<PAGE>
As filed with the Securities and Exchange Commission on June 23, 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,
organization) and 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)
--------------------
Copies to:
Robert W. Murray Jr., Esq. Norman D. Slonaker, Esq.
Baker & Botts, L.L.P. Brown & Wood LLP
599 Lexington Avenue One World Trade Center
New York, New York 10022 New York, New York 10048
(212) 705-5000 (212) 839-5300
--------------------
Approximate date of commencement of proposed sale of the securities to the
public: From time to time after the effective date of this 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. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================
Proposed Proposed
maximum maximum
Title of each class of Amount offering aggregate Amount of
securities to be price per offering registration
to be registered registered 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 ............... 50,000,000 shares $16.53125 $826,562,500 $250,474
=========================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Act on the basis of the average of the high and
low sales prices reported on the Nasdaq National Market on June 18, 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 this 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 June 23, 1997
PROSPECTUS
TELE-COMMUNICATIONS, INC.
Tele-Communications, Inc. Series A TCI Group Common Stock ($1.00 par value)
This Prospectus relates to shares of Tele-Communications, Inc. Series A TCI
Group Common Stock, par value $1.00 per share (the "TCI Group Series A Common
Stock"), of Tele-Communications, Inc., a Delaware corporation (the "Company" or
"TCI"), to be offered and sold by the holders thereof (each, a "Selling
Stockholder") from time to time (all such shares being hereinafter referred to
collectively as the "Shares") which Shares (i) were acquired by certain of the
Selling Stockholders pursuant to the Stock Purchase Agreements (defined
below),either as an initial purchaser thereunder or as a transferee of an
initial purchaser or (ii) may be acquired by certain of the Selling Stockholders
from TCI pursuant to the Master Agreements (defined below). See "Shares Being
Offered and Selling Stockholders."
The Company's common stock, par value $1.00 per share (the "TCI Common
Stock"), is comprised of six series: TCI Group Series A Common Stock, Tele-
Communications, Inc. Series B TCI Group Common Stock (the "TCI Group Series B
Common Stock" and, together with the TCI Group Series A Common Stock, the "TCI
Group Common Stock"), Tele-Communications, Inc. Series A Liberty Media Group
Common Stock (the "LMG Series A Common Stock"), Tele-Communications, Inc. Series
B Liberty Media Group Common Stock (the "LMG Series B Common Stock" and,
together with the LMG Series A Common Stock, the "Liberty Media Group Common
Stock"), Tele-Communications, Inc. Series A Telephony Group Common Stock (the
"Telephony Group Series A Common Stock") and Tele-Communications, Inc. Series B
Telephony Group Common Stock (the "Telephony Group Series B Common Stock" and
together with the Telephony Group Series A Common Stock, the "Telephony Group
Common Stock"). As of the date of this Prospectus no shares of Telephony Group
Series A Common Stock or Telephony Group Series B Common Stock have been issued
and are outstanding.
Both series of TCI Group Common Stock are identical in all respects, except
(i) each share of TCI Group Series B Common Stock has ten votes and each share
of TCI Group Series A Common Stock has one vote and (ii) each share of TCI Group
Series B Common Stock is convertible, at the option of the holder, into one
share of TCI Group Series A Common Stock. Similarly, both series of Liberty
Media Group Common Stock are identical in all respects, except (i) each share of
LMG Series B Common Stock has ten votes and each share of LMG Series A Common
Stock has one vote and (ii) each share of LMG Series B Common Stock is
convertible, at the option of the holder, into one share of LMG Series A Common
Stock. The shares of TCI Group Series A Common Stock and LMG Series A Common
Stock are not convertible into shares of TCI Group Series B Common Stock and LMG
Series B Common Stock, respectively. See "Description of TCI Common Stock."
Shares of the TCI Group Series A Common Stock, the TCI Group Series B Common
Stock, the LMG Series A Common Stock and the LMG Series B Common Stock are
traded on the Nasdaq National Market tier of The Nasdaq Stock Market under the
symbols "TCOMA," "TCOMB," "LBTYA" and "LBTYB," respectively.
See "Risk Factor" on page 3 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
Stockholders 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 Stockholders, 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 Stockholders 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 Stockholders 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 Stockholders. See "Shares Being Offered and
Selling Stockholders." The Selling Stockholders may also sell all or a portion
of the Shares pursuant to Rule 144 promulgated under the Securities Act of 1933,
as amended (the "Securities Act"), to the extent that such sales may be made in
compliance with such Rule. See "Plan of Distribution." The Company will not
receive any proceeds from the sale of the Shares. The Company knows of no
selling arrangement between any underwriter, agent or broker-dealer and the
Selling Stockholders.
The Selling Stockholders and any broker-dealers or agents that participate
with the Selling Stockholders in the distribution of any of the Shares may be
deemed to be "underwriters" within the meaning of the Securities Act, and any
discount or commission received by them and any profit on the resale of the
Shares purchased by them may be deemed to be underwriting discounts or
commissions under the Securities Act.
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 year ended
December 31, 1996, as amended by Form 10-K/A (Amendment No. 1), (ii) the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1997, (iii) the Company's Current Reports on Form 8-K, dated January 22,
1997 and March 5, 1997 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 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.
2
<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 $58 million and $121 million for the three months
ended March 31, 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, compensation relating to options
and to stock appreciation rights, adjustment to compensation relating to
options and to stock appreciation rights and restructuring charges) ($738
million and $533 million for the three months ended March 31, 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 ($289 million
and $261 million for the three months ended March 31, 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 three months ended March 31, 1997 and 1996
and for the years ended December 31, 1996, 1995 and 1994 were 255%, 204%,
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 ($239 million and $317
million for the three months ended March 31, 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. Except for the three months
ended March 31, 1997, amounts expended by the Company for its investing
activities exceeded net cash provided by operating activities.
THE COMPANY
The Company, through its subsidiaries and affiliates, is
principally engaged in the construction, acquisition, ownership and
operation of cable television systems and the provision of satellite-
delivered video entertainment, information and home shopping programming
services to various video distribution media, principally cable television
systems. The Company is one of the largest providers of cable television
services in the United States. The Company also has investments in cable
and telecommunications operations and television programming in certain
international markets, as well as investments in companies and joint
ventures involved in developing and providing programming for new
television and telecommunications technologies. The Company is 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 STOCKHOLDERS
On June 16, 1997, Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MLPFS") and LB I Group Inc. ("LBIG"), pursuant to separate
stock purchase agreements (the "Stock Purchase Agreements"), each purchased
16,034,294 Shares from the Estate of Bob Magness, the deceased former
Chairman of TCI (the "Estate"), for a purchase price of $264,946,532.
Also on June 16, 1997, the Company entered into separate ISDA
Master Agreements (together with the related Schedule and confirmations,
each a "Master Agreement") with Merrill Lynch International ("MLI") and
Lehman Brothers Finance S.A. ("LBF"). Each Master Agreement initially
relates to 16,034,294 Shares. Under each Master Agreement, the Company may
on each March 31, June 30, September 30 and December 31 (each a
"Termination Date"), and shall on June 30, 1999, settle, in whole or part,
with respect to the Shares then subject to such Master
3
<PAGE>
Agreement, except that settlement on June 30, 1999 must be with respect to
all Shares then subject to such Master Agreement. In any settlement of
Shares under a Master Agreement on a Termination Date, TCI will pay the
then market price for such Shares (which will equal the closing price for
the Shares on the Nasdaq National Market tier of The Nasdaq Stock Market on
such Termination Date), up to $16.523742 per share (the "initial per share
amount"), and TCI may, at its discretion, satisfy such payment by paying
cash or delivering shares of TCI Group Series A Common Stock. Any
appreciation in such Shares above the initial per share amount will be for
the account of TCI, and may by satisfied, at TCI's discretion, through the
payment to TCI of cash or the delivery of shares of TCI Group Series A
Common Stock. Among other settlement methods, TCI may cause MLI or LBF (or
both) to sell the Shares being settled, with TCI making up any difference
between the sale price (less commissions) and the initial per share amount
for each Share so sold. TCI may make up such difference through the
delivery of additional Shares under the Master Agreement, and if it so
delivers additional Shares and MLI or LBF resells such Shares within ten
business days thereafter for an amount less than the equivalent cash amount
that would have been paid in lieu of delivery of physical Shares, TCI will
be obligated to make up such difference in cash or with additional Shares.
As a result of the ability of TCI to settle with additional Shares, it is
possible that each of MLI and LBF, and their respective successors and
assigns under the Master Agreements, may acquire an undetermined amount of
additional Shares from the Company from time to time.
Shares subject to the Master Agreement may also be sold upon the
occurrence and during the continuance of certain events of default
specified in the Master Agreements or in connection with transactions
described under "Plan of Distribution."
In connection with the signing of the Stock Purchase Agreements
and the Master Agreements, each of MLPFS and LBIG have agreed to vote or
cause to be voted all shares of TCI Group Series A Common Stock acquired by
them pursuant to the applicable Stock Purchase Agreement and Master
Agreement on any matter submitted for a vote of holders of TCI Group Series
A Common Stock in such proportion as is equal to the proportion of votes
cast in favor of and against such matter by all other holders of TCI Group
Series A Common Stock (other than holders who are officers or directors of
the Company).
The Shares acquired pursuant to the Master Agreements and the
Stock Purchase Agreements by the respective Selling Stockholders are and
will be "restricted securities" (as such term is defined in Rule 144(a)(3)
under the Securities Act) and may not be transferred unless they are
registered under the Securities Act or an exemption from registration is
available. In connection with the transactions described above, the
Company entered into separate Registration Rights Agreements, each dated
as of June 16, 1997 (the "Registration Rights Agreements"), with MLPFS and
LBIG (each a "Registration Rights Agreement" and collectively the
"Registration Rights Agreements"), copies of which are included as exhibits
to the Registration Statement of which this Prospectus comprises a part.
See "Available Information." Pursuant to the Registration Rights
Agreements the Company has agreed, for the benefit of the Selling
Stockholders, to register the resale of the Shares acquired under or
pursuant to the Master Agreements and the Stock Purchase Agreements from
time to time by the Selling Stockholders. Pursuant to the Registration
Rights Agreements, the Company has agreed 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 each of the Selling Stockholders from the Company under the
Master Agreements and (y) the sale of all Shares held by the Selling
Stockholders which were acquired under or pursuant to the Master
Agreements or the Stock Purchase Agreements.
The Company has agreed to indemnify the Selling Stockholders
against certain liabilities that may arise in connection with any offer and
sale of the Shares, including liabilities under the Securities Act, and to
contribute payments that the Selling Stockholders may be required to make
in respect thereof.
Selling Stockholders. As of June 16, 1997, the Selling
Stockholders held the shares of TCI Group Series A Common Stock set forth
in the table below, which table also sets forth the percentage of the
outstanding shares of TCI Group Series A Common Stock which such number of
shares represent and the maximum number of Shares to be offered by such
Selling Stockholders pursuant to this Prospectus. Selling Stockholders may
also include transferees of Shares from the initial purchasers under the
Stock Purchase Agreements and Selling Stockholders that acquire an interest
in either of the Master Agreements and receive Shares from TCI pursuant to
the provisions thereof for physical settlement. To the extent required, the
name of the Selling Stockholder in connection with any particular sale of
Shares, the number of Shares to be sold and the number and (if one percent
or more) the percentage of the outstanding shares of TCI Group Series
4
<PAGE>
A Common Stock to be owned by such Selling Stockholder after completion of any
offering hereunder will be specified in a Prospectus Supplement.
<TABLE>
<CAPTION>
Maximum Number
Number of Shares of Shares to be
Name of Selling Stockholder Beneficially Owned Offered Hereby Percent of Class /(1)/
- --------------------------- ------------------ --------------- ----------------------
<S> <C> <C> <C>
LB I Group Inc./(2)/ 16,034,294
Lehman Brothers Finance S.A./(2)/ /(4)/
Merrill Lynch International/(3)/ /(4)/
Merrill Lynch, Pierce, Fenner & 16,034,294
Smith Incorporated/(3)/
</TABLE>
- --------------------
(1) Based on 598,224,986 shares of TCI Group Series A Common Stock
outstanding as of May 31, 1997 (which number does not include shares of TCI
Group Series A Common Stock held by subsidiaries of TCI).
(2) LBIG and LBF are affiliated entities.
(3) MLI and MLPFS are affiliated entities.
(4) LBF and MLI may offer and sell pursuant to this Prospectus an
undetermined number of Shares, if any, acquired pursuant to the Master
Agreements, but in no event may the aggregate number of Shares so sold by
LBF and MLI pursuant to this Prospectus exceed 17,931,412 Shares (as such
number may be adjusted by stock splits, stock dividends or similar
transactions).
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 any Selling Stockholder within the past three years.
During the past three years, MLPFS has acted as a principal underwriter in
several public offerings of securities by subsidiaries of the Company, including
TCI Communications, Inc. MLPFS received customary fees in connection with
rendering such services. Additionally, during the past three years Lehman
Brothers Inc., an affiliate of LBIG and LBF, has also acted as a principal
underwriter in several public offerings of securities by subsidiaries of the
Company. Lehman Brothers Inc. received customary fees in connection with
rendering such services. Any other material relationship between the Company or
any of its affiliates, on the one hand, and a Selling Stockholder, on the other,
within three years prior to the date of a sale by such Selling Stockholder
hereunder will be described in the Prospectus Supplement relating to such sale.
The Company has agreed to bear all costs and expenses of registering the Shares
under the Securities Act and 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 Stockholders 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 Stock Market pursuant to the Master Agreements.
PLAN OF DISTRIBUTION
Any distribution of the Shares by the Selling Stockholders 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,
5
<PAGE>
credit or other financing arrangements and any subsequent foreclosure, if
any, thereunder; or (e) by any other legally available means. Also, offers
to purchase Shares may be solicited by agents designated by the Selling
Stockholders 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 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 each Selling Stockholder that it
has not, as of the date of this Prospectus, entered into any arrangement
with an underwriter, agent or broker-dealer for the sale of the Shares.
The Selling Stockholders may also sell all or a portion of the
Shares pursuant to Rule 144 promulgated under the Securities Act, to the
extent that such sales may be made in compliance with such Rule.
The Selling Stockholders and any agents or broker-dealers that
participate with the Selling Stockholders in the distribution of any of the
Shares may be deemed to be "underwriters" within the meaning of the
Securities Act, and any discount or commission received by them and any
profit on the resale of the Shares purchased by them may be deemed to be
underwriting discounts or commissions under the Securities Act.
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 TCI COMMON STOCK
The following description of certain terms of the TCI Common
Stock does not purport to be complete and is qualified in its entirety by
reference to the Restated Certificate of Incorporation, as amended, of TCI
(the "TCI Charter"), which is an exhibit to the Registration Statement of
which this Prospectus comprises a part.
General
The TCI Charter currently provides, among other things, that TCI
is authorized to issue 3,602,375,096 shares of capital stock, including (i)
3,550,000,000 shares of common stock, par value $1.00 per share, of which
1,750,000,000 shares are designated TCI Group Series A Common Stock,
150,000,000 shares are designated TCI Group Series B Common Stock,
750,000,000 shares are designated LMG Series A Common Stock, 75,000,000
shares are designated LMG Series B Common Stock, 750,000,000 shares are
designated Telephony Group Series A Common Stock and 75,000,000 shares are
designated Telephony Group Series B Common Stock and (ii) 52,375,096 shares
of preferred stock ("TCI Preferred Stock"), of which 700,000 shares are
designated Class A Preferred Stock, par value $.01 per share (the "Class A
Preferred Stock"), 1,675,096 shares are designated Class B 6% Cumulative
Redeemable Exchangeable Junior Preferred Stock, par value $.01 per share
(the "Class B Preferred Stock") and 50,000,000 shares are designated as
Series Preferred Stock, par value $.01 per share (the "Series Preferred
Stock"), issuable in series. Of the Series Preferred Stock, 80,000 shares
are designated as Convertible Preferred Stock, Series C (the "Series C
Preferred Stock"), 1,000,000 shares are designated as Convertible Preferred
Stock, Series D (the "Series D Preferred Stock"), 400,000 shares are
designated as Redeemable Convertible Preferred Stock, Series E (the "Series
E Preferred Stock"), 500,000 shares are designated Convertible Redeemable
Participating Preferred Stock, Series F (the "Series F Preferred Stock"),
7,259,380 shares are designated as Redeemable Convertible TCI Group
Preferred Stock, Series G (the "Series G Preferred Stock"), and 7,259,380
shares are designated as Redeemable Convertible Liberty Media Group
Preferred Stock, Series H (the "Series H Preferred Stock").
No shares of the Telephony Group Common Stock have been issued
and are outstanding. As of March 31, 1997, 598,204,963 shares of TCI Group
Series A Common Stock, 84,647,065 shares of TCI Group Series B Common
6
<PAGE>
Stock, 228,749,797 shares of LMG Series A Common Stock and 21,187,969
shares of LMG Series B Common Stock (in each case net of shares held by
subsidiaries of TCI) had been issued and were outstanding and 116,853,196
shares of TCI Group Series A Common Stock were held by subsidiaries of TCI.
As of that date, 126,384,805 shares of TCI Group Series A Common Stock and
30,616,358 shares of LMG Series A Common Stock were reserved for issuance
upon conversion, exchange or exercise of outstanding convertible or
exchangeable securities and options. In addition, TCI has reserved a
number of shares of TCI Group Series A Common Stock equal to the number of
shares of TCI Group Series B Common Stock outstanding and a number of
shares of LMG Series A Common Stock equal to the number of shares of LMG
Series B Common Stock outstanding, for issuance upon conversion, at the
option of the holder, of TCI Group Series B Common Stock and LMG Series B
Common Stock, respectively. Additionally, subsidiaries of TCI own shares
of Series F Preferred Stock, which are convertible into an aggregate of
416,528,172 shares of TCI Group Series A Common Stock. As of March 31,
1997, 1,620,026 shares of Class B Preferred Stock, 70,575 shares of Series
C Preferred Stock, 997,222 shares of Series D Preferred Stock, 278,307
shares of Series F Preferred Stock, 6,693,177 shares of Series G Preferred
Stock and 6,693,177 shares of Series H Preferred Stock had been issued and
were outstanding. All of the shares of Series E Preferred Stock have
previously been redeemed and retired with the effect that such shares have
been restored to the status of authorized and unissued shares of Series
Preferred Stock and may be reissued as shares of another series of Series
Preferred Stock, but not as Series E Preferred Stock. All of the
outstanding shares of Series F Preferred Stock are held by subsidiaries of
TCI. Approximately 33,901,240 shares of Series Preferred Stock remain
available for designation pursuant to the TCI Charter as of March 31, 1997.
The rights evidenced by the TCI Common Stock are subject to the prior
preferences and rights of the TCI Preferred Stock.
Certain Definitions
As used herein, the following terms have the meanings specified
below:
"Appraisal Date" means, with respect to any determination of the
Liberty Media Group Private Market Value or the Telephony Group Private
Market Value, the last day of the calendar month preceding the month in
which the Selection Date occurs.
"Appraiser" means each of the First Appraiser, the Second
Appraiser and the Mutually Designated Appraiser.
"Committed Acquisition Shares" means (i) the shares of LMG
Series A Common Stock that TCI had, prior to the record date for the LMG
Distribution, agreed to issue, but as of such record date had not issued,
and (ii) the shares of LMG Series A Common Stock that are issuable upon
conversion, exercise or exchange of Convertible Securities that TCI had,
prior to the record date for the LMG Distribution, agreed to issue, but as
of such record date had not issued, in each case including obligations of
TCI to issue shares of TCI's Class A Common Stock, par value $1.00 per
share (which has been redesignated TCI Group Series A Common Stock), which
as a result of the LMG Distribution, constitute obligations to issue, among
other securities, LMG Series A Common Stock or Convertible Securities which
are convertible into or exercisable or exchangeable for LMG Series A Common
Stock; provided, however, that Committed Acquisition Shares will not
include any shares of Liberty Media Group Common Stock issuable upon
conversion, exercise or exchange of Pre-Distribution Convertible
Securities. The type and amount of Committed Acquisition Shares issuable
will be appropriately adjusted to reflect subdivisions and combinations of
the LMG Series A Common Stock and dividends or distributions of shares of
LMG Series A Common Stock or LMG Series B Common Stock to holders of LMG
Series A Common Stock and other reclassifications of the LMG Series A
Common Stock, in each case occurring (or the record date for which occurs)
after the LMG Distribution. The shares of LMG Series A Common Stock
issuable upon conversion of the Series H Preferred Stock will constitute
Committed Acquisition Shares.
