assets or properties equal to the aggregate amount of such
kind of assets or properties so paid in respect of shares of Liberty Media Group
Common Stock multiplied by a fraction the numerator of which is equal to the
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 the Company pays a dividend
or makes any other distribution with respect to shares of Liberty Media Group
Common Stock payable in securities of the Company attributed to the Liberty
Media Group other than Liberty Media Group Common Stock, the TCI Group will be
deemed to hold an amount of such other securities equal to the amount so
distributed multiplied by the fraction specified in clause (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. The Company may also, to the extent any
such other securities constitute Convertible Securities which are at the time
convertible, exercisable or exchangeable, cause such Convertible Securities
deemed to be held by the TCI Group to be deemed to be converted, exercised or
exchanged (and to the extent the terms of such Convertible Securities require
payment or delivery of consideration in order to effect such conversion,
exercise or exchange, the Liberty Media Group will in such case include an
amount of the kind of properties or assets required to be paid or delivered as
such consideration for the amount of the Convertible Securities deemed
converted, exercised or exchanged as if such Convertible Securities were
outstanding), in which case such Convertible Securities will no longer be deemed
to be held by the TCI Group or attributed to the Liberty Media Group.
"Liberty Media Group Distribution" shall mean the share distribution of
shares of Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock made to the holders of record of Series A TCI Group Common
Stock and Series B TCI Group Common Stock as of the close of business on August
4, 1995.
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"Liberty Media Group Inter-Group Interest Fraction," as of any date, shall
mean a fraction the numerator of which is the Number of Shares Issuable with
Respect to the Liberty Media 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 Liberty Media Group Inter-Group Interest as of such date and (b)
the aggregate number of shares of Liberty Media Group Common Stock outstanding
as of such date.
"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 the
Company 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 TCI Ventures Group), (b) any transaction costs, including, without
limitation, any legal, investment banking and accounting fees and expenses and
(c) any liabilities and other obligations (contingent or otherwise) of, or
attributed to, the Liberty Media Group, including, without limitation, any
indemnity or guarantee obligations incurred in connection with the Disposition
or any liabilities for future purchase price adjustments and any preferential
amounts plus any accumulated and unpaid dividends and other obligations (without
duplication of amounts allocated for the satisfaction of the Company's
obligations with respect to Pre-Distribution Convertible Securities and
Committed Acquisition Shares issuable which are included in the determination of
the Adjusted Liberty Media Group Outstanding Interest Fraction) in respect of
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 Board of Directors
shall determine the value of such securities or property, including for the
purpose of determining the equivalent value thereof if the Board of Directors
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."
"Liberty Media Group Outstanding Interest Fraction," as of any date, shall
mean a fraction the numerator of which is the aggregate number of shares of
Liberty Media Group Common Stock outstanding on such date and the denominator of
which is the sum of (a) such aggregate number of shares of Liberty Media Group
Common Stock outstanding on such date and (b) the Number of Shares Issuable with
Respect to the Liberty Media Group Inter-Group Interest as of such date.
"Lower Appraised Amount," with respect to any determination of the Liberty
Media Group Private Market Value or the TCI Ventures Group Private Market Value,
shall mean the lower of the
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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 the
Company 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 the Company 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 to time by the Company, or if such closing bid and asked
prices are not made available by any such New York Stock Exchange member firm on
such Trading Day, the market value of a share of such class or series as
determined by the Board of Directors; provided that for purposes of determining
the ratios described under "--Conversion and Redemption--Conversion of Liberty
Media Group Common Stock at the Option of the Company," "--Conversion and
Redemption--Conversion of TCI Ventures Group Common Stock at the Option of the
Company," "--Mandatory Dividend, Redemption or Conversion of Liberty Media Group
Common Stock," and "--Mandatory Dividend, Redemption or Conversion of TCI
Ventures Group Common Stock" and as described under "--Liquidation Rights," (a)
the "Market Value" of any share of any series of 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 Common Stock shall be reduced by the fair
market value of the per share amount of such dividend or distribution as
determined by the Board of Directors and (b) the "Market Value" of any share of
any series of 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 Common Stock or (ii) the
"ex" date or any similar date for any dividend or distribution with respect to
any such series of Common Stock in shares of such series of Common Stock shall
be appropriately adjusted to reflect such subdivision, combination, dividend or
distribution.
"Mutually Appraised Amount," with respect to any determination of the
Liberty Media Group Private Market Value or the TCI Ventures Group Private
Market Value, shall mean 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 TCI
Ventures Group Private Market Value,
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the investment banking firm of recognized national standing jointly designated
by the First Appraiser and the Second Appraiser to make such determination.
"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
Series A Liberty Media Group Common Stock and dividends or distributions of
shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock to holders of Series A Liberty Media Group Common
Stock and other reclassifications of Series A Liberty Media Group Common
Stock,
(ii) decreased (but not to less than zero) by (a) the aggregate
number of shares of Series A Liberty Media Group Common Stock issued or
sold by the Company after the Liberty Media Group Distribution other than
Committed Acquisition Shares, the proceeds of which are attributed to the
TCI Group, (b) the aggregate number of shares of Series A Liberty Media
Group 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 Series A Liberty Media Group Common Stock issued or delivered by
the Company as a dividend or distribution to holders of Series A TCI Group
Common Stock and Series B TCI Group Common Stock, (d) the aggregate number
of shares of Series A 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 the Company after the
Liberty Media Group Distribution as a dividend or distribution or by
reclassification or exchange to holders of Series A TCI Group Common Stock
and Series B TCI Group Common Stock and (e) the aggregate number of shares
of Series A Liberty Media Group Common Stock (rounded, if necessary, to the
nearest whole number), equal to the aggregate fair value (as determined by
the Board of Directors) of assets or properties attributed to the Liberty
Media Group that are transferred from the Liberty Media Group to the TCI
Group in consideration of a reduction in the Number of Shares Issuable with
Respect to the Liberty Media Group Inter-Group Interest, divided by the
Market Value of one share of Series A Liberty Media Group Common Stock as
of the date of such transfer, and
(iii) increased by (a) the aggregate number of any shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group 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 Board of Directors) of assets or properties
theretofore
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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 Series A Liberty Media Group Common Stock as
of the date of such contribution and (c) the aggregate number of shares of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock into or for which Convertible Securities are deemed to be
converted, exercised or exchanged pursuant to the last sentence of the
definition of "TCI Group."
The Company will not issue or sell shares of Series B Liberty Media Group 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, the Company will prepare and file a statement of such change with the
Secretary of the Company.
"Number of Shares Issuable with Respect to the TCI Ventures Group Inter-
Group Interest" is currently zero and will from time to time, 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
Series A TCI Ventures Group Common Stock and Series B TCI Ventures Group
Common Stock and dividends or distributions of shares of Series A TCI
Ventures Group Common Stock or Series B TCI Ventures Group Common Stock to
holders of Series A TCI Ventures Group Common Stock and Series B TCI
Ventures Group Common Stock and other reclassifications of the Series A TCI
Ventures Group Common Stock and Series B TCI Ventures Group Common Stock,
(ii) decreased (but not to less than zero) by (a) the aggregate
number of shares of Series A TCI Ventures Group Common Stock or Series B
TCI Ventures Group Common Stock issued or sold by the Company after the
consummation of the Exchange Offers the proceeds of which are attributed to
the TCI Group, (b) the aggregate number of shares of Series A TCI Ventures
Group Common Stock or Series B TCI Ventures Group Common Stock issued or
delivered upon conversion, exercise or exchange of Convertible Securities
(other than Pre-Exchange Offer Securities), the proceeds of which are
attributed to the TCI Group, (c) the aggregate number of shares of Series A
TCI Ventures Group Common Stock or Series B TCI Ventures Group Common Stock
issued or delivered by the Company as a dividend or distribution to holders
of Series A TCI Group Common Stock and Series B TCI Group Common Stock, (d)
the aggregate number of shares of Series A TCI Ventures Group Common Stock
or Series B TCI Ventures Group Common Stock issued or delivered upon the
conversion, exercise or exchange of any Convertible Securities (other than
Pre-Exchange Offer Securities) issued or delivered by the Company after the
consummation of the Exchange Offers as a dividend or distribution or by
reclassification or exchange to holders of Series A TCI Group Common Stock
and Series B TCI Group Common Stock and (e) the aggregate number of shares
of Series A TCI Ventures Group Common Stock and Series B TCI Ventures Group
Common Stock (rounded, if necessary, to the nearest whole number),
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equal to the aggregate fair value (as determined by the Board of Directors)
of assets or properties attributed to the TCI Ventures Group that are
transferred from the TCI Ventures Group to the TCI Group in consideration
of a reduction in the Number of Shares Issuable with Respect to the TCI
Ventures Group Inter-Group Interest, divided by the Market Value of one
share of Series A TCI Ventures Group Common Stock as of the date of such
transfer, and
(iii) increased by (a) the aggregate number of any shares of Series A
TCI Ventures Group Common Stock and Series B TCI Ventures Group 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 Board of Directors) of assets or properties
theretofore attributed to the TCI Group that are contributed to the TCI
Ventures Group in consideration of an increase in the Number of Shares
Issuable with Respect to the TCI Ventures Group Inter-Group Interest,
divided by the Market Value of one share of Series A TCI Ventures Group
Common Stock as of the date of such contribution and (c) the aggregate
number of shares of Series A TCI Ventures Group Common Stock and Series B
TCI Ventures Group 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."
Whenever a change in the Number of Shares Issuable with Respect to the TCI
Ventures Group Inter-Group Interest occurs, the Company shall prepare and file a
statement of such change with the Secretary of the Company.
"Pre-Distribution Convertible Securities" means Convertible Securities that
were outstanding on the record date for the Liberty Media Group Distribution and
were, prior to such date, convertible into or exercisable or exchangeable for
shares of the Company's Class A Common Stock, par value $1.00 per share (which
has been redesignated Series A TCI Group Common Stock).
"Pre-Exchange Offer Securities" means the TCI-UA Notes and the Initial
Ventures Options.
"Qualifying Subsidiary" shall mean a Subsidiary of the Company in which (i)
the Company's ownership and voting interest is sufficient to satisfy the
requirements of the Internal Revenue Service for (x), in the case of a
Subsidiary that holds assets attributed to the Liberty Media Group, a
distribution of the Company's interest in such Subsidiary to the holders of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock that is tax free to such holders or (y), in the case of a
Subsidiary that holds assets attributed to the TCI Ventures Group, a
distribution of the Company's interest in such Subsidiary to the holders of
Series A TCI Ventures Group Common Stock and Series B TCI Ventures Group Common
Stock that is tax free to such holders or (ii) the Company owns, directly or
indirectly, all of the issued and outstanding capital stock.
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"Related Business Transaction" shall mean any Disposition of all or
substantially all of the properties and assets of the Liberty Media Group or the
TCI Ventures Group, as the case may be, in which the Company receives as
proceeds of such Disposition primarily equity securities (including, without
limitation, capital stock, convertible securities, partnership or limited
partnership interests and other types of equity securities, without regard to
the voting power or contractual or other management or governance rights related
to such equity securities) of the purchaser or acquiror of such assets and
properties of the Liberty Media Group or the TCI Ventures 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 TCI Ventures 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 TCI Ventures Group, as the case may
be, prior to such Disposition, as determined in good faith by the Board of
Directors.
"Second Appraiser" means, with respect to any determination of the Liberty
Media Group Private Market Value or the TCI Ventures Group Private Market Value,
an investment banking firm of recognized national standing selected by the
Independent Committee to make such determination.
"Selection Date," with respect to any determination of the Liberty Media
Group Private Market Value or the TCI Ventures Group Private Market Value, shall
mean the date upon which the Second Appraiser for such determination is selected
by the Independent Committee.
"Subsidiary" shall mean, with respect to any person or entity, any
corporation or partnership 50% or more of whose outstanding voting securities or
partnership interests, as the case may be, are directly or indirectly owned by
such person or entity.
"TCI Group" means as of any date of determination thereof:
(i) the interest of the Company or any of its subsidiaries in all of
the businesses in which the Company or any of its subsidiaries (or any of
their predecessors or successors) is or has been engaged, directly or
indirectly, and the respective assets and liabilities of the Company or
any of its subsidiaries, other than any businesses, assets or liabilities
of the Liberty Media Group or the TCI Ventures 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 TCI Ventures Group equal
to the TCI Ventures 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
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to the Liberty Media Group Inter-Group Interest," or in other securities of
the Company attributed to the Liberty Media Group, for which provision will
be made as described in the 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;
(iv) from and after any dividend or other distribution with respect
to shares of TCI Ventures Group Common Stock (other than a dividend or
other distribution payable in shares of TCI Ventures 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 TCI
Ventures Group Inter-Group Interest," or in other securities of the Company
attributed to the TCI Ventures 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 TCI Ventures 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
TCI Ventures Group Common Stock multiplied by a fraction the numerator of
which is equal to the TCI Ventures 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 TCI Ventures
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 TCI Ventures 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 TCI Ventures
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 TCI
Ventures Group, as applicable, described in clause (ii) above). If the Company
pays a dividend or makes any other distribution with respect to shares of
Liberty Media Group Common Stock payable in other securities of the Company
attributed to the Liberty Media Group, the TCI Group will be deemed to hold an
amount of such other securities equal to the amount so distributed multiplied by
the fraction specified in clause (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 the Company pays a dividend or makes any other distribution with
respect
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to shares of TCI Ventures Group Common Stock payable in other securities of the
Company attributed to the TCI Ventures 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 TCI Ventures 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. The Company may also, to the extent any such other securities constitute
Convertible Securities which are at the time convertible, exercisable or
exchangeable, cause such Convertible Securities deemed to be held by the TCI
Group to be deemed to be converted, exercised or exchanged (and to the extent
the terms of such Convertible Securities require payment or delivery of
consideration in order to effect such conversion, exercise or exchange, the TCI
Group will in such case no longer include an amount of the kind of properties or
assets required to be paid or delivered as such consideration for the amount of
the Convertible Securities deemed converted, exercised or exchanged as if such
Convertible Securities were outstanding), in which case such Convertible
Securities will no longer be deemed to be held by the TCI Group or attributed to
the Liberty Media Group or the TCI Ventures Group, as applicable.
"TCI-UA Notes" shall mean those certain convertible notes due December 12,
2021 issued by TCI UA, Inc., a Subsidiary of the Company, which notes were,
prior to the consummation of the Exchange Offers, exchangeable for shares of
Series A TCI Group Common Stock and Series A Liberty Media Group Common Stock.
"TCI Ventures Group" shall mean, as of any date that any shares of Series A
TCI Ventures Group Common Stock or Series B TCI Ventures Group Common Stock have
been issued and continue to be outstanding:
(i) the interest of the Company or of any of its subsidiaries in any
of the following persons or any of their respective 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:
TCI Ventures Group, LLC, Tele-Communications International, Inc., TCI
Telephony Holdings, Inc., New Jersey Fiber Technologies, L.P., Louisville
Lightwave, Western Tele-Communications, Inc., TCI GCI, Inc., TCI UVSG,
Inc., Acclaim Entertainment, Inc., TCI TSX, Inc., Intessera, Inc., TCI-
TVGOS, Inc., TCI MCNS Holdings, Inc., TCI ETC Holdings, Inc., TCI Internet
Holdings, Inc., TCI Online Sports Holdings, Inc., TCI Online Village
Holdings, Inc., TCI INZ Sports Holdings, Inc., TCI Netscape Holdings, Inc.,
TCI Java, Inc., National Digital Television Center, Inc., TCI SUMMITrak of
Texas, Inc., TCI SUMMITrak, LLC, DigiVentures, LLC, Kitty Hawk Capital
Limited Partners, II, New Enterprise Associates, IV, Limited Partnership,
Venture First II, L.P., TVSM, Inc.,
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(ii) all assets and liabilities of the Company or any of its
subsidiaries to the extent attributed to any of the properties or assets
referred to in clause (i) of this sentence, whether or not such assets or
liabilities are assets and liabilities of any of the Persons named in
clause (i) or any of their respective subsidiaries (or any successor as
described in clause (i) of this sentence),
(iii) the proceeds of exercise of the Initial Ventures Options and
the expense of exercise of any related stock appreciation rights,
(iv) all assets and properties contributed or otherwise transferred
to the TCI Ventures Group from the TCI Group, and
(v) the interest of the Company or any of its subsidiaries in the
businesses, assets and liabilities acquired by the Company or any of its
subsidiaries for the TCI Ventures Group, as determined by the Board of
Directors;
provided that (a) from and after any dividend or other distribution with respect
to any shares of TCI Ventures Group Common Stock (other than a dividend or other
distribution payable in shares of TCI Ventures 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 TCI Ventures Group Inter-Group
Interest," or in other securities of the Company attributed to the TCI Ventures
Group for which provision shall be made as set forth in the penultimate sentence
of this definition), the TCI Ventures 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 TCI Ventures Group Common Stock
multiplied by a fraction the numerator of which is equal to the TCI Ventures
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 TCI Ventures 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 TCI Ventures
Group to the TCI Group, the TCI Ventures Group shall no longer include the
assets or properties so transferred. If the Company pays a dividend or makes
any other distribution with respect to shares of TCI Ventures Group Common Stock
payable in securities of the Company attributed to the TCI Ventures Group other
than TCI Ventures 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 (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 TCI Ventures Group
Common Stock, the TCI Ventures Group will no longer include a corresponding
ratable amount of the kind of assets paid as such interest or dividends or other
distributions in respect of such securities so deemed to be held by the TCI
Group. The Company may also, to the extent any such other securities constitute
Convertible Securities which are at the time convertible, exercisable or
exchangeable, cause such Convertible Securities deemed to be held by the TCI
Group to be deemed to be converted, exercised or exchanged (and to the extent
the terms of such Convertible Securities require
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payment or delivery of consideration in order to effect such conversion,
exercise or exchange, the TCI Ventures 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 TCI Ventures Group.
