<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. 8)*
TELE-COMMUNICATIONS, INC.
(Name of Issuer)
(1) Tele-Communications, Inc. Series A TCI Group Common Stock, par value $1.00
per share.
(2) Tele-Communications, Inc. Series A Liberty Media Group Common Stock, par
value $1.00 per share.
(3) Tele-Communications, Inc. Series A TCI Ventures Group Common Stock, par
value $1.00 per share.
(4) Tele-Communications, Inc. Series B TCI Group Common Stock, par value $1.00
per share.
(5) Tele-Communications, Inc. Series B Liberty Media Group Common Stock, par
value $1.00 per share.
(6) Tele-Communications, Inc. Series B TCI Ventures Group Common Stock, par
value $1.00, per share.
(7) Class B 6% Cumulative Redeemable Exchangeable Junior Preferred Stock, par
value $.01 per share.
- --------------------------------------------------------------------------------
(Title of Classes of Securities)
(1) Series A TCI Group Common Stock: 87924V101
(2) Series A Liberty Group Common Stock: 87924V507
(3) Series A Ventures Group Common Stock: 87924V887
(4) Series B TCI Group Common Stock: 87924V200
(5) Series B Liberty Group Common Stock: 87924V606
(6) Series B Ventures Group Common Stock: 87924V879
(7) Class B Preferred Stock: 87924V309
- --------------------------------------------------------------------------------
(CUSIP Numbers)
Dr. John C. Malone
c/o Tele-Communications, Inc.
Terrace Tower II, 5619 DTC Parkway, Englewood, CO 80111, (303-267-5500)
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
FEBRUARY 9, 1998
----------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b) (3) or (4), check the following box: [ ].**
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
_______________
** See discussion in Item 1 relating to prior Schedule 13G filing.
Exhibit Index is on Page 9
<PAGE>
Cusip No. for Series A TCI Group Common Stock-- 87924V101
Cusip No. for Series A Liberty Group Common Stock -- 87924V507
Cusip No. for Series A Ventures Group Common Stock-- 87924V887
Cusip No. for Series B TCI Group Common Stock-- 87924V200
Cusip No. for Series B Liberty Group Common Stock -- 87924V606
Cusip No. for Series B Ventures Group Common Stock-- 87924V879
Cusip No. for Class B Preferred Stock -- 87924V309
- -------------------------------------------------------------------------------
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above
Persons
Dr. John C. Malone
- ------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [ ]
- ------------------------------------------------------------------------------
(3) SEC Use Only
- ------------------------------------------------------------------------------
(4) Source of Funds
OO
- ------------------------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
- ------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
U.S.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
(7) Sole Voting Power 1,400,146 Shares of Series A TCI Group/1/
54,688,117 Shares of Series B TCI Group/2,3/
1,137,807 Shares of Series A Liberty Group/2,4/
27,233,811 Shares of Series B Liberty Group/2,5/
1,200,000 Shares of Series A Ventures Group/6/
45,239,888 Shares of Series B Ventures Group/2,7/
Number of 273,600 Shares of Class B Preferred/2/
Shares Bene- --------------------------------------------------------------------------------------
ficially (8) Shared Voting Power 0 Shares
Owned by --------------------------------------------------------------------------------------
Each Report- (9) Sole Dispositive Power/8/ 1,400,146 Shares of Series A TCI Group/1/
ing Person 36,483,461 Shares of Series B TCI Group/2,3/
With 1,137,807 Shares of Series A Liberty Group/2,4/
12,941,092 Shares of Series B Liberty Group/2,5/
1,200,000 Shares of Series A Ventures Group/6/
24,834,494 Shares of Series B Ventures Group/2,7/
273,600 Shares of Class B Preferred/2/
--------------------------------------------------------------------------------------
(10) Shared Dispositive Power 0 Shares
</TABLE>
- -------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
1,400,146 Shares of Series A TCI Group/1/
54,688,117 Shares of Series B TCI Group/2,3/
1,137,807 Shares of Series A Liberty Group/2,4/
27,233,811 Shares of Series B Liberty Group/2,5/
1,200,000 Shares of Series A Ventures Group/6/
45,239,888 Shares of Series B Ventures Group/2,7/
273,600 Shares of Class B Preferred/2/
- ------------------------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
2
<PAGE>
- ------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)9
Series A TCI Group greater than 1%
Series B TCI Group 84.5%
Series A Liberty Group greater than 1%
Series B Liberty Group 86.0%
Series A Ventures Group greater than 1%
Series B Ventures Group 93.2%
Class B Preferred 17.6%
- ------------------------------------------------------------------------------
(14) Type of Reporting Person
IN
_____________________________
1 Includes 1,400,000 shares Dr. Malone would acquire upon the exercise of
stock options granted in tandem with stock appreciation rights of which options
for 980,000 shares are currently exerciseable, but does not include shares of
Series A TCI Group Stock issuable upon conversion of shares of Series B TCI
Group Stock owned by Dr. Malone or his spouse. (See Items 3 and 5 of the
Statement)
2 Includes, as applicable, 784,892 shares of Series B TCI Group Stock, 12,726
shares of Series A Liberty Group Stock, 439,875 shares of Series B Liberty Group
Stock, 793,240 shares of Series B Ventures Group Stock, and 6,900 shares of
Class B Preferred Stock beneficially owned by Dr. Malone's spouse, to which Dr.
Malone disclaims any beneficial ownership thereof. (See Item 5 of the
Statement)
3 Includes 14,511,570 shares of Series B TCI Group Stock that Dr. Malone has
the right to acquire at any time prior to June 30, 1999, without giving effect
to certain proportionate rights thereto by the Magness Group (see Item 6
hereof), and 11,500,000 shares and 2,795,000 shares, respectively, of Series B
TCI Group Stock pledged as security for two loans. Also includes 1,684,775
shares of Series B TCI Group Stock on which Dr. Malone has been granted the
voting rights and 16,519,881 shares of Series B TCI Group Stock on which Dr.
Malone may exercise voting rights if the holders of such shares and Dr. Malone
disagree on how the shares should be voted; however, Dr. Malone has no right to
dispose of such shares (which are excluded in (9) above). (See Item 6 hereof)
4 Includes 1,125,000 shares Dr. Malone would acquire upon the exercise of
stock options granted in tandem with stock appreciation rights of which options
for 787,500 shares are currently exerciseable. These shares do not include
shares of Series A Liberty Group Stock issuable upon conversion of shares of
Series B Liberty Group Stock owned by Dr. Malone or his spouse. (See Items 3
and 5 of the Statement)
5 Includes 4,626,537 shares and 750,000 shares, respectively, of Series B
Liberty Group Stock pledged as security for two loans (see Item 6 of the
Statement) and 14,292,719 shares of Series B Liberty Group Stock on which Dr.
Malone may exercise voting rights if the holders of such shares and Dr. Malone
disagree on how the shares should be voted; however, Dr. Malone has no right to
dispose of such shares (which are excluded in (9) above). (See Item 6 hereof)
6 Includes 1,200,000 shares Dr. Malone would acquire upon the exercise of
stock options granted in tandem with stock appreciation rights of which options
for 840,000 shares are currently exerciseable, but does not include shares of
Series A Ventures Group Stock issuable upon conversion of shares of Series B
Ventures Group Stock owned by Dr. Malone or his spouse. (See Items 3 and 5 of
the Statement)
7 Includes 1,721,360 shares of Series B Ventures Group Stock on which Dr.
Malone has been granted voting rights and 18,684,034 shares of Series B Ventures
Group Stock on which Dr. Malone may exercise voting rights if the holders of
such shares and Dr. Malone disagree on how the shares should be voted; however,
Dr. Malone has no right to dispose of such shares (which are excluded in (9)
above). (See Item 6 hereof) Also, includes 2,800,000 shares Dr. Malone would
acquire upon the exercise of stock options granted in tandem with stock
appreciation rights of which none are currently exerciseable. (See Item 5
hereof)
8 Subject to the Call Agreement. (See Item 6 hereof)
9 Each share of Series B TCI Group Stock, Series B Liberty Group Stock and
Series B Ventures Group Stock is entitled to 10 votes per share and each share
of Series A TCI Group Stock, Series A Liberty Group Stock and Series A Ventures
Group Stock is entitled to one vote per share. In addition, holders of Class B
Preferred Stock vote with the holders of the Series A TCI Group Stock, Series B
TCI Group Stock, Series A Liberty Group Stock, Series B Liberty Group Stock,
Series A Ventures Group Stock, Series B Ventures Group Stock, and certain
classes/series of Issuer preferred stock on the election of directors.
Accordingly, when these series and classes of stock are aggregated, the
Reporting Person may be deemed to beneficially own voting equity securities
representing approximately 48.8% of the voting power with respect to a general
election of directors of the Issuer.
3
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Amendment No. 8)
Statement of
DR. JOHN C. MALONE
Pursuant to Section 13(d) of the
Securities Exchange Act of 1934
in respect of
TELE-COMMUNICATIONS, INC.
(Commission File No. 0-20421)
ITEM 1. Security and the Issuer
-----------------------
Dr. John C. Malone hereby amends and supplements his Statement on
Schedule 13D, as amended to the date hereof (the "Statement"), with respect to
the following shares of stock of Tele-Communications, Inc., a Delaware
corporation (the "Issuer"), beneficially owned by Dr. John C. Malone:
(1) Tele-Communications, Inc. Series A TCI Group Common Stock, par value
$1.00 per share (the "Series A TCI Group Stock");
(2) Tele-Communications, Inc. Series A Liberty Media Group Common Stock,
par value $1.00 per share (the "Series A Liberty Group Stock");
(3) Tele-Communications, Inc. Series A TCI Ventures Group Common Stock, par
value $1.00 per share (the "Series A Ventures Group Stock");
(4) Tele-Communications, Inc. Series B TCI Group Common Stock, par value
$1.00 per share (the "Series B TCI Group Stock");
(5) Tele-Communications, Inc. Series B Liberty Media Group Common Stock,
par value $1.00 per share (the "Series B Liberty Group Stock");
(6) Tele-Communications, Inc. Series B TCI Ventures Group Common Stock, par
value $1.00 per share (the "Series B Ventures Group Stock"); and
(7) Class B 6% Cumulative Redeemable Exchangeable Junior Preferred Stock,
par value $.01 per share (the "Class B Preferred Stock").
The Issuer's executive offices are located at 5619 DTC Parkway, Englewood,
Colorado 80111. Unless otherwise indicated, capitalized terms used but not
defined herein shall have the meanings assigned to such terms in the Statement.
4
<PAGE>
ITEM 4. Purpose of Transaction
----------------------
Item 4 of the Statement is hereby amended and supplemented by adding
the following:
On February 9, 1998, the Issuer; Dr. Malone and Leslie Malone, his
spouse (collectively, the "Malone Group"); and the Estate of Bob Magness, the
Estate of Betsy Magness, Gary and Kim Magness (individually and in certain
representative capacities) (collectively, the "Magness Group") closed the
transactions required by an Agreement dated January 5, 1998, to settle matters
concerning the administration and the assets and liabilities of the Estate of
Bob Magness, the late founder of the Issuer (the "Settlement Agreement"). In
connection with the Settlement Agreement, the Malone Group entered into a
Stockholders Agreement dated as of February 9, 1998, with the Issuer and the
Magness Group (the "Stockholders' Agreement"). This Agreement and a Call
Agreement dated as of February 9, 1998, between Dr. Malone and the Issuer (the
"Call Agreement") are described more fully in Item 6 below.
ITEM 5. Interest in Securities of the Issuer
------------------------------------
Item 5(a) of the Statement is hereby amended and supplemented by adding
the following :
Dr. Malone beneficially owns (without giving effect to the conversion
of Series B TCI Group Stock for Series A TCI Group Stock, of Series B Liberty
Group Stock for Series A Liberty Group Stock, or of Series B Ventures Group
Stock for Series A Ventures Group Stock): (a) 1,400,146 shares of Series A TCI
Group Stock, which includes options for 1,400,000 shares of which options for
980,000 shares are currently exerciseable and represents less than 1% of the
outstanding shares of Series A TCI Group Stock; (b) 54,688,117 shares of Series
B TCI Group Stock, which includes Dr. Malone's right to acquire from the Issuer
14,511,570 shares (the "June Option"), without giving affect to the Magness
Group's right to acquire 12,406,238 shares thereof on a proportionate basis (see
Item 6 below), and includes his right to direct the voting of 1,684,775 shares
owned by the Trusts and 16,519,881 shares owned by the Magness Group (see Item 6
below), and represents 84.5% of the outstanding shares of Series B TCI Group
Stock; (c) 1,137,807 shares of Series A Liberty Group Stock, which includes
options for 1,125,000 shares of which options for 787,500 shares are currently
exerciseable and represents less than 1% of the outstanding shares of Series A
Liberty Group Stock; (d) 27,233,811 shares of Series B Liberty Group Stock,
which includes his right to direct the voting of 14,292,719 shares owned by the
Magness Group and represents 86.0% of the outstanding shares of Series B Liberty
Group Stock; (e) 1,200,000 shares of Series A Ventures Group Stock, which
consists solely of options for such shares of which options for 840,000 shares
are currently exerciseable and represents less than 1% of the outstanding shares
of Series A Ventures Group Stock; and (f) 45,239,888 shares of Series B Ventures
Group Stock, which includes his right to direct the voting of 1,721,360 shares
owned by the Trusts and 18,684,034 shares owned by the Magness Group (see Item 6
below), and options for 2,800,000 shares of which none are currently
exerciseable and represents 93.2% of the outstanding shares of Series B Ventures
Group Stock. In addition, Dr. Malone beneficially owns 273,600 shares of Class B
Preferred Stock, which represents 17.6% of the outstanding shares of Class B
Preferred Stock. The foregoing percentage interests are based on the outstanding
share numbers provided by the Issuer as of December 31, 1997 (adjusted for the
transactions disclosed in Item 4 above and Item 5(c) below, including the
settlement of In re Liberty Media Shareholders Litigation previously reported in
Item 5(c), and Dr. Malone's options as if exercised in full), as follows:
459,942,344 shares of Series A TCI Group Stock; 64,750,185 shares of Series B
TCI Group Stock (assumes Dr. Malone and the Magness Group exercised the June
Option); 314,350,982 shares of Series A Liberty Group Stock; 31,681,124 shares
of Series B Liberty Group Stock; 365,387,690 shares of Series A Ventures Group
Stock; 48,560,736 shares of Series B Ventures Group Stock; and 1,552,490 shares
of Class B Preferred Stock. When all series and classes of stock beneficially
owned by Dr. Malone are aggregated, Dr. Malone may be deemed to beneficially own
voting equity securities representing approximately 48.8% of the voting power
with respect to a general election of directors of the Issuer.