"Convertible Securities" means any securities of TCI (other than
any series of TCI Common Stock) that are convertible into, exchangeable for
or evidence the right to purchase any shares of any series of TCI Common
Stock, whether upon conversion, exercise, exchange, pursuant to
antidilution provisions of such securities or otherwise.
"Corporation Earnings (Loss) Attributable to the Liberty Media
Group" means, for any period, the net earnings or loss of the Liberty Media
Group for such period determined on a basis consistent with the
determination of the net earnings or loss of the Liberty Media Group for
such period as presented in the combined financial statements of the
Liberty Media Group for such period, including income and expenses of TCI
attributed to the operations of the Liberty
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Media Group on a substantially consistent basis, including without
limitation, corporate administrative costs, net interest and income taxes.
"Corporation Earnings (Loss) Attributable to the TCI Group"
means, for any period, the net earnings or loss of the TCI Group for such
period determined on a basis consistent with the determination of the net
earnings or loss of the TCI Group for such period as presented in the
combined financial statements of the TCI Group for such period, including
income and expenses of TCI attributed to the operations of the TCI Group on
a substantially consistent basis, including without limitation, corporate
administrative costs, net interest and income taxes.
"Corporation Earnings (Loss) Attributable to the Telephony Group"
means, for any period, the net earnings or loss of the Telephony Group for
such period determined on a basis consistent with the determination of the
net earnings or loss of the Telephony Group for such period as presented in
the combined financial statements of the Telephony Group for such period,
including income and expenses of TCI attributed to the operations of the
Telephony Group on a substantially consistent basis, including without
limitation, corporate administrative costs, net interest and income taxes.
"DGCL" means the General Corporation Law of the State of
Delaware.
"Disposition" shall mean the sale, transfer, assignment or other
disposition (whether by merger, consolidation, sale or contribution of
assets or stock or otherwise) of properties or assets.
"First Appraiser" means, with respect to any determination of the
Liberty Media Group Private Market Value or the Telephony Group Private
Market Value, an investment banking firm of recognized national standing
selected by TCI to make such determination.
"Higher Appraised Amount" means, with respect to any
determination of the Liberty Media Group Private Market Value or the
Telephony Group Private Market Value, the higher of the respective final
views of the First Appraiser and the Second Appraiser as to such private
market value.
"Independent Committee" shall mean a committee of the TCI Board
of Directors (the "TCI Board") all members of which are independent
directors as determined under the rules of the Nasdaq National Market.
The "Inter-Group Interest" of the TCI Group in the Liberty Media
Group or the Telephony Group means any common stockholders' equity value of
TCI attributable to the Liberty Media Group or the Telephony Group, as the
case may be, that is not represented by outstanding shares of Liberty Media
Group Common Stock or Telephony Group Common Stock, as the case may be.
The TCI Group's Inter-Group Interest in the Liberty Media Group is
represented by the Number of Shares Issuable with Respect to the Liberty
Media Group Inter-Group Interest and the TCI Group's Inter-Group Interest
in the Telephony Group is represented by the Number of Shares Issuable with
Respect to the Telephony Group Inter-Group Interest.
The "Liberty Media Group" means as of any date of determination
thereof:
(i) the interest of TCI or any of its subsidiaries in
Liberty Media Corporation or any of its subsidiaries (including
any successor thereto by merger, consolidation or sale of all or
substantially all of its assets, whether or not in connection
with a Related Business Transaction) and their respective
properties and assets;
(ii) all assets and liabilities of TCI or any of its
subsidiaries to the extent attributed to any of the properties or
assets referred to in clause (i) of this sentence, whether or not
such assets or liabilities are assets and liabilities of Liberty
Media Corporation or any of its subsidiaries (or a successor as
described in clause (i) of this sentence);
(iii) all assets and properties contributed or otherwise
transferred to the Liberty Media Group from the TCI Group; and
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(iv) the interest of TCI or any of its subsidiaries in the
businesses, assets and liabilities acquired by TCI or any of its
subsidiaries for the Liberty Media Group, as determined by the
TCI Board;
provided that (a) from and after any dividend or other distribution with
respect to any shares of Liberty Media Group Common Stock (other than a
dividend or other distribution payable in shares of Liberty Media Group
Common Stock, with respect to which adjustment will be made as described in
clause (i) of the definition of "Number of Shares Issuable with Respect to
the Liberty Media Group Inter-Group Interest," or in other securities of
TCI attributed to the Liberty Media Group for which provision will be made
as described in the penultimate sentence of this definition), the Liberty
Media Group will no longer include an amount of assets or properties equal
to the aggregate amount of such kind of assets or properties so paid in
respect of shares of Liberty Media Group Common Stock multiplied by a
fraction the numerator of which is equal to the Liberty Media Group Inter-
Group Interest Fraction in effect immediately prior to the record date for
such dividend or other distribution and the denominator of which is equal
to the Liberty Media Group Outstanding Interest Fraction in effect
immediately prior to the record date for such dividend or other
distribution and (b) from and after any transfer of assets or properties
from the Liberty Media Group to the TCI Group, the Liberty Media Group will
no longer include the assets or properties so transferred. If TCI pays a
dividend or makes any other distribution with respect to shares of Liberty
Media Group Common Stock payable in securities of TCI attributed to the
Liberty Media Group other than Liberty Media Group Common Stock, the TCI
Group will be deemed to hold an amount of such other securities equal to
the amount so distributed multiplied by the fraction specified in clause
(a) of this definition (determined as of a time immediately prior to the
record date for such dividend or other distribution), and to the extent
interest or dividends are paid or other distributions are made on such
other securities so distributed to the holders of Liberty Media Group
Common Stock, the Liberty Media Group will no longer include a
corresponding ratable amount of the kind of assets paid as such interest or
dividends or other distributions in respect of such securities so deemed to
be held by the TCI Group. TCI may also, to the extent any such other
securities constitute Convertible Securities which are at the time
convertible, exercisable or exchangeable, cause such Convertible Securities
deemed to be held by the TCI Group to be deemed to be converted, exercised
or exchanged (and to the extent the terms of such Convertible Securities
require payment or delivery of consideration in order to effect such
conversion, exercise or exchange, the Liberty Media Group will in such case
include an amount of the kind of properties or assets required to be paid
or delivered as such consideration for the amount of the Convertible
Securities deemed converted, exercised or exchanged as if such Convertible
Securities were outstanding), in which case such Convertible Securities
will no longer be deemed to be held by the TCI Group or attributed to the
Liberty Media Group.
The "Liberty Media Group Inter-Group Interest Fraction" means a
fraction the numerator of which is the Number of Shares Issuable with
Respect to the Liberty Media Group Inter-Group Interest and the denominator
of which is the sum of such Number of Shares Issuable with Respect to the
Liberty Media Group Inter-Group Interest and the aggregate number of shares
of Liberty Media Group Common Stock outstanding.
"Liberty Media Group Net Proceeds" shall mean, as of any date,
with respect to any Disposition of any of the properties and assets of the
Liberty Media Group, an amount, if any, equal to the gross proceeds of such
Disposition after any payment of, or reasonable provision for, (a) any
taxes payable by TCI in respect of such Disposition or in respect of any
resulting dividend or redemption pursuant to clause (i) or (ii),
respectively, of the second paragraph under "--Conversion and Redemption--
Mandatory Dividend, Redemption or Conversion of Liberty Media Group Common
Stock" (or which would have been payable but for the utilization of tax
benefits attributable to the TCI Group or the Telephony Group), (b) any
transaction costs, including, without limitation, any legal, investment
banking and accounting fees and expenses and (c) any liabilities and other
obligations (contingent or otherwise) of, or attributed to, the Liberty
Media Group, including, without limitation, any indemnity or guarantee
obligations incurred in connection with the Disposition or any liabilities
for future purchase price adjustments and any preferential amounts plus any
accumulated and unpaid dividends and other obligations (without duplication
of amounts allocated for the satisfaction of TCI's obligations with respect
to Pre-Distribution Convertible Securities and Committed Acquisition Shares
issuable which are included in the determination of the Adjusted Liberty
Media Group Outstanding Interest Fraction) in respect of TCI Preferred
Stock attributed to the Liberty Media Group. For purposes of this
definition, any properties and assets of the Liberty Media Group remaining
after such Disposition shall constitute "reasonable provision" for such
amount of taxes, costs and liabilities (contingent or otherwise) as can be
supported by such properties and assets. To the extent the proceeds of any
Disposition include any securities or other property other than cash, the
TCI Board shall determine the value of such securities or property,
including for the purpose of determining the equivalent value thereof if
the TCI
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Board determines to pay a dividend or redemption price in cash or
securities or other property as provided in the penultimate paragraph under
"--Conversion and Redemption --Mandatory Dividend, Redemption or Conversion
of Liberty Media Group Common Stock."
The "Liberty Media Group Outstanding Interest Fraction" means a
fraction the numerator of which is the aggregate number of shares of
Liberty Media Group Common Stock outstanding and the denominator of which
is the sum of such aggregate number of shares of Liberty Media Group Common
Stock outstanding and the Number of Shares Issuable with Respect to the
Liberty Media Group Inter-Group Interest.
The "LMG Distribution" means the distribution paid by TCI on
August 10, 1995 of one-fourth of one share of LMG Series A Common Stock on
each outstanding share of TCI Group Series A Common Stock and one-fourth of
one share of LMG Series B Common Stock on each outstanding share of TCI
Group Series B Common Stock to holders of record on August 4, 1995.
"Lower Appraised Amount" means, with respect to any determination
of the Liberty Media Group Private Market Value or the Telephony Group
Private Market Value, the lower of the respective final views of the First
Appraiser and the Second Appraiser as to such private market value.
"Market Capitalization" of any class or series of capital stock
of TCI on any trading day shall mean the product of (i) the Market Value of
one share of such class or series on such trading day and (ii) the number
of shares of such class or series outstanding on such trading day.
"Market Value" of any class or series of capital stock of TCI on
any day shall mean the average of the high and low reported sales prices
regular way of a share of such class or series on such day (if such day is
a trading day, and if such day is not a trading day, on the trading day
immediately preceding such day) or in case no such reported sale takes
place on such trading day the average of the reported closing bid and asked
prices regular way of a share of such class or series on such trading day,
in either case on the Nasdaq National Market, or if the shares of such
class or series are not quoted on the Nasdaq National Market on such
trading day, the average of the closing bid and asked prices of a share of
such class or series in the over-the-counter market on such trading day as
furnished by any New York Stock Exchange member firm selected from time to
time by TCI, or if such closing bid and asked prices are not made available
by any such New York Stock Exchange member firm on such trading day, the
market value of a share of such class or series as determined by the TCI
Board; provided that for purposes of determining the ratios described under
"--Conversion and Redemption--Conversion of Liberty Media Group Common
Stock at the Option of TCI," "--Conversion of Telephony Group Common Stock
at the Option of TCI," "--Mandatory Dividend, Redemption or Conversion of
Liberty Media Group Common Stock," and "--Mandatory Dividend, Redemption or
Conversion of Telephony Group Common Stock" and as described under "--
Liquidation Rights," (a) the "Market Value" of any share of any series of
TCI Common Stock on any day prior to the "ex" date or any similar date for
any dividend or distribution paid or to be paid with respect to such series
of TCI Common Stock shall be reduced by the fair market value of the per
share amount of such dividend or distribution as determined by the TCI
Board and (b) the "Market Value" of any share of any series of TCI Common
Stock on any day prior to (i) the effective date of any subdivision (by
stock split or otherwise) or combination (by reverse stock split or
otherwise) of outstanding shares of such series of TCI Common Stock or (ii)
the "ex" date or any similar date for any dividend or distribution with
respect to any such series of TCI Common Stock in shares of such series of
TCI Common Stock shall be appropriately adjusted to reflect such
subdivision, combination, dividend or distribution; and provided, further,
that to the extent that any assets or properties of the TCI Group are
transferred to the Telephony Group prior to there being any shares of
Telephony Group Series A Common Stock or Telephony Group Series B Common
Stock issued and outstanding, the Market Value of a share of Telephony
Group Series A Common Stock shall be as determined in good faith by the TCI
Board for purposes of determining the increase in the Number of Shares
Issuable in Respect of the Telephony Group Inter-Group Interest.
"Mutually Appraised Amount" means, with respect to any
determination of the Liberty Media Group Private Market Value or the
Telephony Group Private Market Value, the determination by the Mutually
Designated Appraiser of such private market value.
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"Mutually Designated Appraiser" shall mean, if required with
respect to any determination of the Liberty Media Group Private Market
Value or the Telephony Group Private Market Value, the investment banking
firm of recognized national standing jointly designated by the First
Appraiser and the Second Appraiser to make such determination.
The "Number of Shares Issuable with Respect to the Liberty Media
Group Inter-Group Interest" is currently zero and will from time to time be
(i) adjusted as appropriate to reflect subdivisions (by
stock split or otherwise) and combinations (by reverse stock split or
otherwise) of the LMG Series A Common Stock and dividends or
distributions of shares of LMG Series A Common Stock or LMG Series B
Common Stock to holders of LMG Series A Common Stock and other
reclassifications of LMG Series A Common Stock,
(ii) decreased (but not to less than zero) by (a) the
aggregate number of shares of LMG Series A Common Stock issued or
sold by TCI after the Distribution other than Committed Acquisition
Shares, the proceeds of which are attributed to the TCI Group, (b)
the aggregate number of shares of LMG Series A Common Stock issued or
delivered upon conversion, exercise or exchange of Convertible
Securities (other than Pre-Distribution Convertible Securities and
Convertible Securities which are convertible into or exercisable or
exchangeable for Committed Acquisition Shares), the proceeds of which
are attributed to the TCI Group, (c) the aggregate number of shares
of Liberty Media Group Common Stock issued or delivered by TCI as a
dividend or distribution to holders of TCI Group Series A Common
Stock and TCI Group Series B Common Stock, (d) the aggregate number
of shares of Liberty Media Group Common Stock issued or delivered
upon the conversion, exercise or exchange of any Convertible
Securities (other than Pre-Distribution Convertible Securities and
Convertible Securities which are convertible into or exercisable or
exchangeable for Committed Acquisition Shares) issued or delivered by
TCI after the Distribution as a dividend or distribution or by
reclassification or exchange to holders of TCI Group Series A Common
Stock and TCI Group Series B Common Stock and (e) the aggregate
number of shares of LMG Series A Common Stock (rounded, if necessary,
to the nearest whole number), equal to the aggregate fair value (as
determined by the TCI Board) of assets or properties attributed to
the Liberty Media Group that are transferred from the Liberty Media
Group to the TCI Group in consideration of a reduction in the Number
of Shares Issuable with Respect to the Liberty Media Group Inter-
Group Interest, divided by the Market Value of one share of LMG
Series A Common Stock as of the date of such transfer, and
(iii) increased by (a) the aggregate number of any shares of
LMG Series A Common Stock and LMG Series B Common Stock which are
retired or otherwise cease to be outstanding following their purchase
with funds attributed to the TCI Group, (b) a number (rounded, if
necessary, to the nearest whole number), equal to the fair value (as
determined by the TCI Board) of assets or properties theretofore
attributed to the TCI Group that are contributed to the Liberty Media
Group in consideration of an increase in the Number of Shares
Issuable with Respect to the Liberty Media Group Inter-Group
Interest, divided by the Market Value of one share of LMG Series A
Common Stock as of the date of such contribution and (c) the
aggregate number of shares of LMG Series A Common Stock and LMG
Series B Common Stock into or for which Convertible Securities are
deemed to be converted, exercised or exchanged pursuant to the last
sentence of the definition of "TCI Group."
TCI will not issue or sell shares of LMG Series B Common Stock in respect
of a reduction in the Number of Shares Issuable with Respect to the Liberty
Media Group Inter-Group Interest. Whenever a change in the Number of
Shares Issuable with Respect to the Liberty Media Group Inter-Group
Interest occurs, TCI will prepare and file a statement of such change with
the Secretary of TCI.
"Number of Shares Issuable with Respect to the Telephony Group
Inter-Group Interest" shall initially be that number of shares of Telephony
Group Common Stock which represents 100% of the common stockholders' equity
value of TCI attributable to the Telephony Group (which may be issued as
shares of Telephony Group Series A Common Stock or Telephony Group Series B
Common Stock), as determined by the TCI Board prior to the first issuance
of shares of Telephony Group Common Stock, and shall from time to time
thereafter, as applicable, be
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(i) adjusted as appropriate to reflect subdivisions (by
stock split or otherwise) and combinations (by reverse stock split or
otherwise) of the Telephony Group Series A Common Stock and Telephony
Group Series B Common Stock and dividends or distributions of shares
of Telephony Group Series A Common Stock or Telephony Group Series B
Common Stock to holders of Telephony Group Series A Common Stock and
Telephony Group Series B Common Stock and other reclassifications of
the Telephony Group Series A Common Stock and Telephony Group Series
B Common Stock,
(ii) decreased (but not to less than zero) by (a) the
aggregate number of shares of Telephony Group Series A Common Stock
or Telephony Group Series B Common Stock issued or sold by TCI the
proceeds of which are attributed to the TCI Group, (b) the aggregate
number of shares of Telephony Group Series A Common Stock or
Telephony Group Series B Common Stock issued or delivered upon
conversion, exercise or exchange of Convertible Securities, the
proceeds of which are attributed to the TCI Group, (c) the aggregate
number of shares of Telephony Group Series A Common Stock or
Telephony Group Series B Common Stock issued or delivered by TCI as a
dividend or distribution to holders of TCI Group Series A Common
Stock and TCI Group Series B Common Stock, (d) the aggregate number
of shares of Telephony Group Series A Common Stock or Telephony Group
Series B Common Stock issued or delivered upon the conversion,
exercise or exchange of any Convertible Securities issued or
delivered by TCI as a dividend or distribution or by reclassification
or exchange to holders of TCI Group Series A Common Stock and TCI
Group Series B Common Stock and (e) the aggregate number of shares of
Telephony Group Series A Common Stock and Telephony Group Series B
Common Stock (rounded, if necessary, to the nearest whole number),
equal to the aggregate fair value (as determined by the TCI Board) of
assets or properties attributed to the Telephony Group that are
transferred from the Telephony Group to the TCI Group in
consideration of a reduction in the Number of Shares Issuable with
Respect to the Telephony Group Inter-Group Interest, divided by the
Market Value of one share of Telephony Group Series A Common Stock as
of the date of such transfer, and
(iii) increased by (a) the aggregate number of any shares of
Telephony Group Series A Common Stock and Telephony Group Series B
Common Stock which are retired or otherwise cease to be outstanding
following their purchase with funds attributed to the TCI Group, (b)
a number (rounded, if necessary, to the nearest whole number), equal
to the fair value (as determined by the TCI Board) of assets or
properties, theretofore attributed to the TCI Group that are
contributed to the Telephony Group in consideration of an increase in
the Number of Shares Issuable with Respect to the Telephony Group
Inter-Group Interest, divided by the Market Value of one share of
Telephony Group Series A Common Stock as of the date of such
contribution and (c) the aggregate number of shares of Telephony
Group Series A Common Stock and Telephony Group Series B Common Stock
into or for which Convertible Securities are deemed to be converted,
exercised or exchanged pursuant to the last sentence of the
definition of "TCI Group."
Whenever a change in the Number of Shares Issuable with Respect
to the Telephony Group Inter-Group Interest occurs, TCI shall prepare and
file a statement of such change with the Secretary of TCI.
"Pre-Distribution Convertible Securities" means Convertible
Securities that were outstanding on the record date for the LMG
Distribution and were, prior to such date, convertible into or exercisable
or exchangeable for shares of TCI's Class A Common Stock, par value $1.00
per share (which has been redesignated TCI Group Series A Common Stock).
"Qualifying Subsidiary" shall mean a subsidiary of TCI in which
(x) TCI's ownership and voting interest is sufficient to satisfy the
requirements of the Internal Revenue Service for a tax free distribution of
TCI's interest in such subsidiary to the holders of Telephony Group Series
A Common Stock and Telephony Group Series B Common Stock or (y) TCI owns,
directly or indirectly, all of the issued and outstanding capital stock.