"TCI Ventures Group Inter-Group Interest Fraction," as of any date, shall
mean a fraction the numerator of which is the Number of Shares Issuable with
Respect to the TCI Ventures 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 TCI Ventures Group Inter-Group Interest as of such date and (b)
the aggregate number of shares of TCI Ventures Group Common Stock outstanding as
of such date.
"TCI Ventures Group Net Proceeds" shall mean, as of any date, with respect
to any Disposition of any of the properties and assets of the TCI Ventures
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 the
Company 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 TCI Ventures 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 TCI Ventures Group, including, without limitation, any indemnity or
guarantee obligations incurred in connection with the Disposition or any
liabilities for future purchase price adjustments and any preferential amounts
plus any accumulated and unpaid dividends and other obligations (without
duplication of amounts allocated for the satisfaction of the Company's
obligations with respect to Pre-Exchange Offer Securities which are included in
the determination of the Adjusted TCI Ventures Group Outstanding Interest
Fraction) in respect of Preferred Stock attributed to the TCI Ventures Group.
For purposes of this definition, any properties and assets of the TCI Ventures
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 Board
of Directors shall determine the value of such securities or property, including
for the purpose of determining the equivalent value thereof if the Board of
Directors 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 TCI Ventures Group
Common Stock."
"TCI Ventures Group Outstanding Interest Fraction," as of any date, shall
mean a fraction the numerator of which is the aggregate number of shares of TCI
Ventures Group Common Stock outstanding on such date and the denominator of
which is the sum of (a) such aggregate number of
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shares of TCI Ventures Group Common Stock outstanding on such date and (b) the
Number of Shares Issuable with Respect to the TCI Ventures Group Inter-Group
Interest as of such date.
"Trading Day" shall mean each weekday other than any day on which any
relevant class or series of capital stock of the Corporation is not traded on
the Nasdaq National Market System or in the over-the-counter market.
VOTING RIGHTS
Holders of Series A TCI Group Common Stock, Series A Liberty Media Group
Common Stock and Series A TCI Ventures Group Common Stock, in each case, are
entitled to one vote for each share of such stock held, and holders of Series B
TCI Group Common Stock, Series B Liberty Media Group Common Stock and Series B
TCI Ventures Group Common Stock, in each case, are entitled to ten votes for
each share of such stock held, on all matters presented to such stockholders.
Except as may otherwise be required by the laws of the State of Delaware or,
with respect to any class of Preferred Stock or any series of such a class, in
the Charter (including any resolution or resolutions providing for the
establishment of such class or series pursuant to authority vested in the Board
of Directors by the Charter), the holders of TCI Group Common Stock, the holders
of Liberty Media Group Common Stock, the holders of TCI Ventures Group Common
Stock and the holders of each class or series of Preferred Stock, if any,
entitled to vote thereon will vote as one class with respect to all matters to
be voted on by stockholders of the Company.
None of the holders of Series A TCI Group Common Stock, Series B TCI Group
Common Stock, Series A Liberty Media Group Common Stock, Series B Liberty Media
Group Common Stock, Series A TCI Ventures Group Common Stock or Series B TCI
Ventures Group Common Stock have any rights to vote as a separate class or
series on any matter coming before the stockholders of the Company, except with
respect to certain limited class and series voting rights provided under the
Delaware General Corporation Law ("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 of such corporation 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. Because the Series A TCI Group Common Stock, the
Series B TCI Group Common Stock, the Series A Liberty Media Group Common Stock,
the Series B Liberty Media Group Common Stock, the Series A TCI Ventures Group
Common Stock and the Series B TCI Ventures Group Common Stock are each a
separate series of a single class of stock, each series will be entitled to vote
separately as a class upon an amendment to the Charter that would alter or
change the powers, preferences or special rights of such series so as to affect
them adversely only if the other series were not so affected. The DGCL does not
provide for any other separate voting rights of a class or series of capital
stock (other than with respect to a change in par value or, in certain
circumstances not applicable in the case of the Company's
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outstanding stock, an increase or decrease in the authorized shares of such
class or series). Consequently, because most matters brought to a stockholder
vote will require the approval of only a specified percentage of all of the
Company's outstanding capital stock entitled to vote on such matters (including
the TCI Group Common Stock, the Liberty Media Group Common Stock and the TCI
Ventures Group Common Stock) voting together as a single class, if the holders
of one or more series of Common Stock have more than the number of votes
required to approve any such matter, such holders would be in a position to
control the outcome of the vote on such matter.
DIVIDENDS
Subject to the prior payment of dividends on, and other rights of, any of
the outstanding shares of Preferred Stock, dividends may be paid as determined
by the Board of Directors (i) on the TCI Group Common Stock out of the lesser of
(x) the TCI Group Available Dividend Amount and (y) funds of the Company legally
available therefor under the DGCL, (ii) on the Liberty Media Group Common Stock
out of the lesser of (x) the Liberty Media Group Available Dividend Amount and
(y) funds of the Company legally available therefor under the DGCL, and (iii) on
the TCI Ventures Group Common Stock out of the lesser of (x) the TCI Ventures
Group Available Dividend Amount and (y) funds of the Company legally available
therefor under the DGCL. Under the DGCL, the amount of the funds of the Company
legally available for the payment of dividends on any series of Common Stock is
determined on the basis of the entire corporation and not just the TCI Group,
the Liberty Media Group or the TCI Ventures 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 TCI Ventures Group and any dividends
or distributions on, or repurchases of, the TCI Group Common Stock, the Liberty
Media Group Common Stock or the TCI Ventures Group Common Stock, if any, and
dividends on, or certain repurchases of, Preferred Stock. Certain loan
agreements to which certain subsidiaries of the Company are parties or are
subject contain restricted payment provisions that limit the amount of
dividends, other than stock dividends, that those companies may pay. Future
loan agreements may also contain similar restrictions and limits.
The "TCI Group Available Dividend Amount," as of any date, means either (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 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 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, 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, 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
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the TCI Group Common Stock under the DGCL if the TCI Group were a separate
Delaware corporation. There can be no assurance that there will be a TCI Group
Available Dividend Amount.
The "Liberty Media Group Available Dividend Amount," as of any date, means
the product of the 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 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 the Company attributed to the operations of the Liberty
Media Group on a substantially consistent basis, including, without limitation,
corporate administrative costs, net interest and income taxes. The Liberty
Media Group Available Dividend Amount is intended to be similar to the amount
that would be legally available for the payment of dividends on the Liberty
Media Group Common Stock under the DGCL if the Liberty Media Group were a
separate Delaware corporation. There can be no assurance that there will be a
Liberty Media Group Available Dividend Amount.
The "TCI Ventures Group Available Dividend Amount," as of any date, means
the product of the TCI Ventures Group Outstanding Interest Fraction and either
(i) the excess of (a) an amount equal to the total assets of the TCI Ventures
Group less the total liabilities (not including preferred stock) of the TCI
Ventures 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 Ventures Group Common Stock and each class or series of Preferred Stock
attributed to the TCI Ventures Group or (ii) in case there is no such excess, an
amount equal to the Corporation Earnings (Loss) Attributable to the TCI Ventures
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 TCI
Ventures Group," for any period, means the net earnings or loss of the TCI
Ventures Group for such period determined on a basis consistent with the
determination of the net earnings or loss of the TCI Ventures Group for such
period as presented in the combined financial statements of the TCI Ventures
Group, including income and expenses of the Company attributed to the operations
of the TCI Ventures Group on a substantially consistent basis, including,
without limitation, corporate administrative costs, net interest and income
taxes. The TCI Ventures 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 Ventures Group Common Stock under the DGCL if the TCI
Ventures Group were a separate Delaware corporation. There can be no assurance
that there will be a TCI Ventures Group Available Dividend Amount.
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Except for dividends declared or paid as described below under "--Share
Distributions," "--Conversion and Redemption--Mandatory Dividend, Redemption or
Conversion of Liberty Media Group Common Stock," and "--Conversion and
Redemption--Mandatory Dividend, Redemption or Conversion of TCI Ventures Group
Common Stock," any dividends paid on the Series A TCI Group Common Stock or the
Series B TCI Group Common Stock will be paid only on both series, in equal
amounts per share; any dividends paid on the Series A Liberty Media Group Common
Stock or the Series B Liberty Media Group Common Stock will be paid only on both
series, in equal amounts per share; and any dividends paid on the Series A TCI
Ventures Group Common Stock or the Series B TCI Ventures Group Common Stock will
be paid only on both series, in equal amounts per share.
The Board of Directors, 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 the TCI Ventures Group Common Stock in equal or unequal amounts,
notwithstanding the relationship among the TCI Group Available Dividend Amount,
the Liberty Media Group Available Dividend Amount and the TCI Ventures 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 the TCI Ventures Group Common Stock or any other factor.
At the time of any dividend or other distribution on the outstanding shares
of Liberty Media Group Common Stock (including any dividend of 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.
At the time of any dividend or other distribution on the outstanding shares
of TCI Ventures Group Common Stock (including any dividend of TCI Ventures Group
Net Proceeds from the Disposition of all or substantially all of the properties
and assets of the TCI Ventures Group as described under "--Conversion and
Redemption--Mandatory Dividend, Redemption or Conversion of TCI Ventures Group
Common Stock"), the TCI Group will (if at such time there is an Inter-Group
Interest in the TCI Ventures Group) be credited, and the TCI Ventures Group will
be charged (in addition to the charge for the dividend or other distribution
paid or distributed in respect of outstanding shares of TCI Ventures 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 TCI Ventures Group Common Stock times (ii) a fraction the numerator of
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which is the TCI Ventures Group Inter-Group Interest Fraction and the
denominator of which is the TCI Ventures Group Outstanding Interest Fraction.
SHARE DISTRIBUTIONS
Distributions on TCI Group Common Stock. If at any time after the initial
issuance of shares of TCI Ventures Group Common Stock, a distribution paid in
TCI Group Common Stock, TCI Ventures Group Common Stock, Liberty Media Group
Common Stock, or any other securities of the Company or any other person (a
"share distribution"), is made with respect to the TCI Group Common Stock, such
share distribution will be declared and paid only as follows:
(i) a share distribution consisting of shares of Series A TCI Group
Common Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A TCI Group Common Stock) to holders of
Series A TCI Group Common Stock and Series B TCI Group Common Stock, on an
equal per share basis; or consisting of shares of Series B TCI Group Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series B TCI Group Common Stock) to holders of
Series A TCI Group Common Stock and Series B TCI Group Common Stock, on an
equal per share basis; or consisting of shares of Series A TCI Group Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A TCI Group Common Stock) to holders of
Series A TCI Group Common Stock and, on an equal per share basis, shares of
Series B TCI Group Common Stock (or like Convertible Securities convertible
into or exercisable or exchangeable for shares of Series B TCI Group Common
Stock) to holders of Series B TCI Group Common Stock;
(ii) a share distribution consisting of shares of Series A Liberty
Media Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A Liberty Media Group
Common Stock) to holders of Series A TCI Group Common Stock and Series B
TCI Group Common Stock, on an equal per share basis; provided that the sum
of (A) the aggregate number of shares of Series A Liberty Media Group
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 Series A TCI
Ventures Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A TCI Ventures Group
Common Stock) to holders of Series A TCI Group Common Stock and Series B
TCI Group Common Stock, on an equal per share basis;
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or consisting of shares of Series B TCI Ventures Group Common Stock (or
Convertible Securities convertible into or exercisable or exchangeable for
shares of Series B TCI Ventures Group Common Stock) to holders of Series A
TCI Group Common Stock and Series B TCI Group Common Stock, on an equal per
share basis; or consisting of shares of Series A TCI Ventures Group Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A TCI Ventures Group Common Stock) to
holders of Series A TCI Group Common Stock and, on an equal per share
basis, shares of Series B TCI Ventures Group Common Stock (or like
Convertible Securities convertible into or exercisable or exchangeable for
shares of Series B TCI Ventures Group Common Stock) to holders of Series B
TCI Group Common Stock; provided that the sum of (A) the aggregate number
of shares of Series A TCI Ventures Group Common Stock and Series B TCI
Ventures Group Common Stock to be so distributed (or the number of such
shares which would be issuable upon conversion, exercise or exchange of any
Convertible Securities to be so distributed) and (B) the number of shares
of Series A TCI Ventures Group Common Stock and Series B TCI Ventures Group
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 (other than Pre-Exchange Offer Securities) is less than or
equal to the Number of Shares Issuable with Respect to the TCI Ventures
Group Inter-Group Interest; and
(iv) a share distribution consisting of any class or series of
securities of the Company or any other person other than TCI Group Common
Stock, Liberty Media Group Common Stock or TCI Ventures 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
TCI Ventures Group Common Stock), either on the basis of a distribution of
identical securities, on an equal per share basis, to holders of Series A
TCI Group Common Stock and Series B TCI Group Common Stock or on the basis
of a distribution of one class or series of securities to holders of Series
A TCI Group Common Stock and another class or series of securities to
holders of Series B TCI Group Common Stock, provided that the securities so
distributed (and, if the distribution consists of Convertible Securities,
the securities into which such Convertible Securities are convertible or
for which they are exercisable or exchangeable) do not differ in any
respect other than their relative voting rights and related differences in
designation, conversion, redemption and share distribution provisions, with
holders of shares of Series B TCI Group Common Stock receiving the class or
series having the higher relative voting rights (without regard to whether
such rights differ to a greater or lesser extent than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A TCI Group Common Stock and the
Series B TCI Group Common Stock), provided that if the securities so
distributed constitute capital stock of a Subsidiary of the Company, such
rights will not differ to a greater extent than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A TCI Group Common Stock and the
Series B TCI Group Common
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Stock, and provided in each case that such distribution is otherwise made
on an equal per share basis.
The Company will not reclassify, subdivide or combine the Series A TCI
Group Common Stock without reclassifying, subdividing or combining the Series B
TCI Group Common Stock, on an equal per share basis, and the Company will not
reclassify, subdivide or combine the Series B TCI Group Common Stock without
reclassifying, subdividing or combining the Series A TCI Group Common Stock, on
an equal per share basis.
Distributions on Liberty Media Group Common Stock. If at any time a share
distribution is to be made with respect to the Liberty Media Group Common Stock,
such share distribution will be declared and paid only as follows (or as
described under "--Conversion and Redemption" with respect to the redemptions
and other distributions referred to therein):
(i) a share distribution consisting of shares of Series A Liberty
Media Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A Liberty Media Group
Common Stock) to holders of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock, on an equal per share basis; or
consisting of shares of Series B Liberty Media Group Common Stock (or
Convertible Securities convertible into or exercisable or exchangeable for
shares of Series B Liberty Media Group Common Stock) to holders of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common
Stock, on an equal per share basis; or consisting of shares of Series A
Liberty Media Group Common Stock (or Convertible Securities convertible
into or exercisable or exchangeable for shares of Series A Liberty Media
Group Common Stock) to holders of Series A Liberty Media Group Common Stock
and, on an equal per share basis, shares of Series B Liberty Media Group
Common Stock (or like Convertible Securities convertible into or
exercisable or exchangeable for shares of Series B Liberty Media Group
Common Stock) to holders of Series B Liberty Media Group Common Stock; and
(ii) a share distribution consisting of any class or series of
securities of the Company or any other person other than as described in
the immediately preceding clause (i) and other than TCI Group Common Stock
or TCI Ventures Group Common Stock (or Convertible Securities convertible
into or exercisable or exchangeable for shares of TCI Group Common Stock or
TCI Ventures Group Common Stock), either on the basis of a distribution of
identical securities, on an equal per share basis, to holders of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common
Stock or on the basis of a distribution of one class or series of
securities to holders of Series A Liberty Media Group Common Stock and
another class or series of securities to holders of Series B Liberty Media
Group Common Stock, provided that the securities so distributed (and, if
the distribution consists of Convertible Securities, the securities into
which such Convertible Securities are convertible or for which they are
exercisable or exchangeable) do not differ in any respect other than their
relative voting rights and related differences in designation,
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conversion, redemption and share distribution provisions, with holders of
shares of Series B Liberty Media Group Common Stock receiving the class or
series having the higher relative voting rights (without regard to whether
such rights differ to a greater or lesser extent than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A Liberty Media Group Common
Stock and the Series B Liberty Media Group Common Stock), provided that if
the securities so distributed constitute capital stock of a Subsidiary of
the Company, such rights will not differ to a greater extent than the
corresponding differences in voting rights, designation, conversion,
redemption and share distribution provisions between the Series A Liberty
Media Group Common Stock and the Series B Liberty Media Group Common Stock,
and provided in each case that such distribution is otherwise made on an
equal per share basis.
Because under the Charter the Liberty Media Group is not permitted to have
an Inter-Group Interest in either the TCI Group or the TCI Ventures Group, no
distributions on the Liberty Media Group Common Stock of shares of TCI Group
Common Stock (or related Convertible Securities) or TCI Ventures Group Common
Stock (or related Convertible Securities) are permitted.
The Company will not reclassify, subdivide or combine the Series A Liberty
Media Group Common Stock without reclassifying, subdividing or combining the
Series B Liberty Media Group Common Stock, on an equal per share basis, and the
Company will not reclassify, subdivide or combine the Series B Liberty Media
Group Common Stock without reclassifying, subdividing or combining the Series A
Liberty Media Group Common Stock, on an equal per share basis.