5
<PAGE>
Item 5(b) of the Statement is hereby amended and supplemented by adding
the following :
Dr. Malone and, to his knowledge, his spouse each have the sole power
to vote, or to direct the voting of, their respective shares of each Series of
the Issuer's Common Stock and the Class B Preferred Stock. Subject to the Call
Agreement described in Item 6 below, Dr. Malone and, to his knowledge, his
spouse each have the sole power to dispose of, or to direct the disposition of,
their respective shares, except with respect to the pledge of 14,295,000 shares
of Series B TCI Group Stock and 5,376,537 shares of Series B Liberty Group
Stock. In addition, Dr. Malone has the power to direct the voting of 1,684,775
shares of Series B TCI Group Stock and 1,721,360 shares of Series B Ventures
Group Stock owned by the Trusts as described in Item 6 of Amendment No. 5 to the
Statement. Dr. Malone does not have the power to dispose of such shares owned by
the Trusts. He also has the power to direct the voting of 16,519,881 shares of
Series B TCI Group Stock, 14,292,719 shares of Series B Liberty Group Stock and
18,684,034 Series B Ventures Group Stock owned by the Magness Group pursuant to
the terms of the Stockholders' Agreement described in Item 6 below. Dr. Malone
does not have the power to dispose of such shares owned by the Magness Group.
Until December 31, 1997, Dr. Malone beneficially owned shares of the
Issuer's Common Stock held by the trustee of the Issuer's Employee Stock
Purchase Plan. Effective January 1, 1998, the Issuer amended such Plan and the
value of the shares beneficially owned by Dr. Malone at the time of such
amendment has been credited to an account in the name of Dr. Malone. As a
result, Dr. Malone no longer beneficially owns the shares previously held for
him in the Employee Stock Purchase Plan, which has been renamed the TCI 401(k)
Stock Plan in connection with said amendment. At such time as Dr. Malone elects
to withdraw from the Plan, in whole or in part, however, Dr. Malone may request
the value of his account to be delivered in cash or shares of the Issuer's
Common Stock or a combination thereof.
Item 5(c) of the Statement is hereby amended and supplemented by adding
the following:
Pursuant to the terms of a stock dividend announced by the Issuer in
January 1998, effective February 6, 1998, the Issuer issued to the record
holders at the close of business on January 30, 1998: (a) of Series A Liberty
Group Stock and Series B Liberty Group Stock, one share of Series A Liberty
Group Stock for every two shares of Series A Liberty Group Stock held and one
share of Series B Liberty Group Stock for every two shares of Series B Liberty
Group Stock held; and (b) of Series A Ventures Group Stock and Series B Ventures
Group Stock, one share of Series A Ventures Group Stock for every share of
Series A Ventures Group Stock held and one share of Series B Ventures Group
Stock for every share of Series B Ventures Group Stock held. As a result of such
stock dividends, Dr. Malone and his spouse received 27 shares and 4,242 shares,
respectively, of Series A Liberty Group Stock, 4,167,072 shares and 146,625
shares, respectively, of Series B Liberty Group Stock and 10,620,627 shares and
396,620 shares, respectively, of Series B Ventures Group Stock. In addition, the
Issuer adjusted all outstanding options and related stock appreciation rights to
reflect such dividends, resulting in Dr. Malone having an option for 1,125,000
shares of Series A Liberty Group Stock of which options for 787,500 shares are
currently exerciseable, an option for 1,200,000 shares of Series A Ventures
Group Stock of which options for 840,000 shares are currently exerciseable, and
an option for 2,800,000 shares of Series B Ventures Group Stock of which none
are currently exerciseable. Similar adjustments have been made to Dr. Malone's
outstanding stock appreciation rights with respect to such shares.
On December 16, 1997, the Issuer granted to Dr. Malone, in tandem with
stock appreciation rights, an option to purchase 1,400,000 shares of Series B
Ventures Group Stock. As stated above, such option and stock appreciation rights
have been adjusted to an option for 2,800,000 shares of Series B Ventures Group
Stock with a similar adjustment to the stock appreciation rights as a result of
the stock dividend. The option is subject to stockholder approval and the
following vesting schedule: 20% on each anniversary of the grant date with the
option fully vested on December 16, 2002.
6
<PAGE>
ITEM 6. Contracts, Arrangements, Understandings or Relationships With Respect
---------------------------------------------------------------------
to Securities of the Issuer
---------------------------
The Issuer, the Malone Group and the Magness Group are parties to a
certain Stockholders' Agreement, which provides for the following: (a) the
Magness Group to designate a nominee for the Issuer's Board of Directors and Dr.
Malone's agreement to vote for such nominee; (b) a representative of the Malone
Group and a representative of the Magness Group to consult with each other on
all matters to be brought to a vote of the Issuer's stockholders; provided,
however, that if a mutual agreement on how to vote can not be reached, Dr.
Malone shall vote the Series B Stock (as defined below) owned by the Magness
Group pursuant to an irrevocable proxy; (c) the Magness Group to participate, at
its option, on a proportionate basis with Dr. Malone in any acquisition of
securities of the Issuer, including 12,406,238 shares of Series B TCI Group
Stock subject to the June Option, except for certain specified acquisition
opportunities including those made available to Dr. Malone solely in his
capacity as an officer of the Issuer; (d) a tag-along right in favor of the
Magness Group with respect to any sale by the Malone Group of shares of Series B
TCI Group Stock, Series B Liberty Group and Series B Ventures Group Stock
(collectively, the "Series B Stock"), subject to certain exceptions such as
transfers to related parties; and (e) a drag-along right in favor of Dr. Malone
with respect to the sale of all or substantially all of the Series B Stock
beneficially owned by Dr. Malone or of the business or assets of the Issuer
pursuant to which the Magness Group will consent to such sale and, if the sale
is of the Series B Stock, the Magness Group may either convert their Series B
Stock to the respective Series A Common Stock of the Issuer or sell their Series
B Stock pursuant to the terms of such sale. In addition, the June Option granted
by the Issuer to Dr. Malone to acquire 30,545,864 shares of Series B TCI Group
Stock has been reduced to an option to acquire 14,511,570 shares of Series B TCI
Group Stock. Pursuant to the terms of the Stockholders' Agreement, the Magness
Group has the right to participate in the reduced June Option on a proportionate
basis with respect to 12,406,238 shares of the 14,511,570 shares subject to the
June Option. This description of the Stockholders' Agreement is qualified in its
entirety by reference to the Stockholders' Agreement attached to this Amendment
No. 8 to the Statement as Exhibit 7(M) and incorporated herein by reference.
The Issuer and the Malone Group are parties to the Call Agreement,
pursuant to which the Malone Group granted to the Issuer a right to acquire all
of the shares of Series B Stock owned by them upon Dr. Malone's death or a
contemplated sale of such Series B Stock to third parties, in consideration of
the Issuer paying to the Malone Group $150,000,000 for such right. When such
right is triggered, the Issuer may acquire the Series B Stock at a price equal
to the market price of the respective Series A Common Stock of the Issuer, plus
a 10% premium or, in the event of a sale, the lesser of such price or the price
offered by such third parties. In addition, the Call Agreement states that, if
the Issuer is sold to a third party, then the maximum premium the Malone Group
may receive for their Series B Stock would be the price paid for the respective
Series A Common Stock of the Issuer by said third party, plus a 10% premium. The
Call Agreement also prohibits any member of the Malone Group from disposing of
their Series B Stock, except for certain exempt transfers (such as transfers to
related parties or the Magness Group or public sales of up to an aggregate of 5%
of their Series B Stock after conversion to the respective Series A Common
Stock). If the Issuer exercises its call right, the Issuer may also be required
to purchase shares of Series B Stock from the members of the Magness Group who
exercise their "tag-along" rights under the Stockholders' Agreement. This
description of the Call Agreement is qualified in its entirety by reference to
the Call Agreement attached to this Amendment No. 8 to the Statement as Exhibit
7(N) and incorporated herein by reference. A similar Call Agreement has been
entered into with the Issuer by the Magness Group.
ITEM 7. Material to be filed as Exhibits
--------------------------------
7(M) Stockholders' Agreement dated as of February 9, 1998, among the
Issuer, the Malone Group, and the Magness Group.
7(N) Call Agreement dated as of February 9, 1998, between the Issuer
and Dr. Malone and Leslie Malone.
7
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Amendment No. 8 to the Statement is true,
complete and correct.
February 18, 1998 /s/ Dr. John C. Malone
-----------------------
Dr. John C. Malone
8
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT
------
NUMBER EXHIBIT PAGE
------ ------- ----
<S> <C> <C>
7(M) Stockholders' Agreement dated as of February 9, 1998, among 10
the Issuer, the Malone Group, and the Magness Group
7(N) Call Agreement dated as of February 9, 1998, between the 48
Issuer and Dr. Malone and Leslie Malone
</TABLE>
9
<PAGE>
EXHIBIT 7(M)
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT, dated as of February 1998, by and among Tele-
Communications, Inc., a Delaware corporation ("TCI"); John C. Malone, a resident
of Colorado ("JCM"); Leslie Malone, a resident of Colorado ("LM"); Gary Magness,
a resident of Colorado, both in any Representative Capacity (as defined in
Exhibit A to this Agreement) and individually ("Gary"); Kim Magness, a resident
of Colorado, both in any Representative Capacity (as defined in Exhibit A to
this Agreement) and individually ("Kim"); the Estate of Bob Magness (the "Bob
Estate"); the Estate of Betsy Magness (the "Betsy Estate"); and each individual
or entity which hereafter becomes a party to or bound by this Agreement in
accordance with its terms.
PREAMBLE
TCI, JCM, Gary, Kim, the Bob Estate and the Betsy Estate are, together with
certain other persons, the parties to a certain Agreement, effective as of
January 5, 1998 and titled "AGREEMENT RE: SETTLEMENT OF MAGNESS ESTATE
LITIGATION" (the "Settlement Agreement").
This Agreement is the "Shareholders' Agreement" referred to in the
Settlement Agreement, and each party to this Agreement has independently
concluded that the execution, delivery and performance of this Agreement is in
his, her or its best interests.
In consideration of the foregoing premises and the covenants and agreements
contained in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.1 Defined Terms. Capitalized terms used in this Agreement
-------------
have the respective meanings given them in Exhibit A.
Section 1.2 Certain Rules of Construction. Certain rules for the
-----------------------------
interpretation and construction of this Agreement are contained in Section 6.1.
10
<PAGE>
EXHIBIT 7(M)
ARTICLE II
VOTING OF SHARES
----------------
Section 2.1 Board Representation of Magness Group. (a) Subject to
-------------------------------------
subsections 2.1(b), 2.1(c) and 2.1(d), in each election of directors of any
Company (whether at a meeting or by written consent in lieu of a meeting or
otherwise), JCM (or his legal representative, if he is incapacitated) will vote
or cause to be voted all High Vote Shares Beneficially Owned by him for the
election as one of the directors of such Company (the "Designated Director" of
such Company) either Kim Magness or another individual designated by the Magness
Group, provided that the following requirements are satisfied:
(i) Kim Magness will be the Magness Group's initial nominee as the
Designated Director of TCI. Not later than the tenth day after
the Magness Group Representative receives written notice from JCM
or such Company of the intended mailing (at any time after the
date of this Agreement) of notice to stockholders of any Company
of a meeting for the purpose of electing directors, the Magness
Group Representative shall notify each of JCM, TCI and such
Company in writing of the name of the individual designated by
the Magness Group as their nominee as Designated Director. If no
such notice is given on a timely basis, JCM, TCI and such Company
may for all purposes treat the then incumbent individual, if any,
then serving as the Designated Director of such Company as the
nominee designated by the Magness Group for election as
Designated Director in such election.
(ii) No Company nor JCM shall be required to nominate, appoint, elect
reappoint, reelect or vote for the election, appointment,
reelection or reappointment of any individual serving or
nominated to serve as the Designated Director of any Company if,
in the good faith judgment of the Board of Directors of such
Company or JCM, (A) there has been any action or omission by such
Person or any other event or circumstance affecting or existing
with respect to such Person that would constitute cause for
removal of a director of a business corporation under the laws of
the jurisdiction of incorporation of such Company, (B) such
individual does not, at the time of nomination and at the time of
election or appointment, meet all eligibility requirements under
applicable law and of NASDAQ or any stock exchange on which
securities of such Company are listed or quoted or (C) such
individual is directly or indirectly a director, officer or
Affiliate of any Entity that directly or indirectly competes with
any significant business of any Company or any Affiliate of
11
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EXHIBIT 7(M)
any Company. JCM or such Company shall give the Magness Group
Representative prompt written notice of any determination by him
or it that any nominee of the Magness Group is disqualified under
the terms of this clause (ii), and the Magness Group
Representative may, within five Business Days after such notice
is given, nominate a substitute who meets the requirements of
this clause (ii). For purposes of this clause (ii) the fact that
Kim Magness or another nominee as a Designated Director commenced
the actions and proceedings referred to in the Settlement
Agreement shall not itself be a disqualification of any of the
kinds referred to above in this clause.
(iii) If any individual proposed by the Magness Group Representative
to serve as the Designated Director of any Company who satisfies
the requirements set forth in clause (ii) above is not nominated
by the Board of Directors of that Company for election or is not
appointed to fill a vacancy contemplated by subsection 2.1(b),
but such individual is nominated on a timely basis by the Magness
Group Representative in a manner permitted by applicable law and
the certificate of incorporation and by-laws of that Company, JCM
shall (subject to the terms and conditions set forth in this
Section 2.1) vote all High Vote Shares Beneficially Owned by him
for the election of such individual as one of the directors of
such Company.
(b) Subject to subsections 2.1(a), 2.1(c) and 2.1(d), in the event of
any vacancy in the office of Designated Director of any Company results from the
resignation, death or removal of the incumbent Designated Director and if the
Board of Directors of that Company has the legal authority to fill the vacancy
for the balance of that incumbent's term with a substitute appointed by such
Board, JCM and the Magness Group Representative will use their respective best
efforts to cause such Board to exercise that authority and fill the vacancy with
an individual designated by the Magness Group Representative in a written notice
delivered to Malone not later than three Business Days after such vacancy
occurs.
(c) For the sake of certainty, subsections 2.1(a) and 2.1(b) are intended
to create obligations or rights with respect to only one Designated Director for
each Company. Without limiting the generality of the foregoing sentence, in the
event that the Board of Directors of any Company is or shall be classified,
neither JCM nor any Company will be obligated to nominate, elect, appoint or
vote for more than one Designated Director for the entire Board of Directors,
and the requirements of subsections 2.1(a) and 2.1(b) will apply only to the
election of the members of the class that includes such sole Designated
Director.
(d) The parties acknowledge and agree that the directors of each Company
are or may be subject to fiduciary duties to stockholders or other security
holders under mandatory provisions
12
<PAGE>
EXHIBIT 7(M)
of law. In addition, although this Section 2.1 is intended (subject to its
express terms and conditions) to bind JCM to vote High Vote Shares Beneficially
Owned by him if, as and when required by this Agreement, the parties recognize
and agree that nothing contained in this Agreement constitutes a guarantee or
other assurance that any nominee of the Magness Group as the Designated Director
of a Company will be elected or remain in office.