"Related Business Transaction" shall mean any Disposition of all
or substantially all of the properties and assets of the Liberty Media
Group or the Telephony Group, as the case may be, in which TCI receives as
proceeds of such Disposition primarily equity securities (including,
without limitation, capital stock, convertible securities, partnership or
limited partnership interests and other types of equity securities, without
regard to the voting power or contractual
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<PAGE>
or other management or governance rights related to such equity securities)
of the purchaser or acquiror of such assets and properties of the Liberty
Media Group or the Telephony Group, as the case may be, any entity which
succeeds (by merger, formation of a joint venture enterprise or otherwise)
to such assets and properties of the Liberty Media Group or the Telephony
Group, as the case may be, or a third party issuer, which purchaser,
acquiror or other issuer is engaged or proposes to engage primarily in one
or more businesses similar or complementary to the businesses conducted by
the Liberty Media Group or the Telephony Group, as the case may be, prior
to such Disposition, as determined in good faith by the TCI Board.
"Second Appraiser" means, with respect to any determination of
the Liberty Media Group Private Market Value or the Telephony Group Private
Market Value, an investment banking firm of recognized national standing
selected by the Independent Committee to make such determination.
"Selection Date" means, with respect to any determination of the
Liberty Media Group Private Market Value or the Telephony Group Private
Market Value, the date upon which the Second Appraiser for such
determination is selected by the Independent Committee.
The "TCI Group" means as of any date of determination thereof:
(i) the interest of TCI or any of its subsidiaries in all of
the businesses in which TCI or any of its subsidiaries (or any of
their predecessors or successors) is or has been engaged, directly or
indirectly, and the respective assets and liabilities of TCI or any
of its subsidiaries, other than any businesses, assets or liabilities
of the Liberty Media Group or the Telephony Group;
(ii) a proportionate interest in the businesses, assets and
liabilities of the Liberty Media Group equal to the Liberty Media
Group Inter-Group Interest Fraction as of such date and a
proportionate interest in the businesses, assets and liabilities of
the Telephony Group equal to the Telephony Group Inter-Group Interest
Fraction as of such date;
(iii) from and after any dividend or other distribution with
respect to shares of Liberty Media Group Common Stock (other than a
dividend or other distribution payable in shares of Liberty Media
Group Common Stock, with respect to which adjustment will be made as
described in clause (i) of the definition of "Number of Shares
Issuable with Respect to the Liberty Media Group Inter-Group
Interest," or in other securities of TCI attributed to the Liberty
Media Group, for which provision will be made as described in the
second sentence of this definition), an amount of assets or
properties theretofore included in the Liberty Media Group equal to
the aggregate amount of such kind of assets or properties so paid in
respect of such dividend or other distribution with respect to shares
of Liberty Media Group Common Stock multiplied by a fraction the
numerator of which is equal to the Liberty Media Group Inter-Group
Interest Fraction in effect immediately prior to the record date for
such dividend or other distribution and the denominator of which is
equal to the Liberty Media Group Outstanding Interest Fraction in
effect immediately prior to the record date for such dividend or
other distribution;
(iv) from and after any dividend or other distribution with
respect to shares of Telephony Group Common Stock (other than a
dividend or other distribution payable in shares of Telephony Group
Common Stock, with respect to which adjustment will be made as
described in clause (i) of the definition of "Number of Shares
Issuable with Respect to the Telephony Group Inter-Group Interest, or
in other securities of TCI attributed to the Telephony Group, for
which provision will be made as described in the penultimate sentence
of this definition), an amount of assets or properties theretofore
included in the Telephony Group equal to the aggregate amount of such
kind of assets or properties so paid in respect of such dividend or
distribution with respect to shares of Telephony Group Common Stock
multiplied by a fraction the numerator of which is equal to the
Telephony Group Inter-Group Interest Fraction in effect immediately
prior to the record date for such dividend or other distribution and
the denominator of which is equal to the Telephony Group Outstanding
Interest Fraction in effect immediately prior to the record date for
such dividend or other distribution; and
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(v) any assets or properties transferred from the Liberty
Media Group or the Telephony Group to the TCI Group;
provided that, from and after any contribution or transfer of any assets or
properties from the TCI Group to the Liberty Media Group or the Telephony
Group, the TCI Group will no longer include such assets or properties so
contributed or transferred (other than pursuant to its interest in the
businesses, assets and liabilities of the Liberty Media Group or the
Telephony Group, as applicable, described in clause (ii) above). If TCI
pays a dividend or makes any other distribution with respect to shares of
Liberty Media Group Common Stock payable in other securities of TCI
attributed to the Liberty Media Group, the TCI Group will be deemed to hold
an amount of such other securities equal to the amount so distributed
multiplied by the fraction specified in clause (iii) of this definition
(determined as of a time immediately prior to the record date for such
dividend or other distribution), and to the extent interest or dividends
are paid or other distributions are made on such other securities so
distributed to holders of Liberty Media Group Common Stock, the TCI Group
will include a corresponding ratable amount of the kind of assets paid as
such interest or dividends or other distributions in respect of such
securities so deemed to be held by the TCI Group. If Telephony Group
Common Stock is issued and TCI pays a dividend or makes any other
distribution with respect to shares of Telephony Group Common Stock payable
in other securities of TCI attributed to the Telephony Group, the TCI Group
will be deemed to hold an amount of such other securities equal to the
amount so distributed multiplied by the fraction specified in clause (iv)
of this definition (determined as of a time immediately prior to the record
date for such dividend or other distribution), and to the extent interest
or dividends are paid or other distributions are made on such other
securities so distributed to holders of Telephony Group Common Stock, the
TCI Group will include a corresponding ratable amount of the kind of assets
paid as such interest or dividends or other distribution in respect of such
securities so deemed to be held by the TCI Group. TCI may also, to the
extent any such other securities constitute Convertible Securities which
are at the time convertible, exercisable or exchangeable, cause such
Convertible Securities deemed to be held by the TCI Group to be deemed to
be converted, exercised or exchanged (and to the extent the terms of such
Convertible Securities require payment or delivery of consideration in
order to effect such conversion, exercise or exchange, the TCI Group will
in such case no longer include an amount of the kind of properties or
assets required to be paid or delivered as such consideration for the
amount of the Convertible Securities deemed converted, exercised or
exchanged as if such Convertible Securities were outstanding), in which
case such Convertible Securities will no longer be deemed to be held by the
TCI Group or attributed to the Liberty Media Group or Telephony Group, as
applicable.
"Telephony Group" shall mean, as of any date that any shares of
Telephony Group Common Stock have been issued and continue to be
outstanding:
(i) the interest of TCI or of any of its subsidiaries in
TCI Telephony Services, Inc., a Delaware corporation and an indirect
wholly owned subsidiary of TCI, or any of its subsidiaries (including
any successor thereto by merger, consolidation or sale of all or
substantially all of its assets, whether or not in connection with a
Related Business Transaction) and their respective properties and
assets;
(ii) all assets and liabilities of TCI or any of its
subsidiaries to the extent attributed to any of the properties or
assets referred to in clause (i) of this sentence, whether or not such
assets or liabilities are assets and liabilities of TCI Telephony
Services, Inc. (together with its consolidated subsidiaries) or any of
its subsidiaries (or a successor as described in clause (i) of this
sentence);
(iii) all assets and properties contributed or otherwise
transferred to the Telephony Group from the TCI Group; and
(iv) the interest of TCI or any of its subsidiaries in the
businesses, assets and liabilities acquired by TCI or any of its
subsidiaries for the Telephony Group, as determined by the TCI Board;
provided that (a) from and after any dividend or other distribution with
respect to any shares of Telephony Group Common Stock (other than a
dividend or other distribution payable in shares of Telephony Group Common
Stock, with respect to which adjustment shall be made as provided in clause
(i) of the definition of "Number of Shares Issuable with Respect to the
Telephony Group Inter-Group Interest," or in other securities of TCI
attributed to the Telephony Group for which provision shall be made as set
forth in the penultimate sentence of this definition), the Telephony Group
shall
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no longer include an amount of assets or properties equal to the aggregate
amount of such kind of assets or properties so paid in respect of shares of
Telephony Group Common Stock multiplied by a fraction the numerator of
which is equal to the Telephony Group Inter-Group Interest Fraction in
effect immediately prior to the record date for such dividend or other
distribution and the denominator of which is equal to the Telephony Group
Outstanding Interest Fraction in effect immediately prior to the record
date for such dividend or other distribution and (b) from and after any
transfer of assets or properties from the Telephony Group to the TCI Group,
the Telephony Group shall no longer include the assets or properties so
transferred. If TCI shall pay a dividend or make any other distribution
with respect to shares of Telephony Group Common Stock payable in
securities of TCI attributed to the Telephony Group other than Telephony
Group Common Stock, the TCI Group shall be deemed to hold an amount of such
other securities equal to the amount so distributed multiplied by the
fraction specified in clause (i) of this definition (determined as of a
time immediately prior to the record date for such dividend or other
distribution), and to the extent interest or dividends are paid or other
distributions are made on such other securities so distributed to the
holders of Telephony Group Common Stock, the Telephony Group shall no
longer include a corresponding ratable amount of the kind of assets paid as
such interest or dividends or other distributions in respect of such
securities so deemed to be held by the TCI Group. TCI may also, to the
extent any such other securities constitute Convertible Securities which
are at the time convertible, exercisable or exchangeable, cause such
Convertible Securities deemed to be held by the TCI Group to be deemed to
be converted, exercised or exchanged (and to the extent the terms of such
Convertible Securities require payment or delivery of consideration in
order to effect such conversion, exercise or exchange, the Telephony Group
shall in such case include an amount of the kind of properties or assets
required to be paid or delivered as such consideration for the amount of
the Convertible Securities deemed converted, exercised or exchanged as if
such Convertible Securities were outstanding), in which case such
Convertible Securities shall no longer be deemed to be held by the TCI
Group or attributed to the Telephony Group.
"Telephony Group Inter-Group Interest Fraction" means, as of any
date, a fraction the numerator of which is the Number of Shares Issuable
with Respect to the Telephony Group Inter-Group Interest as of such date
and the denominator of which is the sum of (a) such Number of Shares
Issuable with Respect to the Telephony Group Inter-Group Interest as of
such date and (b) the aggregate number of shares of Telephony Group Common
Stock outstanding as of such date.
"Telephony Group Net Proceeds" shall mean, as of any date, with
respect to any Disposition of any of the properties and assets of the
Telephony Group, an amount, if any, equal to the gross proceeds of such
Disposition after any payment of, or reasonable provision for, (a) any
taxes payable by TCI in respect of such Disposition or in respect of any
resulting dividend or redemption pursuant to clause (i) or (ii),
respectively, of the second paragraph under "--Conversion and Redemption--
Mandatory Dividend, Redemption or Conversion of Telephony Group Common
Stock" (or which would have been payable but for the utilization of tax
benefits attributable to the TCI Group or the Liberty Media Group), (b) any
transaction costs, including, without limitation, any legal, investment
banking and accounting fees and expenses and (c) any liabilities and other
obligations (contingent or otherwise) of, or attributed to, the Telephony
Group, including, without limitation, any indemnity or guarantee
obligations incurred in connection with the Disposition or any liabilities
for future purchase price adjustments and any preferential amounts plus any
accumulated and unpaid dividends and other obligations in respect of TCI
Preferred Stock attributed to the Telephony Group. For purposes of this
definition, any properties and assets of the Telephony Group remaining
after such Disposition shall constitute "reasonable provision" for such
amount of taxes, costs and liabilities (contingent or otherwise) as can be
supported by such properties and assets. To the extent the proceeds of any
Disposition include any securities or other property other than cash, the
TCI Board shall determine the value of such securities or property,
including for the purpose of determining the equivalent value thereof if
the TCI Board determines to pay a dividend or redemption price in cash or
securities or other property as provided in the third paragraph under "--
Conversion and Redemption--Mandatory Dividend, Redemption or Conversion of
Telephony Group Common Stock."
"Telephony Group Outstanding Interest Fraction" means, as of any
date, a fraction the numerator of which is the aggregate number of shares
of Telephony Group Common Stock outstanding on such date and the
denominator of which is the sum of (a) such aggregate number of shares of
Telephony Group Series A Common Stock outstanding on such date and (b) the
Number of Shares Issuable with Respect to the Telephony Group Inter-Group
Interest as of such date.
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Voting Rights
Holders of TCI Group Series A Common Stock are entitled to one
vote for each share of such stock held, holders of TCI Group Series B
Common Stock are entitled to ten votes for each share of such stock held,
holders of LMG Series A Common Stock are entitled to one vote for each
share of such stock held and holders of LMG Series B Common Stock are
entitled to ten votes for each share of such stock held, on all matters
presented to such stockholders. If the Telephony Group Common Stock is
issued, holders of Telephony Group Series A Common Stock will be entitled
to one vote for each share of such stock held and holders of Telephony
Group Series B Common Stock will be entitled to ten votes for each share of
such stock held, on all matters presented to such stockholders. Except as
may otherwise be required by the laws of the State of Delaware or, with
respect to any class of TCI Preferred Stock or any series of such a class,
in the TCI Charter (including any resolution or resolutions providing for
the establishment of such class or series pursuant to authority vested in
the TCI Board by the TCI Charter), the holders of TCI Group Common Stock,
the holders of Liberty Media Group Common Stock, the holders of Telephony
Group Common Stock, if any, and the holders of each class or series of TCI
Preferred Stock, if any, entitled to vote thereon will vote as one class
for all purposes. See " -- Anti-Takeover Considerations."
None of the holders of TCI Group Series A Common Stock, TCI Group
Series B Common Stock, LMG Series A Common Stock or LMG Series B Common
Stock have, and, if Telephony Group Common Stock is issued, none of the
holders of Telephony Group Series A Common Stock or Telephony Group Series
B Common Stock would have, any rights to vote as a separate class or series
on any matter coming before the stockholders of TCI, except with respect to
certain limited class and series voting rights provided under the DGCL.
Under the DGCL, the approval of the holders of a majority of the
outstanding shares of any class of capital stock of a corporation, voting
separately as a class, is required to approve any amendment to the charter
that would alter or change the powers, preferences or special rights of the
shares of such class so as to affect them adversely, provided that, if any
amendment would alter or change the powers, preferences or special rights
of one or more series of the class so as to affect them adversely, but
would not so affect the entire class, then only the shares of the series so
affected by the amendment would be entitled to vote thereon separately as a
class.
Dividends
Subject to the prior payment of dividends on, and other rights
of, any of the outstanding shares of TCI Preferred Stock, dividends may be
paid as determined by the TCI Board (i) on the TCI Group Common Stock out
of the lesser of (x) the TCI Group Available Dividend Amount and (y) funds
of TCI legally available therefor under the DGCL, (ii) on the Liberty Media
Group Common Stock out of the lesser of (x) the Liberty Media Group
Available Dividend Amount and (y) funds of TCI legally available therefor
under the DGCL, and (iii) on the Telephony Group Common Stock, if issued,
out of the lesser of (x) the Telephony Group Available Dividend Amount and
(y) funds of TCI legally available therefor under the DGCL. Under the
DGCL, the amount of the funds of TCI legally available for the payment of
dividends on any series of TCI Common Stock is determined on the basis of
the entire corporation and not just the TCI Group, the Liberty Media Group
or the Telephony Group. Consequently, the amount of legally available
funds will be reduced by the amount of any net losses of the TCI Group, the
Liberty Media Group or the Telephony Group and any dividends or
distributions on, or repurchases of, the TCI Group Common Stock, the
Liberty Media Group Common Stock or, if issued, the Telephony Group Common
Stock, if any, and any dividends or distributions on, or repurchases of,
the TCI Group Common Stock, the Liberty Media Group Common Stock or, if
issued, the Telephony Group Common Stock, if any, and dividends on, or
certain repurchases of, TCI Preferred Stock. Certain loan agreements to
which certain subsidiaries of TCI are parties or are subject contain
restricted payment provisions that limit the amount of dividends, other
than stock dividends, that those companies may pay. Future loan agreements
may also contain similar restrictions and limits.
The "TCI Group Available Dividend Amount" means, as of any date,
either (i) the excess of (a) an amount equal to the total assets of the TCI
Group less the total liabilities (not including preferred stock) of the TCI
Group as of such date over (b) the aggregate par value of, or any greater
amount determined to be capital in respect of, all outstanding shares of
TCI Group Common Stock and each class or series of TCI Preferred Stock
attributed to the TCI Group or (ii) in case there is no such excess, an
amount equal to the Corporation Earnings (Loss) Attributable to the TCI
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<PAGE>
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, including income and expenses of TCI attributed
to the operations of the TCI Group on a substantially consistent basis,
including, without limitation, corporate administrative costs, net interest
and income taxes. The TCI Group Available Dividend Amount is intended to
be similar to the amount that would be legally available for the payment of
dividends on the TCI Group Common Stock under the DGCL if the TCI Group
were a separate Delaware corporation. There can be no assurance that there
will be a TCI Group Available Dividend Amount.
The "Telephony Group Available Dividend Amount" means, as of any
date, the product of the Telephony Group Outstanding Interest Fraction and
either (i) the excess of (a) an amount equal to the total assets of the
Telephony Group less the total liabilities (not including preferred stock)
of the Telephony Group as of such date over (b) the aggregate par value of,
or any greater amount determined to be capital in respect of, all
outstanding shares of Telephony Group Common Stock and each class or series
of TCI Preferred Stock attributed to the Telephony Group or (ii) in case
there is no such excess, an amount equal to the Corporation Earnings (Loss)
Attributable to the Telephony Group (if positive) for the fiscal year in
which such date occurs and/or the preceding fiscal year. The "Corporation
Earnings (Loss) Attributable to the Telephony Group," for any period, means
the net earnings or loss of the Telephony Group for such period determined
on a basis consistent with the determination of the net earnings or loss of
the Telephony Group for such period as presented in the combined financial
statements of the Telephony Group, including income and expenses of TCI
attributed to the operations of the Telephony Group on a substantially
consistent basis, including, without limitation, corporate administrative
costs, net interest and income taxes. The Telephony Group Available
Dividend Amount is intended to be similar to the amount that would be
legally available for the payment of dividends on the Telephony Group
Common Stock under the DGCL if the Telephony Group were a separate Delaware
corporation. There can be no assurance that there will be a Telephony
Group Available Dividend Amount.
The "Liberty Media Group Available Dividend Amount" means, as of
any date, the product of the Liberty Media Group Outstanding Interest
Fraction and either (i) the excess of (a) an amount equal to the total
assets of the Liberty Media Group less the total liabilities (not including
preferred stock) of the Liberty Media Group as of such date over (b) the
aggregate par value of, or any greater amount determined to be capital in
respect of, all outstanding shares of Liberty Media Group Common Stock and
each class or series of TCI Preferred Stock attributed to the Liberty Media
Group or (ii) in case there is no such excess, an amount equal to the
Corporation Earnings (Loss) Attributable to the Liberty Media Group (if
positive) for the fiscal year in which such date occurs and/or the
preceding fiscal year. The "Corporation Earnings (Loss) Attributable to
the Liberty Media Group," for any period, means the net earnings or loss of
the Liberty Media Group for such period determined on a basis consistent
with the determination of the net earnings or loss of the Liberty Media
Group for such period as presented in the combined financial statements of
the Liberty Media Group, including income and expenses of TCI attributed to
the operations of the Liberty Media Group on a substantially consistent
basis, including, without limitation, corporate administrative costs, net
interest and income taxes. The Liberty Media Group Available Dividend
Amount is intended to be similar to the amount that would be legally
available for the payment of dividends on the Liberty Media Group Common
Stock under the DGCL if the Liberty Media Group were a separate Delaware
corporation. There is no assurance that there will be a Liberty Media
Group Available Dividend Amount.
Except for dividends declared or paid as described below under "-
-Share Distributions" and "--Conversion and Redemption--Mandatory Dividend,
Redemption or Conversion of Liberty Media Group Common Stock," any
dividends paid on the TCI Group Series A Common Stock or the TCI Group
Series B Common Stock will be paid only on both series, in equal amounts
per share; any dividends paid on the LMG Series A Common Stock or the LMG
Series B Common Stock will be paid only on both series, in equal amounts
per share; and, if Telephony Group Common Stock is issued, any dividends
paid on the Telephony Group Series A Common Stock or the Telephony Group
Series B Common Stock will be paid only on both series, in equal amounts
per share.