Distributions on TCI Ventures Group Common Stock. If at any time a share
distribution is to be made with respect to the TCI Ventures Group Common Stock,
such share distribution will be declared and paid only as follows (or as
described under "--Conversion and Redemption" with respect to the redemptions
and other distributions referred to therein):
(i) a share distribution consisting of shares of Series A TCI Ventures
Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A TCI Ventures Group
Common Stock) to holders of Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock, on an equal per share basis; or
consisting of shares of Series B TCI Ventures Group Common Stock (or
Convertible Securities convertible into or exercisable or exchangeable for
shares of Series B TCI Ventures Group Common Stock) to holders of Series A
TCI Ventures Group Common Stock and Series B TCI Ventures Group Common
Stock, on an equal per share basis; or consisting of shares of Series A TCI
Ventures Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A TCI Ventures Group
Common Stock) to holders of Series A TCI Ventures Group Common Stock and,
on an equal per share basis, shares of Series B TCI Ventures Group Common
Stock (or like Convertible Securities convertible into or exercisable or
exchangeable for shares of Series B TCI Ventures Group Common Stock) to
holders of Series B TCI Ventures Group Common Stock; and
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(ii) a share distribution consisting of any class or series of
securities of the Company or any other person other than as described in
the immediately preceding clause (i) and other than TCI Group Common Stock
or Liberty Media Group Common Stock (or Convertible Securities convertible
into or exercisable or exchangeable for shares of TCI Group Common Stock or
Liberty Media Group Common Stock), either on the basis of a distribution of
identical securities, on an equal per share basis, to holders of Series A
TCI Ventures Group Common Stock and Series B TCI Ventures Group Common
Stock or on the basis of a distribution of one class or series of
securities to holders of Series A TCI Ventures Group Common Stock and
another class or series of securities to holders of Series B TCI Ventures
Group Common Stock, provided that the securities so distributed (and, if
the distribution consists of Convertible Securities, the securities into
which such Convertible Securities are convertible or for which they are
exercisable or exchangeable) do not differ in any respect other than their
relative voting rights and related differences in designation, conversion,
redemption and share distribution provisions, with holders of shares of
Series B TCI Ventures Group Common Stock receiving the class or series
having the higher relative voting rights (without regard to whether such
rights differ to a greater or lesser extent than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A TCI Ventures Group Common
Stock and the Series B TCI Ventures Group Common Stock), provided that if
the securities so distributed constitute capital stock of a Subsidiary of
the Company, such rights will not differ to a greater extent than the
corresponding differences in voting rights, designation, conversion,
redemption and share distribution provisions between the Series A TCI
Ventures Group Common Stock and the Series B TCI Ventures Group Common
Stock, and provided in each case that such distribution is otherwise made
on an equal per share basis.
Because under the Charter the TCI Ventures Group is not permitted to have
an Inter-Group Interest in either the TCI Group or the Liberty Media Group, no
distributions on the TCI Ventures 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.
The Company will not reclassify, subdivide or combine the Series A TCI
Ventures Group Common Stock without reclassifying, subdividing or combining the
Series B TCI Ventures Group Common Stock, on an equal per share basis, and the
Company will not reclassify, subdivide or combine the Series B TCI Ventures
Group Common Stock without reclassifying, subdividing or combining the Series A
TCI Ventures Group Common Stock, on an equal per share basis.
CONVERSION AND REDEMPTION
Conversion at the Option of the Holder. Each share of Series B TCI Group
Common Stock is convertible, at the option of the holder thereof, into one share
of Series A TCI Group Common Stock. Each share of Series B Liberty Media Group
Common Stock is convertible, at the option of the holder thereof, into
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<PAGE>
one share of Series A Liberty Media Group Common Stock. Each share of Series B
TCI Ventures Group Common Stock is convertible, at the option of the holder
thereof, into one share of Series A TCI Ventures Group Common Stock. Shares of
Series A TCI Group Common Stock are not convertible into shares of Series B TCI
Group Common Stock; shares of Series A Liberty Media Group Common Stock are not
convertible into shares of Series B Liberty Media Group Common Stock; and shares
of Series A TCI Ventures Group Common Stock are not convertible into shares of
Series B TCI Ventures Group Common Stock.
Conversion of Liberty Media Group Common Stock at the Option of the
Company. The Board of Directors may at any time declare that (i) all of the
outstanding shares of Series A Liberty Media Group Common Stock will be
converted into a number (or fraction) of fully paid and nonassessable shares of
Series A TCI Group Common Stock equal to the Liberty Media Group Optional
Conversion Ratio, and (ii) all of the outstanding shares of Series B Liberty
Media Group Common Stock will be converted into a number (or fraction) of fully
paid and nonassessable shares of Series B TCI Group Common Stock equal to the
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 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 Series A TCI Group Common Stock over the
20-Trading Day period ending on the Trading Day preceding the Appraisal Date.
The Liberty Media Group Common Stock Per Share Value will equal the quotient
obtained by dividing the Liberty Media Group Private Market Value by the
Adjusted Outstanding Shares of Liberty Media Group Common Stock, which will be
determined in the manner described below.
The "Liberty Media Group Private Market Value" means an amount equal to the
private market value of the Liberty Media Group as of the Appraisal Date. In
the event that the Company determines to establish the Liberty Media Group
Private Market Value, the Company shall designate the First Appraiser and a
committee of the Board of Directors all of whose members are independent
directors as determined under the Nasdaq National Market rules (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 20th
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<PAGE>
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
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<PAGE>
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 the Company determines to convert shares of Series A Liberty Media Group
Common Stock into Series A TCI Group Common Stock and shares of Series B Liberty
Media Group Common Stock into Series B TCI Group 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
the Company determines not to undertake such conversion, the Company may at any
time thereafter undertake to reestablish the Liberty Media Group Common Stock
Per Share Value as of a subsequent date.
Any such conversion would dilute the interests of holders of TCI Group
Common Stock and would preclude holders of Liberty Media Group Common Stock from
retaining their interest in a security reflecting separately the business of the
Liberty Media Group. In addition, the adjustments in respect of Pre-
Distribution Convertible Securities and Committed Acquisition Shares would
dilute the interests of holders of Liberty Media Group Common Stock upon any
conversion of shares of Liberty Media Group Common Stock into TCI Group Common
Stock at the Liberty Media Group Optional Conversion Ratio.
Conversion of TCI Ventures Group Common Stock at the Option of the Company.
The Board of Directors may at any time declare that (i) all of the outstanding
shares of Series A TCI Ventures Group Common Stock will be converted into a
number (or fraction) of fully paid and nonassessable shares of Series A TCI
Group Common Stock equal to the TCI Ventures Group Optional Conversion Ratio,
and (ii) all of the outstanding shares of Series B TCI Ventures Group Common
Stock will be converted into a number (or fraction) of fully paid and
nonassessable shares of Series B TCI Group Common Stock equal to the TCI
Ventures Group Optional Conversion Ratio. As more fully described below, the
TCI Ventures Group Optional Conversion Ratio is the ratio of the private market
value of a share of TCI Ventures Group Common Stock determined by appraisal to
the public trading price of a share of TCI Group Common Stock.
Under the Charter, the "TCI Ventures Group Optional Conversion Ratio" means
the quotient (calculated to the nearest five decimal places) obtained by
dividing (x) the TCI Ventures Group Common Stock Per Share Value by (y) the
average Market Value of one share of Series A TCI Group Common Stock over the
20-Trading Day period ending on the Trading Day preceding the Appraisal Date.
The TCI Ventures Group Common Stock Per Share Value will equal the quotient
obtained by dividing the TCI Ventures Group Private Market Value by the Adjusted
Outstanding Shares of TCI Ventures Group Common Stock, which will be determined
in the manner described below.
The "TCI Ventures Group Private Market Value" means an amount equal to the
private market value of the TCI Ventures Group as of the Appraisal Date. In the
event that the Company determines to establish the TCI Ventures Group Private
Market Value, the Company shall designate
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<PAGE>
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 TCI Ventures 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 TCI
Ventures 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 TCI
Ventures 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 TCI Ventures 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 TCI Ventures 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 TCI Ventures Group, as if the TCI Ventures 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 TCI
Ventures Group other than that which would have existed if the TCI Ventures
Group were a publicly traded non-controlled entity.
Following the determination of the TCI Ventures Group Private Market Value,
the investment banking firms whose final views of the private market value of
the TCI Ventures Group were used in the calculation of the TCI Ventures Group
Private Market Value will determine the Adjusted Outstanding Shares of TCI
Ventures Group Common Stock together with any further appropriate adjustments to
the TCI Ventures Group Private Market Value resulting from such determination.
The "Adjusted Outstanding Shares of TCI Ventures 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 TCI Ventures Group Common Stock
outstanding, the Number of
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Shares Issuable with Respect to the TCI Ventures Group Inter-Group Interest, the
number of shares of TCI Ventures Group Common Stock issuable upon the
conversion, exercise or exchange of all Pre-Exchange Offer Securities, and the
number of shares of TCI Ventures Group Common Stock issuable upon the
conversion, exercise or exchange of those Convertible Securities (other than
Pre-Exchange Offer 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 "TCI Ventures Group Common Stock Per Share
Value" means the quotient obtained by dividing the TCI Ventures Group Private
Market Value by the Adjusted Outstanding Shares of TCI Ventures Group Common
Stock, provided that if such investment banking firms do not agree on the
determinations provided for in this paragraph, the TCI Ventures 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 the Company determines to convert shares of Series A TCI Ventures Group
Common Stock into Series A TCI Group Common Stock and shares of Series B TCI
Ventures Group Common Stock into Series B TCI Group Common Stock at the TCI
Ventures Group Optional Conversion Ratio, such conversion will occur on a
conversion date on or prior to the 120th day following the Appraisal Date. If
the Company determines not to undertake such conversion, the Company may at any
time thereafter undertake to reestablish the TCI Ventures 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 TCI Ventures Group Common Stock from
retaining their interest in a security reflecting separately the business of the
TCI Ventures Group. In addition, the adjustments in respect of Pre-Exchange
Offer Securities would dilute the interests of holders of TCI Ventures Group
Common Stock upon any conversion of shares of TCI Ventures Group Common Stock
into TCI Group Common Stock at the TCI Ventures Group Optional Conversion Ratio.
Mandatory Dividend, Redemption or Conversion of Liberty Media Group Common
Stock. Upon the Disposition, in one transaction or a series of related
transactions by the Company and its subsidiaries of all or substantially all of
the properties and assets of the Liberty Media Group to one or more persons,
entities or groups, the Company 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 the Company of all of the
Company's properties and assets in one transaction or a series of related
transactions in connection with the liquidation, dissolution or winding up of
the Company, (b) by dividend, other distribution or redemption in accordance
with any provision described under "--Conversion and Redemption -- 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 the Company, 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
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properties and assets that represents at least 80% of the then-current market
value (as determined by the Board of Directors) of the properties and assets of
the Liberty Media Group as of such date.
The action the Company 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 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 the Company legally available
therefor and the Liberty Media Group Available Dividend Amount would have
been sufficient to pay a dividend in lieu thereof as described in clause
(i) of this paragraph, 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 Series A Liberty Media Group Common Stock
and Series B Liberty Media Group Common Stock in exchange for cash
and/or securities or other property (other than 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 Series A
Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock in the ratio of the number of shares of each such series
outstanding (so that the amount of consideration paid for the
redemption of each share of Series A Liberty Media Group Common Stock
and each share of Series B Liberty Media Group 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 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 Series A
Liberty Media Group Common Stock and Series B Liberty Media Group
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 Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock in the ratio of
the
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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 Series A Liberty Media Group
Common Stock during the ten-Trading Day period beginning on the 16th
Trading Day following the consummation of such Disposition and (y) the
number of shares of such series outstanding (so that the amount of
consideration paid for the redemption of each share of Series A
Liberty Media Group Common Stock and each share of Series B Liberty
Media Group Common Stock is the same); or
(iii) convert (A) each outstanding share of Series A Liberty Media
Group Common Stock into a number (or fraction) of fully paid and
nonassessable shares of Series A TCI Group Common Stock and (B) each
outstanding share of Series B Liberty Media Group Common Stock into a
number (or fraction) of fully paid and nonassessable shares of Series B TCI
Group Common Stock, in each case equal to 110% of the average daily ratio
(calculated to the nearest five decimal places) of the Market Value of one
share of Series A Liberty Media Group Common Stock to the Market Value of
one share of Series A TCI Group Common Stock during the ten-Trading Day
period referred to in clause (ii)(B) of this paragraph.
The Company 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 Board of Directors 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 the Company, the Board of Directors
may determine either to (i) pay the dividend or redemption price in the form of
separate classes or series of securities, with one class or series of such
securities to holders of Series A Liberty Media Group Common Stock and another
class or series of securities to holders of Series B Liberty Media Group Common
Stock, provided that such securities (and, if such securities are convertible
into or exercisable or exchangeable for shares of another class or series of
securities, the securities so issuable upon such conversion, exercise or
exchange) do not differ in any respect other than their relative voting rights
and related differences in designation, conversion, redemption and share
distribution provisions, with holders of shares of Series B Liberty Media Group
Common Stock receiving the class or series having the higher relative voting
rights (without regard to whether such rights differ to a greater or lesser
extent than the corresponding differences in voting rights, designation,
conversion, redemption and share distribution provisions between the Series A
Liberty Media Group Common Stock and the Series B Liberty Media Group Common
Stock), provided that if such securities constitute capital stock of a
Subsidiary of the Company, such rights will not differ to a greater extent than
the corresponding differences in voting rights, designation, conversion,
redemption and share distribution provisions between the Series A Liberty Media
Group Common Stock and the Series B Liberty Media Group Common Stock, and
otherwise such securities will be
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<PAGE>
distributed on an equal per share basis, or (ii) pay the dividend or redemption
price in the form of a single class of securities without distinction between
the shares received by the holders of Series A Liberty Media Group Common Stock
and Series B Liberty Media Group Common Stock. The Related Business Transaction
exception to the foregoing requirements would enable the Company to enter into
transactions in which the properties or assets of the Liberty Media 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 Liberty Media Group while maintaining the capital structure and
delineation of business groups of the Liberty Media Group.
The effect of using the Adjusted Liberty Media Group Outstanding Interest
Fraction, instead of the Liberty Media Group Outstanding Interest Fraction, in
the determination of amounts to be paid in redemption of shares of Liberty Media
Group Common Stock following a Disposition of all of the properties and assets
of the Liberty Media Group is to allocate to the TCI Group a portion of the
Liberty Media Group Net Proceeds of the Disposition, in addition to the amount
so allocated in respect of any Inter-Group Interest, sufficient to provide for
the delivery of the portion of the consideration deliverable by the Company upon
any post-Disposition conversion, exercise or exchange of Pre-Distribution
Convertible Securities that is in substitution for shares of Liberty Media Group
Common Stock that would have been issuable upon such conversion, exercise or
exchange if it had occurred prior to such Distribution and to make similar
provision for the Company's obligation in respect of any Committed Acquisition
Shares that remain issuable. To the extent such Pre-Distribution Convertible
Securities and Committed Acquisition Shares are included in the determination of
the Adjusted Liberty Media Group Outstanding Interest Fraction, the Company's
obligations in respect of such securities would not be a reduction in the
calculation of the Liberty Media Group Net Proceeds. In the event any
redemption of the Liberty Media Group Common Stock or conversion of the Liberty
Media Group Common Stock into TCI Group Common Stock is made in circumstances in
which securities or property are allocated to the TCI Group in respect of Pre-
Distribution Convertible Securities, Committed Acquisition Shares or other
Convertible Securities entitled to receive such securities or property upon
conversion, exercise or exchange, the TCI Group will segregate and hold such
securities or other property separate (in the case of any securities or property
other than TCI Group Common Stock), or duly reserve shares of TCI Group Common
Stock issuable upon such conversion, exercise or exchange, for the benefit of
the holders of Pre-Distribution Convertible Securities, Committed Acquisition
Shares or other Convertible Securities. In the event the holders of any such
Pre-Distribution Convertible Securities or other Convertible Securities do not
convert, exercise or exchange such securities prior to the expiration of any
conversion or exercise right or the retirement of such security, or the
acquisition relating to such Committed Acquisition Shares is not consummated (or
any Convertible Securities which are convertible into or exercisable or
exchangeable for Committed Acquisition Shares are not converted, exercised or
exchanged), then the securities or other property so reserved shall revert to
the TCI Group and the former holders of Liberty Media Group Common Stock shall
have no interest in such securities or property.
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
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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.
The option to convert the Liberty Media Group Common Stock into TCI Group
Common Stock in the event of a Disposition provides the Company with additional
flexibility by allowing the Company 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
the Company did not have sufficient legally available assets under the DGCL to
pay the full amount of an otherwise required dividend or redemption or when the
Company desired to retain such proceeds.
If less than substantially all of the properties and assets of the Liberty
Media Group were disposed of by the Company in one transaction, the Company
would not be required to pay a dividend on, redeem or convert the outstanding
shares of Liberty Media Group Common Stock, even if an additional transaction
were consummated at a later time in which additional properties and assets of
the Liberty Media Group were disposed of by the Company, 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 Liberty Media
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 Liberty Media Group at
such time. If less than substantially all of the properties and assets of the
Liberty Media Group were disposed of by the Company, the holders of the Liberty
Media 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
Board of Directors could determine, in its sole discretion, to pay a dividend on
the Liberty Media Group Common Stock in an amount related to the proceeds of
such Disposition.