Section 2.2 Voting on Other Matters
-----------------------
(a) In the case of any matter (other than the election or appointment of a
Designated Director subject to Section 2.1) submitted or to be submitted to a
vote or the written consent of, or other action by, the holders of any class or
series of High Vote Shares of any Company at a time when any member of the
Magness Group and any member of the Malone Group Beneficially Own any such High
Vote Shares, JCM, on behalf of the Malone Group, and the Magness Group
Representative, on behalf of the Magness Group, will use their reasonable
efforts to consult with each other in advance concerning the manner in which
each Group will vote or otherwise act with respect to such matter. Subject to
the next sentence, if such Persons are unable to reach unanimous agreement
concerning the manner in which each Group will vote or otherwise act with
respect to such matter, each member of the Malone Group and each Member of the
Magness Group will vote or otherwise act with respect to such matter in the
manner directed by JCM. If JCM shall fail in any material respect to vote for
any qualified nominee of the Magness Group as Designated Director for any
Company if, as and when required by Section 2.1 or if the directors of any
Company fail to fill any vacancy referred to in Section 2.1(b) with the
substitute proposed as provided therein, then unless such failure is the result
of the failure of such nominee to agree to serve or otherwise caused by any act
or omission of such nominee or any member of the Magness Group, the members of
the Magness Group shall have complete discretion in determining the manner in
which they will vote their High Vote Shares in such Company with respect to any
such matter that is submitted to the holders of such High Vote Shares (and the
rights and powers granted to JCM with respect to such High Vote Shares in
subsection 2.2(b) shall be suspended) unless and until JCM or such directors
shall correct such failure by voting for or appointing the Magness Group's
nominee on a subsequent occasion or otherwise.
(b) In furtherance of the purposes and intent of this Section, each member
of the Magness Group hereby grants to JCM or to his designee(s), with full power
of substitution, an irrevocable proxy to vote, in person or by proxy and at any
annual or special meeting of stockholders (or adjournment thereof), by written
consent or otherwise, all High Vote Shares in each and every Company (whether
now existing or hereafter created) now or at any time hereafter Beneficially
Owned by such member. Each member of the Magness Group affirms and agrees that
such proxy is coupled with an interest and, to the maximum extent permitted by
applicable law, is irrevocable and shall survive the disability, incapacity,
bankruptcy, insolvency, dissolution, liquidation or death of such member and
shall extend to such member's heirs,
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EXHIBIT 7(M)
successors, assigns and legal representatives. Each member of the Magness Group
hereby ratifies and confirms all that JCM or his designee(s) or substitute(s)
may lawfully do or cause to be done by virtue of such proxy. Each member of the
Magness Group agrees to execute any separate form of proxy, written consent to
action or other instrument that JCM may at any time and from time to time
reasonably request in order to evidence such member's proxy and to carry out the
purposes and intent of this Section.
Section 2.3 Other Actions. Each party to this Agreement agrees that
-------------
whenever this Agreement requires any action on the part of any party in his
capacity as a holder of any High Vote Shares of any Company, such party will,
solely in such capacity, take all steps reasonably necessary to make such action
effective, including attending and voting at any meeting of stockholders (or any
adjournment thereof) all shares of High Vote Shares held by such party in favor
of such action, or executing or causing to be executed, as promptly as
practicable, a consent in writing to the taking of such action.
ARTICLE III
ACQUISITION OPPORTUNITIES
-------------------------
Section 3.1 Participation Offer
-------------------
(a) Subject to the terms and provisions of this Article III, if JCM shall
hereafter acquire, and shall determine to exercise, any right (an "Acquisition
Right") to acquire any Equity Securities or any Rights to acquire any Equity
Securities of any Covered Issuer from such Covered Issuer or any third-party
which is not a Related Party or Affiliate of JCM (collectively, "Subject
Securities"), other than an Exempt Acquisition Right, JCM shall promptly notify
the Magness Group Representative of such Acquisition Right and shall either
offer or cause such Covered Issuer or third party to offer to the Magness Group
(a "Participation Offer"), in the manner hereinafter set forth, the opportunity
to acquire, collectively and on economic terms on a per share or per security
basis that are substantially identical to those offered to JCM, up to, but in no
event more than the number or amount (as appropriate) of Subject Securities
equal to the product obtained by multiplying the total number or amount (as
appropriate) of such Subject Securities as to which JCM exercises such
Acquisition Right by a fraction the numerator of which is the total number of
High Vote Shares Beneficially Owned by any and all members of the Magness Group
as of the date the applicable Participation Notice is given and the denominator
of which is the sum of (i) the total number of High Vote Shares Beneficially
Owned by any and all members of the Magness Group as of such date plus (ii) the
total number of High Vote Shares Beneficially Owned by any and all members of
the Malone Group as of such date. If, when and to the extent the options to
acquire shares of TCI capital stock created in favor of JCM by the June 16 Stock
Transaction (as defined in the Settlement Agreement) are exercised, they shall
collectively constitute an Acquisition Right subject to this Article III, but
14
<PAGE>
EXHIBIT 7(M)
the number of shares which are Subject Shares with respect to such Acquisition
Right shall be reduced by the number of TCI Low Vote Shares that the Betsy
Estate has the right to exchange pursuant to numbered paragraph 24 of the
Settlement Agreement. The term Acquisition Right includes any right of JCM (if
and to the extent exercised) to acquire Equity Securities of a Covered Issuer in
connection with a "going private" transaction involving that Covered Issuer.
(b) The Magness Group may exercise in whole or in part its rights under
Section 3.1(a) with respect to any Acquisition Right. Subject to the terms and
conditions set forth Section 3.2, the Subject Securities that the Magness Group
shall be entitled to acquire with respect to any Participation Offer may be
allocated among the members of the Magness Group in any manner in which they
agree among themselves. Without limiting the generality of Section 6.2, the
members of the Malone Group and each Covered Issuer shall be entitled to rely
exclusively and conclusively on information provided by the Magness Group
Representative as to any such allocation or other matters in connection with the
exercise of the rights of the Magness Group under this Article III and shall
not, in any event, have any liability to any member of the Magness Group as a
result of such reliance.
Section 3.2 Notices of Acceptance and Other Procedural Matters.
--------------------------------------------------
(a) Unless JCM and the Magness Group Representative otherwise agree, in
order to accept a Participation Offer, the Magness Group members must, on or
befor e the date of execution and delivery by JCM (or any of his Controlled
Affiliates or designees), execute and deliver to the Covered Issuer or the
third-party referred to in Section 3.1(a), as the case may be, all of the
agreements, instruments and other documents required to be executed and
delivered by JCM (or any of his Affiliates or designees) in connection with the
exercise of the relevant Acquisition Right; provided that the representations,
--------
warranties, covenants, conditions and other terms and provisions thereof are
substantially identical on a per share or per security basis as the terms and
conditions of any such agreements, instruments and other documents required to
be executed and delivered by JCM (or any of his Controlled Affiliates or
designees), subject to any variations customary in similar transactions to
reflect differences in the sizes of participations and other differences in the
particular circumstances of such participants.
(b) In order to accept any opportunity presented to the Magness Group by
JCM pursuant to Section 3.1, the Magness Group Representative must give a
written notice of acceptance to JCM, not later than 21 days after JCM gives the
Magness Group Representative written notice of such opportunity. If the Magness
Group does not duly elect on a timely basis to accept any Participation Offer
for all or any portion of its allocated number or amount of the Subject
Securities, or in the event any unexcused default by any member of the Magness
Group in purchasing all of such Subject Securities if, as and when required by
the terms of the agreements, instruments and documents executed and delivered
pursuant to subsection 3.2(a), then in addition to any other rights or remedies
otherwise available to the Covered Issuer, any third-party offeror, JCM or any
other Person participating in that or a related transaction, (i) the Covered
Issuer or
15
<PAGE>
EXHIBIT 7(M)
third-party referred to in Section 3.1(a), as the case may be, may sell or
otherwise dispose of the Subject Securities that the Magness Group does not
elect to acquire or fails to purchase to JCM or any other Person and on any
terms selected by it in its absolute discretion, without being required to re-
offer such Subject Securities to the Magness Group, (ii) JCM shall be relieved
of all further obligations or liabilities to the Magness Group pursuant to this
Article III with respect to that Acquisition Right and (iii) in the case of any
such unexcused default by any member of the Magness Group, JCM also will be
relieved of all further obligations or liabilities to such defaulting member
with respect to any future Acquisition Right.
(c) Without limiting the generality of subsection 3.2 (a), (i) if an
Acquisition Right is in conjunction with the borrowing of money from JCM or any
of his Affiliates or Related Parties, then no member of the Magness Group shall
have any right to participate therein unless such member (or its Affiliates)
purchases or participates, on a pro rata basis, in the related financing on the
--- ----
same basis as JCM or any of his Affiliates or Related Parties or (ii) if an
Acquisition Right is part of a larger transaction or one of a series of related
transactions pursuant to which JCM or any of his Affiliates or Related Parties
have agreed (or are required to agree in order to exercise such Acquisition
Right) to provide consideration or make commitments or undertakings beyond
simply paying the purchase price for the Equity Securities that are subject to
such Acquisition Right, then no member of the Magness Group shall have any right
to participate therein unless such member (or its Affiliates) agrees to and has
the ability to provide the same consideration, make the same commitments and
undertakings and, in general, consummate such larger transaction or series of
related transactions on substantially the same per share or per security basis
as JCM or any of this Affiliates or Related Parties.
ARTICLE IV
TAG-ALONG AND DRAG-ALONG RIGHTS
-------------------------------
Section 4.1 Tag-Along Right.
---------------
(a) Subject to the terms and conditions set forth in this Section 4.1, if,
at any time after the date of this Agreement, any member of the Malone Group (a
"Selling Stockholder") proposes to Transfer to any Person(s), including TCI or
any of its Affiliates (the "Prospective Purchaser"), any TCI High Vote Shares of
any class or series, other than in an Exempt Transfer, such Selling Stockholder
shall not consummate or enter into a binding agreement to consummate such sale
unless the Prospective Purchaser, one or more members of the Malone Group, any
other Person or Persons designated by JCM or any combination of the foregoing
(in any such case, the "Buyers") shall offer to purchase TCI High Vote Shares of
the same class or series that were Beneficially Owned by any one or more members
of the Magness Group as of the date of the applicable Tag-Along Notice and that
at all times thereafter continue to be owned by one or
16
<PAGE>
EXHIBIT 7(M)
more members of the Magness Group until sold pursuant to this Section ("Eligible
Shares"). In no event will Eligible Shares include any TCI High Vote Shares the
Beneficial Ownership of which is acquired after the date the Tag-Along Notice is
given or which cease to be Beneficially Owned by a member of the Magness Group
at any time prior to the sale and purchase of such TCI High Vote Shares pursuant
to this Section 4.1.
(b) Prior to any sale by any Selling Stockholder subject to subsection
4.1(a), such Selling Stockholder or JCM shall give the Magness Group
Representative a written notice (the "Tag-Along Notice") that shall set forth:
(i) the number of TCI High Vote Shares subject to the proposed sale; (ii) the
name and address of the Prospective Purchaser; and (iii) the proposed amount and
kind(s) of consideration (including a good faith estimate of the value of any
non-cash consideration) and terms and conditions of payment offered by the
Prospective Purchaser. The Magness Group may exercise its tag-along right under
this Section 4.1 by delivery to JCM, within 21 days after the date the
applicable Seller's Notice is given, of a written notice (the "Tag-Along
Exercise Notice") signed by the Magness Group Representative and stating the
aggregate number of Eligible Shares that the Magness Group proposes to include
in the proposed sale (which number may not exceed the number determined under
subsection (c) of this Section 4.1)(the "Tag-Along Shares"), as well as the name
of each member of the Magness Group who will participate in such sale and the
number of Tag-Along Shares allocated to each such participating member. If no
Tag-Along Exercise Notice is received during such ten-day period or if any one
or more members of the Magness Group otherwise fail to comply with the
requirements set forth in this Section 4.1, each Selling Stockholder will have
the right for 180 days thereafter to effect or enter into a binding agreement to
effect the proposed sale, provided that the terms and conditions relating to the
amount, kind and payment of consideration are not materially more favorable to
the Selling Stockholder than those stated in the Tag-Along Notice (or any
subsequent communication by JCM with the Magness Group or the Magness Group
Representative). Notwithstanding the foregoing, if a proposed sale is subject
to the receipt of any regulatory approval or expiration of any waiting period
under applicable law, the time period during which such sale may be consummated
or such binding agreement may be entered into shall be extended until the
expiration of five Business Days after all such approvals have been received and
all such waiting periods have expired, but in no event shall such time period
exceed an additional 180 days.
(c) The aggregate number of Eligible Shares of any class or series as to
which the Magness Group, collectively, shall be entitled to exercise the tag-
along right under this Section 4.1 with respect to any transaction referenced in
any Tag-Along Notice shall be up to, but in no event more than the product
obtained by multiplying the total number of TCI High Vote Shares of such class
or series that the Prospective Purchaser is willing to purchase from the members
of the Malone Group and the members of the Magness Group, collectively, by a
fraction the numerator of which is the total number of Eligible Shares of that
class or series Beneficially Owned by any and all members of the Magness Group
as of the date the applicable Seller's
17
<PAGE>
EXHIBIT 7(M)
Notice is given and the denominator of which is the sum of (i) the total number
of Eligible Shares of that class or series Beneficially Owned by any and all
members of the Magness Group as of such date plus (ii) the total number of TCI
High Vote Shares of that class or series Beneficially Owned by any and all
members of the Malone Group as of such date. Subject to the terms and conditions
set forth in this Section 4.1, the total number of Tag-Along Shares that the
Magness Group shall be entitled to sell with respect to any transaction
referenced in any Tag-Along Notice may be allocated among the members of the
Magness Group in any manner in which they agree among themselves. Without
limiting the generality of Section 6.2 the members of the Malone Group and the
Prospective Purchaser shall be entitled to rely exclusively and conclusively on
information provided by the Magness Group Representative as to any such
allocation or other matters in connection with the exercise of the rights of the
Magness Group under this Section 4.1 and shall not, in any event, have any
liability to any member of the Magness Group as a result of such reliance. The
Magness Group shall be entitled to exercise the tag-along right under this
Section 4.1 only with respect to issued and outstanding Tag-Along Shares held by
participating members of the Magness Group and shall not be entitled to exercise
such right with respect to any Eligible Shares underlying any unexercised
Rights.