The TCI Board, subject to the provisions described above and
under "--Share Distributions" below, has the authority and discretion to
declare and pay dividends on the TCI Group Common Stock, the Liberty Media
Group Common Stock or, if issued, the Telephony Group Common Stock, in
equal or unequal amounts, notwithstanding the relationship between the TCI
Group Available Dividend Amount, the Liberty Media Group Available
Dividend Amount and the Telephony Group Available Dividend Amount, the
respective amounts of prior dividends declared on, or
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<PAGE>
liquidation rights of, the TCI Group Common Stock, the Liberty Media Group
Common Stock or, if issued, the Telephony Group Common Stock or any other
factor.
At the time of any dividend or other distribution on the
outstanding shares of Liberty Media Group Common Stock (including any
dividend of Liberty Media Group Net Proceeds from the Disposition of all or
substantially all of the properties and assets of the Liberty Media Group
as described below under "--Conversion and Redemption--Mandatory Dividend,
Redemption or Conversion of Liberty Media Group Common Stock"), the TCI
Group will (if at such time there is an Inter-Group Interest in the Liberty
Media Group) be credited, and the Liberty Media Group will be charged (in
addition to the charge for the dividend or other distribution paid or
distributed in respect of outstanding shares of Liberty Media Group Common
Stock), with an amount equal to the product of (i) the aggregate amount of
such dividend or distribution paid or distributed in respect of outstanding
shares of Liberty Media Group Common Stock times (ii) a fraction the
numerator of which is the Liberty Media Group Inter-Group Interest Fraction
and the denominator of which is the Liberty Media Group Outstanding
Interest Fraction.
If Telephony Group Common Stock is issued, at the time of any
dividend or other distribution on the outstanding shares of Telephony Group
Common Stock (including any dividend of Telephony Group Net Proceeds from
the Disposition of all or substantially all of the properties and assets of
the Telephony Group as described under "--Conversion and Redemption--
Mandatory Dividend, Redemption or Conversion of Telephony Group Common
Stock"), the TCI Group will (if at such time there is an Inter-Group
Interest in the Telephony Group) be credited, and the Telephony Group will
be charged (in addition to the charge for the dividend or other
distribution paid or distributed in respect of outstanding shares of
Telephony Group Common Stock), with an amount equal to the product of (i)
the aggregate amount of such dividend or distribution paid or distributed
in respect of outstanding shares of Telephony Group Common Stock times (ii)
a fraction the numerator of which is the Telephony Group Inter-Group
Interest Fraction and the denominator of which is the Telephony Group
Outstanding Interest Fraction.
Share Distributions
Distributions on TCI Group Common Stock. If at any time after
the LMG Distribution and the initial issuance of shares of Telephony Group
Common Stock a distribution is to be made with respect to the TCI Group
Common Stock in TCI Group Common Stock, Liberty Media Group Common Stock,
Telephony Group Common Stock, or any other securities of TCI or any other
person (a "share distribution"), such share distribution will be declared
and paid only as follows:
(i) a share distribution consisting of shares of TCI Group
Series A Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of TCI Group Series A Common
Stock) to holders of TCI Group Series A Common Stock and TCI Group
Series B Common Stock, on an equal per share basis; or consisting of
shares of TCI Group Series B Common Stock (or Convertible Securities
convertible into or exercisable or exchangeable for shares of TCI Group
Series B Common Stock) to holders of TCI Group Series A Common Stock
and TCI Group Series B Common Stock, on an equal per share basis; or
consisting of shares of TCI Group Series A Common Stock (or Convertible
Securities convertible into or exercisable or exchangeable for shares
of TCI Group Series A Common Stock) to holders of TCI Group Series A
Common Stock and, on an equal per share basis, shares of TCI Group
Series B Common Stock (or like Convertible Securities convertible into
or exercisable or exchangeable for shares of TCI Group Series B Common
Stock) to holders of TCI Group Series B Common Stock;
(ii) a share distribution consisting of shares of LMG Series
A Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of LMG Series A Common Stock) to
holders of TCI Group Series A Common Stock and TCI Group Series B
Common Stock, on an equal per share basis; provided that the sum of (A)
the aggregate number of shares of LMG Series A Common Stock to be so
issued (or the number of such shares which would be issuable upon
conversion, exercise or exchange of any Convertible Securities to be so
issued) and (B) the number of shares of such series that are subject to
issuance upon conversion, exercise or exchange of any Convertible
Securities then outstanding that are attributed to the TCI Group (other
than Pre-Distribution Convertible Securities and other than Convertible
Securities
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<PAGE>
convertible into or exercisable or exchangeable for Committed Acquisition
Shares) is less than or equal to the Number of Shares Issuable with Respect
to the Liberty Media Group Inter-Group Interest;
(iii) a share distribution consisting of shares of Telephony
Group Series A Common Stock (or Convertible Securities convertible
into or exercisable or exchangeable for shares of Telephony Group
Series A Common Stock) to holders of TCI Group Series A Common Stock
and TCI Group Series B Common Stock, on an equal per share basis; or
consisting of shares of Telephony Group Series B Common Stock (or
Convertible Securities convertible into or exercisable or
exchangeable for shares of Telephony Group Series B Common Stock) to
holders of TCI Group Series A Common Stock and TCI Group Series B
Common Stock, on an equal per share basis; or consisting of shares of
Telephony Group Series A Common Stock (or Convertible Securities
convertible into or exercisable or exchangeable for shares of
Telephony Group Series A Common Stock) to holders of TCI Group Series
A Common Stock and, on an equal per share basis, shares of Telephony
Group Series B Common Stock (or like Convertible Securities
convertible into or exercisable or exchangeable for shares of
Telephony Group Series B Common Stock) to holders of TCI Group Series
B Common Stock; provided that the sum of (A) the aggregate number of
shares of Telephony Group Series A Common Stock and Telephony Group
Series B Common Stock to be so issued (or the number of such shares
which would be issuable upon conversion, exercise or exchange of any
Convertible Securities to be so issued) and (B) the number of shares
of Telephony Group Series A Common Stock that are subject to issuance
upon conversion, exercise or exchange of any Convertible Securities
then outstanding that are attributed to the TCI Group is less than or
equal to the Number of Shares Issuable with Respect to the Telephony
Group Inter-Group Interest; and
(iv) a share distribution consisting of any class or series
of securities of TCI or any other person other than TCI Group Common
Stock, Liberty Media Group Common Stock or Telephony Group Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of TCI Group Common Stock, Liberty Media
Group Common Stock or Telephony Group Common Stock), either on the
basis of a distribution of identical securities, on an equal per
share basis, to holders of TCI Group Series A Common Stock and TCI
Group Series B Common Stock or on the basis of a distribution of one
class or series of securities to holders of TCI Group Series A Common
Stock and another class or series of securities to holders of TCI
Group Series B Common Stock, provided that the securities so
distributed (and, if the distribution consists of Convertible
Securities, the securities into which such Convertible Securities are
convertible or for which they are exercisable or exchangeable) do not
differ in any respect other than their relative voting rights and
related differences in designation, conversion, redemption and share
distribution provisions, with holders of shares of TCI Group Series B
Common Stock receiving the class or series having the higher relative
voting rights (without regard to whether such rights differ to a
greater or lesser extent than the corresponding differences in voting
rights, designation, conversion, redemption and share distribution
provisions between the TCI Group Series A Common Stock and the TCI
Group Series B Common Stock), provided that if the securities so
distributed constitute capital stock of a subsidiary of TCI, such
rights will not differ to a greater extent than the corresponding
differences in voting rights, designation, conversion, redemption and
share distribution provisions between the TCI Group Series A Common
Stock and the TCI Group Series B Common Stock, and provided in each
case that such distribution is otherwise made on an equal per share
basis.
TCI will not reclassify, subdivide or combine the TCI Group
Series A Common Stock without reclassifying, subdividing or combining the
TCI Group Series B Common Stock, on an equal per share basis, and TCI will
not reclassify, subdivide or combine the TCI Group Series B Common Stock
without reclassifying, subdividing or combining the TCI Group Series A
Common Stock, on an equal per share basis.
Distributions on Liberty Media Group Common Stock. If at any
time a share distribution is to be made with respect to the Liberty Media
Group Common Stock, such share distribution will be declared and paid only
as follows (or as described under the caption "--Conversion and Redemption"
with respect to the redemptions and other distributions referred to
therein):
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(i) a share distribution consisting of shares of LMG Series
A Common Stock (or Convertible Securities convertible into or exercisable
or exchangeable for shares of LMG Series A Common Stock) to holders of LMG
Series A Common Stock and LMG Series B Common Stock, on an equal per share
basis; or consisting of shares of LMG Series B Common Stock (or Convertible
Securities convertible into or exercisable or exchangeable for shares of
LMG Series B Common Stock) to holders of LMG Series A Common Stock and LMG
Series B Common Stock, on an equal per share basis; or consisting of shares
of LMG Series A Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of LMG Series A Common Stock) to
holders of LMG Series A Common Stock and, on an equal per share basis,
shares of LMG Series B Common Stock (or like Convertible Securities
convertible into or exercisable or exchangeable for shares of LMG Series B
Common Stock) to holders of LMG Series B Common Stock; and
(ii) a share distribution consisting of any class or series
of securities of TCI or any other person other than as described in the
immediately preceding clause (i) and other than TCI Group Common Stock or
Telephony Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of TCI Group Series A Common Stock,
TCI Group Series B Common Stock, Telephony Group Series A Common Stock or
Telephony Group Series B Common Stock), either on the basis of a
distribution of identical securities, on an equal per share basis, to
holders of LMG Series A Common Stock and LMG Series B Common Stock or on
the basis of a distribution of one class or series of securities to holders
of LMG Series A Common Stock and another class or series of securities to
holders of LMG Series B Common Stock, provided that the securities so
distributed (and, if the distribution consists of Convertible Securities,
the securities into which such Convertible Securities are convertible or
for which they are exercisable or exchangeable) do not differ in any
respect other than their relative voting rights and related differences in
designation, conversion, redemption and share distribution provisions, with
holders of shares of LMG Series B Common Stock receiving the class or
series having the higher relative voting rights (without regard to whether
such rights differ to a greater or lesser extent than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the LMG Series A Common Stock and the LMG
Series B Common Stock), provided that if the securities so distributed
constitute capital stock of a subsidiary of TCI, such rights will not
differ to a greater extent than the corresponding differences in voting
rights, designation, conversion, redemption and share distribution
provisions between the LMG Series A Common Stock and the LMG Series B
Common Stock, and provided in each case that such distribution is otherwise
made on an equal per share basis.
TCI will not reclassify, subdivide or combine the LMG Series A Common Stock
without reclassifying, subdividing or combining the LMG Series B Common Stock,
on an equal per share basis, and TCI will not reclassify, subdivide or combine
the LMG Series B Common Stock without reclassifying, subdividing or combining
the LMG Series A Common Stock, on an equal per share basis.
Distributions on Telephony Group Common Stock. If Telephony Group Common
Stock is issued, and if at any time a share distribution is to be made with
respect to the Telephony Group Common Stock, such share distribution will be
declared and paid only as follows (or as described under the caption "--
Conversion and Redemption" with respect to the redemptions and other
distributions referred to therein):
(i) a share distribution consisting of shares of Telephony
Group Series A Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Telephony Group Series A Common
Stock) to holders of Telephony Group Series A Common Stock and Telephony
Group Series B Common Stock, on an equal per share basis; or consisting of
shares of Telephony Group Series B Common Stock (or Convertible Securities
convertible into or exercisable or exchangeable for shares of Telephony
Group Series B Common Stock) to holders of Telephony Group Series A Common
Stock and Telephony Group Series B Common Stock, on an equal per share
basis; or consisting of shares of Telephony Group Series A Common Stock (or
Convertible Securities convertible into or exercisable or exchangeable for
shares of Telephony Group Series A Common Stock) to holders of Telephony
Group Series A Common Stock and, on an equal per share basis, shares of
Telephony Group Series B Common Stock (or like Convertible Securities
convertible into or exercisable or exchangeable for shares of Telephony
Group Series B Common Stock) to holders of Telephony Group Series B Common
Stock; and
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(ii) a share distribution consisting of any class or series
of securities of TCI or any other person other than as described in the
immediately preceding clause (i) and other than TCI Group Common Stock or
Liberty Media Group Common Stock (or Convertible Securities convertible
into or exercisable or exchangeable for shares of TCI Group Common Stock or
Liberty Media Group Common Stock), either on the basis of a distribution of
identical securities, on an equal per share basis, to holders of Telephony
Group Series A Common Stock and Telephony Group Series B Common Stock or on
the basis of a distribution of one class or series of securities to holders
of Telephony Group Series A Common Stock and another class or series of
securities to holders of Telephony Group Series B Common Stock, provided
that the securities so distributed (and, if the distribution consists of
Convertible Securities, the securities into which such Convertible
Securities are convertible or for which they are exercisable or
exchangeable) do not differ in any respect other than their relative voting
rights and related differences in designation, conversion, redemption and
share distribution provisions, with holders of shares of Telephony Group
Series B Common Stock receiving the class or series having the higher
relative voting rights (without regard to whether such rights differ to a
greater or lesser extent than the corresponding differences in voting
rights, designation, conversion, redemption and share distribution
provisions between the Telephony Group Series A Common Stock and the
Telephony Group Series B Common Stock), provided that if the securities so
distributed constitute capital stock of a subsidiary of TCI, such rights
will not differ to a greater extent than the corresponding differences in
voting rights, designation, conversion, redemption and share distribution
provisions between the Telephony Group Series A Common Stock and the
Telephony Group Series B Common Stock, and provided in each case that such
distribution is otherwise made on an equal per share basis.
Because under the TCI Charter the Telephony Group is not permitted to have
an Inter-Group Interest in either the TCI Group or the Liberty Media Group, no
distributions on the Telephony Group Common Stock of shares of TCI Group Common
Stock (or related Convertible Securities) or Liberty Media Group Common Stock
(or related Convertible Securities) are permitted.
TCI will not reclassify, subdivide or combine the Telephony Group Series A
Common Stock without reclassifying, subdividing or combining the Telephony Group
Series B Common Stock, on an equal per share basis, and TCI will not reclassify,
subdivide or combine the Telephony Group Series B Common Stock without
reclassifying, subdividing or combining the Telephony Group Series A Common
Stock, on an equal per share basis.
Conversion and Redemption
Conversion at the Option of the Holder. Each share of TCI Group Series B
Common Stock is convertible, at the option of the holder thereof, into one share
of TCI Group Series A Common Stock. Each share of LMG Series B Common Stock is
convertible, at the option of the holder thereof, into one share of LMG Series A
Common Stock. If Telephony Group Common Stock is issued, each share of Telephony
Group Series B Common Stock would be convertible, at the option of the holder
thereof, into one share of Telephony Group Series A Common Stock. Shares of TCI
Group Series A Common Stock are not convertible into shares of TCI Group Series
B Common Stock; shares of LMG Series A Common Stock are not convertible into
shares of LMG Series B Common Stock; and, if Telephony Group Common Stock is
issued, shares of Telephony Group Series A Common Stock would not be convertible
into shares of Telephony Group Series B Common Stock.
Conversion of Liberty Media Group Common Stock at the Option of TCI. The
TCI Board may at any time declare that (i) all of the outstanding shares of LMG
Series A Common Stock will be converted into a number (or fraction) of fully
paid and nonassessable shares of TCI Group Series A Common Stock equal to the
Liberty Media Group Optional Conversion Ratio, and (ii) all of the outstanding
shares of LMG Series B Common Stock will be converted into a number (or
fraction) of fully paid and nonassessable shares of TCI Group Series B Common
Stock equal to the Liberty Media Group Optional Conversion Ratio. As more fully
described below, the Liberty Media Group Optional Conversion Ratio is the ratio
of the private market value of a share of Liberty Media Group Common Stock
determined by appraisal to the public trading price of a share of TCI Group
Common Stock.
Under the TCI Charter, the "Liberty Media Group Optional Conversion Ratio"
means the quotient (calculated to the nearest five decimal places) obtained by
dividing (x) the Liberty Media Group Common Stock Per Share Value
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by (y) the average Market Value of one share of TCI Group Series A Common
Stock over the 20-trading day period ending on the trading day preceding
the Appraisal Date. The Liberty Media Group Common Stock Per Share Value
will equal the quotient obtained by dividing the Liberty Media Group
Private Market Value by the Adjusted Outstanding Shares of Liberty Media
Group Common Stock, which will be determined in the manner described below.
The "Liberty Media Group Private Market Value" means an amount
equal to the private market value of the Liberty Media Group as of the
Appraisal Date. In the event that TCI determines to establish the Liberty
Media Group Private Market Value, TCI shall designate the First Appraiser
and the Independent Committee shall designate the Second Appraiser. Not
later than 20 days after the Selection Date, the First Appraiser and the
Second Appraiser will each determine its initial view as to the private
market value of the Liberty Media Group as of the Appraisal Date and will
consult with one another with respect thereto. Not later than the 30th day
after the Selection Date, the First Appraiser and the Second Appraiser will
each have determined its final view as to such private market value. If
the Higher Appraised Amount is not more than 120% of the Lower Appraised
Amount, the Liberty Media Group Private Market Value (subject to any
adjustment described in the second succeeding paragraph) will be the
average of those two amounts. If the Higher Appraised Amount is more than
120% of the Lower Appraised Amount, the First Appraiser and the Second
Appraiser will agree upon and jointly designate the Mutually Designated
Appraiser to determine such private market value. The Mutually Designated
Appraiser will not be provided with any of the work of the First Appraiser
and the Second Appraiser. The Mutually Designated Appraiser will, no later
than the 20th day after the date the Mutually Designated Appraiser is
designated, determine the Mutually Appraised Amount, and the Liberty Media
Group Private Market Value (subject to any adjustment described in the
second succeeding paragraph) will be (i) if the Mutually Appraised Amount
is between the Lower Appraised Amount and the Higher Appraised Amount, (a)
the average of (1) the Mutually Appraised Amount and (2) the Lower
Appraised Amount or the Higher Appraised Amount, whichever is closer to the
Mutually Appraised Amount, or (b) the Mutually Appraised Amount, if neither
the Lower Appraised Amount nor the Higher Appraised Amount is closer to the
Mutually Appraised Amount, or (ii) if the Mutually Appraised Amount is
greater than the Higher Appraised Amount or less than the Lower Appraised
Amount, the average of the Higher Appraised Amount and the Lower Appraised
Amount. For these purposes, if any such investment banking firm expresses
its final view of the private market value of the Liberty Media Group as a
range of values, such investment banking firm's final view of such private
market value will be deemed to be the midpoint of such range of values.
Each of the investment banking firms referred to in the
immediately preceding paragraph will be instructed to determine the private
market value of the Liberty Media Group as of the Appraisal Date based upon
the amount a willing purchaser would pay to a willing seller, in an arm's-
length transaction, if it were acquiring the Liberty Media Group, as if the
Liberty Media Group were a publicly traded non-controlled corporation and
the purchaser was acquiring all of the capital stock of such corporation
and without consideration of any potential regulatory constraints limiting
the potential purchasers of the Liberty Media Group other than that which
would have existed if the Liberty Media Group were a publicly traded non-
controlled entity.
Following the determination of the Liberty Media Group Private
Market Value, the investment banking firms whose final views of the private
market value of the Liberty Media Group were used in the calculation of the
Liberty Media Group Private Market Value will determine the Adjusted
Outstanding Shares of Liberty Media Group Common Stock together with any
further appropriate adjustments to the Liberty Media Group Private Market
Value resulting from such determination. The "Adjusted Outstanding Shares
of Liberty Media Group Common Stock" means a number, as determined by such
investment banking firms as of the Appraisal Date, equal to the sum of the
number of shares of Liberty Media Group Common Stock outstanding, the
Number of Shares Issuable with Respect to the Liberty Media Group Inter-
Group Interest, the number of Committed Acquisition Shares issuable, the
number of shares of Liberty Media Group Common Stock issuable upon the
conversion, exercise or exchange of all Pre-Distribution Convertible
Securities and the number of shares of Liberty Media Group Common Stock
issuable upon the conversion, exercise or exchange of those Convertible
Securities (other than Pre-Distribution Convertible Securities and other
than Convertible Securities which are convertible into or exercisable or
exchangeable for Committed Acquisition Shares) the holders of which would
derive an economic benefit from conversion, exercise or exchange of such
Convertible Securities which exceeds the economic benefit of not
converting, exercising or exchanging such Convertible Securities. The
"Liberty Media Group Common Stock Per Share Value" means the quotient
obtained by dividing the Liberty Media Group Private Market Value by the
Adjusted Outstanding Shares of Liberty Media Group Common Stock, provided
that if such
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investment banking firms do not agree on the determinations provided for in this
paragraph, the Liberty Media Group Common Stock Per Share Value will be the
average of the quotients so obtained on the basis of the respective
determinations of such firms.