Mandatory Dividend, Redemption or Conversion of TCI Ventures Group Common
Stock. Upon the Disposition in one transaction or a series of related
transactions by the Company and its subsidiaries of all or substantially all of
the properties and assets of the TCI Ventures Group to any one or more persons,
entities or groups, the Company 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 the Company of all of the
Company's properties and assets in one transaction or a series of related
transactions in connection with the liquidation, dissolution or winding up of
the Company, (b) by dividend, other distribution or redemption in accordance
with any provision described under "--Conversion and Redemption -- Redemption of
TCI Ventures Group Common Stock in Exchange for Stock of Subsidiary" "--
Dividends," "--Share Distributions," or "--Liquidation Rights," (c) to any
person, entity or group which the Company, directly or indirectly,
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<PAGE>
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 TCI Ventures Group" means a portion of such
properties and assets that represents at least 80% of the then-current market
value (as determined by the Board of Directors) of the properties and assets of
the TCI Ventures Group as of such date.
The action the Company 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 Common Stock) to the holders of
the outstanding shares of TCI Ventures Group Common Stock equally on a
share for share basis (subject to the provisions described in the second
sentence of the third paragraph under this caption "--Mandatory Dividends,
Redemption or Conversion of TCI Ventures Group Common Stock,") in an
aggregate amount equal to the product of the TCI Ventures Group Outstanding
Interest Fraction as of the record date for determining the holders
entitled to receive such dividend and the TCI Ventures Group Net Proceeds
of such Disposition;
(ii) provided that there are assets of the Company legally available
therefor and the TCI Ventures 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 TCI Ventures Group, redeem
all outstanding shares of Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock in exchange for cash and/or
securities or other property (other than Common Stock) in an aggregate
amount equal to the product of the Adjusted TCI Ventures Group
Outstanding Interest Fraction as of the date of such redemption and
the TCI Ventures Group Net Proceeds of such Disposition, such
aggregate amount to be allocated (subject to the provisions described
in the second sentence of the following paragraph) to shares of Series
A TCI Ventures Group Common Stock and Series B TCI Ventures Group
Common Stock in the ratio of the number of shares of each such series
outstanding (so that the amount of consideration paid for the
redemption of each share of Series A TCI Ventures Group Common Stock
and each share of Series B TCI Ventures Group Common Stock is the
same); or
(B) if such Disposition involves substantially all (but not all)
of the properties and assets of the TCI Ventures Group, apply an
aggregate amount of cash and/or securities or other property (other
than Common Stock) equal to the product of the TCI Ventures Group
Outstanding Interest Fraction as of the date shares are selected for
redemption and the TCI Ventures Group Net Proceeds of such Disposition
to the redemption of outstanding shares of Series A TCI Ventures Group
Common Stock and Series B TCI Ventures Group Common Stock, such
aggregate
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<PAGE>
amount to be allocated (subject to the provisions described in the
second sentence of the following paragraph) to shares of Series A TCI
Ventures Group Common Stock and Series B TCI Ventures Group Common
Stock in the ratio of the number of shares of each such series
outstanding, with the number of shares of each such series to be
redeemed to equal the lesser of (x) the whole number nearest the
number determined by dividing the aggregate amount so allocated to the
redemption of such series by the average Market Value of one share of
Series A TCI Ventures Group Common Stock during the ten-Trading Day
period beginning on the 16th Trading Day following the consummation of
such Disposition and (y) the number of shares of such series
outstanding (so that the amount of consideration paid for the
redemption of each share of Series A TCI Ventures Group Common Stock
and each share of Series B TCI Ventures Group Common Stock is the
same); or
(iii) convert (A) each outstanding share of Series A TCI Ventures
Group Common Stock into a number (or fraction) of fully paid and
nonassessable shares of Series A TCI Group Common Stock and (B) each
outstanding share of Series B TCI Ventures Group Common Stock into a number
(or fraction) of fully paid and nonassessable shares of Series B TCI Group
Common Stock, in each case equal to 110% of the average daily ratio
(calculated to the nearest five decimal places) of the Market Value of one
share of Series A TCI Ventures Group Common Stock to the Market Value of
one share of Series A TCI Group Common Stock during the ten-Trading Day
period referred to in clause (ii)(B) of this paragraph.
The Company 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 TCI Ventures 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 Board of Directors determines will have an aggregate market value on a
fully distributed basis, of not less than the amount of the TCI Ventures Group
Net Proceeds. If the dividend or redemption price is paid in the form of
securities of an issuer other than the Company, the Board of Directors may
determine either to (i) pay the dividend or redemption price in the form of
separate classes or series of securities, with one class or series of such
securities to holders of Series A TCI Ventures Group Common Stock and another
class or series of securities to holders of Series B TCI Ventures Group Common
Stock, provided that such securities (and, if such securities are convertible
into or exercisable or exchangeable for shares of another class or series of
securities, the securities so issuable upon such conversion, exercise or
exchange) do not differ in any respect other than their relative voting rights
and related differences in designation, conversion, redemption and share
distribution provisions, with holders of shares of Series B TCI Ventures Group
Common Stock receiving the class or series having the higher relative voting
rights (without regard to whether such rights differ to a greater or lesser
extent than the corresponding differences in voting rights, designation,
conversion, redemption and share distribution provisions between the Series A
TCI Ventures Group Common Stock and the Series B TCI Ventures Group Common
Stock), provided that if such securities constitute capital stock of a
Subsidiary of the Company, such rights will not
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<PAGE>
differ to a greater extent than the corresponding differences in voting rights,
designation, conversion, redemption and share distribution provisions between
the Series A TCI Ventures Group Common Stock and the Series B TCI Ventures Group
Common Stock, and otherwise such securities will be distributed on an equal per
share basis, or (ii) pay the dividend or redemption price in the form of a
single class of securities without distinction between the shares received by
the holders of Series A TCI Ventures Group Common Stock and Series B TCI
Ventures Group Common Stock. The Related Business Transaction exception to the
foregoing requirements would enable the Company to enter into transactions in
which the properties or assets of the TCI Ventures 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
TCI Ventures Group while maintaining the capital structure and delineation of
business groups of the TCI Ventures Group.
The effect of using the Adjusted TCI Ventures Group Outstanding Interest
Fraction, instead of the TCI Ventures Group Outstanding Interest Fraction, in
the determination of amounts to be paid in redemption of shares of TCI Ventures
Group Common Stock following a Disposition of all of the properties and assets
of the TCI Ventures Group is to allocate to the TCI Group a portion of the TCI
Ventures Group Net Proceeds of the Disposition, in addition to the amount so
allocated in respect of any Inter-Group Interest, sufficient to provide for the
delivery of the portion of the consideration deliverable by the Company upon any
post-Disposition conversion, exercise or exchange of Pre-Exchange Offer
Securities that is in substitution for shares of TCI Ventures Group Common Stock
that would have been issuable upon such conversion, exercise or exchange if it
had occurred prior to such Disposition. To the extent such Pre-Exchange Offer
Securities are included in the determination of the Adjusted TCI Ventures Group
Outstanding Interest Fraction, the Company's obligations in respect of such
securities would not be a reduction in the calculation of the TCI Ventures Group
Net Proceeds. In the event any redemption of the TCI Ventures Group Common
Stock or conversion of the TCI Ventures Group Common Stock into TCI Group Common
Stock is made in circumstances in which securities or property are allocated to
the TCI Group in respect of Pre-Exchange Offer Securities or other Convertible
Securities entitled to receive such securities or property upon conversion,
exercise or exchange, the TCI Group will segregate and hold such securities or
other property separate (in the case of any securities or property other than
TCI Group Common Stock), or duly reserve shares of TCI Group Common Stock
issuable upon such conversion, exercise or exchange, for the benefit of the
holders of Pre-Exchange Offer Securities or other Convertible Securities. In
the event the holders of any such Pre-Exchange Offer Securities or other
Convertible Securities do not convert, exercise or exchange such securities
prior to the expiration of any conversion, exercise or exchange right or the
retirement of such security, then the securities or other property so reserved
shall revert to the TCI Group and the former holders of TCI Ventures Group
Common Stock shall have no interest in such securities or property.
At the time of any dividend made as a result of a Disposition referred to
above, the TCI Group will be credited, and the TCI Ventures Group will be
charged (in addition to the charge for the dividend paid in respect of
outstanding shares of TCI Ventures Group Common Stock), with an amount equal to
the product of (i) the aggregate amount paid in respect of such dividend times
(ii)
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a fraction the numerator of which is the TCI Ventures Group Inter-Group
Interest Fraction and the denominator of which is the TCI Ventures Group
Outstanding Interest Fraction.
The option to convert the TCI Ventures Group Common Stock into TCI Group
Common Stock in the event of a Disposition provides the Company with additional
flexibility by allowing the Company 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
the Company did not have sufficient legally available assets under the DGCL to
pay the full amount of an otherwise required dividend or redemption or when the
Company desired to retain such proceeds.
If less than substantially all of the properties and assets of the TCI
Ventures Group were disposed of by the Company in one transaction, the Company
would not be required to pay a dividend on, redeem or convert the outstanding
shares of TCI Ventures Group Common Stock, even if an additional transaction
were consummated at a later time in which additional properties and assets of
the TCI Ventures Group were disposed of by the Company, 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 TCI Ventures
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 TCI Ventures Group at such
time. If less than substantially all of the properties and assets of the TCI
Ventures Group were disposed of by the Company, the holders of the TCI Ventures
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 Board of
Directors could determine, in its sole discretion, to pay a dividend on the TCI
Ventures 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 have become and continue to be held directly or
indirectly by any one or more corporations that are Qualifying Subsidiaries (the
"Liberty Media Group Subsidiaries"), the Board of Directors may, subject to the
availability of assets of the Company legally available therefor, redeem, on a
pro rata basis, all of the outstanding shares of Liberty Media Group Common
Stock in exchange for an aggregate number of outstanding fully paid and
nonassessable shares of common stock of each Liberty Media Group Subsidiary
equal to the product of the Adjusted Liberty Media Group Outstanding Interest
Fraction and the number of outstanding shares of common stock of such Liberty
Media Group Subsidiary that are owned by the Company. The effect of using the
Adjusted Liberty Media Group Outstanding Interest Fraction, instead of the
Liberty Media Group Outstanding Interest Fraction, in the determination of the
number of shares of the Liberty Media Group Subsidiaries deliverable in such a
redemption is to allocate to the TCI Group a portion of the shares of the
Liberty Media Group Subsidiaries, in addition to the number of such shares so
allocated in respect of any Inter-Group Interest, sufficient to provide for the
delivery of the consideration deliverable by the
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<PAGE>
Company upon any post-redemption conversion, exercise or exchange of Pre-
Distribution Convertible Securities that become so payable in substitution for
shares of Liberty Media Group Common Stock that would have been issuable upon
such conversion, exercise or exchange if it had occurred prior to such
redemption and to make similar provision for the Company's obligations in
respect of any Committed Acquisition Shares that remain issuable.
In effecting such a redemption, the Board of Directors may determine either
to (i) redeem shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock in exchange for shares of separate classes or
series of common stock of each Liberty Media Group Subsidiary with relative
voting rights and related differences in designation, conversion, redemption and
share distribution provisions not greater than the corresponding differences in
voting rights, designation, conversion, redemption and share distribution
provisions between the Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock, with holders of shares of Series B Liberty
Media Group Common Stock receiving the class or series having the higher
relative voting rights, or (ii) redeem shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock in exchange for
shares of a single class of common stock of each Liberty Media Group Subsidiary
without distinction between the shares distributed to the holders of the two
series of Liberty Media Group Common Stock. If the Company determines to
undertake a redemption as described in clause (i) of the preceding sentence, the
outstanding shares of common stock of each Liberty Media Group Subsidiary not
distributed to holders of Liberty Media Group Common Stock shall consist solely
of the class or series having the lower relative voting rights.
Redemption of TCI Ventures Group Common Stock in Exchange for Stock of
Subsidiary. At any time at which all of the assets and liabilities attributed
to the TCI Ventures Group have become and continue to be held directly or
indirectly by any one or more corporations that are Qualifying Subsidiaries (the
"TCI Ventures Group Subsidiaries"), the Board of Directors may, subject to the
availability of assets of the Company legally available therefor, redeem on a
pro rata basis, all of the outstanding shares of TCI Ventures Group Common Stock
in exchange for an aggregate number of outstanding, fully paid and nonassessable
shares of common stock of each TCI Ventures Group Subsidiary equal to the
product of the Adjusted TCI Ventures Group Outstanding Interest Fraction and the
number of outstanding shares of common stock of such TCI Ventures Group
Subsidiary that are owned by the Company. The effect of using the Adjusted TCI
Ventures Group Outstanding Interest Fraction, instead of the TCI Ventures Group
Outstanding Interest Fraction, in the determination of the number of shares of
the TCI Ventures Group Subsidiaries deliverable in such a redemption is to
allocate to the TCI Group a portion of the shares of the TCI Ventures Group
Subsidiaries, in addition to the number of such shares so allocated in respect
of any Inter-Group Interest, sufficient to provide for the delivery of the
consideration deliverable by the Company upon any post-redemption conversion,
exercise or exchange of Pre-Exchange Offer Securities that become so payable in
substitution for shares of TCI Ventures Group Common Stock that would have been
issuable upon such conversion, exercise or exchange if it had occurred prior to
such redemption.
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In effecting such a redemption, the Board of Directors may determine either
to (i) redeem shares of Series A TCI Ventures Group Common Stock and Series B
TCI Ventures Group Common Stock in exchange for shares of separate classes or
series of common stock of each TCI Ventures Group Subsidiary with relative
voting rights and related differences in designation, conversion, redemption and
share distribution provisions not greater than the corresponding differences in
voting rights, designation, conversion, redemption and share distribution
provisions between the Series A TCI Ventures Group Common Stock and Series B TCI
Ventures Group Common Stock, with holders of shares of Series B TCI Ventures
Group Common Stock receiving the class or series having the higher relative
voting rights, or (ii) redeem shares of Series A TCI Ventures Group Common Stock
and Series B TCI Ventures Group Common Stock in exchange for shares of a single
class of common stock of each TCI Ventures Group Subsidiary without distinction
between the shares distributed to the holders of the two series of TCI Ventures
Group Common Stock.
Certain Provisions Respecting Convertible Securities. Unless the
provisions of any class or series of Pre-Distribution Convertible Securities or
Convertible Securities which are convertible into or exercisable or exchangeable
for Committed Acquisition Shares provide specifically to the contrary, after any
conversion date or redemption date on which all outstanding shares of Liberty
Media Group Common Stock were converted or redeemed, any share of Liberty Media
Group Common Stock that is issued on conversion, exercise or exchange of any
Pre-Distribution Convertible Securities or any Convertible Securities which are
convertible into or exercisable or exchangeable for Committed Acquisition Shares
will, immediately upon issuance pursuant to such conversion, exercise or
exchange and without any notice or any other action on the part of the Company
or the Board of Directors or the holder of such share of Liberty Media Group
Common Stock, be converted into or redeemed in exchange for, as applicable, the
kind and amount of shares of capital stock, cash and/or other securities or
property that a holder of such Pre-Distribution Convertible Securities or any
Convertible Securities which are convertible into or exercisable or exchangeable
for Committed Acquisition Shares would have been entitled to receive as a result
of such conversion and redemption had such securities been converted, exercised
or exchanged immediately prior to such action. 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
Liberty Media Group 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 the Company or the Board of Directors or the holder of such share of Liberty
Media Group Common Stock, be redeemed in
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exchange for, to the extent assets of the Company are legally available
therefor, the amount of $.01 per share in cash.
Unless the provisions of the Pre-Exchange Offer Securities provide
specifically to the contrary, after any conversion date or redemption date on
which all outstanding shares of TCI Ventures Group Common Stock were converted
or redeemed, any share of TCI Ventures Group Common Stock that is issued on
conversion, exercise or exchange of any Pre-Exchange Offer Securities will,
immediately upon issuance pursuant to such conversion, exercise or exchange and
without any notice or any other action on the part of the Company or its Board
of Directors or the holder of such share of TCI Ventures 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 securities or other property that a
holder of such Pre-Exchange Offer Securities would have been entitled to receive
as a result of such conversion and redemption had such Pre-Exchange Offer
Securities been converted, exercised or exchanged immediately prior to such
action. Unless the provisions of any class or series of Convertible Securities
(other than Pre-Exchange Offer Securities) which are convertible into or
exercisable or exchangeable for shares of TCI Ventures Group Common Stock
provide specifically to the contrary, after any conversion date or redemption
date on which all outstanding shares of TCI Ventures Group Common Stock were
converted or redeemed, any share of TCI Ventures Group Common Stock that is
issued on conversion, exercise or exchange of any such Convertible Securities
will, immediately upon issuance pursuant to such conversion, exercise or
exchange and without any notice or any other action on the part of the Company
or its Board of Directors or the holder of such share of TCI Ventures Group
Common Stock, be redeemed in exchange for, to the extent assets of the Company
are legally available therefor, the amount of $.01 per share in cash.
General Conversion and Redemption Provisions. Not later than the 10th
Trading Day following the consummation of a Disposition referred to above under
"--Conversion and Redemption -- Mandatory Dividend, Redemption or Conversion of
Liberty Media Group Common Stock," the Company will announce publicly by press
release (i) the Liberty Media Group Net Proceeds of such Disposition, (ii) the
number of outstanding shares of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock, (iii) the number of shares of Series
A Liberty Media Group Common Stock and Series B Liberty Media Group 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, the Company will announce
publicly by press release which of the actions described in clause (i), (ii) or
(iii) of the second paragraph under "--Conversion and Redemption --
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Mandatory Dividend, Redemption or Conversion of Liberty Media Group Common
Stock" it has irrevocably determined to take.