(d) Any purchase of Tag-Along Shares from the Magness Group pursuant to
this Section 4.1 shall be on terms and conditions relating to the kind, amount
and terms of payment of consideration for such Tag-Along Shares that are
substantially identical, on a per share or per security basis, to the terms and
conditions offered by the Prospective Purchaser to the Selling Stockholder.
(e) Any member of the Magness Group who desires to exercise its rights
under this Section 4.1 must (i) agree and be able to sell to the Buyers good and
marketable title to the Tag-Along Shares proposed to be sold, free and clear of
all liens and restrictions (other than any applicable restrictions on transfer
of such Tag-Along Shares by the Buyers under the federal securities laws), (ii)
satisfy, as of the time of the closing of the sale by the Selling Stockholder to
the Prospective Purchaser, any and all conditions to the sale by such member to
the Buyers that are substantially identical to those required to be satisfied by
the Selling Stockholder (other than any conditions that relate uniquely to the
Selling Stockholder) and (iii) make or provide to or for the benefit of the
Buyers representations, warranties, covenants and indemnities that are
substantially identical to those required to be made or provided by the Selling
Stockholder to or for the benefit of the Prospective Purchaser (other than any
representations and warranties that relate uniquely to the Selling Stockholder).
(f) Any amendments, modifications or waivers of the terms and conditions
on which the Selling Stockholder proposes or agrees to sell TCI High Vote Shares
to a Prospective Purchaser occurring after the conclusion of the ten-day period
referred to in subsection 4.1(b) shall not be deemed to require that such
transaction be re-offered to the Magness Group unless the effect of such
amendment, modification or waiver is to make the terms of such sale materially
more
18
<PAGE>
EXHIBIT 7(M)
favorable to the Selling Stockholder than the terms set forth in the last
Tag-Along Notice delivered prior to the conclusion of such period, and no
increase or decrease in the market value of the consideration offered in any
such sale shall constitute an amendment, modification or waiver of any provision
of such sale requiring further compliance with the provisions of this Section
4.1.
(g) Subject to the terms and conditions contained in any agreement entered
into with the Buyers, and without limiting any other rights or remedies that any
Prospective Purchaser, Buyer or member of the Malone Group may have, in the
event that any member or members of the Magness Group fail to satisfy on a
timely basis any condition to consummation of the purchase of any Tag-Along
Shares by the Buyers, the Tag-Along Shares proposed to be sold by such member or
members of the Magness Group shall be excluded from such sale, and the members
of the Malone Group shall be entitled to substitute additional TCI High Vote
Shares owned by them in place of such excluded Tag-Along Shares.
(h) Nothing contained in this Section shall obligate JCM, any Selling
Stockholder, any Prospective Purchaser or any Buyer to consummate any sale
contemplated by this Section 4.1 and (subject to the terms of any binding
definitive sale agreement which may be entered into) such proposed sale may be
abandoned by such Persons at any time, whether before or after the giving of any
Tag-Along Notice or Tag-Along Exercise Notice.
(i) If the decision of JCM to pursue any sale that otherwise would be
subject to this Section 4.1 is a result of any judgment, order or decree
requiring a sale or other Disposition by any or all members of the Malone Group
of any of its or their High Vote Shares of or other interests in such Company or
imposing penalties or sanctions upon any member of the Malone Group, any Company
or any Affiliate of either if such interests are maintained and if, in the good
faith opinion of JCM, compliance with the time periods, procedures or other
provisions of this Section 4.1 would be inconsistent with such judgment, order
or decree or with avoiding any such penalties or sanctions, then JCM may, with
the consent of the Magness Group Representative (which consent shall not be
withheld unreasonably), modify or forego strict compliance with such time
periods, procedures and provisions so long as the essential purpose and intent
of this Section 4.1 are preserved.
Section 4.2 Drag-Along Right.
----------------
(a) For purposes of this Section 4.2, the term "Approved Sale" shall mean
any proposal made or approved by JCM to Transfer to any Person(s), including any
Company or any Affiliate of any Company (a "Drag-Along Purchaser"), in one
transaction or a series of transactions, either all or substantially all of the
High Vote Shares of any Company Beneficially Owned by him, or substantially all
of the business or assets of any Company, in either case regardless of whether
such transaction or series of transactions take the form of or include a merger
or consolidation, a
19
<PAGE>
EXHIBIT 7(M)
sale of all or substantially all of assets of such Company, a sale of
outstanding capital stock or another type of transaction.
(b) If JCM at any time proposes an Approved Sale, the members of the
Magness Group (the "Other Stockholders") will, subject to the terms and
conditions set forth in this Section 4.2, consent to, vote for, participate in
and raise no objections against such Approved Sale and will take all reasonable
actions in connection with the consummation of such Approved Sale requested by
JCM or the Drag-Along Purchaser. If the Approved Sale is structured as a sale
of outstanding High Vote Shares of any class or series (an "Approved Stock
Sale"), each such Other Stockholder must elect to either (i) convert into Low
Vote Shares of the issuer all High Vote Shares of each affected class or series
then owned by such Other Stockholder or thereafter acquired by such Other
Stockholder upon any exercise of any Rights to acquire any High Vote Shares or
(ii) agree to sell or otherwise Dispose of all of the High Vote Shares of such
class or series Beneficially Owned by such Other Stockholder (including any such
High Vote Shares issuable upon exercise of any unexercised Rights held by such
Other Stockholder) on terms and conditions substantially identical, on a per
share or per security basis, to those applicable to the High Vote Shares of such
class or series Beneficially Owned by JCM. If any such Other Stockholder elects
the option described in clause (ii) of the immediately preceding sentence, the
purchase price payable for any High Vote Shares issuable upon exercise of any
unexercised Rights held by such Other Stockholder shall be reduced by the amount
of cash or the fair market value of any other consideration that would be
payable by a holder thereof upon exercise.
(c) Without limiting the generality of subsection 4.2(b), if any Approved
Sale is structured as a sale of stock, each Other Stockholder will, subject to
the terms and conditions of this Section 4.2, enter into the same form of sale
agreement as the members of the Malone Group participating in such sale, and
provide the purchaser with such representations and warranties as to such Other
Stockholder's power and authority to sell and its ownership of the securities
being sold by such Other Stockholder to such purchaser, with such covenants and
with such indemnification for breach of such representations, warranties and
covenants as are customarily given by selling stockholders in similar
transactions. In the event any dispute arises over whether the form of any such
requested representations, warranties, covenants or indemnities is considered
customary in such transactions, such dispute shall promptly be submitted to a
law firm reasonably satisfactory to the Magness Group Representative and JCM,
whose determination shall be binding upon the parties.
(d) Nothing contained in this Section 4.2 shall obligate JCM, any member
of the Malone Group, any Company or any Drag-Along Purchaser to consummate any
proposed Approved Sale and, subject to the terms of any binding definitive
agreement for an Approved Sale which may be entered into, any such proposed
Approved Sale may be abandoned by any or all of such Persons at any time.
20
<PAGE>
EXHIBIT 7(M)
(e) If the decision of JCM to pursue an Approved Sale with respect to any
Company is a result of any judgment, order or decree requiring a sale or other
Disposition by any or all members of the Malone Group of its or their interests
in such Company or imposing penalties or sanctions upon any member of the Malone
Group, any Company or any Affiliate of either if such interests are maintained
and if, in the good faith opinion of JCM compliance with the time periods,
procedures or other provisions of this Section 4.2 would be inconsistent with
such judgment, order or decree or with avoiding any such penalties or sanctions,
then JCM may, with the consent of the Magness Group Representative (which
consent shall not be withheld unreasonably), modify or forego strict compliance
with such time periods, procedures and provisions so long as the essential
purpose and intent of this Section 4.2 are preserved.
ARTICLE V
CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
-------------------------------------------------
Section 5.1. Representations and Warranties. Each party to this Agreement
------------------------------
represents and warrants to each other party that:
(a) Such party has the legal right and capacity, and all requisite power
and authority, to make and enter into this Agreement and to perform its
obligations hereunder and to comply with the provisions hereof. The execution,
delivery and performance of this Agreement by such party has been duly
authorized by all necessary action on the part of such party. This Agreement
has been duly executed and delivered by such party and constitutes the valid and
binding obligation of such party enforceable against it in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting the rights of creditors
generally and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding therefor may be brought.
(b) The execution, delivery and performance of this Agreement by such
party, and the compliance by such party with the provisions hereof, do not and
will not (with or without notice or lapse of time, or both) conflict with, or
result in any violation of, or default under, or give rise to any right of
termination, cancellation or acceleration of any obligation or the loss of a
material benefit under, any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to such party or any of its properties or assets, other than any such
conflicts, violations, defaults, or other effects which, individually or in the
aggregate, do not and will not prevent, restrict or impede such party's
performance of its obligations under and compliance with the provisions of this
Agreement. If such party is an Entity, the execution, delivery and performance
of this Agreement by such party does not and will not contravene the charter,
bylaws or other organizational documents of such party.
21
<PAGE>
EXHIBIT 7(M)
Section 5.2. Revocation of Any Prior Proxies;No Impairment. Other than
----------------------------------------------
the BT Proxy, each member of the Magness Group or the Malone Group hereby
revokes all proxies and voting instructions, if any, with respect to any High
Vote Shares previously given by such Person and agrees that, except as permitted
by this Agreement, such member will not grant or give any other proxies or
voting instructions with respect to any High Vote Shares of any Company, enter
into any voting trust or other arrangement or agreement with respect to the
voting of any High Vote Shares of any Company now owned or hereafter acquired by
such Person, or agree, in any manner, to vote or dispose of any such High Vote
Shares of any Company in any manner other than as provided herein or in an
applicable Call Agreement. No party, by entering into or amending any
agreement, any transfer of securities or assets or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Agreement or any Call Agreement applicable to such party or any securities
Beneficially Owned by such party. The term "BT Proxy" means the voting rights
granted to Bankers Trust Company in the event of an exercise of remedies under a
Permitted Pledge of certain TCI High Vote Shares. The members of the Magness
Group represent and warrant to the Company and the members of the Magness Group
that the BT Proxy (including the terms and conditions of use of the BT Proxy) is
in a form customary for similar arm's length loan transactions between similarly
situated parties.
Section 5.3. Reasonable Efforts. Each party to this Agreement shall use
------------------
reasonable efforts to take, or cause to be taken, all lawful actions, and to do,
or cause to be done, and to assist and cooperate with the other parties hereto
in doing, all lawful things, necessary, proper or advisable to carry out the
intent and purposes of this Agreement, including (i) applying for, obtaining
and maintaining in effect all necessary actions or nonactions, waivers, consents
and approvals from Governmental Authorities and the making of all necessary
registrations and filings (including filings with Governmental Authorities, if
any) and the taking of all reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Authority, (ii) obtaining all other necessary consents, approvals
or waivers from third parties, (iii) defending any lawsuits or other legal
proceedings, whether judicial or administrative, challenging the legality or
validity of this Agreement or any part hereof, including seeking to have any
stay or temporary restraining order entered by any court or other Governmental
Authority vacated or reversed and (iv) executing and delivering any additional
instruments necessary to carry out the intent and purposes of this Agreement;
provided, however, that nothing in this Section 5.2 shall require any such party
- -------- -------
to agree to, approve or otherwise be bound by or satisfy any condition of any
kind referred to in Section 6.3 or to agree to any change to or waiver of the
terms of this Agreement or either Call Agreement or any waiver of any breach or
violation hereof or thereof or any rights or remedies with respect thereto.
Without limiting the generality of the foregoing, the parties will cooperate
with each other in seeking to structure any Approved Sale in the most tax-
efficient manner reasonably possible, consistently with the essential purposes
and intent of the applicable provisions of this Agreement.
22
<PAGE>
EXHIBIT 7(M)
Section 5.4 Covenants Regarding Dispositions.
--------------------------------
(a) Except for Exempt Transfers, no member of the Malone Group or the
Magness Group shall sell, convey, exchange, pledge, hypothecate, give, donate,
distribute, assign or otherwise transfer, whether voluntarily, involuntarily,
directly or indirectly, any High Vote Shares of any Company, any Rights to
acquire any shares of or any voting or dispositive rights with respect to any
High Vote Shares of any Company or any other securities subject to this
Agreement or any Call Agreement, whether voluntary or involuntary and whether
directly or indirectly (any such action being referred to as a "Disposition"),
unless (i) such Disposition is made in accordance with all applicable provisions
of this Agreement and any applicable Call Agreement, and (ii) prior to
consummation of such Disposition each Person to whom any such Disposition is
made shall agree in writing to be bound by the provisions hereof applicable to
members of the same Group as the transferor; provided, however, that clause (ii)
-------- -------
of this sentence shall not apply to any Disposition that is an "Exempt Transfer"
under any provision of this Agreement or the applicable Call Agreement unless
such provision expressly requires that the transferee become a party hereto or
thereto. Any purported Disposition in violation of this Agreement shall be null
and void and of no force or effect, and each party agrees that the issuer of the
securities involved in any such Disposition may (and may direct each registrar
and transfer agent, if any, for such securities to) refuse to register or record
any such purported Disposition on its transfer and registration books and
records or to otherwise recognize such purported Disposition. For the sake of
certainty, the term "Disposition" includes any distribution or other Disposition
of any securities subject to this Section by the Bob Estate or the Betsy Estate
to any of the decedent's heirs or any other Person.
(b) If, notwithstanding the foregoing, any purported Disposition in
violation of this Agreement is made, then (in addition to any other rights or
remedies of the parties hereto) the provisions of this Agreement (including this
Section) shall apply to each transferee and all securities involved in such
Disposition as fully as if such transferee were a party to this Agreement and
bound by all of the provisions hereof that are or were applicable to the Person
making such Disposition, whether or not such transferee is required to or shall
formally agree to become a party to or be bound by this Agreement.
(c) If, notwithstanding the foregoing, any purported Disposition in
violation of this Agreement is held by a court of competent jurisdiction upon
entry of a final judgment or order to be effective, the parties intend that, to
the maximum extent permitted by applicable law, the provisions of this Agreement
(including this Section) shall apply to each transferee and all securities
involved in such Disposition as fully as if such transferee were a party to this
Agreement and bound by all of the provisions hereof which were applicable or
intended to be applicable to the Person making such Disposition, whether or not
such transferee is required to or shall formally agree to be a party hereto.
23
<PAGE>
EXHIBIT 7(M)
Section 5.5. Addition of Spin-Off Companies as Parties. If any Spin-Off
-----------------------------------------
Company is created after the date of this Agreement, the parties will use their
respective reasonable efforts to cause such Spin-Off Company to agree in writing
to become a party to this Agreement and to be bound by the provisions hereof
applicable to Companies generally. If such Spin-Off Company does not so agree,
the parties agree that the provisions of this Agreement that are applicable to
the High Vote Shares or other securities of Companies generally shall continue
to apply to the parties and the parties will use their good faith, reasonable
efforts to negotiate and agree upon any appropriate and equitable modifications
to such provisions reasonably required in order to carry out the intent and
purposes of such provisions as they relate to such Spin-Off Company, so far as
may be possible and reasonably practicable given the failure of such Spin-Off
Company to become a party to this Agreement.