If TCI determines to convert shares of LMG Series A Common Stock
into TCI Group Series A Common Stock and shares of LMG Series B Common Stock
into TCI Group Series B Common Stock at the Liberty Media Group Optional
Conversion Ratio, such conversion will occur on a conversion date on or prior to
the 120th day following the Appraisal Date. If TCI determines not to undertake
such conversion, TCI may at any time thereafter undertake to reestablish the
Liberty Media Group Common Stock Per Share Value as of a subsequent date.
Conversion of Telephony Group Common Stock at the Option of TCI.
If Telephony Group Common Stock is issued, the TCI Board may at any time declare
that (i) all of the outstanding shares of Telephony Group Series A Common Stock
will be converted into a number (or fraction) of fully paid and nonassessable
shares of TCI Group Series A Common Stock equal to the Telephony Group Optional
Conversion Ratio, and (ii) all of the outstanding shares of Telephony Group
Series B Common Stock will be converted into a number (or fraction) of fully
paid and nonassessable shares of TCI Group Series B Common Stock equal to the
Telephony Group Optional Conversion Ratio. As more fully described below, the
Telephony Group Optional Conversion Ratio is the ratio of the private market
value of a share of Telephony Group Common Stock determined by appraisal to the
public trading price of a share of TCI Group Common Stock.
Under the TCI Charter, the "Telephony Group Optional Conversion
Ratio" means the quotient (calculated to the nearest five decimal places)
obtained by dividing (x) the Telephony Group Common Stock Per Share Value by (y)
the average Market Value of one share of TCI Group Series A Common Stock over
the 20-trading day period ending on the trading day preceding the Appraisal
Date. The Telephony Group Common Stock Per Share Value will equal the quotient
obtained by dividing the Telephony Group Private Market Value by the Adjusted
Outstanding Shares of Telephony Group Common Stock, which will be determined in
the manner provided below.
The "Telephony Group Private Market Value" means an amount equal
to the private market value of the Telephony Group as of the Appraisal Date. In
the event that TCI determines to establish the Telephony Group Private Market
Value, TCI shall designate the First Appraiser and the Independent Committee
shall designate the Second Appraiser. Not later than 20 days after the Selection
Date, the First Appraiser and the Second Appraiser will each determine its
initial view as to the private market value of the Telephony Group as of the
Appraisal Date and will consult with one another with respect thereto. Not later
than the 30th day after the Selection Date, the First Appraiser and the Second
Appraiser will each have determined its final view as to such private market
value. If the Higher Appraised Amount is not more than 120% of the Lower
Appraised Amount, the Telephony Group Private Market Value (subject to any
adjustment described in the second succeeding paragraph) will be the average of
those two amounts. If the Higher Appraised Amount is more than 120% of the Lower
Appraised Amount, the First Appraiser and the Second Appraiser will agree upon
and jointly designate the Mutually Designated Appraiser to determine such
private market value. The Mutually Designated Appraiser will not be provided
with any of the work of the First Appraiser and the Second Appraiser. The
Mutually Designated Appraiser will, no later than the 20th day after the date
the Mutually Designated Appraiser is designated, determine the Mutually
Appraised Amount, and the Telephony Group Private Market Value (subject to any
adjustment described in the second succeeding paragraph) will be (i) if the
Mutually Appraised Amount is between the Lower Appraised Amount and the Higher
Appraised Amount, (a) the average of (1) the Mutually Appraised Amount and (2)
the Lower Appraised Amount or the Higher Appraised Amount, whichever is closer
to the Mutually Appraised Amount, or (b) the Mutually Appraised Amount, if
neither the Lower Appraised Amount nor the Higher Appraised Amount is closer to
the Mutually Appraised Amount, or (ii) if the Mutually Appraised Amount is
greater than the Higher Appraised Amount or less than the Lower Appraised
Amount, the average of the Higher Appraised Amount and the Lower Appraised
Amount. For these purposes, if any such investment banking firm expresses its
final view of the private market value of the Telephony Group as a range of
values, such investment banking firm's final view of such private market value
will be deemed to be the midpoint of such range of values.
Each of the investment banking firms referred to in the
immediately preceding paragraph will be instructed to determine the private
market value of the Telephony Group as of the Appraisal Date based upon the
amount a willing purchaser would pay to a willing seller, in an arm's-length
transaction, if it were acquiring the Telephony Group, as if
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the Telephony Group were a publicly traded non-controlled corporation and the
purchaser was acquiring all of the capital stock of such corporation and without
consideration of any potential regulatory constraints limiting the potential
purchasers of the Telephony Group other than that which would have existed if
the Telephony Group were a publicly traded non-controlled entity.
Following the determination of the Telephony Group Private Market
Value, the investment banking firms whose final views of the private market
value of the Telephony Group were used in the calculation of the Telephony Group
Private Market Value will determine the Adjusted Outstanding Shares of Telephony
Group Common Stock together with any further appropriate adjustments to the
Telephony Group Private Market Value resulting from such determination. The
"Adjusted Outstanding Shares of Telephony Group Common Stock" means a number, as
determined by such investment banking firms as of the Appraisal Date, equal to
the sum of the number of shares of Telephony Group Common Stock outstanding, the
Number of Shares Issuable with Respect to the Telephony Group Inter-Group
Interest, and the number of shares of Telephony Group Common Stock issuable upon
the conversion, exercise or exchange of those Convertible Securities the holders
of which would derive an economic benefit from conversion, exercise or exchange
of such Convertible Securities which exceeds the economic benefit of not
converting, exercising or exchanging such Convertible Securities. The "Telephony
Group Common Stock Per Share Value" means the quotient obtained by dividing the
Telephony Group Private Market Value by the Adjusted Outstanding Shares of
Telephony Group Common Stock, provided that if such investment banking firms do
not agree on the determinations provided for in this paragraph, the Telephony
Group Common Stock Per Share Value will be the average of the quotients so
obtained on the basis of the respective determinations of such firms.
If TCI determines to convert shares of Telephony Group Series A
Common Stock into TCI Group Series A Common Stock and shares of Telephony Group
Series B Common Stock into TCI Group Series B Common Stock at the Telephony
Group Optional Conversion Ratio, such conversion will occur on a conversion date
on or prior to the 120th day following the Appraisal Date. If TCI determines not
to undertake such conversion, TCI may at any time thereafter undertake to
reestablish the Telephony Group Common Stock Per Share Value as of a subsequent
date.
Any such conversion would dilute the interests of holders of TCI
Group Common Stock and would preclude holders of Telephony Group Common Stock
from retaining their interest in a security reflecting separately the business
of the Telephony Group.
Mandatory Dividend, Redemption or Conversion of Liberty Media
Group Common Stock. Upon the Disposition, in one transaction or a series of
related transactions by TCI and its subsidiaries of all or substantially all of
the properties and assets of the Liberty Media Group to one or more persons,
entities or groups TCI is required, on or prior to the 85th trading day
following the consummation of such Disposition, to take one of the actions
listed in the following paragraph. This requirement does not apply to a
Disposition (a) in connection with the Disposition by TCI of all of TCI's
properties and assets in one transaction or a series of related transactions in
connection with the liquidation, dissolution or winding up of TCI, (b) by
dividend, other distribution or redemption in accordance with any provision
described under "--Redemption of Liberty Media Group Common Stock in Exchange
for Stock of Subsidiary," "--Dividends," "--Share Distributions," or "--
Liquidation Rights," (c) to any person, entity or group which TCI, directly or
indirectly, after giving effect to the Disposition, controls or (d) in
connection with a Related Business Transaction. For these purposes,
"substantially all of the properties and assets of the Liberty Media Group"
means a portion of such properties and assets that represents at least 80% of
the then-current market value (as determined by the TCI Board) of the properties
and assets of the Liberty Media Group as of such date.
The action TCI is required to take is to either:
(i) subject to the limitations described under "--Dividends,"
declare and pay a dividend in cash and/or securities or other property
(other than a dividend or distribution of TCI Common Stock) to the holders
of the outstanding shares of Liberty Media Group Common Stock equally on a
share for share basis (subject to the provisions described in the last
sentence of the penultimate paragraph under this caption "--Mandatory
Dividend, Redemption or Conversion of Liberty Media Group Common Stock"),
in an aggregate amount equal to the product of the Liberty Media Group
Outstanding Interest Fraction as of the record date for determining the
holders entitled to receive such dividend and the Liberty Media Group Net
Proceeds;
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(ii) provided that there are assets of TCI legally available
therefor and the Liberty Media Group Available Dividend Amount would have
been sufficient to pay a dividend in lieu thereof as described in clause
(i) of this paragraph, then:
(A) if such Disposition involves all (not merely
substantially all) of the properties and assets of the Liberty Media
Group, redeem all outstanding shares of LMG Series A Common Stock and
LMG Series B Common Stock in exchange for cash and/or securities or
other property (other than TCI Common Stock) in an aggregate amount
equal to the product of the Adjusted Liberty Media Group Outstanding
Interest Fraction as of the date of such redemption and the Liberty
Media Group Net Proceeds, such aggregate amount to be allocated
(subject to the provisions described in the last sentence of the
penultimate paragraph under this caption) to shares of LMG Series A
Common Stock and LMG Series B Common Stock in the ratio of the number
of shares of each such series outstanding (so that the amount of
consideration paid for the redemption of each share of LMG Series A
Common Stock and each share of LMG Series B Common Stock is the
same); or
(B) if such Disposition involves substantially all
(but not all) of the properties and assets of the Liberty Media
Group, apply an aggregate amount of cash and/or securities or other
property (other than TCI Common Stock) equal to the product of the
Liberty Media Group Outstanding Interest Fraction as of the date
shares are selected for redemption and the Liberty Media Group Net
Proceeds of such Disposition to the redemption of outstanding shares
of LMG Series A Common Stock and LMG Series B Common Stock, such
aggregate amount to be allocated (subject to the provisions described
in the last sentence of the penultimate paragraph under this caption)
to shares of LMG Series A Common Stock and LMG Series B Common Stock
in the ratio of the number of shares of each such series outstanding,
and the number of shares of each such series to be redeemed to equal
the lesser of (x) the whole number nearest the number determined by
dividing the aggregate amount so allocated to the redemption of such
series by the average Market Value of one share of LMG Series A
Common Stock during the ten-trading day period beginning on the 16th
trading day following the consummation of such Disposition and (y)
the number of shares of such series outstanding (so that the amount
of consideration paid for the redemption of each share of LMG Series
A Common Stock and each share of LMG Series B Common Stock is the
same); or
(iii) convert (A) each outstanding share of LMG Series A Common
Stock into a number (or fraction) of fully paid and nonassessable shares of
TCI Group Series A Common Stock and (B) each outstanding share of LMG
Series B Common Stock into a number (or fraction) of fully paid and
nonassessable shares of TCI Group Series B Common Stock, in each case equal
to 110% of the average daily ratio (calculated to the nearest five decimal
places) of the Market Value of one share of LMG Series A Common Stock to
the Market Value of one share of TCI Group Series A Common Stock during the
ten-trading day period referred to in clause (ii)(B) of this paragraph.
The "Adjusted Liberty Media Group Outstanding Interest Fraction"
means a fraction the numerator of which is the number of outstanding shares of
Liberty Media Group Common Stock and the denominator of which is the sum of (a)
such number of outstanding shares, (b) the Number of Shares Issuable with
Respect to the Liberty Media Group Inter-Group Interest, (c) the number of
shares of Liberty Media Group Common Stock issuable upon conversion, exercise or
exchange of Pre-Distribution Convertible Securities and (d) the number of
Committed Acquisition Shares issuable.
TCI may elect to pay the dividend or redemption price referred to
in clause (i) or (ii) of the second paragraph under this caption "--Mandatory
Dividend, Redemption or Conversion or Liberty Media Group Common Stock" either
in the same form as the proceeds of the Disposition were received or in any
other combination of cash or securities or other property (other than Common
Stock) that the TCI Board determines will have an aggregate market value on a
fully distributed basis, of not less than the amount of the Liberty Media Group
Net Proceeds. If the dividend or redemption price is paid in the form of
securities of an issuer other than TCI, the TCI Board may determine either to
(i) pay the dividend or redemption price in the form of separate classes or
series of securities, with one class or series of such
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securities to holders of LMG Series A Common Stock and another class or series
of securities to holders of LMG Series B Common Stock, provided that such
securities (and, if such securities are convertible into or exercisable or
exchangeable for shares of another class or series of securities, the securities
so issuable upon such conversion, exercise or exchange) do not differ in any
respect other than their relative voting rights and related differences in
designation, conversion, redemption and share distribution provisions with
holders of shares of LMG Series B Common Stock receiving the class or series
having the higher relative voting rights (without regard to whether such rights
differ to a greater or lesser extent than the corresponding differences in
voting rights, designation, conversion, redemption and share distribution
provisions between the LMG Series A Common Stock and the LMG Series B Common
Stock), provided that if such securities constitute capital stock of a
subsidiary of TCI, such rights will not differ to a greater extent than the
corresponding differences in voting rights, designation, conversion, redemption
and share distribution provisions between the LMG Series A Common Stock and the
LMG Series B Common Stock, and otherwise such securities will be distributed on
an equal per share basis, or (ii) pay the dividend or redemption price in the
form of a single class of securities without distinction between the shares
received by the holders of LMG Series A Common Stock and LMG Series B Common
Stock.
At the time of any dividend made as a result of a Disposition
referred to above, the TCI Group will be credited, and the Liberty Media Group
will be charged (in addition to the charge for the dividend paid in respect of
outstanding shares of Liberty Media Group Common Stock), with an amount equal to
the product of (i) the aggregate amount paid in respect of such dividend times
(ii) a fraction the numerator of which is the Liberty Media Group Inter-Group
Interest Fraction and the denominator of which is the Liberty Media Group
Outstanding Interest Fraction.
Mandatory Dividend, Redemption or Conversion of Telephony Group
Common Stock. If Telephony Group Common Stock is issued, upon the Disposition in
one transaction or a series of related transactions by TCI and its subsidiaries
of all or substantially all of the properties and assets of the Telephony Group
to any one or more persons, entities or groups, TCI is required, on or prior to
the 85th trading day following the consummation of such Disposition, to take one
of the actions listed in the following paragraph. This requirement does not
apply to a Disposition (a) in connection with the Disposition by TCI of all of
TCI's properties and assets in one transaction or a series of related
transactions in connection with the liquidation, dissolution or winding up of
TCI, (b) by dividend, other distribution or redemption in accordance with any
provision described under "--Redemption of Telephony Group Common Stock in
Exchange for Stock of Subsidiary" "--Dividends," "--Share Distributions," or "--
Liquidation Rights," (c) to any person, entity or group which TCI, directly or
indirectly, after giving effect to the Disposition, controls or (d) in
connection with a Related Business Transaction. For these purposes,
"substantially all of the properties and assets of the Telephony Group" means a
portion of such properties and assets that represents at least 80% of the then-
current market value (as determined by the TCI Board) of the properties and
assets of the Telephony Group as of such date.
The action TCI is required to take is to either:
(i) subject to the limitations described above under "--
Dividends," declare and pay a dividend in cash and/or securities or other
property (other than a dividend or distribution of TCI Common Stock) to the
holders of the outstanding shares of Telephony Group Common Stock equally
on a share for share basis (subject to the provisions described in the last
sentence of the third paragraph under this caption "--Mandatory Dividends,
Redemption or Conversion of Telephony Group Common Stock," in an aggregate
amount equal to the product of the Telephony Group Outstanding Interest
Fraction as of the record date for determining the holders entitled to
receive such dividend and the Telephony Group Net Proceeds;
(ii) provided that there are assets of TCI legally available
therefor and the Telephony Group Available Dividend Amount would have been
sufficient to pay a dividend in lieu thereof as described in clause (i) of
this paragraph, then:
(A) if such Disposition involves all (not merely
substantially all) of the properties and assets of the Telephony
Group, redeem all outstanding shares of Telephony Group Series A
Common Stock and Telephony Group Series B Common Stock in exchange
for cash and/or securities or other property (other than TCI Common
Stock) in an aggregate amount equal to the product of the Telephony
Group Outstanding Interest Fraction as of the date of such redemption
and the Telephony
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Group Net Proceeds, such aggregate amount to be allocated (subject to the
provisions described in the last sentence of the following paragraph) to
shares of Telephony Group Series A Common Stock and Telephony Group Series
B Common Stock in the ratio of the number of shares of each such series
outstanding (so that the amount of consideration paid for the redemption of
each share of Telephony Group Series A Common Stock and each share of
Telephony Group Series B Common Stock is the same); or
(B) if such Disposition involves substantially all (but not
all) of the properties and assets of the Telephony Group, apply an
aggregate amount of cash and/or securities or other property (other than
TCI Common Stock) equal to the product of the Telephony Group Outstanding
Interest Fraction as of the date shares are selected for redemption and the
Telephony Group Net Proceeds of such Disposition to the redemption of
outstanding shares of Telephony Group Series A Common Stock and Telephony
Group Series B Common Stock, such aggregate amount to be allocated (subject
to the provisions described in the last sentence of the following
paragraph) to shares of Telephony Group Series A Common Stock and Telephony
Group Series B Common Stock in the ratio of the number of shares of each
such series outstanding, and the number of shares of each such series to be
redeemed to equal the lesser of (x) the whole number nearest the number
determined by dividing the aggregate amount so allocated to the redemption
of such series by the average Market Value of one share of Telephony Group
Series A Common Stock during the ten-trading day period beginning on the
16th trading day following the consummation of such Disposition and (y) the
number of shares of such series outstanding (so that the amount of
consideration paid for the redemption of each share of Telephony Group
Series A Common Stock and each share of Telephony Group Series B Common
Stock is the same); or
(iii) convert (A) each outstanding share of Telephony Group
Series A Common Stock into a number (or fraction) of fully paid and
nonassessable shares of TCI Group Series A Common Stock and (B) each
outstanding share of Telephony Group Series B Common Stock into a number
(or fraction) of fully paid and nonassessable shares of TCI Group Series B
Common Stock, in each case equal to 110% of the average daily ratio
(calculated to the nearest five decimal places) of the Market Value of one
share of Telephony Group Series A Common Stock to the Market Value of one
share of TCI Group Series A Common Stock during the ten-trading day period
referred to in clause (ii)(B) of this paragraph.
TCI may elect to pay the dividend or redemption price referred to
in clause (i) or (ii) of the second paragraph under this caption "--Mandatory
Dividend, Redemption or Conversion of Telephony Group Common Stock" either in
the same form as the proceeds of the Disposition were received or in any other
combination of cash or securities or other property (other than Common Stock)
that the TCI Board determines will have an aggregate market value on a fully
distributed basis, of not less than the amount of the Telephony Group Net
Proceeds. If the dividend or redemption price is paid in the form of securities
of an issuer other than TCI, the TCI Board may determine either to (i) pay the
dividend or redemption price in the form of separate classes or series of
securities, with one class or series of such securities to holders of Telephony
Group Series A Common Stock and another class or series of securities to holders
of Telephony Group Series B Common Stock, provided that such securities (and, if
such securities are convertible into or exercisable or exchangeable for shares
of another class or series of securities, the securities so issuable upon such
conversion, exercise or exchange) do not differ in any respect other than their
relative voting rights and related differences in designation, conversion,
redemption and share distribution provisions with holders of shares of Telephony
Group Series B Common Stock receiving the class or series having the higher
relative voting rights (without regard to whether such rights differ to a
greater or lesser extent than the corresponding differences in voting rights,
designation, conversion, redemption and share distribution provisions between
the Telephony Group Series A Common Stock and the Telephony Group Series B
Common Stock), provided that if such securities constitute capital stock of a
subsidiary of TCI, such rights will not differ to a greater extent than the
corresponding differences in voting rights, designation, conversion, redemption
and share distribution provisions between the Telephony Group Series A Common
Stock and the Telephony Group Series B Common Stock, and otherwise such
securities will be distributed on an equal per share basis, or (ii) pay the
dividend or redemption price in the form of a single class of securities without
distinction between the shares received by the holders of Telephony Group Series
A Common Stock and Telephony Group Series B Common Stock. The Related Business
Transaction exception would enable TCI to enter into transactions in which the
properties or assets
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of the Telephony Group may be considered to be "disposed of" in exchange for
equity securities of an entity engaged or proposing to engage in similar or
complementary business areas to those of the Telephony Group while maintaining
the capital structure and delineation of business groups of the Telephony Group.