If the Company determines to pay a dividend described in clause (i) of the
second paragraph under "-- Conversion and Redemption -- Mandatory Dividend,
Redemption or Conversion of Liberty Media Group Common Stock," the Company 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 Series A
Liberty Media Group Common Stock and Series B Liberty Media Group 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 Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock, (iv) the Liberty
Media Group Net Proceeds of such Disposition, (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 Series A Liberty Media
Group Common Stock and Series B Liberty Media Group Common Stock and the number
of shares of Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock into or for which outstanding Convertible Securities
are then convertible, exercisable or exchangeable and the conversion, exercise
or exchange prices thereof.
If the Company 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 "--Conversion and
Redemption -- Mandatory Dividend, Redemption or Conversion of Liberty Media
Group Common Stock," the Company will cause to be given to each holder of
outstanding shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group 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 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 of
such Disposition, (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 the Company waives such
requirement), are to be surrendered for delivery of certificates for shares of
such capital stock, cash and/or other securities or property, and (vii) the
number of outstanding shares of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock and the number of shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group 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-
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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 the Company 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 "--Conversion and Redemption--
Mandatory Dividend, Redemption or Conversion of Liberty Media Group Common
Stock," the Company 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 Series A Liberty Media Group Common Stock and Series B
Liberty Media Group 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 of such
Disposition, (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 Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock and the number of shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group 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 the Company will not be required to register a transfer of any
shares of Liberty Media Group Common Stock for a period of 15 Trading Days next
preceding the date 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, the Company will cause to be
given to each holder of shares of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock to be redeemed, a notice setting forth
(i) the number of shares of Series A Liberty Media Group Common Stock and Series
B Liberty Media Group Common Stock held by such holder to be redeemed, (ii) a
statement that such shares of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock will be redeemed, (iii) the redemption
date (which will not be more than 85 Trading Days following the consummation of
such Disposition), (iv) the kind and per share amount of shares of capital
stock, cash and/or other securities or property to be received by such holder
with respect to each share of such Liberty Media Group Common Stock to be
redeemed, including details as to the calculation thereof, and (v) the place or
places where certificates for shares of such Liberty Media Group Common Stock,
properly endorsed or assigned for transfer (unless the Company waives such
requirement), are to be surrendered for delivery of certificates for shares of
such capital stock, cash and/or other securities or property. The outstanding
shares of Liberty Media Group Common Stock to be redeemed will be redeemed by
the Company
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pro rata among the holders of Liberty Media Group Common Stock or by such other
method as may be determined by the Board of Directors to be equitable.
In the event of any conversion as described above under "--Conversion and
Redemption--Conversion of Liberty Media Group Common Stock at the Option of the
Company" or "--Conversion and Redemption--Mandatory Dividend, Redemption or
Conversion of Liberty Media Group Common Stock," the Company will cause to be
given to each holder of outstanding shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group 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 "--Conversion and
Redemption -- 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 and Redemption -- Conversion of Liberty Media Group Common Stock at
the Option of the Company"), (iii) the per share number (or fraction) of shares
of Series A TCI Group Common Stock or Series B TCI Group Common Stock, as
applicable, to be received with respect to each share of Series A Liberty Media
Group Common Stock or Series B Liberty Media Group 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 transfer (unless the Company waives such requirement), are to be
surrendered, and (v) the number of outstanding shares of Series A Liberty Media
Group Common Stock and Series B Liberty Media Group Common Stock, the number of
Committed Acquisition Shares issuable and the number of shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group 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 the Company determines to redeem shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock as described above
under "--Conversion and Redemption -- Redemption of Liberty Media Group Common
Stock in Exchange for Stock of Subsidiary," the Company will promptly cause to
be given to each holder of Series A Liberty Media Group Common Stock and Series
B Liberty Media Group 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 the Company 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 Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock and the number of shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock into or
for which outstanding Convertible Securities are then convertible,
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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 by 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 Series A Liberty Media Group Common Stock and Series B
Liberty Media Group 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 the Company.
Neither the failure to mail any notice to any particular holder of Liberty Media
Group Common Stock or of Convertible Securities nor any defect therein will
affect the sufficiency thereof with respect to any other holder of outstanding
shares of Liberty Media Group Common Stock or of Convertible Securities, or the
validity of any conversion or redemption.
The Company will not be required to issue or deliver fractional shares of
any class of capital stock or any fractional securities to any holder of Liberty
Media Group Common Stock upon any conversion, redemption, dividend or other
distribution described above. In connection with the determination of the
number of shares of any class of capital stock that is issuable or the amount of
securities that is deliverable to any holder of record upon any such conversion,
redemption, dividend or other distribution (including any fractions of shares or
securities), the Company may aggregate the number of shares of Liberty Media
Group Common Stock held at the relevant time by such holder of record. If the
number of shares of any class of capital stock or the amount of securities
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remaining to be issued or delivered to any holder of Liberty Media Group Common
Stock is a fraction, the Company will, if such fraction is not issued or
delivered to such holder, pay a cash adjustment in respect of such fraction in
an amount equal to the fair market value of such fraction on the fifth Trading
Day prior to the date such payment is to be made (without interest). For
purposes of the preceding sentence, "fair market value" of any fraction will be
(i) in the case of any fraction of a share of capital stock of the Company, the
product of such fraction and the Market Value of one share of such capital stock
and (ii) in the case of any other fractional security, such value as is
determined by the Board of Directors.
No adjustments in respect of dividends will be made upon the conversion or
redemption of any shares of Liberty Media Group Common Stock; provided, however,
that if the conversion date or the redemption date with respect to the Liberty
Media Group Common Stock is subsequent to the record date for the payment of a
dividend or other distribution thereon or with respect thereto, the holders of
shares of Liberty Media Group Common Stock at the close of business on such
record date will be entitled to receive the dividend or other distribution
payable on or with respect to such shares on the date set for payment of such
dividend or other distribution, notwithstanding the conversion or redemption of
such shares or the Company's default in payment of the dividend or distribution
due on such date.
Before any holder of shares of Liberty Media Group Common Stock will be
entitled to receive certificates representing shares of any kind of capital
stock or cash and/or securities or other property to be received by such holder
with respect to any conversion or redemption of shares of Liberty Media Group
Common Stock, such holder is required to surrender at such place as the Company
will specify certificates for such shares, properly endorsed or assigned for
transfer (unless the Company waives such requirement). The Company will as soon
as practicable after 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, the Company will issue and deliver a new
certificate for the shares of Liberty Media Group Common Stock not redeemed.
The Company will not be required to register a transfer of (i) any shares of
Liberty Media Group Common Stock for a period of 15 Trading Days next preceding
any selection of shares of Liberty Media Group Common Stock to be redeemed or
(ii) any shares of Liberty Media Group Common Stock selected or called for
redemption. Shares selected for redemption may not thereafter be converted
pursuant to the provisions described under 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
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any payment for fractional securities, and such holder will have no other or
further rights in respect of the shares of Liberty Media Group Common Stock so
converted or redeemed, including, but not limited to, any rights with respect to
any cash, securities or other property which are reserved or otherwise
designated by the Company as being held for the satisfaction of the Company's
obligations to pay or deliver any cash, securities or other property upon the
conversion, exercise or exchange of any Convertible Securities outstanding as of
the date of such conversion or redemption or any Committed Acquisition Shares
which may then be issuable. No holder of a certificate that, immediately prior
to the applicable conversion date or redemption date for the Liberty Media Group
Common Stock, represented shares of Liberty Media Group Common Stock will be
entitled to receive any dividend or other distribution with respect to shares of
any kind of capital stock into or in exchange for which the Liberty Media Group
Common Stock was converted or redeemed until surrender of such holder's
certificate for a certificate or certificates representing shares of such kind
of capital stock. Upon such surrender, there will be paid to the holder the
amount of any dividends or other distributions (without interest) which
theretofore became payable with respect to a record date after the conversion
date or redemption date, as the case may be, but that were not paid by reason of
the foregoing, with respect to the number of whole shares of the kind of capital
stock represented by the certificate or certificates issued upon such surrender.
From and after a conversion date or redemption date, as the case may be, of
Liberty Media Group Common Stock, the Company will, however, be entitled to
treat the certificates for shares of Liberty Media Group Common Stock that have
not yet been surrendered for conversion or redemption as evidencing the
ownership of the number of whole shares of the kind or kinds of capital stock
for which the shares of Liberty Media Group Common Stock represented by such
certificates have been converted or redeemed, notwithstanding the failure to
surrender such certificates.
The Company will pay any and all documentary, stamp or similar issue or
transfer taxes that may be payable in respect of the issue or delivery of any
shares of capital stock and/or other securities on conversion or redemption of
shares of Liberty Media Group Common Stock. The Company will not, however, be
required to pay any tax that may be payable in respect of any transfer involved
in the issue and delivery of any shares of capital stock in a name other than
that in which the shares of Liberty Media Group Common Stock so converted or
redeemed were registered and no such issue or delivery will be made unless and
until the person requesting such issue has paid to the Company the amount of any
such tax, or has established to the satisfaction of the Company that such tax
has been paid.
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 TCI
Ventures Group and a determination of the Company to pay a dividend on or
undertake a partial or complete redemption of the TCI Ventures Group Common
Stock following such Disposition, in the event of any conversion of the TCI
Ventures Group Common Stock as described under "--Conversion and Redemption --
Conversion of TCI Ventures Group Common Stock at the Option of the Company" or
"--Conversion and Redemption --Mandatory Dividend, Redemption or Conversion of
TCI Ventures Group Common Stock," and in the event of a redemption of the TCI
Ventures Group Common Stock in exchange for stock of one
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or more subsidiaries as described under "--Conversion and Redemption--Redemption
of TCI Ventures Group Common Stock in Exchange for Stock of Subsidiary."
LIQUIDATION RIGHTS
In the event of a liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, after payment or provision for payment of the
debts and other liabilities of the Company and subject to the prior payment in
full of the preferential amounts to which any class or series of Preferred Stock
is entitled, (i) the holders of the shares of TCI Group Common Stock will share
equally, on a share for share basis, in a percentage of the funds of the Company
remaining for distribution to its common stockholders equal to 100% multiplied
by the average daily ratio (expressed as a decimal) of 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 the Company remaining for
distribution to its common stockholders equal to 100% multiplied by the average
daily ratio (expressed as a decimal) of X/Z for such 20-Trading Day period and
(iii) the holders of the shares of TCI Ventures Group Common Stock will share
equally, on a share for share basis, in a percentage of the funds of the Company
remaining for distribution to its common stockholders equal to 100% multiplied
by the average daily ratio (expressed as a decimal) of Y/Z for such 20-Trading
Day period, where W is the aggregate Market Capitalization of the Series A TCI
Group Common Stock and the Series B TCI Group Common Stock, X is the aggregate
Market Capitalization of the Series A Liberty Media Group Common Stock and the
Series B Liberty Media Group Common Stock, Y is the aggregate Market
Capitalization of the Series A TCI Ventures Group Common Stock and the Series B
TCI Ventures Group Common Stock, and Z is the aggregate Market Capitalization of
the Series A TCI Group Common Stock, the Series B TCI Group Common Stock, the
Series A Liberty Media Group Common Stock, the Series B Liberty Media Group
Common Stock, the Series A TCI Ventures Group Common Stock and the Series B TCI
Ventures Group Common Stock. Neither a consolidation, merger nor sale of assets
will be construed to be a "liquidation," "dissolution" or "winding up" of the
Company.
No holder of Liberty Media Group Common Stock or TCI Ventures Group Common
Stock will have any special right to receive specific assets of the Liberty
Media Group or the TCI Ventures Group, as the case may be, in the case of any
dissolution, liquidation or winding up of the Company.
DETERMINATIONS BY THE BOARD OF DIRECTORS
The Charter provides that any determinations made by the Board of Directors
under any provision described under "Common Stock" will be final and binding on
all stockholders of the Company, except as may otherwise be required by law.
Such a determination would not be binding if it were established that the
determination was made in breach of a fiduciary duty of the Board of Directors.
The Company will prepare a statement of any such determination by the Board of
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Directors respecting the fair market value of any properties, assets or
securities and will file such statement with the Secretary of the Company.
PREEMPTIVE RIGHTS
Holders of the TCI Group Common Stock, the Liberty Media Group Common Stock
and the TCI Ventures Group Common Stock do not have any preemptive rights to
subscribe for any additional shares of capital stock or other obligations
convertible into or exercisable for shares of capital stock that may hereafter
be issued by the Company.
PREFERRED STOCK
As of September 30, 1997, 1,620,026 shares of Class B Preferred Stock,
70,575 shares of Series C Preferred Stock, 994,876 shares of Series D Preferred
Stock, 278,307 shares of Series F Preferred Stock, 6,693,027 shares of Series G
Preferred Stock and 6,693,127 shares of Series H Preferred Stock were
outstanding. All of the outstanding shares of Series F Preferred Stock and
67,536 shares of Class B Preferred Stock are held by subsidiaries of the
Company. The liquidation preference as of such date of the Class B Preferred
Stock was $100 per share, of the Series C Preferred Stock was $2,375 per share,
of the Series D Preferred Stock was $300 per share, of the Series F Preferred
Stock was $.01 per share, of the Series G Preferred Stock was $21.60 per share,
and of the Series H Preferred Stock was $5.40 per share. After receipt of their
liquidation preference, holders of Series F Preferred Stock are entitled to
receive from the assets of the Company available for distribution to common
stockholders an amount equal to the amount per share to be distributed to
holders of Series A TCI Group Common Stock in such liquidation, multiplied by
the number of shares of Series A TCI Group Common Stock into which their shares
of Series F Preferred Stock are then convertible. Each share of Series C
Preferred Stock is convertible at the option of the holder into 116.24 shares of
Series A TCI Group Common Stock and 25 shares of Series A Liberty Media Group
Common Stock (and, upon conversion of shares of Series C Preferred Stock, each
holder of Series C Preferred Stock is entitled to receive one additional share
of Series A Liberty Media Group Common Stock for every two such shares received
upon conversion). Each share of Series D Preferred Stock is convertible at the
option of the holder into 10 shares of Series A TCI Group Common Stock, two and
one-half shares of Series A Liberty Media Group Common Stock (and, upon
conversion of shares of the Series D Preferred Stock, each holder of Series D
Preferred Stock is entitled to receive one additional share of Series A Liberty
Media Group Common Stock for every two such shares received upon conversion),
and one share of TCI Satellite Entertainment, Inc. Series A Common Stock. Each
share of Series F Preferred Stock is convertible into 1,496.65 shares of Series
A TCI Group Common Stock. Each share of Series G Preferred Stock is convertible
at the option of the holder into 1.190 shares of Series A TCI Group Common
Stock. Each share of Series H Preferred Stock is convertible at the option of
the holder into .2625 shares of Series A Liberty Media Group Common Stock (and,
upon conversion of shares of Series H Preferred Stock, each holder of Series H
Preferred Stock is entitled to receive one additional share of Series A Liberty
Media Group Common Stock for every two such shares received upon conversion), in
each case subject to antidilution adjustments. The Series C Preferred Stock,
the
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Series G Preferred Stock and the Series H Preferred Stock are required to be
redeemed by the Company out of legally available funds on August 8, 2001,
February 1, 2016 and February 1, 2016, respectively. The Series D Preferred
Stock is redeemable at the option of the holder at any time after the tenth
anniversary of its issuance.
The Class B Preferred Stock, the Series F Preferred Stock, the Series G
Preferred Stock and the Series H Preferred Stock are each entitled to vote, on
the basis of one vote per share, together with the Common Stock and any class or
series of Preferred Stock of the Company entitled to vote thereon, in the
general election of directors of the Company. The holders of shares of Series C
Preferred Stock are entitled to vote such shares on an as converted basis on all
matters submitted to a vote of holders of Common Stock and any other class of
capital stock of the Company entitled to vote generally on the election of
directors. The consent of the holders of 66b% of the aggregate liquidation
value of the Series D Preferred Stock is required in order for the Company to
create any series of Preferred Stock that is senior to the Series D Preferred
Stock. Except as described above and as otherwise required by the DGCL or the
Charter, the currently outstanding Preferred Stock of the Company has no voting
rights. The terms of the various classes and series of the Company's Preferred
Stock include provisions that restrict the redemption or repurchase of and the
payment of dividends or the making of distributions on the Common Stock if any
dividends are in arrears on the Preferred Stock or if the Company has failed to
redeem any shares of Preferred Stock that it was required to redeem.
ANTI-TAKEOVER CONSIDERATIONS
The DGCL, the Charter and the Company's Bylaws contain provisions which may
serve to discourage or make more difficult a change in control of the Company
without the support of the Board of Directors or without meeting various other
conditions. The principal provisions of the DGCL, the Charter and the Company's
Bylaws with respect to the foregoing are outlined below.
DGCL Section 203, in general, prohibits a "business combination" between a
corporation and an "interested stockholder" within three years of the time such
stockholder became an "interested stockholder," unless (i) prior to such time
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) at
or subsequent to such time, 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
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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 or
entity that individually or with or through such person or entity's affiliates
or associates, among other things, beneficially owns such stock, or has the
right to acquire such stock (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement or understanding or
upon the exercise of warrants or options or otherwise or has the right to vote
such stock pursuant to any agreement or understanding, or has an agreement or
understanding with the beneficial owner of such stock for the purpose of
acquiring, holding, voting or disposing of such stock. The restrictions of DGCL
Section 203 do not apply to corporations that have elected, in the manner
provided therein, not to be subject to such section or, with certain exceptions,
which do not have a class of voting stock that is listed on a national
securities exchange or authorized for quotation on The Nasdaq Stock Market or
held of record by more than 2,000 stockholders.