ARTICLE VI
MISCELLANEOUS
-------------
Section 6.1. Terms Generally; Certain Rules of Construction.
----------------------------------------------
(a) The definitions in Exhibit A shall apply equally to both the singular
and plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The word "or" is not exclusive and means "and/or." The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". The words "herein", "hereof" and "hereunder" and words of similar
import refer to this Agreement in its entirety and not to any part hereof unless
the context shall otherwise require. All references herein to Sections,
subsections, Exhibits and Schedules shall be deemed references to and Sections
or subsections of, and Exhibits and Schedules to, this Agreement unless the
context shall otherwise require. Unless otherwise expressly provided herein or
unless the context shall otherwise require, any references as of any time to any
agreement (including this Agreement) or other agreement, instrument or document
or to any statute or regulation or any specific section or other provision
thereof are to it as amended and supplemented through such time (and, in the
case of a statute or regulation or specific section or other provision thereof,
to any successor of such statute, regulation, section or other provision). Any
reference in this Agreement to a "day" or number of "days" (without the explicit
qualification of "Business") shall be interpreted as a reference to a calendar
day or number of calendar days. If any action or notice is to be taken or given
on or by a particular calendar day, and such calendar day is not a Business Day,
then such action or notice shall be deferred until, or may be taken or given on,
the next Business Day. Unless otherwise expressly provided herein or unless the
context shall otherwise require, any provision of this Agreement using a term
(by way of example and without limitation, such as "members of the Magness
Group," "members of the Malone Group," "Affiliate" or Controlled Affiliate") the
definition of which is based on a
24
<PAGE>
EXHIBIT 7(M)
specified characteristic, qualification, feature or status shall, as of any
time, refer only to such Persons who or other things which have the specified
characteristic, qualification, feature or status as of that particular time.
When used with reference to any Right, the term "exercise" shall mean to
exercise the right to subscribe for, purchase or otherwise acquire shares of
capital stock represented by such Right, and variants of such word (including
"exercised" and "exercisable") shall have correlative meanings.
(b) In the event of any stock split, stock dividend, recapitalization or
other change in any Company's capital structure affecting the outstanding shares
of any class or series of its capital stock, there shall be an appropriate
adjustment in the kind, number or percentage of shares of such class or series
specified in any provision of this Agreement under which (i) an action requires
the approval or consent of the holders of a specified or determinable number or
percentage of shares of such class or series or (ii) the effectiveness,
enforceability or parameters of a right granted to any Person, or an agreement,
covenant or obligation of any Person, is stated to depend upon ownership of a
specified or determinable number or percentage of shares of such class or
series.
(c) In the event that any shares of capital stock or other securities of
any issuer of any class or series are or could be deemed to be Beneficially
Owned by more than one member of the Magness Group or more than one member of
the Malone Group, then for purposes of any provision of this Agreement under
which (i) an action requires the approval or consent of the members of either
Group that Beneficially Own a specified or determinable number or percentage of
such shares of capital stock or other securities or (ii) the effectiveness,
enforceability or parameters of any right or obligation of either Group or any
or all members thereof is stated to depend upon or be based upon Beneficial
Ownership of a specified or determinable number, amount or percentage of shares
or other securities of such class or series, no such share or other security
shall be deemed to be Beneficially Owned by more than one member of such Group
or shall otherwise be counted or taken into account more than once.
(d) The headings of the articles and sections contained in this Agreement
are solely for the purpose of reference, are not part of the agreement of the
parties and shall not affect the meaning or interpretation of this Agreement.
(e) Each party and its own legal counsel have participated in the drafting
of this Agreement, and this Agreement will be construed simply and according to
its fair meaning and not strictly for or against any party.
Section 6.2. Determinations and Group Actions Generally.
------------------------------------------
(a) Unless otherwise expressly provided herein, all decisions and
determinations (including any decision as to whether to give any consent or
approval) required or permitted to
25
<PAGE>
EXHIBIT 7(M)
be made hereunder by any one or more Persons (including any party or parties to
this Agreement) shall be made by such Person or Persons in its or their sole
discretion. Any notice, consent, approval or other decision by or on behalf of
either Group or required or permitted by this Agreement shall be effective if
expressed in a writing which is either (i) executed by a member or members of
such Group that Beneficially Own issued and outstanding TCI High Vote Shares
equal to at least a majority of the aggregate number of all issued and
outstanding TCI High Vote Shares Beneficially Owned by all members of such Group
collectively, or (ii) in the case of the Magness Group, executed by the Magness
Group Representative or (iii) in the case of the Malone Group, executed by JCM,
and in any such case the parties to this Agreement may assume that such member
or members, the Magness Group Representative or JCM, as the case may be, has the
power and authority to do so and may rely conclusively on such writing as
expressing the action of the Magness Group or the Malone Group, as the case may
be. JCM shall not be liable, in damages or otherwise, to any party to this
Agreement, any Company, any of the Affiliates, stockholders, directors,
officers, employees or agents of any such Person or to any other Person for or
by reason of any action or omission in his capacity as the representative of the
Malone Group. No Magness Group Representative shall be liable, in damages or
otherwise, to any party to this Agreement, any Company, any of the Affiliates,
stockholders, directors, officers, employees or agents of any such Person or to
any other Person for or by reason of any action or omission in his capacity as
the Magness Group Representative unless such act or failure to act was not
within the scope of the authority or discretion conferred on the Magness Group
Representative by this Agreement.
(b) The Magness Group may designate any of its members as the Magness
Group Representative by written notice of such designation (and containing such
representatives address for notices and other communications) delivered to TCI
and JCM. In the event of the death, incapacity or removal of the Person serving
as the Magness Group Representative, the Magness Group shall promptly designate
a successor. Pending such designation, each party to this Agreement shall be
entitled to treat as the Magness Group Representative the member of the Magness
Group who holds of record the greatest number of TCI High Vote Shares.
(c) Unless otherwise expressly provided in this Agreement, this Agreement
is not intended to create any "group" obligations or liabilities; the
obligations and liabilities of the members of each Group shall be several and
not joint; and no member of either Group or nor any other party hereto or Person
referred to herein shall have any obligation or liability for the obligations or
liabilities of any other member of such Group, any other party or any other
Person. Without limiting the generality of the foregoing, unless otherwise
expressly provided in this Agreement, if any member of either Group becomes
obligated to purchase, sell or vote any shares of capital stock or other
securities pursuant to this Agreement, such obligation shall be solely the
individual obligation of such member. Each party shall be separately and
independently entitled to rely on the representations and warranties of each
other party made to in this Agreement and to the benefit of all agreements,
covenants, obligations and commitments
26
<PAGE>
EXHIBIT 7(M)
of each other party made with or to such party or the Group of which such party
is a member.
(d) No member of either Group who acquires any shares of capital stock or
other securities from any member of the other Group shall be or become a member
of such other Group unless otherwise agreed in writing by such acquiring member,
JCM and the Magness Representative.
Section 6.3. Rights of Ownership; Obligations Subject to Applicable Laws.
-----------------------------------------------------------
Nothing contained in this Agreement shall create any obligation or restriction
on the part of any member of either Group in the exercise and enjoyment of full
rights of ownership of any shares of capital stock or other securities
Beneficially Owned by such Person, except as expressly provided in this
Agreement. The obligations of JCM and any other member of the Malone Group
pursuant to Article II, III or IV shall in all cases be subject to and qualified
by (i) the mandatory requirements of applicable laws, rules and regulations from
time to time in effect, including the receipt of all consents and approvals of
Governmental Authorities required and the expiration of all waiting periods
applicable under any such law, rule or regulation without the commencement or
threat of commencement of any action or proceeding seeking to enjoin or impose
damages or penalties by reason of the consummation of any transaction
contemplated by any such Article or to impose any restrictions, limitations,
requirements or conditions which are or might be burdensome or adverse to any
member of the Malone Group or any Company, and (ii) the absence of any material
breach or violation of this Agreement or either Call Agreement by any member of
the Magness Group.
Section 6.4. Legends; Stop Transfers.
-----------------------
(a) Each certificate or other instrument representing any shares of
capital stock, Rights or other securities that are Beneficially Owned by any
member of either Group that are subject to any of the provisions of this
Agreement or either Call Agreement shall bear a legend substantially in the
following form, in addition to any other legend required under applicable law or
by contract:
"THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO (i) THE SHAREHOLDERS'
AGREEMENT, DATED AS OF FEBRUARY 9, 1998, AMONG THE REGISTERED HOLDER
HEREOF, CERTAIN OTHER PARTIES AND THE CORPORATION AND (ii) THE CALL
AGREEMENT, DATED AS OF FEBRUARY 9, 1998, AMONG THE REGISTERED HOLDER
HEREOF, CERTAIN OTHER PARTIES AND THE CORPORATION. COPIES OF SUCH
SHAREHOLDERS AGREEMENT AND CALL AGREEMENT ARE ON FILE AT THE PRINCIPLE
OFFICES OF THE CORPORATION. THE SECURITIES REPRESENTED MAY BE TRANSFERRED
OR VOTED ONLY IN ACCORDANCE WITH SAID SHAREHOLDERS AGREEMENT AND SAID CALL
AGREEMENT."
27
<PAGE>
EXHIBIT 7(M)
(b) Unless the Person(s) to whom such Disposition is made (the
"transferor(s)") is already a party to and bound by this Agreement or an
applicable Call Agreement or is required by the terms hereof or thereof to
become such a party or this Agreement, or an applicable Call Agreement requires
that the shares, Rights or other securities Disposed of continue to be subject
to this Agreement or an applicable Call Agreement, if any shares of capital
stock, Rights or other securities represented by a certificate or other
instrument that bears the legend set forth in subsection 6.4(a) are Disposed of
in a transaction that is permitted by the provisions of this Agreement and the
provisions of an applicable Call Agreement, the transferor(s) shall be entitled
to receive from the issuer a new certificate or instrument, of like tenor but
without the legend set forth in subsection 6.4(a), representing the shares,
Rights or other securities so Disposed of that are not required to continue to
be subject to either this Agreement or such applicable Call Agreement. In the
case of any such Disposition of only part of the shares, Rights or other
securities evidenced by a certificate bearing such legend, the certificate
representing the shares, Rights or other securities that are not Disposed of
shall continue to bear such legend.
(c) Each Company agrees that it shall not, and shall direct each registrar
and transfer agent of the Company not to, register any Disposition of any
securities of such Company by any member of either Group that is not made in
compliance with the applicable provisions of this Agreement.
Section 6.5. Binding Effect; Assignability. This Agreement and all of the
-----------------------------
provisions hereof (including the exhibits and schedules hereto) shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, assigns, heirs, executors, administrators and personal
representatives, and except as otherwise expressly provided herein, nothing in
this Agreement, express or implied, is intended or shall be construed to confer
upon or give any Person other than the parties any right, benefit, remedy or
claim under or by reason of this Agreement or any term, covenant or condition
hereof. Except as otherwise specifically permitted or required pursuant to this
Agreement, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any party without the prior written
consent of TCI, JCM and the Magness Group Representative. The disability,
incapacity, bankruptcy, insolvency, dissolution, liquidation or death of any
member of the Malone Group or any member of the Magness Group shall not result
in the termination or otherwise affect the rights or obligations of any such
Person under this Agreement, it being agreed that such member's heirs,
successors, assigns and legal representatives shall, in their capacities as
such, succeed to all of such member's rights and obligations hereunder. Without
limiting the generality of the foregoing, in the event of the disability,
incapacity, or death of JCM, his executors or other legal representatives, in
their capacities as such, and his heirs or distributees shall succeed to all of
JCM's rights and obligations hereunder; provided, however, that, unless JCM's
-------- -------
executors, administrators or heirs otherwise agree with the Magness Group
Representative, in the event of JCM's death, (x) all High Vote Shares of any
Company of any class or series subject to the voting rights of JCM under Section
2.2 shall be voted (or any other action required or requested
28
<PAGE>
EXHIBIT 7(M)
of the holders of shares of that class or series shall be taken) in the manner
directed or recommended by the Board of Directors of that Company and (y) unless
TCI shall elect, on or before the latest date permitted by the Magness Call
Agreement, to exercise its Call Right under Section 2.2 of the Magness Call
Agreement, or if having made that election the closing under such Call Agreement
shall not occur when required (otherwise as a result of a default by any member
of the Magness Group), all further rights and obligations of the parties under
Sections 2.1 and 2.2 (as modified by clause (x) of this provision) shall
terminate as of that latest date or the required closing date, as the case may
be.
Section 6.6. Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers of or consents to departures from the provisions
hereof may not be given unless approved in writing by TCI, JCM and the Magness
Group Representative. For the sake of certainty, the parties specifically agree
that (i) any supplemental agreement or instrument by which any Person who is not
already a party to this Agreement agrees, as required or permitted by this
Agreement, to become a party to and be bound by this Agreement and (ii) any
amendment or supplement to this Agreement to reflect transfers or other
transactions in accordance with this Agreement, and which does not, in either
case, purport to amend, modify, waive or supplement in any material respect any
of the substantive provisions hereof, shall be effective if executed by such
Person, TCI, JCM and the Magness Group Representative.
Section 6.7 Governing Law. This Agreement and the validity,
-------------
interpretation and performance of the terms and provisions hereof shall be
governed by, and construed in accordance with, the laws of the State of
Delaware, without regard to the provisions thereof relating to choice or
conflict of laws.
Section 6.8 Notices. All notices, requests, consents, demands,
-------
elections and other communications required or permitted hereunder shall be in
writing and shall be given to the intended recipient at: (i) in the case of JCM
or any member of the Malone Group, to JCM at such address as he may from time to
time specify by written notice to TCI, each other Company that shall be a party
to this Agreement, and the Magness Group Representative, (ii) in the case of the
Magness Group Representative or any member of the Magness Group, to the Magness
Group Representative at such address as he may from time to time specify by
written notice to TCI, each other Company that shall be a party to this
Agreement, and JCM, and (iii) in the case of TCI or any other Company, to it at
its principal executive offices or at such changed address as it may from time
to time specify in writing to JCM, the Magness Group Representative and each
other Company that shall be a party to this Agreement. Any such notice, request,
consent, demand, election or other communication shall be deemed to have been
duly given if personally delivered or sent by registered or certified mail,
return receipt requested, Express Mail, Federal Express or similar overnight
delivery service for next Business Day delivery or by telegram, telex or
facsimile transmission and will be deemed given, unless earlier received: (1) if
sent by certified
29
<PAGE>
EXHIBIT 7(M)
or registered mail, return receipt requested, five calendar days after being
deposited in the United States mail, postage prepaid; (2) if sent by Express
Mail, Federal Express or similar overnight delivery service for next Business
Day delivery, the next Business Day after being entrusted to such service, with
delivery charges prepaid or charged to the sender's account; (3) if sent by
telegram or telex or facsimile transmission, on the date sent; and (4) if
delivered by hand, on the date of delivery.