At the time of any dividend made as a result of a Disposition
referred to above, the TCI Group will be credited, and the Telephony Group will
be charged (in addition to the charge for the dividend paid in respect of
outstanding shares of Telephony Group Common Stock), with an amount equal to the
product of (i) the aggregate amount paid in respect of such dividend times (ii)
a fraction the numerator of which is the Telephony Group Inter-Group Interest
Fraction and the denominator of which is the Telephony Group Outstanding
Interest Fraction.
The option to convert the Telephony Group Common Stock into TCI
Group Common Stock in the event of a Disposition provides TCI with additional
flexibility by allowing TCI to deliver consideration in the form of shares of
TCI Group Common Stock rather than cash or securities or other properties. This
alternative could be used, for example, in circumstances when TCI did not have
sufficient legally available assets under the DGCL to pay the full amount of an
otherwise required dividend or redemption or when TCI desired to retain such
proceeds.
If less than substantially all of the properties and assets of
the Telephony Group were disposed of by TCI in one transaction, TCI would not be
required to pay a dividend on, redeem or convert the outstanding shares of
Telephony Group Common Stock, even if an additional transaction were consummated
at a later time in which additional properties and assets of the Telephony Group
were disposed of by TCI, which, together with the properties and assets disposed
of in the first transaction, would have constituted substantially all of the
properties and assets of the Telephony Group at the time of the first
transaction, unless such transactions constituted a series of related
transactions. The second transaction, however, could trigger such a requirement
if, at the time of the second transaction, the properties and assets disposed of
in such transaction constituted at least substantially all of the properties and
assets of the Telephony Group at such time. If less than substantially all of
the properties and assets of the Telephony Group were disposed of by TCI, the
holders of the Telephony Group Common Stock would not be entitled to receive any
dividend or have their shares redeemed or converted for TCI Group Common Stock,
although the TCI Board could determine, in its sole discretion, to pay a
dividend on the Telephony Group Common Stock in an amount related to the
proceeds of such Disposition.
Redemption of Liberty Media Group Common Stock in Exchange for
Stock of Subsidiary. At any time at which all of the assets and liabilities
attributed to the Liberty Media Group are and continue to be held directly or
indirectly by any one or more corporations all of the capital stock of which is
owned by TCI (the "Liberty Media Group Subsidiaries"), the TCI Board may,
subject to the availability of assets of TCI legally available therefor, redeem
on a pro rata basis, all of the outstanding shares of Liberty Media Group Common
Stock in exchange for an aggregate number of outstanding fully paid and
nonassessable shares of common stock of each Liberty Media Group Subsidiary
equal to the product of the Adjusted Liberty Media Group Outstanding Interest
Fraction and the number of all of the outstanding shares of common stock of such
Liberty Media Group Subsidiary.
In effecting such a redemption, the TCI Board may determine
either to (i) redeem shares of LMG Series A Common Stock and LMG Series B Common
Stock in exchange for shares of separate classes or series of common stock of
each Liberty Media Group Subsidiary with relative voting rights and related
differences in designation, conversion, redemption and share distribution
provisions not greater than the corresponding differences in voting rights,
designation, conversion, redemption and share distribution provisions between
the LMG Series A Common Stock and LMG Series B Common Stock, with holders of
shares of LMG Series B Common Stock receiving the class or series having the
higher relative voting rights, or (ii) redeem shares of LMG Series A Common
Stock and LMG Series B Common Stock in exchange for shares of a single class of
common stock of each Liberty Media Group Subsidiary without distinction between
the shares distributed to the holders of the two series of Liberty Media Group
Common Stock. If TCI determines to undertake a redemption as described in clause
(i) of the preceding sentence, the outstanding shares of common stock of each
Liberty Media Group Subsidiary not distributed to holders of Liberty Media Group
Common Stock would consist solely of the class or series having the lower
relative voting rights.
Redemption of Telephony Group Common Stock in Exchange for Stock
of Subsidiary. If Telephony Group Common Stock is issued, at any time at which
all of the assets and liabilities attributed to the Telephony Group have become
and continue to be held directly or indirectly by any one or more corporations
that are Qualifying Subsidiaries
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(the "Telephony Group Subsidiaries"), the TCI Board may, subject to the
availability of assets of TCI legally available therefor, redeem on a pro rata
basis, all of the outstanding shares of Telephony Group Common Stock in exchange
for an aggregate number of outstanding, fully paid and nonassessable shares of
common stock of each Telephony Group Subsidiary equal to the product of the
Telephony Group Outstanding Interest Fraction and the number of outstanding
shares of common stock of each Telephony Group Subsidiary that is owned by TCI.
In effecting such a redemption, the TCI Board may determine
either to (i) redeem shares of Telephony Group Series A Common Stock and
Telephony Group Series B Common Stock in exchange for shares of separate classes
or series of common stock of each Telephony Group Subsidiary with relative
voting rights and related differences in designation, conversion, redemption and
share distribution provisions not greater than the corresponding differences in
voting rights, designation, conversion, redemption and share distribution
provisions between the Telephony Group Series A Common Stock and Telephony Group
Series B Common Stock, with holders of shares of Telephony Group Series B Common
Stock receiving the class or series having the higher relative voting rights, or
(ii) redeem shares of Telephony Group Series A Common Stock and Telephony Group
Series B Common Stock in exchange for shares of a single class of common stock
of each Telephony Group Subsidiary without distinction between the shares
distributed to the holders of the two series of Telephony Group Common Stock.
Certain Provisions Respecting Convertible Securities. Unless the
provisions of any class or series of Convertible Securities which are
convertible into or exercisable or exchangeable for shares of Telephony Group
Common Stock provide specifically to the contrary, after any conversion date or
redemption date on which all outstanding shares of Telephony Group Common Stock
were converted or redeemed, any share of Telephony Group Common Stock that is
issued on conversion, exercise or exchange of any such Convertible Securities
will, immediately upon issuance pursuant to such conversion, exercise or
exchange and without any notice or any other action on the part of TCI or the
TCI Board or the holder of such share of Telephony Group Common Stock, be
redeemed in exchange for, to the extent assets of TCI are legally available
therefor, the amount of $.01 per share in cash.
Unless the provisions of any class or series of Pre-Distribution
Convertible Securities or Convertible Securities which are convertible into or
exercisable or exchangeable for Committed Acquisition Shares provide
specifically to the contrary, after any conversion date or redemption date on
which all outstanding shares of Liberty Media Group Common Stock were converted
or redeemed, any share of Liberty Media Group Common Stock that is issued on
conversion, exercise or exchange of any Pre-Distribution Convertible Securities
or any Convertible Securities which are convertible into or exercisable or
exchangeable for Committed Acquisition Shares will, immediately upon issuance
pursuant to such conversion, exercise or exchange and without any notice or any
other action on the part of TCI or the TCI Board or the holder of such share of
Liberty Media Group Common Stock, be converted into or redeemed in exchange for,
as applicable, the kind and amount of shares of capital stock, cash and/or other
securities or property that a holder of such Pre-Distribution Convertible
Securities or any Convertible Securities which are convertible into or
exercisable or exchangeable for Committed Acquisition Shares would have been
entitled to receive pursuant to the terms of such securities had such terms
provided that the conversion, exercise or exchange privilege in effect
immediately prior to any such conversion or redemption of all outstanding shares
of Liberty Media Group Common Stock would be adjusted so that the holder of any
such Pre-Distribution Convertible Securities or any Convertible Securities which
are convertible into or exercisable or exchangeable for Committed Acquisition
Shares thereafter surrendered for conversion, exercise or exchange would be
entitled to receive the kind and amount of shares of capital stock, cash and/or
other securities or property such holder would have received as a result of such
action had such securities been converted, exercised or exchanged immediately
prior thereto. With respect to any Convertible Securities that are convertible
into or exercisable or exchangeable for shares of Liberty Media Group Common
Stock and which are created, established or otherwise first authorized for
issuance subsequent to the record date for the LMG Distribution (other than Pre-
Distribution Convertible Securities and Convertible Securities which are
convertible into or exercisable or exchangeable for Committed Acquisition
Shares), the terms and provisions of which do not provide for adjustments
specifying the kind and amount of capital stock, cash and/or securities or other
property that such holder would be entitled to receive upon the conversion,
exercise or exchange of such Convertible Securities following any conversion
date or redemption date on which all outstanding shares of Liberty Media Group
Common Stock were converted or redeemed, then upon such conversion, exercise or
exchange of such Convertible Securities, any share of Liberty Media Group Common
Stock that is issued on conversion, exercise or exchange of any such Convertible
Securities will, immediately upon issuance and without any notice or any other
action on the part of TCI or the TCI Board or the holder of such share of
Liberty Media
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Group Common Stock, be redeemed in exchange for, to the extent assets of TCI are
legally available therefor, the amount of $.01 per share in cash.
General Conversion and Redemption Provisions. Not later than the
10th trading day following the consummation of a Disposition referred to above
under "--Mandatory Dividend, Redemption or Conversion of Liberty Media Group
Common Stock," TCI will announce publicly by press release (i) the Liberty Media
Group Net Proceeds, (ii) the number of outstanding shares of LMG Series A Common
Stock and LMG Series B Common Stock, (iii) the number of shares of LMG Series A
Common Stock and LMG Series B Common Stock into or for which Convertible
Securities are then convertible, exercisable or exchangeable and the conversion,
exercise or exchange prices thereof (and stating which, if any, of such
Convertible Securities constitute Pre-Distribution Convertible Securities or
Convertible Securities which are convertible into or exercisable or exchangeable
for Committed Acquisition Shares) and the number of Committed Acquisition Shares
issuable, (iv) the Liberty Media Group Outstanding Interest Fraction as of a
recent date preceding the date of such notice and (v) the Adjusted Liberty Media
Group Outstanding Interest Fraction as of a recent date preceding the date of
such notice. Not earlier than the 26th trading day and not later than the 30th
trading day following the consummation of such Disposition, TCI will announce
publicly by press release which of the actions described in clause (i), (ii) or
(iii) of the second paragraph under "--Mandatory Dividend, Redemption or
Conversion of Liberty Media Group Common Stock" it has irrevocably determined to
take.
If TCI determines to pay a dividend described in clause (i) of
the second paragraph under the caption "--Mandatory Dividend, Redemption or
Conversion of Liberty Media Group Common Stock," TCI will, not later than the
30th trading day following the consummation of such Disposition, cause to be
given to each holder of outstanding shares of LMG Series A Common Stock and LMG
Series B Common Stock, a notice setting forth (i) the record date for
determining holders entitled to receive such dividend, which will be not earlier
than the 40th trading day and not later than the 50th trading day following the
consummation of such Disposition, (ii) the anticipated payment date of such
dividend (which will not be more than 85 trading days following the consummation
of such Disposition), (iii) the kind of shares of capital stock, cash and/or
other securities or property to be distributed in respect of shares of Liberty
Media Group Common Stock, (iv) the Liberty Media Group Net Proceeds, (v) the
Liberty Media Group Outstanding Interest Fraction as of a recent date preceding
the date of such notice, and (vi) the number of outstanding shares of LMG Series
A Common Stock and LMG Series B Common Stock and the number of shares of LMG
Series A Common Stock and LMG Series B Common Stock into or for which
outstanding Convertible Securities are then convertible, exercisable or
exchangeable and the conversion, exercise or exchange prices thereof.
If TCI determines to undertake a redemption of shares of Liberty
Media Group Common Stock following a Disposition of all (not merely
substantially all) of the properties and assets of the Liberty Media Group as
described in clause (ii)(A) of the second paragraph under the caption "--
Mandatory Dividend, Redemption or Conversion of Liberty Media Group Common
Stock," TCI will cause to be given to each holder of outstanding shares of LMG
Series A Common Stock and LMG Series B Common Stock, a notice setting forth (i)
a statement that all shares of Liberty Media Group Common Stock outstanding on
the redemption date will be redeemed, (ii) the redemption date (which will not
be more than 85 trading days following the consummation of such Disposition),
(iii) the kind of shares of capital stock, cash and/or other securities or
property to be paid as a redemption price in respect of shares of Liberty Media
Group Common Stock outstanding on the redemption date, (iv) the Liberty Media
Group Net Proceeds, (v) the Adjusted Liberty Media Group Outstanding Interest
Fraction as of a recent date preceding the date of such notice, (vi) the place
or places where certificates for shares of Liberty Media Group Common Stock,
properly endorsed or assigned for transfer (unless TCI waives such requirement),
are to be surrendered for delivery of certificates for shares of such capital
stock, cash and/or other securities or property, and (vii) the number of
outstanding shares of LMG Series A Common Stock and LMG Series B Common Stock
and the number of shares of LMG Series A Common Stock and LMG Series B Common
Stock into or for which outstanding Convertible Securities are then convertible,
exercisable or exchangeable and the conversion, exercise or exchange prices
thereof (and, stating which, if any, of such Convertible Securities constitute
Pre-Distribution Convertible Securities or Convertible Securities which are
convertible into or exercisable or exchangeable for Committed Acquisition Shares
and the number of Committed Acquisition Shares issuable). Such notice will be
sent not less than 35 trading days nor more than 45 trading days prior to the
redemption date.
If TCI determines to undertake a redemption of shares of Liberty
Media Group Common Stock following a Disposition of substantially all (but not
all) of the properties and assets of the Liberty Media Group as described in
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clause (ii)(B) of the second paragraph under the caption "--Mandatory Dividend,
Redemption or Conversion of Liberty Media Group Common Stock," TCI will, not
later than the 30th trading day following the consummation of such Disposition,
cause to be given to each holder of record of outstanding shares of LMG Series A
Common Stock and LMG Series B Common Stock a notice setting forth (i) a date not
earlier than the 40th trading day and not later than the 50th trading day
following the consummation of such Disposition which will be the date on which
shares of the Liberty Media Group Common Stock then outstanding will be selected
for redemption, (ii) the anticipated redemption date (which will not be more
than 85 trading days following the consummation of such Disposition), (iii) the
kind of shares of capital stock, cash and/or other securities or property to be
paid as a redemption price in respect of shares of Liberty Media Group Common
Stock selected for redemption, (iv) the Liberty Media Group Net Proceeds, (v)
the Liberty Media Group Outstanding Interest Fraction as of a recent date
preceding the date of such notice, (vi) the number of outstanding shares of LMG
Series A Common Stock and LMG Series B Common Stock and the number of shares of
LMG Series A Common Stock and LMG Series B Common Stock into or for which
outstanding Convertible Securities are then convertible, exercisable or
exchangeable and the conversion, exercise or exchange prices thereof and (vii) a
statement that TCI will not be required to register a transfer of any shares of
Liberty Media Group Common Stock for a period of 15 trading days next preceding
the date referred to in clause (i) of this sentence. Promptly following the date
referred to in clause (i) of the preceding sentence, but not earlier than the
40th trading day and not later than the 50th trading day following the
consummation of such Disposition, TCI will cause to be given to each holder of
shares of LMG Series A Common Stock and LMG Series B Common Stock to be
redeemed, a notice setting forth (i) the number of shares of LMG Series A Common
Stock and LMG Series B Common Stock held by such holder to be redeemed, (ii) a
statement that such shares of LMG Series A Common Stock and LMG Series B Common
Stock will be redeemed, (iii) the redemption date (which will not be more than
85 trading days following the consummation of such Disposition), (iv) the kind
and per share amount of shares of capital stock, cash and/or other securities or
property to be received by such holder with respect to each share of such
Liberty Media Group Common Stock to be redeemed, including details as to the
calculation thereof, and (v) the place or places where certificates for shares
of such Liberty Media Group Common Stock, properly endorsed or assigned for
transfer (unless TCI waives such requirement), are to be surrendered for
delivery of certificates for shares of such capital stock, cash and/or other
securities or property. The outstanding shares of Liberty Media Group Common
Stock to be redeemed will be redeemed by TCI pro rata among the holders of
Liberty Media Group Common Stock or by such other method as may be determined by
the TCI Board to be equitable.
In the event of any conversion as described above under the
caption "--Conversion of Liberty Media Group Common Stock at the Option of TCI"
or as described in clause (iii) of the second paragraph under "--Mandatory
Dividend, Redemption or Conversion of Liberty Media Group Common Stock," TCI
will cause to be given to each holder of outstanding shares of LMG Series A
Common Stock and LMG Series B Common Stock a notice setting forth (i) a
statement that all outstanding shares of Liberty Media Group Common Stock will
be converted, (ii) the conversion date (which will not be more than 85 trading
days following the consummation of such Disposition in the event of a conversion
pursuant to the provisions described under "--Mandatory Dividend, Redemption or
Conversion of Liberty Media Group Common Stock" and which will not be more than
120 days after the Appraisal Date in the event of a conversion pursuant to the
provisions described under "--Conversion of Liberty Media Group Common Stock at
the Option of TCI"), (iii) the per share number (or fraction) of shares of TCI
Group Series A Common Stock or TCI Group Series B Common Stock, as applicable,
to be received with respect to each share of LMG Series A Common Stock or LMG
Series B Common Stock, including details as to the calculation thereof, (iv) the
place or places where certificates for shares of Liberty Media Group Common
Stock, properly endorsed or assigned for transfer (unless TCI waives such
requirement), are to be surrendered, and (v) the number of outstanding shares of
LMG Series A Common Stock and LMG Series B Common Stock, the number of Committed
Acquisition Shares issuable and the number of shares of LMG Series A Common
Stock and LMG Series B Common Stock into or for which outstanding Convertible
Securities are then convertible, exercisable or exchangeable and the conversion,
exercise or exchange prices thereof. Such notice will be sent not less than 35
trading days nor more than 45 trading days prior to the conversion date.
If TCI determines to redeem shares of LMG Series A Common Stock
and LMG Series B Common Stock as described above under the caption "--Redemption
of Liberty Media Group Common Stock in Exchange for Stock of Subsidiary," TCI
will promptly cause to be given to each holder of LMG Series A Common Stock and
LMG Series B Common Stock a notice setting forth (i) a statement that all
outstanding shares of Liberty Media Group Common Stock will be redeemed in
exchange for shares of common stock of the Liberty Media Group Subsidiaries,
(ii) the redemption date, (iii) the Adjusted Liberty Media Group Outstanding
Interest Fraction as of a recent date preceding the date of such
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notice, (iv) the place or places where certificates for shares of Liberty
Media Group Common Stock, properly endorsed or assigned for transfer
(unless TCI waives such requirement), are to be surrendered for delivery of
certificates for shares of common stock of the Liberty Media Group
Subsidiaries, and (v) the number of outstanding shares of LMG Series A
Common Stock and LMG Series B Common Stock and the number of shares of LMG
Series A Common Stock and LMG Series B Common Stock into or for which
outstanding Convertible Securities are then convertible, exercisable or
exchangeable and the conversion, exercise or exchange prices thereof. Such
notice will be sent not less than 35 trading days nor more than 45 trading
days prior to the redemption date.
In each case in which a notice is required to be given to holders
of outstanding shares of LMG Series A Common Stock and LMG Series B Common
Stock in accordance with the preceding five paragraphs (other than a notice
to holders of shares selected for redemption), notice shall also be given,
within the required time period, to each holder of Convertible Securities
that are convertible into or exercisable or exchangeable for shares of
either such series (unless provision for such notice is otherwise made
pursuant to the terms of such Convertible Securities), which notice shall
include, in addition to all of the information set forth in the
corresponding notice to holders of Liberty Media Group Common Stock, a
statement to the effect that the holders of such Convertible Securities
will be entitled to receive the dividend, participate in the redemption of
shares following a Disposition or in the selection of shares for
redemption, participate in the conversion of shares or participate in the
redemption of shares in exchange for stock of the Liberty Media Group
Subsidiaries only if such holder appropriately converts, exercises or
exchanges such Convertible Securities on or prior to the record date for
the dividend, redemption date, date fixed for selection of shares to be
redeemed or conversion date, as applicable, set forth in such notice. In
the case of a redemption or conversion of shares of Liberty Media Group
Common Stock, the notice to holders of Convertible Securities shall also
state what, if anything, such holders will be entitled to receive pursuant
to the terms of such Convertible Securities or, if applicable, the
provision described under "--Conversion and Redemption--Certain Provisions
Respecting Convertible Securities" if such holders convert, exercise or
exchange such Convertible Securities following the redemption date or
conversion date, as applicable.