The Charter does not contain any provision "opting out" of the application
of DGCL Section 203 and the Company has not taken any of the actions necessary
for it to "opt out" of such provision. As a result, the provisions of Section
203 will remain applicable to transactions between the Company and any of its
"interested stockholders."
The Charter also contains certain provisions which could make a change in
control of the Company more difficult. For example, the Charter requires,
subject to the rights, if any, of any class or series of 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 the Company with, or into, another corporation, other than a
merger or consolidation which does not require the consent of stockholders under
the DGCL or a merger or consolidation which has been approved by 75% of the
members of the Board of Directors (in which case, in accordance with the DGCL,
the affirmative vote of a majority of the total voting power of the outstanding
Voting Securities would, with certain exceptions, be required for approval),
(ii) the sale, lease or exchange of all or substantially all of the property and
assets of the Company or (iii) the dissolution of the Company. "Voting
Securities" is defined in the Charter as the TCI Group Common Stock, the Liberty
Media Group Common Stock, the TCI Ventures Group Common Stock and any class or
series of Preferred Stock entitled to vote generally with the holders of Common
Stock on matters submitted to stockholders for a vote, which currently would
include the Series C Preferred Stock. The Charter also provides for a Board of
Directors of not less than three members, divided into three classes of
approximately equal size, with each class to be elected for a three-year term at
the annual meeting of stockholders at which such class of directors' term
expires. The exact
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number of directors, currently ten, is fixed by the Board of Directors. The
holders of Voting Securities and of Class B 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 the Company's Series F Preferred Stock
are 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 the
Company.) Stockholders of the Company do not have cumulative voting rights.
The Charter authorizes the issuance of 50,000,000 shares of Series
Preferred Stock, of which 33,901,240 remain available for issuance as of
September 30, 1997. Under the Charter, the Board of Directors is authorized,
without further action by the stockholders of the Company, to establish the
preferences, limitations and relative rights of the Series Preferred Stock. In
addition, 1,900,000,000 shares of TCI Group Common Stock, 825,000,000 shares of
Liberty Media Group Common Stock and 825,000,000 shares of TCI Ventures Group
Common Stock are currently authorized by the Charter, of which 1,043,774,248
shares of TCI Group Common Stock, 561,120,509 shares of Liberty Media Group
Common Stock and 620,072,300 shares of TCI Ventures Group Common Stock remain
available for issuance as of September 30, 1997 (in each case without taking
into consideration shares 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, TCI Ventures Group Common Stock and/or Series Preferred Stock
could occur in connection with an attempt to acquire control of the Company, and
the terms of such shares of Series Preferred Stock could be designed in part to
impede the acquisition of such control.
The 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 Charter or the addition or insertion of other provisions therein.
The Charter and the Company's Bylaws provide that a special meeting of
stockholders will be held at any time, subject to the rights of the holders of
any class or series of Preferred Stock, upon the call of the Secretary of the
Company 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 Board of Directors.
Subject to the rights of any class or series of Preferred Stock, the Company's
Bylaws require that written notice of the intent to make a nomination at a
meeting of stockholders must be received by the Secretary of the Company, at the
Company's principal executive offices, not later than (a) with respect to an
election of directors to be held at an annual meeting of stockholders, 90 days
in advance of such meeting, and (b) with respect to an election of directors to
be held at a special meeting of stockholders, the close of business on the
seventh day following the day on which notice of such meeting is first given to
stockholders. The notice must contain: (1) the name and address of the
stockholder who intends to make the nomination and of the person or persons to
be nominated; (2) a representation that the stockholder is a holder of record of
the Company's Voting Securities entitled to vote at the meeting and intends to
appear in person or by proxy at the meeting to nominate the person or persons
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specified in the notice; (3) a description of all arrangements or understandings
between the stockholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or nominations are to
be made by the stockholder; (4) such other information regarding each nominee
proposed by such stockholder as would have been required to be included in a
proxy statement filed pursuant to the proxy rules of the Securities and Exchange
Commission had each proposed nominee been nominated, or intended to be
nominated, by the Board of Directors; and (5) the consent of each nominee to
serve as a director of the Company if so elected. Any action to remove directors
is required to be for "cause" (as defined in the 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 (which would include the Class B Preferred
Stock, the Series G Preferred Stock and the Series H Preferred Stock, in
addition to the Voting Securities).
LEGAL MATTERS
The validity of the Shares will be passed upon for the Company by Stephen
M. Brett, Esq., Executive Vice President and General Counsel of the Company.
EXPERTS
The consolidated balance sheets of Tele-Communications, Inc. and
subsidiaries as of December 31, 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., as amended by Form 10-K/A
(Amendment No. 1), 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., as amended by Form 10-K/A (Amendment No. 1), 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
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Report on Form 10-K of Tele-Communications, Inc., as amended by Form 10-K/A
(Amendment No. 1), 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., as amended by Form 10-K/A
(Amendment No. 1), 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, as amended on Form 10-K/A
(Amendment No. 1), for the year ended December 31, 1996 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their 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, as amended on Form 10-K/A (Amendment
No. 1), 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, incorporated by reference herein, given
on the authority of said firm as experts in auditing and accounting.
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================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH
DATE. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE
SPECIFICALLY OFFERED HEREBY OR OF ANY SECURITIES OFFERED HEREBY IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
-----------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information..................................................... 2
Incorporation of Documents by Reference................................... 2
Risk Factor............................................................... 4
The Company............................................................... 4
Shares Being Offered and Selling Stockholder(s)........................... 5
Plan of Distribution...................................................... 9
Description of Capital Stock.............................................. 10
Common Stock........................................................... 11
Preferred Stock........................................................ 58
Legal Matters............................................................. 62
Experts................................................................... 62
</TABLE>
================================================================================
================================================================================
TELE-COMMUNICATIONS, INC.
Tele-Communications, Inc. Series A TCI Group Common Stock ($1.00 par value)
Tele-Communications, Inc. Series A TCI Ventures Group Common Stock ($1.00 par
value)
-----------------------------------------
PROSPECTUS
-----------------------------------------
______________________, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
All of the expenses in connection with the distribution of the Shares are
set forth below and will be borne by the Registrant. Except for the
registration fee, all expenses are estimated.
<TABLE>
<S> <C>
Registration Fee..........................................$103,197.00
Blue Sky Fees and Expenses (including counsel fees)....... 1,000.00
Legal Fees and Expenses................................... 20,000.00
Accounting Fees and Expenses.............................. 25,000.00
Miscellaneous............................................. 1,000.00
-----------
Total................................................$150,197.00
===========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("DGCL") provides,
generally, that a corporation shall have the power to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding (except actions by or in the right of
the corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation against all expenses, judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. A corporation may similarly indemnify such person for
expenses actually and reasonably incurred by such person in connection with the
defense or settlement of any action or suit by or in the right of the
corporation, provided such person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and, in the case of claims, issues and matters as to which such
person shall have been adjudged liable to the corporation, provided that a court
shall have determined, upon application, that, despite the adjudication of
liability but in view of all of the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper.
Section 102(b)(7) of the DGCL provides, generally, that the certificate of
incorporation may contain a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
may not eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under section 174 of Title 8 of
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the DGCL, or (iv) for any transaction from which the director derived an
improper personal benefit. No such provision may eliminate or limit the
liability of a director for any act or omission occurring prior to the date when
such provision became effective.
Article V, Section E of the Company's Restated Certificate of Incorporation
provides as follows:
"1. Limitation on Liability.
-----------------------
To the fullest extent permitted by the DGCL as the same exists or may
hereafter be amended, a director of the Corporation shall not be
liable to the Corporation or any of its stockholders for monetary
damages for breach of fiduciary duty as a director. Any repeal or
modification of this paragraph 1 shall be prospective only and shall
not adversely affect any limitation, right or protection of a
director of the Corporation existing at the time of such repeal or
modification.
2. Indemnification.
---------------
(a) RIGHT TO INDEMNIFICATION. The Corporation shall indemnify and
hold harmless, to the fullest extent permitted by applicable law as
it presently exists or may hereafter be amended, any person who was
or is made or is threatened to be made a party or is otherwise
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "proceeding") by reason of the
fact that he, or a person for whom he is the legal representative, is
or was a director or officer of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture,
trust, enterprise or nonprofit entity, including service with respect
to employee benefit plans, against all liability and loss suffered
and expenses (including attorneys' fees) reasonably incurred by such
person. Such right of indemnification shall inure whether or not the
claim asserted is based on matters which antedate the adoption of
this Section E. The Corporation shall be required to indemnify a
person in connection with a proceeding (or part thereof) initiated by
such person only if the proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation.
(b) PREPAYMENT OF EXPENSES. The Corporation shall pay the expenses
(including attorneys' fees) incurred in defending any proceeding in
advance of its final disposition, provided, however, that the payment
of expenses incurred by a director or officer in advance of the final
disposition of the proceeding shall be made only upon receipt of an
undertaking by the director or officer to repay all amounts advanced
if it should be ultimately determined that the director or officer is
not entitled to be indemnified under this paragraph or otherwise.
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<PAGE>
(c) CLAIMS. If a claim for indemnification or payment of expenses
under this paragraph is not paid in full within 60 days after a
written claim therefor has been received by the Corporation, the
claimant may file suit to recover the unpaid amount of such claim
and, if successful in whole or in part, shall be entitled to be paid
the expense of prosecuting such claim. In any such action the
Corporation shall have the burden of proving that the claimant was
not entitled to the requested indemnification or payment of expenses
under applicable law.
(d) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person
by this paragraph shall not be exclusive of any other rights which
such person may have or hereafter acquire under any statute,
provision of this Certificate, the Bylaws, agreement, vote of
stockholders or disinterested directors or otherwise.
(e) OTHER INDEMNIFICATION. The Corporation's obligation, if any,
to indemnify any person who was or is serving at its request as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust, enterprise or nonprofit entity
shall be reduced by any amount such person may collect as
indemnification from such other corporation, partnership, joint
venture, trust, enterprise or nonprofit entity.
3. Amendment or Repeal.
-------------------
Any repeal or modification of the foregoing provisions of this
Section E shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification."
Article II, Section 2.9 of the Company's Bylaws also contains an indemnity
provision, requiring the Company to indemnify members of the Board of Directors
and officers of the Company and their respective heirs, personal representatives
and successors in interest for or on account of any action performed on behalf
of the Company, to the fullest extent provided by the laws of the State of
Delaware and the Company's Restated Certificate of Incorporation, as then or
thereafter in effect.
The Company has also entered into indemnification agreements with each of
its directors (each director, an "indemnitee"). The indemnification agreements
provide (i) for the prompt indemnification to the fullest extent permitted by
law against any and all expenses, including attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with investigating,
defending, being a witness or participating in (including on appeal), or in
preparing for ("Expenses"), any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation ("Claim"), related to the fact that
such indemnitee is or was a director, officer, employee, agent or fiduciary of
the Company or is or was serving at the Company's request as a director,
officer, employee, trustee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise, or
by reason of anything done or not done by a director or officer in any such
capacity, and against any and all judgments, fines, penalties and
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<PAGE>
amounts paid in settlement (including all interest, assessments and other
charges paid or payable in connection therewith) of any Claim, unless the
Reviewing Party (one or more members of the Board of Directors or other person
appointed by the Board of Directors, who is not a party to the particular claim,
or independent legal counsel) determines that such indemnification is not
permitted under applicable law and (ii) for the prompt advancement of Expenses,
and for reimbursement to the Company if the Reviewing Party determines that such
indemnitee is not entitled to such indemnification under applicable law. In
addition, the indemnification agreements provide (i) a mechanism through which
an indemnitee may seek court relief in the event the Reviewing Party determines
that the indemnitee would not be permitted to be indemnified under applicable
law (and therefore is not entitled to indemnification or expense advancement
under the indemnification agreement) and (ii) indemnification against all
expenses (including attorneys' fees), and advancement thereof if requested,
incurred by the indemnitee in seeking to collect an indemnity claim or
advancement of expenses from the Company or incurred in seeking to recover under
a directors' and officers' liability insurance policy, regardless of whether
successful or not. Furthermore, the indemnification agreements provide that
after there has been a "change in control" in the Company (as defined in the
indemnification agreements), other than a change in control approved by a
majority of directors who were directors prior to such change, then, with
respect to all determinations regarding a right to indemnity and the right to
advancement of Expenses, the Company will seek legal advice only from
independent legal counsel selected by the indemnitee and approved by the
Company.
The indemnification agreements impose upon the Company the burden of
proving that an indemnitee is not entitled to indemnification in any particular
case and negate certain presumptions that may otherwise be drawn against an
indemnitee seeking indemnification in connection with the termination of actions
in certain circumstances. Indemnitees' rights under the indemnification
agreements are not exclusive of any other rights they may have under Delaware
law, the Company's Bylaws or otherwise. Although not requiring the maintenance
of directors' and officers' liability insurance, the indemnification agreements
require that an indemnitee be provided with the maximum coverage available for
any director or officer of the Company if there is such a policy.
The Company may purchase liability insurance policies covering its
directors and officers.
In addition, the Selling Stockholder(s) have agreed to indemnify the
Company, its directors and officers and each person, if any, who controls the
Company within the meaning of either the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), against certain
liabilities, including civil liabilities under the Securities Act, in connection
with certain actions arising out of the sale of the Shares registered hereby.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibits Description
- -------- -----------
<S> <C>
4.1 Restated Certificate of Incorporation of the Company dated August 4,
1994, as amended on August 4, 1994, August 16, 1994, October 11,
1994, October 21, 1994, January 26, 1995, August 3, 1995, August 3,
1995, January 25, 1996, January 25,
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C>
1996, April 7, 1997 and August 28, 1997. (Incorporated herein by
reference to Exhibit 1 of the Company's registration statement on
Form 8-A, as amended by Form 8-A/A (Amendment No. 1) on August 28,
1997 (Commission File No. 0-20421)).
4.2 Bylaws of the Company as adopted June 16, 1994 (Incorporated herein
by reference to Exhibit 3.2 of the Company's Annual Report on Form
10-K for the year ended December 31, 1994, as amended by Form 10-K/A
(Commission File No. 0-20421)).
4.3 Specimen Stock Certificate for the Tele-Communications, Inc. Series A
TCI Group Common Stock, par value $1.00 per share (Incorporated
herein by reference to Exhibit 4.3 of the initial filing of Company's
registration statement on Form 8-A, which was subsequently amended by
Form 8-A/A (Amendment Nos. 1, 2 and 3) (Commission File No. 0-
20421)).
4.4 Specimen Stock Certificate for Tele-Communications, Inc. Series A TCI
Ventures Group Common Stock, par value $1.00 per share (Incorporated
herein by reference to Exhibit 4.3 of Company's registration
statement on Form S-8, filed with the Commission on November 13, 1997
(333-40141)).
5 Opinion of Stephen M. Brett, Esq.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of KPMG Peat Marwick LLP.
23.4 Consent of KPMG Audit Plc.
23.5 Consent of Deloitte & Touche LLP.
23.6 Consent of Price Waterhouse LLP.
23.7 Consent of Price Waterhouse LLP.
23.8 Consent of Stephen M. Brett, Esq. (included in Exhibit 5).
24 Powers of Attorney (included on Page II-9).
99.1 Registration Rights Agreement, dated as of November 17, 1997, by and
between the Company and Toronto Dominion (New York), Inc.
</TABLE>
II-5
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of the prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
- -------- -------
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to section 13 or section 15(d) of the
Exchange Act that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to section 13(a) or
section 15(d) of the Exchange Act that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Greenwood Village, State of Colorado, on December 3,
1997.
TELE-COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
--------------------------------------------
Name: Stephen M. Brett
Title: Executive Vice President
II-8
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Stephen M. Brett, Esq. and Elizabeth M.
Markowski, Esq., and each of them, his true and lawful attorneys-in-fact and
agents with full power of substitution and re-substitution for him and in his
name, place and stead, in any and all capacities, to sign any or all amendments
(including post-effective amendments) to this Registration Statement and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Commission, granting unto said attorneys-in-fact and agents
and each of them full power and authority, to do and perform each and every act
and thing requisite or necessary to be done in and about the premises, to all
intents and purposes and as fully as they might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement on Form S-3 has been signed by the following persons (which persons
constitute a majority of the Board of Directors) in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ John C. Malone Chairman of the Board, Chief December 3, 1997
- --------------------------- Executive Officer and
(John C. Malone) Director (Principal Executive
Officer)
/s/ Leo J. Hindery, Jr. President, Chief Operating December 3, 1997
- --------------------------- Officer and Director
(Leo J. Hindery, Jr.)
- --------------------------- Director ---------------,1997
(Donne F. Fisher)
- --------------------------- Director ---------------,1997
(Kim Magness)
- --------------------------- Director ---------------,1997
(John W. Gallivan)
- --------------------------- Director ---------------,1997
(Robert A. Naify)
/s/ Jerome H. Kern Director December 3, 1997
- ---------------------------
(Jerome H. Kern)
/s/ J.C. Sparkman Director December 3, 1997
- ---------------------------
(J.C. Sparkman)
/s/ Paul A. Gould Director December 3, 1997
- ---------------------------
(Paul A. Gould)
/s/ Bernard W. Schotters Senior Vice President and December 3, 1997
- --------------------------- Treasurer (Principal Financial
(Bernard W. Schotters) Officer)
/s/ Gary K. Bracken Senior Vice President of TCI December 3, 1997
- --------------------------- Communications, Inc.