Section 6.9 No Implied Waivers. No action taken pursuant to this
------------------
Agreement, including any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained herein or
made pursuant hereto. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
preceding or succeeding breach and no failure by any party to exercise any right
or privilege hereunder shall be deemed a waiver of such party's rights or
privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder.
Section 6.10 Entire Agreement. This Agreement (together with the
----------------
Exhibits and Schedules hereto, if any) constitutes the entire agreement of the
parties with respect to the specific subject matter hereof, and merges and
supersedes all prior agreements and undertakings, both written and oral, among
the parties with respect to such specific subject matter. For the sake of
certainty, the parties specifically acknowledge that (i) this Agreement is not
intended to merge, supersede or alter the provisions of (A) either Call
Agreement, (B) any provision of the Settlement Agreement other than numbered
paragraph 8 thereof, or (C) any separate agreement, release or instrument
granted, entered into or delivered pursuant to the Settlement Agreement; and
(ii) unless this Agreement is terminated under subsection (b), (c), (d) or (e)
of Section 6.20, this Agreement and the Call Agreements will, as among the
parties and effective as of the Effective Date, merge and supersede the letter
agreement, dated June 17, 1988, among Bob Magness, Malone and Kearns-Tribune
Corp. relating to the shares of TCI Common Stock owned by them. The respective
representations and warranties of the parties shall survive the execution and
delivery of this Agreement.
Section 6.11 Inspection. Copies of this Agreement will be available for
----------
inspection or copying by any stockholder of TCI or any other Company that shall
be a party to this Agreement through the secretary of TCI or such other Company.
Section 6.12 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to constitute one and the same agreement.
Section 6.13. Further Assurances. Each party shall cooperate and take
------------------
such actions as
30
<PAGE>
EXHIBIT 7(M)
may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
Section 6.14. Specific Performance; Injunctive Relief; Remedies Are
-----------------------------------------------------
Cumulative. Without intending to limit the rights or remedies available to any
- ----------
of the parties pursuant to this Agreement, a Call Agreement, at law or in equity
(all of which shall be cumulative), each of the parties acknowledges that a
violation by such party of any provision of this Agreement will cause the other
parties irreparable injury for which an adequate remedy at law is not available
and, therefore, the parties agree that the provisions of this Agreement shall be
specifically enforceable, that each party shall be entitled to an injunction,
restraining order, decree of specific performance or other form of equitable
relief from any court of competent jurisdiction restraining any other party from
committing any breach or threatened breach of, or otherwise specifically to
enforce, any provision of this Agreement, and each party hereby waives and
agrees not to assert in any action or proceeding in which any such form of
relief is sought any defense that a remedy at law would be adequate. The rights
and remedies herein expressly provided are cumulative and not exclusive of any
other rights or remedies which any party would otherwise have pursuant hereto,
at law, in equity, by statute or otherwise.
Section 6.15 Severability. If any provision of this Agreement or the
------------
application thereof to any person or circumstance is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, provided, that if any provision
hereof or the application thereof shall be so held to be invalid, void or
unenforceable by a court of competent jurisdiction, then such court may
substitute therefor a suitable and equitable provision in order to carry out, so
far as may be valid and enforceable, the intent and purpose of the invalid, void
or unenforceable provision and, if such court shall fail to decline to do so,
the parties shall negotiate in good faith in an effort to agree upon such a
suitable and equitable provision. To the extent that any provision shall be
judicially unenforceable in any one or more states, such provision shall not be
affected with respect to any other state, each provision with respect to each
state being construed as several and independent.
Section 6.16 Consent to Jurisdiction; Service of Process;
--------------------------------------------
Waiver of Jury Trial
--------------------
(a) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY (I) SUBMITS, FOR ITSELF AND ITS PROPERTY,
TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN
WILMINGTON, DELAWARE (INCLUDING OF ANY APPELLATE COURT TO WHICH AN APPEAL OF ANY
JUDGMENT, ORDER, DECREE OR DECISION OF ANY SUCH COURT MAY BE TAKEN) IN ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
31
<PAGE>
EXHIBIT 7(M)
OR EITHER CALL AGREEMENT OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT
RENDERED IN ANY SUCH SUIT, ACTION OR PROCEEDING, (II) WAIVES ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING IN ANY SUCH COURT, INCLUDING ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (III) WAIVES ALL RIGHTS TO
A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND (IV) WAIVES PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS BY ANY MEANS, MANNER OR
METHOD OTHER THAN IN THE MANNER PROVIDED FOR THE GIVING OF NOTICES TO SUCH PARTY
IN SECTION 6.8, AND AGREES THAT ANY PROCESS SERVED UPON SUCH PARTY IN SUCH
MANNER PROVIDED FOR IN SECTION 6.8 SHALL HAVE THE SAME VALIDITY AND LEGAL FORCE
AND EFFECT AS IF SERVED UPON SUCH PARTY PERSONALLY WITHIN WILMINGTON, DELAWARE.
(b) Nothing in this Section shall affect the right of any party to serve
legal process in any other manner permitted by law or affect the right of any
party to bring any action or proceeding against any other party or its property
in the courts of any other jurisdiction. The consents to jurisdiction set forth
in this Section shall not constitute general consents to service of process in
the State of Delaware, shall have no effect for any purpose except as provided
in this Section and shall not be deemed to confer rights on any Person other
than the parties to this Agreement.
Section 6.17. Facsimile Signatures. This Agreement and any proxy or other
--------------------
instrument executed and delivered by any party pursuant to this Agreement may be
executed by facsimile signatures.
Section 6.18 Attorneys' Fees. In any action or proceeding brought to
---------------
enforce any provision of this Agreement, and in any action or proceeding
otherwise arising under or with respect to this Agreement, the prevailing party
shall be entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
Section 6.19. Expenses. Except as otherwise expressly provided in this
--------
Agreement, each party will pay its own costs and expenses in connection with the
negotiation, preparation, execution, delivery and performance of this Agreement,
any amendment or supplement to or modification of this Agreement and any and all
other agreements, instruments, certificates and other documents furnished
pursuant hereto or in connection herewith.
Section 6.20 Termination; Lapse of Certain Provisions.
----------------------------------------
(a) This Agreement shall terminate automatically without the necessity of
action by any party upon the first to occur of (i) the written agreement by JCM
and the Magness Group
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EXHIBIT 7(M)
Representative to terminate this Agreement; and (ii) the delivery to TCI, each
other Company that shall be a party to this Agreement and the Magness Group
Representative of a notice of termination executed by JCM at any time after the
date on which the Malone Group or the Magness Group ceases, otherwise than as a
result of a breach or violation of this Agreement or any Call Agreement, to
collectively Beneficially Own issued and outstanding TCI High Vote Shares
entitling the holders thereof to 5% or more of the total number of Director
Votes represented by all TCI High Vote Shares then outstanding.
(b) If any action required to be taken or completed prior to the Closing
Date (as defined in the Settlement Agreement) by any provision of the Settlement
Agreement, including those required or contemplated by paragraph 4 of the
Settlement Agreement, is not duly taken or completed as provided therein, then
without limiting any rights or remedies otherwise available to him, JCM may
elect at any time thereafter to terminate this Agreement effective as of the
date of delivery by him of a written notice of termination to TCI and the
Magness Group Representative.
(c) If a member of either Group no longer owns any High Vote Shares of any
Company, otherwise than as a result of a breach or violation of this Agreement
or any applicable Call Agreement, such party will cease to be a party to this
Agreement, but this Agreement shall continue in full force and effect and
continue to be binding on all other parties. In addition, unless JCM and the
Magness Group Representative otherwise agree in writing, if any such party
subsequently acquires Beneficial Ownership of any High Vote Shares of any
Company, such party shall be required to simultaneously once again become a
party to this Agreement and a member of his original Group.
(d) If any of the actions contemplated by numbered paragraph 4 of the
Settlement Agreement are not taken when and substantially as set forth in such
paragraph (otherwise than by reason of a material default by JCM of his
obligations thereunder) or if the payment contemplated by Section 2.1 of the
Malone Call Agreement is not made on or prior to the Effective Date otherwise
than by reason of a material default by JCM in the performance of his
obligations hereunder, under the Malone Call Agreement or under the Settlement
Agreement, then in addition to any other rights and remedies he may have by
contract, at law, in equity or otherwise, JCM may at any time after the
Effective Date elect, by written notice to TCI and the Magness Group
Representative, to terminate this Agreement and/or the Malone Call Agreement
unless such action is taken or such payment is made prior to the expiration of
such ten-day period.
(e) If any of the actions contemplated by numbered paragraph 4 of the
Settlement Agreement are not taken when and substantially as set forth in such
paragraph (otherwise than by reason of a material default by any member of the
Magness Group of his obligations thereunder) or if the payment contemplated by
Section 2.1 of the Magness Call Agreement is not made on or prior to the
Effective Date otherwise than by reason of a material default by any member of
the
33
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EXHIBIT 7(M)
Magness Group in the performance of his obligations hereunder, under the
Magness Call Agreement or under the Settlement Agreement, then in addition to
any other rights and remedies they may have by contract, at law, in equity or
otherwise, the Magness Group Representative, on behalf of the Magness Group,
34
<PAGE>
EXHIBIT 7(M)
may at any time after the Effective Date elect, by not less than 10 days' prior
written notice to TCI and JCM, to terminate this Agreement and/or the Magness
Call Agreement unless such action is taken or such payment is made prior to the
expiration of such ten-day period.
Section 6.21 Allocation of Consideration. If, in connection with any
---------------------------
transaction covered by Section 4.1 or Section 4.2, any member of the Malone
Group proposes to transfer to any Prospective Purchaser or Drag-Along Purchaser
(as the case may be) any assets, securities or other property or consideration
in addition to the High Vote Shares referred to in such Section, then the total
consideration payable to such member of the Malone Group for such assets,
securities, other property or consideration and High Vote Shares shall be
allocated among such items in such manner as JCM, such Prospective Purchaser or
Drag-Along Purchaser (as the case may be) and the Magness Group Representative
shall agree in writing or if such Persons, despite their good faith efforts,
fail to agree, then in proportion to the respective fair market values of such
items.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
--------------------------------------------
Kim Magness, individually and as Trustee
of the Magness Family Irrevocable Trusts
and the Magness Issue GST Trusts
--------------------------------------------
Gary Magness, individually and as Trustee
of the Magness Family Irrevocable Trusts
and the Magness Issue GST Trusts
ESTATE OF BETSY MAGNESS
By:
----------------------------------------
Kim Magness, Personal
Representative
35
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EXHIBIT 7(M)
ESTATE OF BOB MAGNESS
By: ________________________________
Kim Magness, Personal
Representative
By: ________________________________
Gary Magness, Personal
Representative
36
<PAGE>
EXHIBIT 7(M)
TELE-COMMUNICATIONS, INC.
By: ____________________________
Its: ____________________________
_______________________________
DR. JOHN C. MALONE
_______________________________
LESLIE MALONE
37
<PAGE>
EXHIBIT 7(M)
EXHIBIT A
DEFINED TERMS
The following terms shall have the following respective meanings:
"Acquisition Right" has the meaning assigned to such term in Section
3.1(a).
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly through or with one or more intermediaries, controls, is
controlled by or is under common control with, such Person. The term
"affiliated" (whether or not capitalized) shall have a correlative meaning. For
purposes of this Agreement, unless JCM and the Magness Group Representative
otherwise agree in writing, no member of either Group shall be deemed to be an
Affiliate of any member of the other Group.
"Agreement" means this Agreement, including all Exhibits and Schedules
hereto, if any, as the same may be amended from time to time in accordance with
its terms.
"Approved Sale" has the meaning assigned to such term in Section 4.2(a).
"Approved Stock Sale" has the meaning assigned to such term in Section
4.2(b).
"Beneficial Owner" means, with reference to any security, a direct or
indirect beneficial owner of such security within the meaning of Rule 13d-3
under the Exchange Act, as in effect on and as interpreted by the Commission
through the date of this Agreement, and the terms (whether or not capitalized)
"beneficially own," "beneficially owned" and "owned beneficially" shall have
correlative meanings; provided, however, that any Person who at any time
-------- -------
beneficially owns any Right to acquire such security shall not be deemed to
beneficially own the underlying securities unless or until such Right is
exercised. Notwithstanding the foregoing, unless otherwise expressly provided
in this Agreement:
(i) no Person who is a member of either Group or any "group" referred
to in Rule 13d-5 under the Exchange Act shall be deemed to be the
Beneficial Owner of any securities of which such Person would not be a
Beneficial Owner absent such group membership;
(ii) a Person shall not be deemed a Beneficial Owner of any securities
if such beneficial ownership (A) arises solely as a result of a revocable
proxy delivered in response to a proxy or consent solicitation made
pursuant to, and in accordance with, the Exchange Act and the applicable
rules and regulations thereunder and is not also then reportable on
Schedule 13D under the Exchange Act or (B) arises solely as a
38
<PAGE>
EXHIBIT 7(M)
result of the possession of any right, power or proxy with respect to
such securities arising under this Agreement;
(iii) TCI shall not be deemed to be a Beneficial Owner or to share
Beneficial Ownership of any shares or other securities that are subject
to either Call Agreement; and
(iv) JCM shall not be deemed to beneficially own any securities
beneficially owned by LM and vice versa;
---- -----
The terms "beneficially own" and "beneficially owning" or similar variants,
whether or not capitalized, shall have meanings that are correlative to this
definition of the term "Beneficial Owner."
"Betsy Estate" has the meaning given to it in the introductory paragraph
of this Agreement.
"Bob Estate" has the meaning given to it in the introductory paragraph of
this Agreement.
"BT Proxy" has the meaning given to it in Section 5.2.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in either New York, New York or Denver, Colorado are
authorized or obligated by law or executive order to close.
"Buyers" has the meaning given to it in Section 4.1(a).
"Call Agreement" means either the Malone Call Agreement or the Magness
Call Agreement, as the context requires.
"Charitable Transferee" means, with respect to either Group, any private
charitable foundation or donor advised fund established by one or more members
of such Group that, in either case, (i) is controlled directly or indirectly
solely by one or more members of such Group, and (ii) meets the requirements
under the Code for such member(s) or Related Parties to deduct donations to such
foundation or donor advised fund.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations from time to time promulgated thereunder.
"Company" means (i) TCI or (ii) any Spin-Off Company as long as and only
so long
39
<PAGE>
EXHIBIT 7(M)
as it (A) has Common Stock registered under Section 12(b) or 12(g) of the
Exchange Act and (B) a majority of TCI's directors then in office are also
members of the Board of Directors of such Spin-Off Company and such TCI
directors constitute a majority of the Board of Directors of such Spin-Off
Company.