All notices required to be given in accordance with the preceding
paragraphs will be sent to a holder by first-class mail, postage prepaid,
at the holder's address as the same appears on the transfer books of TCI.
Neither the failure to mail any notice to any particular holder of Liberty
Media Group Common Stock or of Convertible Securities nor any defect
therein will affect the sufficiency thereof with respect to any other
holder of outstanding shares of Liberty Media Group Common Stock or of
Convertible Securities, or the validity of any conversion or redemption.
TCI will not be required to issue or deliver fractional shares of
any class of capital stock or any fractional securities to any holder of
Liberty Media Group Common Stock upon any conversion, redemption, dividend
or other distribution described above. In connection with the
determination of the number of shares of any class of capital stock that is
issuable or the amount of securities that is deliverable to any holder of
record upon any such conversion, redemption, dividend or other distribution
(including any fractions of shares or securities), TCI may aggregate the
number of shares of Liberty Media Group Common Stock held at the relevant
time by such holder of record. If the number of shares of any class of
capital stock or the amount of securities remaining to be issued or
delivered to any holder of Liberty Media Group Common Stock is a fraction,
TCI will, if such fraction is not issued or delivered to such holder, pay a
cash adjustment in respect of such fraction in an amount equal to the fair
market value of such fraction on the fifth trading day prior to the date
such payment is to be made (without interest). For purposes of the
preceding sentence, "fair market value" of any fraction will be (i) in the
case of any fraction of a share of capital stock of TCI, the product of
such fraction and the Market Value of one share of such capital stock and
(ii) in the case of any other fractional security, such value as is
determined by the TCI Board.
No adjustments in respect of dividends will be made upon the
conversion or redemption of any shares of Liberty Media Group Common Stock;
provided, however, that if the conversion date or the redemption date with
respect to the Liberty Media Group Common Stock is subsequent to the record
date for the payment of a dividend or other distribution thereon or with
respect thereto, the holders of shares of Liberty Media Group Common Stock
at the close of business on such record date will be entitled to receive
the dividend or other distribution payable on or with respect to such
shares on the date set for payment of such dividend or other distribution,
notwithstanding the conversion or redemption of such shares or TCI's
default in payment of the dividend or distribution due on such date.
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Before any holder of shares of Liberty Media Group Common Stock
will be entitled to receive certificates representing shares of any kind of
capital stock or cash and/or securities or other property to be received by
such holder with respect to any conversion or redemption of shares of
Liberty Media Group Common Stock, such holder is required to surrender at
such place as TCI will specify certificates for such shares, properly
endorsed or assigned for transfer (unless TCI waives such requirement).
TCI will as soon as practicable after surrender of certificates
representing shares of Liberty Media Group Common Stock deliver to the
person for whose account such shares were so surrendered, or to the nominee
or nominees of such person, certificates representing the number of whole
shares of the kind of capital stock or cash and/or securities or other
property to which such person is entitled, together with any payment for
fractional securities referred to above. If less than all of the shares of
Liberty Media Group Common Stock represented by any one certificate are to
be redeemed, TCI will issue and deliver a new certificate for the shares of
Liberty Media Group Common Stock not redeemed. TCI will not be required to
register a transfer of (i) any shares of Liberty Media Group Common Stock
for a period of 15 trading days next preceding any selection of shares of
Liberty Media Group Common Stock to be redeemed or (ii) any shares of
Liberty Media Group Common Stock selected or called for redemption. Shares
selected for redemption may not thereafter be converted pursuant to the
provisions described under the caption "--Conversion at the Option of the
Holder."
From and after any applicable conversion date or redemption date,
all rights of a holder of shares of Liberty Media Group Common Stock that
were converted or redeemed will cease except for the right, upon surrender
of the certificates representing shares of Liberty Media Group Common
Stock, to receive certificates representing shares of the kind and amount
of capital stock or cash and/or securities or other property for which such
shares were converted or redeemed, together with any payment for fractional
securities, and such holder will have no other or further rights in respect
of the shares of Liberty Media Group Common Stock so converted or redeemed,
including, but not limited to, any rights with respect to any cash,
securities or other property which are reserved or otherwise designated by
TCI as being held for the satisfaction of TCI's obligations to pay or
deliver any cash, securities or other property upon the conversion,
exercise or exchange of any Convertible Securities outstanding as of the
date of such conversion or redemption or any Committed Acquisition Shares
which may then be issuable. No holder of a certificate that, immediately
prior to the applicable conversion date or redemption date for the Liberty
Media Group Common Stock, represented shares of Liberty Media Group Common
Stock will be entitled to receive any dividend or other distribution with
respect to shares of any kind of capital stock into or in exchange for
which the Liberty Media Group Common Stock was converted or redeemed until
surrender of such holder's certificate for a certificate or certificates
representing shares of such kind of capital stock. Upon such surrender,
there will be paid to the holder the amount of any dividends or other
distributions (without interest) which theretofore became payable with
respect to a record date after the conversion date or redemption date, as
the case may be, but that were not paid by reason of the foregoing, with
respect to the number of whole shares of the kind of capital stock
represented by the certificate or certificates issued upon such surrender.
From and after a conversion date or redemption date, as the case may be, of
Liberty Media Group Common Stock, TCI will, however, be entitled to treat
the certificates for shares of Liberty Media Group Common Stock that have
not yet been surrendered for conversion or redemption as evidencing the
ownership of the number of whole shares of the kind or kinds of capital
stock for which the shares of Liberty Media Group Common Stock represented
by such certificates have been converted or redeemed, notwithstanding the
failure to surrender such certificates.
TCI will pay any and all documentary, stamp or similar issue or
transfer taxes that may be payable in respect of the issue or delivery of
any shares of capital stock and/or other securities on conversion or
redemption of shares of Liberty Media Group Common Stock. TCI will not,
however, be required to pay any tax that may be payable in respect of any
transfer involved in the issue and delivery of any shares of capital stock
in a name other than that in which the shares of Liberty Media Group Common
Stock so converted or redeemed were registered and no such issue or
delivery will be made unless and until the person requesting such issue has
paid to TCI the amount of any such tax, or has established to the
satisfaction of TCI that such tax has been paid.
Provisions substantially the same as those described under this
caption "--General Conversion and Redemption Provisions," apply in the
event of a Disposition of all or substantially all of the properties and
assets of the Telephony Group and a determination of TCI to pay a dividend
on or undertake a partial or complete redemption of the Telephony Group
Common Stock following such Disposition, in the event of any conversion of
the Telephony Group Common Stock as described under the caption "--
Conversion of Telephony Group Common Stock at the Option of TCI" or "--
Mandatory Dividend, Redemption or Conversion of Telephony Group Common
Stock," and in the event of a
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redemption of the Telephony Group Common Stock in exchange for stock of one
or more subsidiaries as described under the caption "--Redemption of
Telephony Group Common Stock in Exchange for Stock of Subsidiary."
Liquidation Rights
In the event of a liquidation, dissolution or winding up of TCI,
whether voluntary or involuntary, after payment or provision for payment of
the debts and other liabilities of TCI and subject to the prior payment in
full of the preferential amounts to which any class or series of TCI
Preferred Stock is entitled, (i) the holders of the shares of TCI Group
Common Stock will share equally, on a share for share basis, in a
percentage of the funds of TCI remaining for distribution to its common
stockholders equal to 100% multiplied by the average daily ratio (expressed
as a decimal) of W/Z for the 20-trading day period ending on the trading
day prior to the date of the public announcement of such liquidation,
dissolution or winding up, (ii) the holders of the shares of Liberty Media
Group Common Stock will share equally, on a share for share basis, in a
percentage of the funds of TCI remaining for distribution to its common
stockholders equal to 100% multiplied by the average daily ratio (expressed
as a decimal) of X/Z for such 20-trading day period and (iii) if Telephony
Group Common Stock is issued, the holders of the shares of Telephony Group
Common Stock will share equally, on a share for share basis, in a
percentage of the funds of TCI remaining for distribution to its common
stockholders equal to 100% multiplied by the average daily ratio (expressed
as a decimal) of Y/Z for such 20-trading day period, where W is the
aggregate Market Capitalization of the TCI Group Series A Common Stock and
the TCI Group Series B Common Stock, X is the aggregate Market
Capitalization of the LMG Series A Common Stock and the LMG Series B Common
Stock, Y is the aggregate Market Capitalization of the Telephony Group
Series A Common Stock and the Telephony Group Series B Common Stock, and Z
is the aggregate Market Capitalization of the TCI Group Series A Common
Stock, the TCI Group Series B Common Stock, the LMG Series A Common Stock,
the LMG Series B Common Stock, the Telephony Group Series A Common Stock
and the Telephony Group Series B Common Stock. Neither a consolidation,
merger nor sale of assets will be construed to be a "liquidation,"
"dissolution" or "winding up" of TCI.
No holder of Liberty Media Group Common Stock or, if issued,
Telephony Group Common Stock will have any special right to receive
specific assets of the Liberty Media Group or the Telephony Group, as the
case may be, in the case of any dissolution, liquidation or winding up of
TCI.
Determinations by the TCI Board
The TCI Charter provides that any determinations made by the TCI
Board under any provision described under "Description of TCI Common Stock"
will be final and binding on all stockholders of TCI, except as may
otherwise be required by law. Such a determination would not be binding if
it were established that the determination was made in breach of a
fiduciary duty of the TCI Board. TCI will prepare a statement of any such
determination by the TCI Board respecting the fair market value of any
properties, assets or securities and will file such statement with the
Secretary of TCI.
Preemptive Rights
Holders of the TCI Group Common Stock and the Liberty Media Group
Common Stock do not have, and if the Telephony Group Common Stock is
issued, holders of the Telephony Group Common Stock would not have, any
preemptive rights to subscribe for any additional shares of capital stock
or other obligations convertible into or exercisable for shares of capital
stock that may hereafter be issued by TCI.
Anti-Takeover Considerations
The DGCL, the TCI Charter and TCI's Bylaws contain provisions
which may serve to discourage or make more difficult a change in control of
TCI without the support of the TCI Board or without meeting various other
conditions. The principal provisions of the DGCL and the aforementioned
corporate governance documents are outlined below.
DGCL Section 203, in general, prohibits a "business combination"
between a corporation and an "interested stockholder" within three years of
the date such stockholder became an "interested stockholder," unless (i)
prior to such
34
<PAGE>
date the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming
an interested stockholder, (ii) upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced, exclusive of
shares owned by directors who are also officers and by certain employee
stock plans or (iii) on or after such date, the business combination is
approved by the board of directors and authorized by the affirmative vote
at a stockholders' meeting of at least 66 2/3% of the outstanding voting
stock which is not owned by the interested stockholder. The term "business
combination" is defined to include, among other transactions between the
interested stockholder and the corporation or any direct or indirect
majority-owned subsidiary thereof, a merger or consolidation; a sale,
pledge, transfer or other disposition (including as part of a dissolution)
of assets having an aggregate market value equal to 10% or more of either
the aggregate market value of all assets of the corporation on a
consolidated basis or the aggregate market value of all the outstanding
stock of the corporation; certain transactions that would increase the
interested stockholder's proportionate share ownership of the stock of any
class or series of the corporation or such subsidiary; and any receipt by
the interested stockholder of the benefit of any loans, advances,
guarantees, pledges or other financial benefits provided by or through the
corporation or any such subsidiary. In general, and subject to certain
exceptions, an "interested stockholder" is any person who is the owner of
15% or more of the outstanding voting stock (or, in the case of a
corporation with classes of voting stock with disparate voting power, 15%
or more of the voting power of the outstanding voting stock) of the
corporation, and the affiliates and associates of such person. The term
"owner" is broadly defined to include any person that individually or with
or through his or its affiliates or associates, among other things,
beneficially owns such stock, or has the right to acquire such stock
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement or understanding or upon the exercise of
warrants or options or otherwise or has the right to vote such stock
pursuant to any agreement or understanding, or has an agreement or
understanding with the beneficial owner of such stock for the purpose of
acquiring, holding, voting or disposing of such stock. The restrictions of
DGCL Section 203 do not apply to corporations that have elected, in the
manner provided therein, not to be subject to such section or, with certain
exceptions, which do not have a class of voting stock that is listed on a
national securities exchange or authorized for quotation on an interdealer
quotation system of a registered national securities association or held of
record by more than 2,000 stockholders. The TCI Charter does not contain
any provision "opting out" of the application of DGCL Section 203 and TCI
has not taken any of the actions necessary for it to "opt out" of such
provision. As a result, the provisions of Section 203 will remain
applicable to transactions between TCI and any of its "interested
stockholders."
The TCI Charter also contains certain provisions which could make
a change in control of TCI more difficult. For example, the TCI Charter
requires, subject to the rights, if any, of any class or series of TCI
Preferred Stock, the affirmative vote of 66 2/3% of the total voting power
of the outstanding shares of Voting Securities, voting together as a single
class, to approve (i) a merger or consolidation of TCI with, or into,
another corporation, other than a merger or consolidation which does not
require the consent of stockholders under the DGCL or a merger or
consolidation which has been approved by 75% of the members of the TCI
Board (in which case, in accordance with the DGCL, the affirmative vote of
a majority of the total voting power of the outstanding Voting Securities
would, with certain exceptions, be required for approval), (ii) the sale,
lease or exchange of all or substantially all of the property and assets of
TCI or (iii) the dissolution of TCI. "Voting Securities" is currently
defined as the TCI Group Common Stock, the Liberty Media Group Common
Stock, the Telephony Group Common Stock, if issued, and any class or series
of TCI Preferred Stock entitled to vote generally with the holders of TCI
Common Stock on matters submitted to stockholders for a vote. The TCI
Charter also provides for a TCI Board of not less than three members,
divided into three classes of approximately equal size, with each class to
be elected for a three-year term at each annual meeting of stockholders.
The exact number of directors, currently nine, is fixed by the TCI Board.
The holders of TCI Group Common Stock, Liberty Media Group Common Stock,
Telephony Group Common Stock, if issued, Class B Preferred Stock, Series C
Preferred Stock, Series G Preferred Stock and Series H Preferred Stock,
voting together as a single class, vote in elections for directors. (The
holders of TCI's Series F Preferred Stock are by the terms thereof entitled
to vote in the election of directors; however, the DGCL prohibits the
voting of such shares because such shares are held by subsidiaries of TCI.)
Stockholders of TCI do not have cumulative voting rights.
The TCI Charter authorizes the issuance of 50,000,000 shares of
Series Preferred Stock, of which 33,901,240 remain available for issuance
as of March 31, 1997. Under the TCI Charter, the TCI Board is authorized,
without further action by the stockholders of TCI, to establish the
preferences, limitations and relative rights of the Series Preferred
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<PAGE>
Stock. In addition, 1,900,000,000 shares of TCI Group Common Stock,
825,000,000 shares of Liberty Media Group Common Stock and 825,000,000
shares of Telephony Group Common Stock are currently authorized by the TCI
Charter, of which 1,100,294,776 shares of the TCI Group Common Stock (as of
March 31, 1997), 575,062,234 shares of the Liberty Media Group Common Stock
(as of March 31, 1997) and all 825,000,000 shares of Telephony Group Common
Stock remain available for issuance (without taking into consideration
shares to be reserved for issuance upon conversion, exchange or exercise of
outstanding convertible or exchangeable securities and options). The issue
and sale of shares of TCI Group Common Stock, Liberty Media Group Common
Stock, Telephony Group Common Stock and/or Series Preferred Stock could
occur in connection with an attempt to acquire control of TCI, and the
terms of such shares of Series Preferred Stock could be designed in part to
impede the acquisition of such control.
The TCI Charter requires the affirmative vote of 66 2/3% of the
total voting power of the outstanding shares of Voting Securities, voting
together as a single class, to approve any amendment, alteration or repeal
of any provision of the TCI Charter or the addition or insertion of other
provisions therein.
The TCI Charter and TCI's Bylaws provide that a special meeting
of stockholders will be held at any time, subject to the rights of the
holders of any class or series of TCI Preferred Stock, upon the call of the
Secretary of TCI upon (i) the written request of the holders of not less
than 66 2/3% of the total voting power of the outstanding shares of Voting
Securities or (ii) at the request of not less than 75% of the members of
the TCI Board. Subject to the rights of any class or series of TCI
Preferred Stock, TCI's Bylaws require that written notice of the intent to
make a nomination at a meeting of stockholders must be received by the
Secretary of TCI, at TCI's principal executive offices, not later than (a)
with respect to an election of directors to be held at an annual meeting of
stockholders, 90 days in advance of such meeting, and (b) with respect to
an election of directors to be held at a special meeting of stockholders,
the close of business on the seventh day following the day on which notice
of such meeting is first given to stockholders. The notice must contain:
(1) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated; (2) a
representation that the stockholder is a holder of record of TCI's Voting
Securities entitled to vote at the meeting and intends to appear in person
or by proxy at the meeting to nominate the person or persons specified in
the notice; (3) a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or nominations are
to be made by the stockholder; (4) such other information regarding each
nominee proposed by such stockholder as would have been required to be
included in a proxy statement filed pursuant to the proxy rules of the
Commission had each proposed nominee been nominated, or intended to be
nominated, by the TCI Board; and (5) the consent of each nominee to serve
as a director of TCI if so elected. Any actions to remove directors is
required to be for "cause" (as defined in the TCI Charter) and be approved
by the holders of 66 2/3% of the total voting power of the outstanding
shares entitled to vote in the election of directors.
LEGAL MATTERS
The validity of the Shares will be passed upon for the Company by
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
36
<PAGE>
reliance upon the report, dated March 24, 1997, of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP covering the combined financial
statements above refers to the effects of not consolidating TCI Group's
interest in Liberty Media Group for all periods that TCI Group has an
interest in Liberty Media Group.
The combined balance sheets of Liberty Media Group as of December
31, 1996 and 1995, and the related combined statements of operations,
equity, and cash flows for each of the years in the three-year period ended
December 31, 1996, which appear in the December 31, 1996 Annual Report on
Form 10-K of Tele-Communications, Inc., 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 for the year ended December
31, 1996, as amended by Form 10K-A (Amendment No. 1), 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 December 31, 1996 Annual Report on Form
10-K of Tele-Communications, Inc., as amended by Form 10K/A (Amendment
No.1), 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
Tele-Communications, Inc.'s Current Report on Form 8-K dated June 19, 1996,
have been incorporated by reference herein in reliance on the report dated
February 14, 1996 of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
37
<PAGE>
================================================================================
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 or the Selling Stockholders. 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...................................................... 3
The Company...................................................... 3
Shares Being Offered and Selling Stockholders.................... 3
Plan of Distribution............................................. 5
Description of TCI Common Stock.................................. 6
Legal Matters.................................................... 36
Experts.......................................................... 36
</TABLE>
================================================================================
================================================================================
Tele-Communications, Inc.
Tele-Communications, Inc. Series A TCI 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...................................... $250,474.00
Blue Sky Fees and Expenses (including counsel fees)... 2,000.00
Legal Fees and Expenses............................... 20,000.00
Accounting Fees and Expenses.......................... 25,000.00
Miscellaneous......................................... 1,000.00
-----------
Total............................................. $298,474.00
-----------
</TABLE>
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law 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 Delaware General Corporation Law 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 the
Delaware General Corporation Law, 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 Delaware General
Corporation Law 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.
II-1
<PAGE>
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.
(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.
II-2
<PAGE>
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 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 Stockholders 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, 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.
II-3
<PAGE>
Item 16. EXHIBITS
Exhibits Description
-------- -----------
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 and January 25, 1996
(Incorporated herein by reference to Exhibit 3.1 of Company's
Annual Report on Form 10-K for the year ended December 31, 1995
(Commission File No. 0-20421)).
4.2 Certificate of Amendment to the Restated Certificate of
Incorporation of the Company, dated April 7, 1997 (Incorporated
herein by reference to Exhibit 4.2 of the Company's
Registration Statement on Form S-3 (No. 333-27039) filed with
the Commission on May 13, 1997).
4.3 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)).