(Gary K. Bracken) (Principal Accounting
Officer)
</TABLE>
II-9
<PAGE>
EXHIBIT INDEX
4.1 Restated Certificate of Incorporation of the Company dated August 4,
1994, as amended on August 4, 1994, August 16, 1994, October 11, 1994,
October 21, 1994, January 26, 1995, August 3, 1995, August 3, 1995,
January 25, 1996, January 25, 1996, April 7, 1997 and August 28, 1997.
(Incorporated herein by reference to Exhibit 1 of the Company's
registration statement on Form 8-A, as amended by Form 8-A/A
(Amendment No. 1) on August 28, 1997 (Commission File No. 0-20421)).
4.2 Bylaws of the Company as adopted June 16, 1994 (Incorporated herein by
reference to Exhibit 3.2 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1994, as amended by Form 10-K/A
(Commission File No. 0-20421)).
4.3 Specimen Stock Certificate for the Tele-Communications, Inc. Series A
TCI Group Common Stock, par value $1.00 per share (Incorporated herein
by reference to Exhibit 4.3 of the initial filing of Company's
registration statement on Form 8-A, which was subsequently amended by
Form 8-A/A (Amendment Nos. 1, 2 and 3) (Commission File No. 0-20421)).
4.4 Specimen Stock Certificate for Tele-Communications, Inc. Series A TCI
Ventures Group Common Stock, par value $1.00 per share (Incorporated
herein by reference to Exhibit 4.3 of Company's registration statement
on Form S-8, filed with the Commission on November 13, 1997 (333-
40141)).
5 Opinion of Stephen M. Brett, Esq.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of KPMG Peat Marwick LLP.
23.4 Consent of KPMG Audit Plc.
23.5 Consent of Deloitte & Touche LLP.
23.6 Consent of Price Waterhouse LLP.
23.7 Consent of Price Waterhouse LLP.
23.8 Consent of Stephen M. Brett, Esq. (included in Exhibit 5).
24 Powers of Attorney (included on Page II-9).
99.1 Registration Rights Agreement, dated as of November 17, 1997, by and
between the Company and Toronto Dominion (New York), Inc.
<PAGE>
TELE-COMMUNICATIONS, INC.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
EXHIBIT 5
---------
December 3, 1997
Board of Directors
Tele-Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
Dear Sirs:
I am Executive Vice President and General Counsel of
Tele-Communications, Inc., a Delaware corporation (the "Company"), and this
opinion is being delivered in connection with the filing of the Company's
Registration Statement on Form S-3 (the "Registration Statement"), with respect
to the registration under the Securities Act of 1933, as amended (the "Act"), of
shares of the Company's Tele-Communications, Inc. Series A TCI Group Common
Stock, par value $1.00 per share (the "TCOMA Shares"), and shares of the
Company's Tele-Communications, Inc. Series A TCI Ventures Group Common Stock,
par value $1.00 per share (the "TCIVA Shares" and, collectively with the TCOMA
Shares, the "Shares"), each to be offered and sold from time to time by the
holder thereof named in the Registration Statement (the "Selling Stockholder").
In connection therewith, I have examined, among other things,
the originals, certified copies or copies otherwise identified to my
satisfaction as being copies of originals, of the Restated Certificate of
Incorporation and By-Laws of the Company, as amended; minutes of the proceedings
of the Company's Board of Directors; and such other documents, records,
certificates of public officials and questions of law as I deemed necessary or
appropriate for the purpose of this opinion. In rendering this opinion, I have
relied, to the extent I deemed such reliance appropriate, on certificates of
officers of the Company as to factual matters. I have assumed the authenticity
of all documents submitted to me as originals and the conformity to authentic
original documents of all documents submitted to me as certified, conformed or
reproduction copies. I have further assumed that there will be no changes in
applicable law between the date of this opinion and the date the Shares proposed
to be sold by the Selling Stockholder pursuant to the Registration Statement are
actually sold.
Based upon the foregoing, I am of the opinion that each of the
TCOMA Shares and TCIVA Shares (i) to the extent such Shares are already issued,
have been duly authorized and are validly issued, fully paid and non-assessable
and (ii) to the extent such Shares have not already been issued, will be duly
authorized and will be, upon payment therefor, validly issued, fully paid and
non-assessable.
<PAGE>
I hereby consent to the filing of this opinion as Exhibit 5 to
the Registration Statement and to the reference to me contained therein under
the heading "Legal Matters." In giving the foregoing consent, I do not admit
that I am in the category of persons whose consent is required under Section 7
of the Act, as amended, or the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
Very truly yours,
/s/ Stephen M. Brett
Stephen M. Brett
Executive Vice President and
General Counsel
<PAGE>
Exhibit 23.1
------------
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Tele-Communications, Inc.:
We consent to the incorporation by reference in the registration statement on
Form S-3 of Tele-Communications, Inc. of our reports, dated March 24, 1997,
relating to 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 reports appear in the December 31, 1996
Annual Report on Form 10-K of Tele-Communications, Inc., as amended by Form 10-
K/A (Amendment No. 1), and to the reference to our firm under the heading
"Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
December 2, 1997
<PAGE>
Exhibit 23.2
------------
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Tele-Communications, Inc.:
We consent to the incorporation by reference in the registration statement on
Form S-3 of Tele-Communications, Inc. of our report, dated March 24, 1997,
relating to 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
report appears in the December 31, 1996 Annual Report on Form 10-K of Tele-
Communications, Inc., as amended by Form 10-K/A (Amendment No. 1), and to the
reference to our firm under the heading "Experts" in the prospectus. Our report
covering the combined financial statements 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.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
December 2, 1997
<PAGE>
Exhibit 23.3
------------
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Tele-Communications, Inc.:
We consent to the incorporation by reference in the registration statement on
Form S-3 of Tele-Communications, Inc. of our report, dated March 24, 1997,
relating to 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 report appears in the December 31, 1996 Annual Report on Form 10-K
of Tele-Communications, Inc., as amended by Form 10-K/A (Amendment No. 1), and
to the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
December 2, 1997
<PAGE>
Exhibit 23.4
------------
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders of
Telewest Communications plc:
We consent to the incorporation by reference in the registration statement on
Form S-3 of Tele-Communications, Inc. of our report, dated March 11, 1997,
relating to 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 report appears in the December 31, 1996
Annual Report on Form 10-K of Tele-Communications, Inc., as amended by Form 10-
K/A (Amendment No. 1), and to the reference to our firm under the heading
"Experts" in the prospectus.
/s/ KPMG Audit Plc
KPMG Audit Plc
Chartered Accountants
Registered Auditors
London, England
December 2, 1997
<PAGE>
Exhibit 23.5
------------
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the registration statement on
Form S-3 of Tele-Communications, Inc. of our report dated March 14, 1997 on the
consolidated financial statements of Sprint Spectrum Holding Company, L.P. and
subsidiaries (which expresses an unqualified opinion and includes an explanatory
paragraph referring to the developmental stage of Sprint Spectrum Holding
Company, L.P. and subsidiaries) 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 appearing in the Annual Report on Form 10-K of
Tele-Communications, Inc., as amended by Form 10-K/A (Amendment No. 1), for the
year ended December 31, 1996 and to the reference to us under the heading
"Experts" in the prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Kansas City, Missouri
December 2, 1997
<PAGE>
Exhibit 23.6
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of Tele-
Communications, Inc. of our report dated March 7, 1997 on the financial
statements of American PCS, L.P. (A Delaware Limited Partnership) as of and for
the year ended December 31, 1996 referred to in the consolidated financial
statements of Sprint Spectrum Holding Company, L.P. and subsidiaries, which
appears in the Annual Report on Form 10-K of Tele-Communications, Inc., as
amended by Form 10-K/A (Amendment No. 1), for the year ended December 31, 1996.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Washington, D.C.
December 2, 1997
<PAGE>
Exhibit 23.7
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of Tele-
Communications, Inc. of our report dated February 14, 1996, relating to the
combined financial statements of VII Cable which appears in the report on Form
8-K of Tele-Communications, Inc. dated June 19, 1996. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Jose, California
December 2, 1997
<PAGE>
Exhibit 99.1
REGISTRATION RIGHTS AGREEMENT
-----------------------------
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of November
17, 1997, by and between TELE-COMMUNICATIONS, INC., a Delaware corporation (the
"Company") and TORONTO DOMINION (NEW YORK), INC., a New York corporation
("TD(NY)").
WITNESSETH:
WHEREAS, TCI and TD Securities (USA) Inc. on its own behalf and as
agent for TD(NY) are parties to a letter agreement, dated as of November 17,
1997 (the "Facility"), pursuant to which TCI may direct TD(NY) to acquire shares
of Tele-Communications, Inc. Series A TCI Group Common Stock, par value $1.00
per share ("TCOMA"), and/or shares of Tele-Communications, Inc. Series A TCI
Ventures Group Common Stock, par value $1.00 per share ("TCIVA"), for an
aggregate purchase price of up to $300,000,000 (shares of TCOMA and TCIVA
acquired by TD(NY) or its permitted assignees pursuant to the terms of the
Facility are referred to herein as "Facility Shares");
WHEREAS, TD(NY) and the Company are parties to an ISDA Master
Agreement, dated November 17, 1997 (the "Master Agreement," which term includes
the related schedule and confirmations), pursuant to which TD(NY) and the
Company may establish equity swaps that correspond to the Facility Shares
acquired by TD(NY);
WHEREAS, upon the termination, in whole or in part, of an equity swap
under the Master Agreement, the Company may settle its obligation thereunder by
delivering to TD(NY) shares of TCOMA and/or shares of TCIVA (shares of TCOMA
and TCIVA delivered by TCI in settlement of its obligations upon any termination
of an equity swap under the Master Agreement are referred to herein as
"Settlement Shares");
WHEREAS, the Facility Shares may be deemed to be, and the Settlement
Shares will be, "restricted securities" within the meaning of subparagraph
(a)(3) of Rule 144 under the Securities Act (as defined below), or may otherwise
be subject to the resale limitations of Rule 144; and
WHEREAS, the Company has agreed to file and keep continuously
effective, for the periods and on the terms and conditions set forth herein, a
"shelf" registration statement for the resale of any Facility Shares, to the
extent such shares may be deemed subject to the limitations of Rule 144, and
any Settlement Shares.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:
<PAGE>
1. Certain Definitions. Capitalized terms used but not defined herein
--------------------
shall have the meanings given such terms in the Master Agreement. In addition
to the terms defined in the recitals to this Agreement, the following terms, as
used herein, shall have the following meanings:
Business Day: Any day other than a Saturday, Sunday or other day on
------------
which banking institutions in Denver, Colorado or New York, New York are
authorized or obligated by law, regulation or executive order to close.
Commission: The Securities and Exchange Commission, or any other
----------
Federal agency at the time administering the Securities Act and the Exchange
Act.
Exchange Act: The Securities Exchange Act of 1934, as amended, or any
------------
successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, as they each may, from time to time, be in effect.
Prospectus: The prospectus included in the Registration Statement as
----------
of the date it becomes effective under the Securities Act and, in the case of
references to the Prospectus as of a date subsequent to the effective date of
the Registration Statement, as amended or supplemented as of such date,
including all documents incorporated by reference therein, as amended, and each
prospectus supplement relating to the offering and sale of any of the
Registrable Shares.
Registrable Shares: The term "Registrable Shares" means (i) all
------------------
Settlement Shares delivered by TCI to a Seller pursuant to a "Net Share
Settlement" under the Master Agreement (including without limitations pursuant
to the "make-whole" provisions thereof), (ii) any Facility Shares acquired by a
Seller from TCI or an affiliate (as that term is defined in Rule 144(a)(3)
under the Securities Act) of TCI and (ii) any Facility Shares that are acquired
by a Seller from a person other than TCI or an affiliate of TCI, but only to the
extent the such Facility Shares are sold by a Seller in connection with a "Cash
Settlement" or a "Net Share Settlement" under the Master Agreement, and any
other shares of capital stock of the Company issued in respect of any shares
referred to in clauses (i), (ii) and (iii) above as a result of stock splits,
stock dividends, reclassification, recapitalizations, mergers, consolidations or
similar events. Following the final settlement of all amounts due to the Seller
by the Company under the Master Agreement, any particular Facility Shares or
Settlement Shares shall cease to be "Registrable Shares" at such time as they
are no longer subject to any of the resale limitations of Rule 144 under the
Securities Act.
Registration Expenses: All expenses incident to the Company's
---------------------
performance of or compliance with this Agreement, including, without limitation,
(i) all Commission and National Association of Securities Dealers, Inc.
registration and filing fees, (ii) fees and expenses of compliance with state
securities or blue sky laws (including, without limitation, reasonable fees and
disbursements of counsel for the Seller in connection with any blue sky
qualifications of any of the Registrable Shares), (iii) all printing expenses
and messenger and delivery expenses in connection with the preparation and
distribution of any documents relating to the performance of and
-2-
<PAGE>
compliance with this Agreement and (iv) fees and disbursements of counsel for
the Company and all independent certified public accountants (including the
expenses of any "cold comfort" letters prepared by such accountants); provided,
--------
however, the term "Registration Expenses" shall not include, and the Company
- -------
shall not be responsible for (except to the extent otherwise expressly provided
in the Master Agreement), any underwriting discounts or commissions or transfer
taxes, if any, attributable to the sale of any Registrable Shares.
Registration Statement: The term "Registration Statement" means the
----------------------
"shelf" registration statement of the Company on Form S-3 (or, if the Company is
not then eligible for Form S-3, such other form for which the Company then
qualifies) which (i) is filed by the Company with the Commission in accordance
with Section 2(a)(i) below and (ii) permits the secondary resale thereunder of
up to 10,090,000 shares of TCOMA and 5,190,000 shares of TCIVA on a delayed or
continuous basis in accordance with Rule 415 under the Securities Act, or any
successor rule that may be promulgated by the Commission under the Securities
Act, as they each may, from time to time, be in effect. The term "Registration
Statement" shall also include all exhibits and financial statements and
schedules and documents incorporated by reference in such Registration Statement
when it becomes effective under the Securities Act, and in the case of
references to the Registration Statement as of a date subsequent to the
effective date, as amended or supplemented as of such date.
Securities Act: The Securities Act of 1933, as amended, or any
--------------
successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, as they each may, from time to time, be in effect.
Seller: TD(NY) and any permitted assignee of TD(NY) under this
------
Agreement that acquires any Registrable Shares.
2. Shelf Registration.
-------------------
(a) The Company shall:
(i) file with the Commission under the Securities Act as
promptly as practicable, but in any event by December 3, 1997, a
Registration Statement providing for resales by the Seller of up to
10,090,000 shares of TCOMA and 5,190,000 shares of TCIVA. The section
of the Prospectus entitled "Plan of Distribution" shall provide that
the Seller may distribute Registrable Shares pursuant to the
Registration Statement and such Prospectus in the manner set forth on
Exhibit A hereto;
(ii) use its best efforts to cause such Registration Statement
to be declared effective by the Commission as promptly as practicable,
but in any event by January 12, 1998; and
-3-
<PAGE>
(iii) use its best efforts to keep such Registration Statement
continuously effective under the Securities Act until the later of (x)
the final settlement of all amounts due to the Seller from the Company
under the Master Agreement and (y) the earlier of (A) the sale of all
Registrable Shares owned by the Seller and (B) such time as there are
no longer any Registrable Shares.
(b) The Company shall supplement or amend the Registration Statement
as necessary to comply with the rules, regulations or instructions
applicable to Form S-3 (or, if different, the form used for the
Registration Statement) or by the Securities Act or by any other rules and
regulations thereunder for "shelf" registration, and the Company shall
furnish to the Seller copies of any such supplement or amendment promptly
after its being filed with the Commission.