"Control" as used with respect to any Person, means the possession,
directly or indirectly through or with one or more intermediaries, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
The terms "controlled by" and "under common control with" shall have correlative
meanings.
"Controlled Affiliate," when used with respect to a specified Person,
means each Affiliate of such Person that is Controlled by such Person and which
is not Controlled by or under common Control with any other Person (except one
or more other Controlled Affiliates of such specified Person); provided,
--------
however, that no Affiliate of such Person which otherwise would be a Controlled
- -------
Affiliate of such specified Person shall, for purposes of this Agreement, be
deemed to be a Controlled Affiliate of such Person unless such specified Person
possesses, directly or indirectly, the power to direct decisions regarding the
disposition and voting of the High Vote Shares held by such Affiliate without
breach or violation of any applicable contractual or fiduciary or other legal
duty or requirement by such specified Person, any of its Affiliates or any
individual designated by such Person or any of its Affiliates as a member of the
board of directors or other governing or managing body of such Affiliate.
"Covered Issuer" means (i) TCI, or (ii) any Controlled Affiliate of TCI
formed or organized after the date of this Agreement that issues or proposes to
issue any securities covered by an Acquisition Right (other than an Exempt
Acquisition Right) or (iii) any other issuer of Equity Securities as to which
JCM acquires an Acquisition Right (other than an Exempt Acquisition Right) and
in which TCI has a substantial economic or equity interest.
"Designated Director" has the meaning assigned to such term in Section
2.1(a).
"Director Votes" when used with reference to any share of capital stock
of any class or series of any issuer means the number of votes, if any, with
respect to the election of directors of such issuer that a record holder of a
single share of such class or series ordinarily is entitled to cast with respect
to the election of such issuer's directors generally, whether at all times or
only so long as no other class or series of capital stock of the Corporation has
such voting power by reason of any contingency.
"Disposition" has the meaning assigned to such term in Section 5.4;
however, the term "Disposition" does not include the granting of any revocable
proxy that satisfies clause (ii) (A) of the proviso of the definition of
"Beneficial Owner" above.
40
<PAGE>
EXHIBIT 7(M)
"Drag-Along Purchaser" has the meaning assigned to such term in Section
4.2(a).
"Effective Date" means the Closing Date, as defined in the Settlement
Agreement, or such earlier or later date agreed to by the parties thereto for
consummation of the transactions contemplated by paragraph 4 thereof.
"Eligible Shares" has the meaning assigned to such term in Section
4.1(a).
"Entity" means any corporation, limited liability company, general or
limited partnership, joint venture, association, joint stock company, trust,
other unincorporated business or organization or other Person which is not
either a natural person or a governmental authority or agency.
"Equity Security" means any High Vote Share or Low Vote Share of any
Covered Issuer and includes any Right to acquire any such High Vote Share or Low
Vote Share.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exempt Acquisition Right" means any Acquisition Right that:
(i) constitutes or is for Equity Securities that constitute all or any
part of the consideration receivable by JCM in any Exempt Transfer;
(ii) is for any Equity Securities that are issued or offered by any
issuer to all holders of shares of such issuer's capital stock of any
class or series on a proportionate basis, including as a stock dividend
or other distribution upon, any subdivision, combination or
recapitalization of or other change in capital structure affecting the
outstanding shares of such class or series;
(iii) is for Equity Securities that are sold by any issuer pursuant to
a bona fide public offering pursuant to a registration statement filed
---- ----
under the Securities Act of 1933, as amended;
(iv) constitutes or is for Equity Securities as to which the Magness
Group had the opportunity to participate or exercise preemptive rights;
(v) is for any Equity Securities issued upon exercise of any Rights to
acquire such Equity Securities that were sold, issued or otherwise
granted to JCM prior to the date of this Agreement or granted to JCM
thereafter as part of a transaction as to which JCM had an Exempt
Acquisition Right or as part of an Acquisition Right as to which
41
<PAGE>
EXHIBIT 7(M)
the Magness Group had the opportunity to participate in accordance with
Article III;
(vi) was or relates to any Equity Securities granted to or acquired by
JCM prior to the date of this Agreement;
(vii) arises from either Call Agreement;
(viii) is granted or offered by any member of the Magness Group with
respect to any Equity Securities Beneficially Owned by such member; or
(xi) is offered or granted as, or is for Equity Securities that are
offered or granted as, compensation (including deferred compensation) for
any past, present or future services by the recipient as an officer,
director, consultant or in any similar capacity to the issuer or any of
its subsidiaries or Affiliates or otherwise offered or granted to the
recipient by virtue of the recipient's status as an officer, director or
consultant to, or a person performing similar functions for, the issuer
or any of its subsidiaries or Affiliates.
"Exempt Transfer" means, with respect to any High Vote Share of any
Company or any Rights to acquire any High Vote Share of any Company Beneficially
Owned by any member of the Malone Group:
(i) an exchange of such security for another security, cash or other
property that occurs by operation of law in connection with a merger or
consolidation of the issuer with or into another corporation, which
merger or consolidation has been duly authorized and approved by the
required vote of the Board of Directors and each class of the
stockholders of such issuer pursuant to its charter documents and the
laws of the state of its incorporation;
(ii) an exchange of such security for, or a conversion of such
security into, a security of any other class, series or issue which
occurs by operation of law as the result of a recapitalization or similar
event which has been duly authorized and approved by the required vote of
the Board of Directors and each class of the stockholders of the issuer
pursuant to its charter documents and the laws of its state of
incorporation;
(iii) any surrender of such security upon redemption or repurchase of
such security by the issuer or any of its Controlled Affiliates;
(iv) any Permitted Pledge of such security and any transfer of such
pledged security to the pledgee upon foreclosure;
42
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EXHIBIT 7(M)
(v) a Disposition to another member of the Malone Group or the
Magness Group or any Controlled Affiliate of a member of either Group;
(vi) a gift or assignment for no consideration by such Person during
his life to any one or more of his Related Parties;
(vii) any transfer to the legal representatives of an individual upon
his death or adjudication of incompetency or by any such legal
representatives to any Person to whom the transferor could have
transferred such security pursuant to any clause of this definition;
(viii) a transfer of High Vote Shares of any Company by one or more
members of the Malone Group to any Charitable Transferee and any
subsequent transfer by any such Charitable Transferee of any such shares;
(ix) any sale or other Disposition of such security to any Person who
shall by a written instrument become a party to this Agreement and bound
by the provisions hereof applicable to the members of the Malone Group;
(x) any involuntary sale or other Disposition of such security,
including any sale or other Disposition upon the death or bankruptcy of
the holder or ordered by any Governmental Authority;
(xi) any sale or other Disposition of such security pursuant to an
offer made by a Prospective Purchaser on the same terms, on a per share
or per security basis, to all members of each Group who hold securities
of the same class or series; or
(xii) any sale or other Disposition of any High Vote Shares of any
Company that is pursuant to or contemplated by Article III or IV or
Section 5.4 of this Agreement or is pursuant to Section 2.3(f) of, or any
other "Exempt Transfer" as defined in, the Malone Call Agreement;
provided, however, that no Disposition pursuant to clause (vi) or (vii) shall be
- -------- -------
an Exempt Transfer, unless each Person to whom any such Disposition is made,
unless already a party to this Agreement and bound by the provisions hereof
applicable to members of the Malone Group or a Controlled Affiliate of such a
party, shall by a written instrument become a party to this Agreement and bound
by the provisions hereof applicable to the members of the Malone Group.
"Gary" has the meaning assigned to such term in the introductory
paragraph of this Agreement.
43
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EXHIBIT 7(M)
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any court, commission, agency or other
body exercising executive, legislative, judicial or regulatory functions.
"Group" means either the Malone Group or the Magness Group, as the
context requires.
"High Vote Share" means, with reference to any issuer, any share of
Voting Stock of such issuer of any class or series that has more than one
Director Vote per share.
"JCM" has the meaning assigned to such term in the introductory paragraph
of this Agreement.
"Kim" has the meaning assigned to such term in the introductory paragraph
of this Agreement.
"LM" has the meaning assigned to such term in the introductory paragraph
of this Agreement.
"Low Vote Share" means, with reference to any issuer, any share of Voting
Stock of such issuer of any class or series that has not more than one Director
Vote per share.
"Magness Call Agreement" means the Call Agreement, dated as of the date
of this Agreement, among TCI and each member of the Magness Group.
"Magness Group" shall mean (i) each of Gary (individually and in any
Representative Capacity), Kim (individually and in any Representative Capacity),
the Bob Estate, the Betsy Estate, each other Person who now or hereafter has a
Representative Capacity with respect to either of such estates or any trust
established thereunder, (ii) each other Person who is required to or becomes a
party to this Agreement and a member of the Magness Group pursuant to any
provision of this Agreement, (iii) each other Person who at any time acquires
any High Vote Shares of any Company in a transaction or a chain of transactions
initiated by another member of the Magness Group, other than Exempt Transfers
and (iv) each spouse or other Related Party of any member of the Magness Group,
in each case so long as such Person is or is required to be a party to this
Agreement or such Person or any of its Related Parties is the direct or indirect
Beneficial Owner of any High Vote Shares of any Company.
"Magness Group Representative" means any natural person who is a member
of the Magness Group duly appointed and serving as the representative of the
Magness Group for purposes of this Agreement. The Magness Group may, at any
time by a written notice delivered to TCI and the members of the Malone Group,
remove and replace the Person then serving as
44
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EXHIBIT 7(M)
Magness Group Representative, provided that such representative shall at all
times be a natural person and a member of the Magness Group.
"Malone Call Agreement" means the Call Agreement, dated as of the date of
this Agreement, among TCI and each member of the Malone Group.
"Malone Group" shall mean (i) each of JCM and LM, (ii) each other Person
who is required to or becomes a party to this Agreement and a member of the
Malone Group pursuant to any provision of this Agreement, (iii) each other
Person who at any time acquires any High Vote Shares of any Company in a
transaction or a chain of transactions initiated by another member of the Malone
Group, other than Exempt Transfers and (iv) each spouse or other Related Party
of any Member of the Malone Group, in each case so long as such Person is or is
required to be a party to this Agreement or such Person or any of its Related
Parties is the direct or indirect Beneficial Owner of any High Vote Shares of
any Company.
"Other Stockholder" has the meaning assigned to such term in Section
4.2(b).
"Participation Offer" has the meaning assigned to such term in Section
3.1(a).
"Permitted Pledge" means, with respect to any security, a bona fide
---- ----
pledge of by a Beneficial Owner or other holder of such security to a financial
institution to secure borrowings.
"Person" means any individual, corporation, limited liability company,
general or limited partnership, joint venture, association, joint stock company,
trust, unincorporated business or organization, governmental authority or other
legal entity or legal person, whether acting in an individual, fiduciary or
other capacity.
"Prospective Purchaser" has the meaning assigned to such term in Section
4.1(a).
"Qualified Trust" means, with respect to any member of either Group, any
trust that is directly or indirectly controlled solely by one or more members of
such Group and the beneficiaries of which are one or more Related Parties or
Charitable Transferees of such members(s), including any such trust that is so
controlled and (i) qualifies under the Code as a so-called "charitable remainder
trust," provided that the income beneficiaries consist solely of one or more
Related Parties of such member(s) and the remainder interest reverts to one or
more Charitable Transferees of such trustee(s), or (ii) qualifies under the Code
as a so-called "charitable lead trust," provided that the income beneficiaries
consist solely of one or more Charitable Transferees and the remainder interest
reverts to such trustee(s) or one or more Related Parties of such member(s).
"Related Party" means, with respect to any member of either Group,
45
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EXHIBIT 7(M)
(i) the spouse, siblings and lineal descendants (which shall include a
Person adopted before the age of 18) of such Person or any spouse of any
such sibling or lineal descendant;
(ii) any Qualified Trust;
(iii) a custodian under the Uniform Gifts to Minors Act or similar
fiduciary for the exclusive benefit of such Person's children during
their lives or a Charitable Transferee; or
(iv) a corporation, limited liability company, private foundation or
other entity organized under the laws of any state in the United States
which is Controlled by, and all equity, participation, beneficial or
similar interests (and rights to acquire any thereof, contingently or
otherwise) of which are beneficially owned solely by such Person or such
Person and one or more Related Parties of such Person.
"Representative Capacity" means, with respect to any Person that is a
party to this Agreement, such Person as an executor or administrator of the Bob
Estate, the Betsy Estate or any other estate, as a trustee of any trust or in
any other fiduciary or representative capacity if such Person, in such capacity,
directly or indirectly possesses or shares the power to vote or dispose or
direct the voting or disposition of any High Vote Shares or Rights to acquire
any High Vote Shares issued by any Company or any other shares of capital stock,
Rights or other securities subject to any provisions of this Agreement.
"Rights' means, with respect to any capital stock of any class or series,
any options, warrants, shares of convertible preferred stock, convertible notes
or other securities, instruments or rights, however denominated, which are
convertible into or exercisable or exchangeable for, or otherwise carry the
right to subscribe for, purchase or otherwise acquire any shares of such capital
stock (or any other Rights with respect to any such shares), whether with or
without payment of additional consideration and whether immediately or upon the
occurrence of a specified date the satisfaction or happening of any condition or
contingency.
"Selling Stockholder" has the meaning assigned to such term in Section
4.1(a).
"Settlement Agreement" has the meaning assigned to such term in the
preamble to this Agreement.
"Spin-Off Company" a wholly owned subsidiary of TCI any High Vote Shares
of which are distributed to the common stockholders of TCI pursuant to a stock
dividend or other distribution, if and so long as such subsidiary continues to
be a Controlled Affiliate of TCI or JCM.
46
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EXHIBIT 7(M)
"Subject Securities" has the meaning assigned to such term in Section
3.1(a).
"Tag-Along Exercise Notice" has the meaning assigned to such term in
Section 4.1(b).
"Tag-Along Notice" has the meaning assigned to such term in Section
4.1(b).
"Tag-Along Shares" has the meaning assigned to such term in Section
4.1(b).
"TCI" has the meaning assigned to such term in the introductory paragraph
of this Agreement.
"Transfer" means, when used with respect to any security, any sale,
exchange or other assignment of Beneficial Ownership of such security for value,
but such term shall not include any transfer of the power to vote a security to
the extent required to avoid any forfeiture or divestiture of any securities or
property or other adverse result under any law, rule, regulation, judgment,
order or decree, any delivery of a revocable proxy, any redemption, purchase or
other acquisition in any manner (whether or not for any consideration) by the
issuer of such security the conversion or exchange of such security for another
security of the same issuer, the exercise of any Right, any other exercise of
any conversion, exchange, purchase or other right of holders of securities of
the same class, series or issue generally or the expiration or failure to
exercise any Right or any other conversion, exchange, purchase or right of the
holder of such security.