4.4 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 Company's
registration statement on Form 8-A, as amended by Form 8-A/A
(Amendments No. 1 and 2) Commission File No. 0-20421).
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-7).
99.1 Registration Rights Agreement, dated as of June 16, 1997, by
and between the Company and Merrill Lynch, Pierce, Fenner &
Smith Incorporated.
99.2 Registration Rights Agreement, dated as of June 16, 1997, by
and between the Company and LB I Group Inc.
II-4
<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;
(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 by the Registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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 of 1933, each filing of the Registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange Act
of 1934 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.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933 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 of 1933 and will be governed by the final adjudication
of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, 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 June 23, 1997.
TELE-COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
---------------------------------
Name: Stephen M. Brett
Title: Executive Vice President
II-6
<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 Securities and Exchange 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 of 1933, as
amended, this Registration Statement 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, June 23, 1997
- -------------------------------- Chief Executive Officer
(John C. Malone) and Director
(Principal Executive
Officer)
/s/ Leo J. Hindery, Jr. President, Chief Operating June 23, 1997
- -------------------------------- Officer and Director
(Leo J. Hindery, Jr.)
/s/ Donne F. Fisher Director June 23, 1997
- --------------------------------
(Donne F. Fisher)
/s/ John W. Gallivan Director June 23, 1997
- --------------------------------
(John W. Gallivan)
- -------------------------------- Director _______, 1997
(Kim Magness)
/s/ Robert A. Naify Director June 23, 1997
- --------------------------------
(Robert A. Naify)
/s/ Jerome H. Kern Director June 23, 1997
- --------------------------------
(Jerome H. Kern)
/s/ Tony Coelho Director June 23, 1997
- --------------------------------
(Tony Coelho)
/s/ J.C. Sparkman Director June 23, 1997
- --------------------------------
(J.C. Sparkman)
/s/ Paul Gould Director June 23, 1997
- --------------------------------
(Paul Gould)
/s/ Bernard W. Schotters Senior Vice President of TCI June 23, 1997
- -------------------------------- Communications, Inc.
(Bernard W. Schotters) (Principal Financial Officer)
/s/ Gary K. Bracken Senior Vice President of TCI June 23, 1997
- -------------------------------- Communications, Inc.
(Gary K. Bracken) (Principal Accounting Officer)
</TABLE>
II-7
<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 and January 25, 1996 (Incorporated herein by
reference to Exhibit 3.1 of Company's Annual Report on Form 10-K for
the year ended December 31, 1995 (Commission File No. 0-20421)).
4.2 Certificate of Amendment to the Restated Certificate of Incorporation
of the Company, dated April 7, 1997 (Incorporated herein by reference
to Exhibit 4.2 of the Company's Registration Statement on Form S-3
(No. 333-27039) filed with the Commission on May 13, 1997).
4.3 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)).
4.4 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 Company's registration statement on
Form 8-A, as amended by Form 8-A/A (Amendments No. 1 and 2) Commission
File No. 0-20421).
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-7).
99.1 Registration Rights Agreement, dated as of June 16, 1997, by and
between the Company and Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
99.2 Registration Rights Agreement, dated as of June 16, 1997, by and
between the Company and LB I Group Inc.
<PAGE>
TELE-COMMUNICATIONS, INC.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
EXHIBIT 5
---------
June 23, 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 up to 50,000,000
shares of the Company's Tele-Communications, Inc. Series A TCI Group Common
Stock, par value $1.00 per share (the "Shares"), to be offered and sold from
time to time by the holders thereof named in the Registration Statement (the
"Selling Stockholders").
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 Stockholders pursuant to the Registration Statement are actually sold.
Based upon the foregoing, I am of the opinion that each of the 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
June 20, 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
June 20, 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
June 20, 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
June 20, 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
June 20, 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.
June 20, 1997
<PAGE>
EXHIBIT 23.7
Consent of Independent Accountants
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the 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 Current 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
June 20, 1997
<PAGE>
Exhibit 99.1
REGISTRATION RIGHTS AGREEMENT
-----------------------------
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June 16,
1997, by and between TELE-COMMUNICATIONS, INC., a Delaware corporation (the
"Company"), and MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, a Delaware
corporation ("MLPF&S").
WITNESSETH:
WHEREAS, MLPF&S is acquiring shares of Tele-Communications, Inc. Series A
TCI Group Common Stock, par value $1.00 per share ("Series A Stock"), from the
Estate of Bob Magness, Deceased (the "Estate"), pursuant to a Stock Purchase
Agreement, dated as of June 16, 1997 (the "Stock Purchase Agreement"), between
MLPF&S and the Personal Representatives of the Estate, which shares are
"restricted securities" (as defined in Rule 144 under the Securities Act of
1933, as amended);
WHEREAS, Merrill Lynch International ("MLI") and the Company are parties
to an ISDA Master Agreement, dated as of June 16, 1997 (the "Master Agreement,"
which term includes the related Schedule and confirmations), pursuant to which
MLI may acquire additional shares of Series A Stock which are "restricted
securities"; and
WHEREAS, the Company has agreed to file and keep continuously effective a
"shelf" registration statement for the resale of any shares of Series A Stock
acquired under the Stock Purchase Agreement or pursuant to the Master
Agreement, on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:
1. Certain Definitions. Capitalized terms used herein but not defined herein
--------------------
shall have the meanings given such terms in the Master Agreement. In addition,
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 or the Exchange Act.
<PAGE>
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: Shares of Series A Stock acquired under or pursuant to
------------------
the Master Agreement or from the Estate pursuant to the Stock Purchase
Agreement, which, in each case, at the time of acquisition, are "restricted
securities" (as that term is defined in Rule 144 under the Securities Act), and
any other shares of capital stock of the Company issued in respect of such
shares as a result of stock splits, stock dividends, reclassification,
recapitalizations, mergers, consolidations or similar events.
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 Sellers 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 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 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: A "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 permits the secondary resale
thereunder of up to 50 million shares of Series A Stock on a delayed or
continuous basis under Rule 415 of the Commission 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.
-2-
<PAGE>
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.
Sellers: MLPF&S and MLI, and any transferee of any interest of MLI under
-------
the Master Agreement or MLPF&S under the Stock Purchase Agreement that acquires
Registrable Shares.
Special Counsel: Brown & Wood LLP, special counsel to the Sellers.
---------------
2. Shelf Registration.
-------------------
(a) The Company shall:
(i) file as promptly as practicable, but in any event by June 23,
1997, a Registration Statement providing for resales by the Sellers of up
to 50 million shares of Series A Stock. The section of the Registration
Statement entitled "Plan of Distribution" shall provide that the Sellers
may distribute Registrable Shares pursuant to such Registration Statement
in the manner set forth on Exhibit A hereto. The Company may include in any
Registration Statement shares of Series A Stock acquired by (i) LB I Group
Inc. from the Estate and (ii) Lehman Brothers Finance S.A. under that
certain ISDA Master Agreement (which includes the related Schedule and
confirmations), dated as of June 16, 1997, with the Company;
(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 August 9, 1997; and
(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 Sellers from the Company under
the Master Agreement and (y) the sale of all Registrable Shares owned by
the Sellers.
(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 Sellers and Special Counsel
copies of any such supplement or amendment promptly after its being filed with
the Commission.
-3-
<PAGE>
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 such 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 Sellers and Special Counsel 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 Sellers
or Special Counsel shall reasonably object on a timely basis;
(ii) notify the Sellers and Special Counsel (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 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 Sellers and Special Counsel 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
-4-
<PAGE>
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 Sellers 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
Sellers 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 Sellers notify the Company that they wish to effect an
underwritten offering of Registrable Shares, (A) the Sellers 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 MLPF&S 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 satisfactory to the managing underwriters and the
Sellers addressed to the underwriters and the Sellers 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 Sellers (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 Sellers 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 Sellers, such
letters to be in customary form and covering matters of the type
-5-
<PAGE>
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 Sellers
and the underwriters) with respect to all parties to be indemnified
pursuant to said section (including, without limitation, the underwriters
and the Sellers);
(viii) make reasonably available for inspection by the Sellers, any
underwriter, agent or broker-dealer participating in any disposition of
Registrable Shares and Special Counsel 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 terms 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 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 States as the Sellers shall reasonably request,
and do any and all other acts and things which may be necessary to enable
the Sellers 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;
-6-
<PAGE>
(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 the Series A
Shares 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 Sellers shall be
conditioned upon the Sellers's compliance with the following:
(i) the Sellers 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
Sellers will provide to the Company, in writing, for use in the
Registration Statement, all information regarding the Sellers 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 Sellers 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 such Sellers propose to participate;
(iii) the Sellers 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 Sellers may be engaged in a
distribution of the Registrable Shares, the Sellers 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 Shares owned by the Sellers solely in the manner described
in the Registration Statement; and (C) not bid for or purchase
-7-
<PAGE>
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 a Seller of Registrable
Shares, such Seller will advise the Company in writing of the dates on
which the distribution will commence and, to the best knowledge of such
Seller at that time, the date on which the distribution will terminate, the
number of the 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 of shares of Series A Stock 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 Sellers shall cease offering or distributing the Registrable
Shares until such time as the Company notifies the Sellers 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 Special Counsel in the preparation of this Agreement, the
Master Agreement, the Stock Purchase Agreement and the Registration Statement.
Except as otherwise expressly set forth in the Master Agreement, the Sellers
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.
5. Indemnification. (a) The Company agrees to indemnify and hold harmless
----------------
each Seller, and each person, if any, who controls such 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 such Seller expressly for use
therein; provided, however, that the Company shall not indemnify any Seller or
any person who controls any such Seller from any such losses, claims, damages or
liabilities alleged by any person who purchased Registrable Shares from such
Seller if the untrue statement, omission
-8-
<PAGE>
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 such
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 such Seller or any
person who controls such Seller, after such time as the Company advised such
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 any Seller or any person controlling such
Seller in respect of which indemnity may be sought from the Company, such 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
reasonably satisfactory to such Underwriter 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. A Seller or any person controlling a 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 such 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 reasonably satisfactory to such Seller in any such action or
proceeding or (c) the named parties to any such action or proceeding (including
any impleaded parties) include both such Seller or such controlling person and
the Company and such Seller or such controlling person shall have been advised
by counsel to such Seller that there may be a conflict of interest between such
Seller or such controlling person and the Company in the conduct of the defense
of such action (in which 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
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<PAGE>
to indemnify and hold harmless such Seller and any such controlling person from
and against any loss or liability by reason of such settlement or judgment.
(c) Each Seller severally 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 such Seller, but only with respect to
information furnished in writing by such 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 an
Seller, such 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 such Seller, by Section 5(b).
(d) If the indemnification provided for in this Section 5 is unavailable
to an indemnified party under the first or third paragraph 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
the second paragraph of this Section 5), 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 Sellers 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
Sellers 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 Sellers 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 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) Each of the Company and the Sellers agrees 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, no Seller shall be required to contribute any
amount in excess of the amount by which the total price at which the Registrable
Shares were offered to the public exceeds the amount of any damages which such
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.
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<PAGE>
(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 any Seller, by or on behalf of any person
controlling such 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 MLPF&S:
World Financial Center
North Tower
New York, New York 10281
Attention: Peggy C. Wilenbucher
Facsimile: 212-449-4590
or to such other person (including any Seller other than MLPF&S) 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) 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
Sellers. 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 two 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.
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<PAGE>
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, MLPF&S and MLI and their respective
successors and (ii) any assignee or transferee of rights and obligations of MLI
pursuant to the Master Agreement or MLPF&S pursuant to the Stock Purchase
Agreement. A transferee of MLI pursuant to the Master Agreement or MLPF&S
pursuant to the Stock Purchase Agreement, and any successor, assignee, or
transferee of any of the foregoing, 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
TELE-COMMUNICATIONS, INC.
By:
--------------------------------
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
By:
--------------------------------
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<PAGE>
EXHIBIT A
Any distribution of Registrable Shares by the Sellers 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; or (e) by any other legally
available means. Also, offers to purchase Registrable Shares may be solicited
by agents designated by the Sellers 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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<PAGE>
Exhibit 99.2
REGISTRATION RIGHTS AGREEMENT
-----------------------------
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June 16,
1997, by and between TELE-COMMUNICATIONS, INC., a Delaware corporation (the
"Company"), and LB I GROUP INC., a Delaware corporation ("LBIG").
WITNESSETH:
WHEREAS, LBIG is acquiring shares of Tele-Communications, Inc. Series A TCI
Group Common Stock, par value $1.00 per share ("Series A Stock"), from the
Estate of Bob Magness, Deceased (the "Estate"), pursuant to a Stock Purchase
Agreement, dated as of June 16, 1997 (the "Stock Purchase Agreement"), between
LBIG and the Personal Representatives of the Estate, which shares are
"restricted securities" (as defined in Rule 144 under the Securities Act of
1933, as amended);
WHEREAS, Lehman Brothers Finance S.A. ("Lehman Finance") and the Company
are parties to an ISDA Master Agreement, dated as of June 16, 1997 (the "Master
Agreement," which term includes the related Schedule and confirmations),
pursuant to which Lehman Finance may acquire additional shares of Series A Stock
which are "restricted securities"; and
WHEREAS, the Company has agreed to file and keep continuously effective a
"shelf" registration statement for the resale of any shares of Series A Stock
acquired under the Stock Purchase Agreement or pursuant to the Master
Agreement, on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:
1. Certain Definitions. Capitalized terms used herein but not defined
--------------------
herein shall have the meanings given such terms in the Master Agreement. In
addition, 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 or the Exchange Act.
<PAGE>
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: Shares of Series A Stock acquired under or
------------------
pursuant to the Master Agreement or from the Estate pursuant to the Stock
Purchase Agreement, which, in each case, at the time of acquisition, are
"restricted securities" (as that term is defined in Rule 144 under the
Securities Act), and any other shares of capital stock of the Company issued in
respect of such shares as a result of stock splits, stock dividends,
reclassification, recapitalizations, mergers, consolidations or similar events.
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 Sellers 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 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 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: A "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 permits the secondary resale
thereunder of up to 50 million shares of Series A Stock on a delayed or
continuous basis under Rule 415 of the Commission 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.
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<PAGE>
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.
Sellers: LBIG and Lehman Finance, and any transferee of any interest
-------
of LBIG under the Master Agreement or Lehman Finance under the Stock Purchase
Agreement that acquires Registrable Shares.
Special Counsel: Brown & Wood LLP, special counsel to the Sellers.
---------------
2. Shelf Registration.
-------------------
(a) The Company shall:
(i) file as promptly as practicable, but in any event by June
23, 1997, a Registration Statement providing for resales by the Sellers
of up to 50 million shares of Series A Stock. The section of the
Registration Statement entitled "Plan of Distribution" shall provide
that the Sellers may distribute Registrable Shares pursuant to such
Registration Statement in the manner set forth on Exhibit A hereto. The
Company may include in any Registration Statement shares of Series A
Stock acquired by (i) Merrill Lynch, Pierce, Fenner & Smith
Incorporated from the Estate and (ii) Merrill Lynch International under
that certain ISDA Master Agreement (which includes the related Schedule
and confirmations), dated as of June 16, 1997, with the Company;
(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 August 9, 1997; and
(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 Sellers from the Company
under the Master Agreement and (y) the sale of all Registrable Shares
owned by the Sellers.
(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 Sellers and Special Counsel
copies of any such supplement or amendment promptly after its being filed with
the Commission.
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<PAGE>
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 such 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 Sellers and Special Counsel 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 Sellers or Special Counsel shall
reasonably object on a timely basis;
(ii) notify the Sellers and Special Counsel (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 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 Sellers and Special Counsel 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
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<PAGE>
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 Sellers 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 Sellers 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 Sellers notify the Company that they wish to effect
an underwritten offering of Registrable Shares, (A) the Sellers 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 Lehman Brothers, 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 satisfactory to the managing underwriters and the
Sellers addressed to the underwriters and the Sellers 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 Sellers (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 Sellers 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 Sellers, such letters
to be in customary form and covering matters
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<PAGE>
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 Sellers and the underwriters) with respect
to all parties to be indemnified pursuant to said section (including,
without limitation, the underwriters and the Sellers);
(viii) make reasonably available for inspection by the Sellers,
any underwriter, agent or broker-dealer participating in any
disposition of Registrable Shares and Special Counsel 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
terms 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 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 States as the Sellers shall reasonably
request, and do any and all other acts and things which may be
necessary to enable the Sellers 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;
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<PAGE>
(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
the Series A Shares 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 Sellers
shall be conditioned upon the Sellers's compliance with the following:
(i) the Sellers 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 Sellers will provide to the Company, in writing, for use in the
Registration Statement, all information regarding the Sellers 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 Sellers 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 such Sellers propose to participate;
(iii) the Sellers 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 Sellers may be engaged in a
distribution of the Registrable Shares, the Sellers 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 Shares owned by the
Sellers solely in the manner described in the Registration Statement;
and (C) not bid for or purchase
-7-
<PAGE>
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 a Seller of
Registrable Shares, such Seller will advise the Company in writing of
the dates on which the distribution will commence and, to the best
knowledge of such Seller at that time, the date on which the
distribution will terminate, the number of the 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 of shares of Series A Stock 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 Sellers shall cease offering or distributing the
Registrable Shares until such time as the Company notifies the Sellers
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 Special Counsel in the preparation of this Agreement, the
Master Agreement, the Stock Purchase Agreement and the Registration Statement.
Except as otherwise expressly set forth in the Master Agreement, the Sellers
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.
5. Indemnification. (a) The Company agrees to indemnify and hold
----------------
harmless each Seller, and each person, if any, who controls such 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 such Seller expressly for use
therein; provided, however, that the Company shall not indemnify any Seller or
any person who controls any such Seller from any such losses, claims, damages or
liabilities alleged by any person who purchased Registrable Shares from such
Seller if the untrue statement, omission
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<PAGE>
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 such
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 such Seller or any
person who controls such Seller, after such time as the Company advised such
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 any Seller or any person
controlling such Seller in respect of which indemnity may be sought from the
Company, such 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 reasonably satisfactory to such Underwriter 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. A Seller or any person
controlling a 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 such 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 reasonably satisfactory to such Seller
in any such action or proceeding or (c) the named parties to any such action or
proceeding (including any impleaded parties) include both such Seller or such
controlling person and the Company and such Seller or such controlling person
shall have been advised by counsel to such Seller that there may be a conflict
of interest between such Seller or such controlling person and the Company in
the conduct of the defense of such action (in which 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
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<PAGE>
to indemnify and hold harmless such Seller and any such controlling person from
and against any loss or liability by reason of such settlement or judgment.
(c) Each Seller severally 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 such Seller, but only with respect to
information furnished in writing by such 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 an
Seller, such 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 such Seller, by Section 5(b).
(d) If the indemnification provided for in this Section 5 is
unavailable to an indemnified party under the first or third paragraph 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 the second paragraph of this Section 5), 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 Sellers 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 Sellers 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 Sellers 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 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) Each of the Company and the Sellers agrees 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, no Seller shall be required to
contribute any amount in excess of the amount by which the total price at which
the Registrable Shares were offered to the public exceeds the amount of any
damages which such 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.
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<PAGE>
(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 any Seller, by or on behalf of any
person controlling such 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 LBIG:
3 World Financial Center
200 Vesey Street
New York, New York 10285
Attention: Michael Dweck
Facsimile: (212) 528-6973
with a copy to:
Richard Chase
Facsimile: (212) 528 6548
or to such other person (including any Seller other than LBIG) 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) 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
Sellers. No consent, waiver or similar act shall be effective unless in writing
and signed by the party sought to be bound.
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<PAGE>
8. Counterparts. This Agreement may be executed in two 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, LBIG and Lehman Finance and their
respective successors and (ii) any assignee or transferee of rights and
obligations of Lehman Finance pursuant to the Master Agreement or LBIG pursuant
to the Stock Purchase Agreement. A transferee of Lehman Finance pursuant to the
Master Agreement or LBIG pursuant to the Stock Purchase Agreement, and any
successor, assignee, or transferee of any of the foregoing, 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
TELE-COMMUNICATIONS, INC.
By:
--------------------------------------
LBI GROUP INC.
By:
--------------------------------------
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EXHIBIT A
Any distribution of Registrable Shares by the Sellers 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; or (e) by any other legally
available means. Also, offers to purchase Registrable Shares may be solicited
by agents designated by the Sellers 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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