3. Registration Procedures.
-----------------------
(a) In connection with the obligations of the Company pursuant to
Section 2 hereof, the Company shall:
(i) prepare and file with the Commission the Registration
Statement and cause the Registration Statement to become effective and
remain continuously effective in accordance with Section 2 hereof;
provided, however, that before filing any Registration Statement or
-------- -------
Prospectus or any amendments or supplements thereto (other than
documents that would be incorporated therein by reference) the Company
shall afford the Seller an opportunity to review copies of all such
documents proposed to be filed. The Company shall not file the
Registration Statement or related Prospectus or any amendments or
supplements thereto (other than such documents to be incorporated by
reference) if the Seller shall reasonably object on a timely basis,
unless such filing would be necessary to prevent a violation of any
applicable law or regulation;
(ii) notify the Seller (A) of the receipt of any comments from
the Commission on the Registration Statement prior to its becoming
effective, and the Company's responses thereto, (B) when the
Registration Statement becomes effective, (C) when the filing of a
post-effective amendment to the Registration Statement or supplement
to the Prospectus is required, when the same is filed, and in the case
of a post-effective amendment, when the same becomes effective, (D) of
any request by the Commission or any state securities authority for
any amendment of or supplement to the Registration Statement or the
Prospectus relating thereto or for additional information, (E) of the
entry of any stop order suspending the effectiveness of the
Registration Statement or of the initiation of any proceedings for
that purpose, (F) of the happening of any event or the failure of any
event to occur or the discovery of any facts or otherwise that makes
any statement made in the Registration Statement or the Prospectus
relating thereto untrue in any material
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<PAGE>
respect or that causes such Registration Statement or Prospectus to
omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading and (G) of the reasonable determination by the Company
that a post-effective amendment to the Registration Statement would be
appropriate;
(iii) use commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of the
Registration Statement or any order directed to any document
incorporated by reference in the related Prospectus at the earliest
possible moment;
(iv) furnish to the Seller a conformed copy of the Registration
Statement as declared effective by the Commission and each post-
effective amendment thereto, and such number of copies of the final
Prospectus and of each supplement thereto (together with documents
incorporated therein by reference) as may reasonably be required to
facilitate the distribution of the Registrable Shares in accordance
with a method of distribution described in the Registration Statement;
(v) cooperate with the Seller to facilitate the timely
preparation and delivery of certificates representing Registrable
Shares to be sold under the Registration Statement and not bearing any
restrictive legends and in such denominations and registered in such
names as the Seller or the underwriters may reasonably request at
least two Business Days prior to the closing of any sale of
Registrable Shares pursuant to the Registration Statement;
(vi) prepare a supplement or post-effective amendment to the
Registration Statement or the Prospectus relating thereto or any
document incorporated therein by reference or file any other required
document whenever necessary upon the occurrence of any circumstance so
that, as thereafter delivered to the purchasers of Registrable Shares,
such Prospectus will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(vii) if the Seller notifies the Company that it wishes to effect
an underwritten offering of Registrable Shares, (A) the Seller shall
have the right to select the managing underwriters, who shall be
subject to the approval of the Company, which approval shall not be
unreasonably withheld (it being understood that TD Securities (USA)
Inc. is, in any event, reasonably acceptable to the Company for this
purpose) and (B) the Company shall (w) enter into such agreements
(including underwriting agreements) as are customary in underwritten
offerings; (x) obtain opinions of counsel to the Company and updates
thereof (which may be in the form of a reliance letter) in form and
substance reasonably
-5-
<PAGE>
satisfactory to the managing underwriters and the Seller addressed to
the underwriters and the Seller covering the matters customarily
covered in opinions requested in underwritten offerings and such other
matters as may be reasonably requested by such underwriters and the
Seller (it being agreed that the matters to be covered by such opinion
may be subject to customary qualifications and exceptions); (y) obtain
"cold comfort" letters and updates thereof in form and substance
reasonably satisfactory to the managing underwriters and the Seller
from the independent certified public accountants of the Company (and,
if necessary, any other independent certified public accountants of
any subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to
each of the underwriters and, if permitted by applicable accounting
rules and statements, the Seller, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings and such other
matters as reasonably requested by such underwriters in accordance
with Statement on Auditing Standards No. 72; and (z) ensure that any
underwriting agreement contains indemnification provisions and
procedures no less favorable than those included in Section 5 hereof
(or such other provisions and procedures acceptable to the Seller and
the underwriters) with respect to all parties to be indemnified
pursuant to said section (including, without limitation, the
underwriters and the Seller);
(viii) make reasonably available for inspection by the Seller
and any underwriter, agent or broker-dealer participating in any
disposition of Registrable Shares such information and corporate
documents as shall be reasonably necessary to enable them to exercise
any applicable due diligence responsibilities, and cause the officers
of the Company and its "significant subsidiaries" (as that term is
defined in Regulation S-X) to be available to respond to questions
relevant to such due diligence inquiries;
(ix) make generally available to its securityholders earning
statements satisfying the provisions of the last paragraph of Section
11(a) of the Securities Act and Rule 158 thereunder (or any similar
rule promulgated under the Securities Act) no later than 45 days after
the end of any 12-month period (or 90 days after the end of any 12-
month period if such period is a fiscal year) (i) commencing at the
end of any fiscal quarter in which Registrable Shares are sold to
underwriters in a firm commitment or best efforts underwritten
offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company
after the effective date of the Registration Statement, which
statements shall cover said 12-month periods;
(x) register or qualify the Registrable Shares covered by the
Registration Statement under the securities or blue sky laws of such
jurisdictions in the United
-6-
<PAGE>
States as the Seller shall reasonably request (to the extent no
exemption from such registration or qualification is available), and
do any and all other acts and things which may be necessary to enable
the Seller to consummate the disposition in such jurisdictions of
Registrable Shares in accordance with a method of distribution
described in such Registration Statement; provided, however, that the
-------- -------
Company shall in no event be required to qualify to do business as a
foreign corporation or as a dealer in any jurisdiction where it is not
so qualified, to conform its capitalization or the composition of its
assets at the time to the securities or blue sky laws of such
jurisdiction, to execute or file any general consent to service of
process under the laws of any jurisdiction, to take any action that
would subject it to service of process in suits other than those
arising out of the offer and sale of the Registrable Shares covered by
such Registration Statement, or to subject itself to taxation in any
jurisdiction where it has not theretofore done so;
(xi) cause the Registrable Shares covered by the Registration
Statement to be listed on the principal exchange or exchanges or
qualified for trading on the principal over-the-counter market on
which shares of the same series of common stock of the Company are
then listed or traded upon the sale of Registrable Shares pursuant to
the Registration Statement; and
(xii) otherwise comply with all applicable rules and regulations
of the Commission and use its commercially reasonable efforts to take
such other actions as may be required to permit unrestricted sales of
Registrable Shares under the Registration Statement.
(b) The Company's obligations under this Agreement to the Seller
shall be conditioned upon the Seller's compliance with the following:
(i) the Seller shall cooperate with the Company in connection
with the preparation of the Registration Statement and, for so long as
the Company is obligated to keep the Registration Statement effective,
the Seller will provide to the Company, in writing, for use in the
Registration Statement, all information regarding the Seller and such
other information as may be reasonably required to enable the Company
to prepare the Registration Statement and Prospectus covering the
Registrable Shares and to maintain the currency and effectiveness
thereof;
(ii) the Seller shall permit the Company, any proposed
underwriters, agents or broker-dealers participating in the offering
or other distribution and their respective representatives and agents
to examine such documents and records and shall supply any information
as they may reasonably request in connection with the offering or
other distribution in which the Seller proposes to participate;
-7-
<PAGE>
(iii) the Seller shall enter into such agreements with the
Company and any underwriter, broker-dealer or similar securities
industry professional participating in an offering containing
representations, warranties, indemnities and agreements as are in each
case customarily entered into and made by selling stockholders, and
will cause its counsel to give any legal opinions customarily given,
in secondary distributions under similar circumstances;
(iv) during such time as the Seller may be engaged in a
distribution of the Registrable Shares, the Seller will comply with
all applicable laws, including, but not limited to, Regulation M
promulgated by the Commission under the Exchange Act and pursuant
thereto will, among other things: (A) not engage in any stabilization
activity in connection with the securities of the Company in
contravention of such rules; (B) distribute the Registrable Shares
owned by the Seller solely in the manner described in the Registration
Statement; and (C) not bid for or purchase any securities of the
Company or attempt to induce any person to purchase any securities of
the Company other than as permitted under the Exchange Act;
(v) other than in the case of an underwritten public offering,
at least one Business Day prior to any distribution by the Seller of
Registrable Shares, the Seller will advise the Company in writing of
the dates on which the distribution will commence and, to the best
knowledge of the Seller at that time, the date on which the
distribution will terminate, the number and kind of Registrable Shares
to be sold, the terms and the manner of sale (including, to the extent
applicable, the purchase price, the name of any underwriter, agent or
broker-dealer to or through whom such distribution is being made, and
the amount of any selling commissions or other items constituting
compensation to such underwriter, agent or broker-dealer) and the
number and kind of Registrable Shares that will be owned beneficially
by the Seller after giving effect to such sale; and
(vi) on notice from the Company of the happening of any of the
events specified in clauses (C), (D), (E), (F) or (G) of Section
3(a)(ii), then the Seller shall cease offering or distributing the
Registrable Shares until such time as the Company notifies the Seller
that offering and distribution of the Registrable Shares may
recommence.
4. Expenses of Registration.
-------------------------
The Company shall pay all Registration Expenses and the fees and
disbursements of the Seller's counsel in the preparation of this Agreement, the
Facility, the Master Agreement and the Registration Statement. Except as
otherwise expressly set forth in the Master Agreement, the Seller shall be
responsible for all underwriting discounts, commissions and transfer taxes, if
any, relating to the sale of any Registrable Shares pursuant to the Registration
Statement.
-8-
<PAGE>
5. Indemnification. (a) The Company agrees to indemnify and hold
----------------
harmless the Seller, and each person, if any, who controls the Seller within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation) arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, except insofar as
such losses, claims, damages, liabilities or expenses arise out of or are based
upon any such untrue statement or omission or allegation thereof based upon
information furnished in writing to the Company by the Seller expressly for use
therein; provided, however, that the Company shall not indemnify the Seller or
any person who controls the Seller from any such losses, claims, damages or
liabilities alleged by any person who purchased Registrable Shares from the
Seller if the untrue statement, omission or allegation thereof upon which such
losses, claims, damages or liabilities are based was made in: (i) any
preliminary prospectus, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of the Seller to such person at
or prior to the written confirmation of the sale of Registrable Shares to such
person, and if the Prospectus (as so amended or supplemented) corrected the
untrue statement or omission giving rise to such loss, claim, damage or
liability; (ii) any Prospectus used by the Seller or any person who controls the
Seller, after such time as the Company advised the Seller that the filing of a
post-effective amendment or supplement thereto was required, except the
Prospectus as so amended or supplemented; or (iii) any Prospectus used after
such time as the obligation of the Company to keep the same current and
effective has expired. This indemnity will be in addition to any liability
which the Company may otherwise have. All fees and expenses which are
reimbursable pursuant to this Section 5 shall be reimbursed as they are
incurred.
(b) If any action or proceeding (including any governmental
investigation) shall be brought or asserted against the Seller or any person
controlling the Seller in respect of which indemnity may be sought from the
Company, the Seller or such controlling person shall promptly notify the Company
in writing, and the Company shall assume the defense thereof, including the
employment of counsel satisfactory to the Seller and the payment of all
expenses. Any omission so to notify the Company shall not, however, relieve the
Company from any liability which it may have to any indemnified party otherwise
than under this Section 5. The Seller or any persons controlling the Seller
shall have the right to employ separate counsel in any such action or proceeding
and to participate in the defense thereof, but the fees and expenses of such
separate counsel shall be the Seller's expense or the expense of such
controlling person unless (a) the Company has agreed to pay such fees and
expenses or (b) the Company shall have failed to assume the defense of such
action or proceeding and employ counsel satisfactory to the Seller in any such
action or proceeding or (c) the named parties to any such action or proceeding
(including any impleaded parties) include both the Seller or such controlling
person and the Company and the Seller or such controlling person shall have been
advised by counsel to the Seller that there may be a conflict of interest
between the Seller or such controlling person and the Company in the conduct of
the defense of such action (in which
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<PAGE>
case, if the Seller or such controlling person notifies the Company in writing
that it elects to employ separate counsel at the expense of the Company, the
Company shall not have the right to assume the defense of such action or
proceeding on behalf of the Seller or such controlling person), it being
understood, however, that the Company shall not, in connection with any one such
action or proceeding or separate but substantially similar or related actions or
proceedings arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (unless the members of such firm are not admitted to practice in a
jurisdiction where an action is pending, in which case the Company shall pay the
reasonable fees and expenses of one additional firm of attorneys to act as local
counsel in such jurisdiction, provided the services of such counsel are
substantially limited to that of appearing as attorneys of record). The Company
shall not be liable for any settlement of any such action or proceeding effected
without its written consent, but if settled with its written consent, or if
there be a final judgment for the plaintiff in any such action or proceeding,
the Company agrees to indemnify and hold harmless the Seller and any such
controlling persons from and against any loss or liability by reason of such
settlement or judgment.
(c) The Seller agrees to indemnify and hold harmless the Company,
including its directors and each of its officers, and each person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, to the same extent as the foregoing
indemnity from the Company to the Seller, but only with respect to information
furnished in writing by the Seller expressly for use in the Registration
Statement, the related Prospectus, or any amendment or supplement thereto, or
any preliminary prospectus. In case any action or proceeding shall be brought
against the Company or the Company's directors or officers or any such
controlling person, in respect of which indemnity may be sought against the
Seller, the Seller shall have the rights and duties given to the Company, and
the Company or the Company's directors or officers or such controlling person
shall have the rights and duties given to the Seller, by Section 5(b).
(d) If the indemnification provided for in this Section 5 is
unavailable to an indemnified party under the paragraphs (a) or (c) hereof in
respect of any losses, claims, damages or liabilities referred to therein (other
than by reason of such indemnified party's failure to comply with the first
sentence of Section 5(b)), then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the Company on the one hand and of the Seller on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the Seller on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or by
the Seller and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include, subject to the
limitations set
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<PAGE>
forth in Section 5(b), any legal or other fees or expenses reasonably incurred
by such party in connection with investigating or defending any action or claim.
(e) The Company and the Seller agree that it would not be just and
equitable if contribution pursuant to this Section 5 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in Section 5(d). Notwithstanding the
provisions of this Section 5, the Seller shall not be required to contribute any
amount in excess of the amount by which the total price at which the Registrable
Shares owned by the Seller were offered to the public exceeds the amount of any
damages which the Seller has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Section 5 shall remain operative and in full force and effect regardless of (a)
any investigation made by or on behalf of the Seller, by or on behalf of any
person controlling the Seller or by or on behalf of the Company or (b) any
termination of this Agreement.
6. Notices. All notices, requests, demands, waivers and other
--------
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally or mailed, certified or registered mail with
postage prepaid, or sent by telex, telegram or telecopier, as follows:
(a) if to the Company:
Tele-Communications, Inc.
5619 DTC Parkway
Englewood, Colorado 80111
Attention: Stephen M. Brett, Esq.
Facsimile: (303) 488-3245
(b) if to TD (NY):
Toronto Dominion (New York), Inc.
31 West 52nd Street
New York, New York 10019
Attention: Marc Baum, Esq.
Facsimile: (212) 765-8593
or to such other person (including any Seller other than TD(NY)) or address as
any party shall specify by notice in writing to the other party. All notices
and other communications given to a party in accordance with the provisions of
this Agreement shall be deemed to have been given (i)
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<PAGE>
three Business Days after the same are sent by certified or registered mail,
postage prepaid, return receipt requested, (ii) when delivered by hand or
transmitted by telecopy (answer back received) or (iii) one Business Day after
the same are sent by a reliable overnight courier service, with acknowledgment
of receipt requested. Notwithstanding the preceding sentence, notice of change
of address shall be effective only upon actual receipt thereof.
7. Amendment. Any provision of this Agreement may be amended or modified
----------
in whole or in part at any time by an agreement in writing among the Company and
the Seller. No consent, waiver or similar act shall be effective unless in
writing and signed by the party sought to be bound.
8. Counterparts. This Agreement may be executed in one or more
-------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
9. Governing Law. This Agreement shall be governed by and interpreted in
--------------
accordance with the internal laws of the State of New York, without giving
effect to principles of conflicts of laws.
10. Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon (i) the Company and TD(NY) and their respective successors,
(ii) any assignee or transferee of rights and obligations of TD (NY) pursuant to
the Facility that acquires Registrable Shares and (iii) any assignee or
transferee of rights and obligations of TD(NY) pursuant to the Master Agreement
that acquires Registrable Shares. A permitted assignee or transferee of TD(NY),
and any successor, assignee, or transferee of any such permitted assignee or
transferee, shall be deemed a party to, and held subject to, all of the terms of
this Agreement. Except as set forth in this Section 10, neither the Company nor
any other party to this Agreement may assign any of its rights, or delegate any
of its duties, under this Agreement.
11. Legend.
------
(a) The Seller agrees that substantially the following legend shall be
placed on the certificates representing any Settlement Shares and any Facility
Shares acquired by the Seller from TCI or an affiliate (as that term is defined
in Rule 144(a)(3) under the Securities Act) of TCI:
"NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933 (THE "ACT") OR (B) IF THE COMPANY HAS BEEN FURNISHED WITH AN OPINION
OF COUNSEL FOR THE HOLDER, WHICH OPINION AND COUNSEL SHALL BE REASONABLY
SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH TRANSFER,
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<PAGE>
SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT."
(b) The parties agree that the certificates representing Facility Shares
acquired by the Seller from a person other than TCI or an "affiliate" of TCI
shall not bear the legend set forth in Section 11(a). The Seller agrees,
however, that any Facility Shares sold by the Seller in connection with a "Cash
Settlement" or a "Net Share Settlement" under the Master Agreement shall be sold
pursuant to the Registration Statement and in a manner described in Exhibit A
hereto.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
TELE-COMMUNICATIONS, INC.
By:
--------------------------------
Name:
Title:
TORONTO DOMINION (NEW YORK), INC.
By:
--------------------------------
Name:
Title:
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<PAGE>
EXHIBIT A
Any sales of Registrable Shares by the Seller may be effected from
time to time in one or more of the following transactions: (a) through brokers,
acting as agent in transactions (which may involve block transactions), in
special offerings, in the over-the-counter market, or otherwise, at market
prices obtainable at the time of sale, at prices related to such prevailing
market prices, at negotiated prices or at fixed prices; (b) to underwriters who
will acquire the Registrable Shares for their own account and resell them in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale (any public
offering price and any discount or concessions allowed or reallowed or paid to
dealers may be changed from time to time); (c) directly or through brokers or
agents in private sales at negotiated prices; (d) to lenders pledged as
collateral to secure loans, credit or other financing arrangements and any
subsequent foreclosure, if any, thereunder; (e) through short sales, option
exercises or other derivative transactions; or (f) by any other legally
available means. Also, offers to purchase Registrable Shares may be solicited
by agents designated by the Seller from time to time. Underwriters or other
agents participating in an offering made pursuant to the Registration Statement
and the related Prospectus (as amended or supplemented from time to time) may
receive underwriting discounts or commissions under the Securities Act and
discounts or concessions may be allowed or reallowed or paid to dealers, and
brokers or agents participating in such transactions may receive brokerage or
agent's commissions or fees.
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