"Voting Stock" when used with reference to any issuer and to any election
of directors of such issuer or any other matter which submitted or to be
submitted to a vote or the written consent of, or other action by, stockholders
of such issuer, means any class or series of capital stock of such issuer that
has voting power with respect to such election or other matter. For purposes of
Article II, an obligation on the part of any Person to vote any Voting Stock
with regard to any matter applies only to those shares held by such Person on
the applicable record date or other date for determining the holders of Voting
Stock of that class or series entitled to vote on such matter.
47
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EXHIBIT 7(N)
CALL AGREEMENT
AGREEMENT, dated as of February , 1998, between Tele-Communications,
Inc., a Delaware corporation ("TCI"), John C. Malone ("Malone") and Leslie
Malone ("Leslie").
WHEREAS, TCI desires to have the right to acquire all of the shares
of its Common Stock, $1.00 par value per share, of any series that has voting
rights greater than one vote per share, that are beneficially owned by the other
parties to this Agreement; and
WHEREAS, each such other party, for himself and his successors
(including his estate upon his death), desires to grant such right to TCI;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS
1.1 CERTAIN DEFINITIONS
"Affiliate" means, when used with reference to a specified Person, any
Person that directly or indirectly through one or more intermediaries Controls,
is Controlled by or is under common Control with, such specified Person.
"Agreement" means this Call Agreement, as the same may be amended or
supplemented from time to time.
"beneficially own" has the meaning ascribed thereto in Rule 13d-3 under the
Exchange Act, as interpreted by the Securities and Exchange Commission, provided
that a Person shall be deemed to have beneficial ownership of all securities
that such Person has a right to acquire without regard to the 60 day limitation
in such Rule, and except that a Person shall not be deemed a beneficial owner
of, or to own beneficially, any securities as to which such Person does not,
directly or indirectly, have or share investment power within the meaning of
said Rule. The terms beneficially owned, own beneficially and beneficial owner
shall have correlative meanings. For purposes of this Agreement, neither Malone
nor Leslie will be deemed to beneficially own any High Vote Stock or other
security beneficially owned by the other.
"Board of Directors" means the Board of Directors of the Company, or any
authorized committee thereof.
"Bona Fide Offer" has the meaning set forth in Section 2.3(b) (i) hereof.
"Call Period" has the meaning set forth in Section 2.2 (b) hereof.
"Call Right" has the meaning set forth in Section 2.2 (a) hereof.
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A "Change of Control" shall have occurred with respect to the Company if:
(i) a merger or consolidation occurs between the Company and any other
Person in which the voting power of all voting securities of the Company
outstanding immediately prior thereto represent (either by remaining
outstanding or being converted into voting securities of the surviving
entity) less than 50% of the voting power of the Company or the surviving
entity outstanding immediately after such merger or consolidation (or if
the Company or the surviving entity after giving effect to such transaction
is a subsidiary of the issuer of securities in such transaction, then the
voting power of all voting securities of the Company outstanding
immediately prior to such transaction represent (by being converted into
voting securities of such issuer) less than 50% of the voting power of the
issuer outstanding immediately after such merger or consolidation); or
(ii) in any share exchange, extraordinary dividend, acquisition,
disposition or recapitalization (or series of related transactions of such
nature) (other than a merger or consolidation) the holders of voting
securities of the Company immediately prior thereto continue to own
beneficially voting securities representing less than 50% of the voting
power of the Company (or any successor entity) immediately thereafter.
"Charitable Transferee" means, with respect to either Group, any private
charitable foundation or donor advised fund established by one or more members
of such Group that, in either case, (i) is controlled directly or indirectly
solely by one or more members of such Group, and (ii) meets the requirements
under the Code for such member(s) or Related Parties to deduct donations to such
foundation or donor advised fund.
"Close of Business" means 5:00 p.m. local time in Denver, Colorado.
"Closing" has the meaning set forth in Section 4.1(a) hereof.
"Closing Date" has the meaning set forth in Section 4.1(a) hereof.
"Closing Date Amount" has the meaning set forth in Section 2.2(d) hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations from time to time promulgated thereunder.
"Combined Offered Shares" has the meaning set forth in Section 2.3(b)(ii)
hereof.
"Commencement Date" has the meaning set forth in Section 2.3(c)(i) hereof.
"Common Stock" means the Common Stock, $1.00 par value per share, of the
Company, as constituted on the date of this Agreement, and any capital stock
into which such Common
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Stock may thereafter be changed (whether as a result of a recapitalization,
reorganization, merger consolidation, share exchange, stock dividend or other
transaction or event). The Common Stock currently is issuable in series.
"Company" means Tele-Communications, Inc., a Delaware corporation, and any
successor (by merger, consolidation, sale, transfer, exchange, or otherwise) to
all or substantially all of its business and assets.
"Company Notice" has the meaning set forth in Section 2.2(b) hereof.
"Company Price" has the meaning set forth in Section 2.3(b)(ii).
"Control", as to any Person, means the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise. "Controlled" and
"Controlling" shall have corresponding meanings.
"Current Market Price" of any security on any day means (i) the last
reported sale price (or, if no sale is reported, the average of the high and low
bid prices) on The Nasdaq Stock Market on such day, or (ii) if the primary
trading market for such security is not The Nasdaq Stock Market, then the
closing sale price regular way on such day (or, in case no such sale takes place
on such day, the reported closing bid price regular way on such day) in each
case on the New York Stock Exchange, or, if such security is not listed or
admitted to trading on such exchange, then on the principal exchange on which
such security is traded, or (iii) if the Current Market Price of such security
on such day is not available pursuant to one of the methods specified above,
then the average of the bid and asked prices for such security on such day as
furnished by any New York Stock Exchange member firm selected from time to time
by the Board of Directors for that purpose.
"Difference" has the meaning set forth in Section 3.2(b) hereof.
"Disposition" means any sale, assignment, alienation, gift, exchange,
conveyance, transfer, hypothecation or other disposition whatsoever, whether
voluntary or involuntary and whether direct or indirect. The term "dispose"
(whether or not capitalized) shall mean to make a Disposition. Neither the
grant and exercise of voting rights under the Stockholders Agreement nor the
grant of rights by Malone to the Magness Group under Article III of the
Stockholders Agreement shall be a "Disposition".
"Election Notice" has the meaning set forth in Section 2.3(b)(iii).
"Estate" means, upon the death of Malone, the estate of Malone, through its
personal representative(s).
"Excepted Shares" means, subject to the last two sentences of this
definition, that number
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of Member Shares which, in the aggregate for all Members, is equal to five
percent (5%) of the largest total number (calculated without duplication) of
Member Shares beneficially owned by all Members at any time during the period
from and after the date of this Agreement until this Agreement shall no longer
be in effect. For purposes of determining the total number of Member Shares
beneficially owned by the Member at any time of determination during such
period, the Members shall be deemed to own all Member Shares actually
beneficially owned by them at such time and also to continue to beneficially own
all Member Shares, if any, sold or otherwise disposed of without violation of
this Agreement at any time prior to such time of determination, so that such
number of Member Shares as of any time of determination shall be calculated as
though the Members at all times continued to beneficially own all Member Shares
that they beneficially owned at any time during such period, without deduction
of any Member Shares that were disposed of at any time during that period and in
each case without duplication. In the event that the Company (i) pays a dividend
or distribution on the outstanding High Vote Stock in shares of High Vote Stock,
(ii) subdivides the outstanding High Vote Stock into a greater number of shares
of High Vote Stock, (iii) combines the outstanding shares of High Vote Stock
into a smaller number of shares of High Vote Stock or (iv) issues by
reclassification of or other change in the High Vote Stock (whether pursuant to
a merger or consolidation or otherwise) any other shares of High Vote Stock,
then (A) any such shares of High Vote Stock received by any Member in exchange
for or replacement of the Excepted Shares shall themselves be Excepted Shares
and (B) calculations of the number of Excepted Shares as of any time pursuant to
the first sentence of this definition shall take appropriate account of such
event.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exempt Transfer" means, with respect to any Member Shares of any Member,
any Disposition:
(i) pursuant to Section 2.2 hereof;
(ii) to another Member;
(iii) to a member of the Magness Group;
(iv) that is an exchange or conversion of such Member Shares
that occurs by operation of law in connection with a merger or
consolidation of the Company with or into another corporation or a
reclassification or similar event, that has been duly authorized and
approved by the required vote of the Board of Directors and the
stockholders of the Company pursuant to its Restated Certificate of
Incorporation and Delaware law; provided, however, that any shares of
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capital stock issued in exchange for or in reclassification of such
Member Shares or into which such Member Shares are converted in any
such transaction shall continue to be Member Shares for purposes of
this Agreement unless such transaction resulted in a Change of Control
of the Company;
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(v) to a Prospective Purchaser in compliance with subsections
(a) through (e), inclusive, of Section 2.3 hereof;
(vi) pursuant to Section 2.3(f) hereof;
(vii) that is a gift or assignment for no consideration by such
Member (if a natural person) during his life to any one or more of his
Related Parties;
(viii) that is a transfer to the legal representatives of such
Member (if a natural person) upon his death or adjudication of
incompetency or by any such legal representatives to any Person to
whom the transferor could have transferred such security pursuant to
any clause of this definition; or
(ix) subject to subsections (a) through (e), inclusive, of
Section 2.3 hereof, pursuant to Article IV of the Stockholders
Agreement;
provided, however, that no Disposition pursuant to clause (ii), (vii) or (viii)
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shall be an Exempt Transfer unless each Person to whom any such Disposition is
made (unless already such a party and so bound) simultaneously therewith becomes
a party to this Agreement and the Stockholders Agreement and agrees to be bound
hereby and thereby with respect to such Member Shares to the same extent as such
Member.
"Exercise Date" has the meaning set forth in Section 2.2(b) hereof.
"Free to Sell Date" has the meaning set forth in Section 2.3(v) hereof.
"Gross Purchase Price" has the meaning set forth in Section 2.2(c) hereof.
"Gross Stock Value" has the meaning set forth in Section 2.2(d) hereof.
"Group" means either the Malone Group or the Magness Group, as the context
requires.
"High Vote Stock" means Common Stock of any series that has voting rights
greater than one vote per share. The High Vote Stock is currently comprised of
the Series B TCI Group Common Stock, Series B LMG Common Stock and Series B
Ventures Group Common Stock.
"Holder" has the meaning set forth in Section 2.2(b) hereof.
"Holder Election Notice" has the meaning set forth in Section 2.2(d)
hereof.
"Independent Committee" means a committee of the Board of Directors
consisting of directors other than a Member, any Permitted Transferee, or any
Related Party of any Member or
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any such Permitted Transferee.
"Leslie" has the meaning assigned for such term in the introductory
paragraph of this Agreement.
"Low Vote Stock" means Common Stock of any series that has voting rights no
greater than one vote per share. The Low Vote Stock is currently comprised of
Series A TCI Group Common Stock, Series A LMG Common Stock and Series A Ventures
Group Common Stock.
"Magness Call Agreement" means the Call Agreement, dated as of the date
hereof, by and among the Company, Malone, Leslie, Gary Magness, Kim Magness, the
Estate of Bob Magness, the Estate of Betsy Magness and certain other holders of
securities of the Company, as it may be amended from time to time.
"Magness Group" has the meaning assigned to it in the Magness Call
Agreement.
"Malone" means John C. Malone, a resident of Colorado.
"Malone Group" shall mean (i) each of Malone and Leslie, (ii) each other
Person who is required to become or becomes a party to this Agreement and a
member of the Malone Group pursuant to any provision of this Agreement, (iii)
each other Person who at any time acquires any High Vote Stock in a transaction
or a chain of transactions initiated by another member of the Malone Group,
other than Exempt Transfers (except those described in clauses (ii), (vii) or
(viii) of the definition of "Exempt Transfer" in Section 1.1 hereof) and (iv)
each spouse or other Related Party of any member of the Malone Group, in each
case so long as such Person is or is required to be a party to this Agreement or
such Person or any of its Related Parties is the direct or indirect Beneficial
Owner of any High Vote Stock. Unless Malone (or his estate), the Company and
the Magness Group Representative otherwise agree in writing, no member of the
Magness Group shall be a Member of the Malone Group or a Related Party of any
Member.
"Member" means any member of the Malone Group.
"Member Shares" means, with respect to any Member, any and all shares of
High Vote Stock beneficially owned by such Member on the date hereof or of which
beneficial ownership is hereafter acquired by such Member or by any Permitted
Transferee from such Member or from another Permitted Transferee.
"Net Proceeds" has the meaning set forth in Section 3.2(a) hereof.
"Offered Shares" has the meaning set forth in Section 2.3(b)(i) hereof.
"Offering Period" has the meaning set forth in Section 3.2(a) hereof.
"Offer Notice" has the meaning set forth in Section 2.3(b)(ii) hereof.
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"Permitted Transferee" means, with respect to any Member, a Related Party
of such Member or another Person to whom any of such Member's Member Shares are
transferred, directly or indirectly, in an Exempt Transfer, in each case if such
Person is or is required to become a party to this Agreement or is or is
required to be bound by its terms and for so long as such Person is the
beneficial owner of any Member Shares.
"Per Share Value", as to any series of High Vote Stock on any relevant day,
means the average of the Current Market Prices of the Low Vote Stock into which
the shares of such series of High Vote Stock are convertible at the option of
the holder for the period of 30 consecutive trading days ending on (i) in the
case of any calculation pursuant to Section 2.2 hereof, the last trading day
prior to the date of Malone's death, (ii) in the case of any calculation of the
Gross Purchase Price for purposes of Section 2.3(b), the last trading day prior
to the date the Offer Notice is given, and (iii) in the case of any
determination pursuant to Section 6.1, the last trading day prior to the date on
which a letter of intent or other documentation for the proposed transaction is
executed, in each case appropriately adjusted to take into account any stock
dividends on the Low Vote Stock, or any stock splits, reclassifications or
combinations of the Low Vote Stock, during the period following the first of
such 30 trading days and ending on the last full trading day immediately
preceding the Closing Date.
"Person" means any natural person, corporation, partnership, joint venture,
limited liability company, trust, unincorporated organization, association or
other entity.
"Prohibited Premium" has the meaning set forth in Section 6.1(a) hereof.
"Prospective Purchaser" has the meaning set forth in Section 2.3(b)(i)
hereof.
"Public Sale Dollar Amount" has the meaning set forth in Section 3.1(a)
hereof.
"Public Sale Notice" has the meaning set forth in Section 3.1(a) hereof.
"Qualified Appraiser" means a Person who is nationally recognized as being
qualified and experienced in the appraisal of assets comparable to the noncash
consideration proposed to be given pursuant to the Bona Fide Offer and shall not
be an Affiliate of any party to this Agreement.
"Qualified Trust" means, with respect to any member of either Group, any
trust that is directly or indirectly controlled solely by one or more members of
such Group and the beneficiaries of which are one or more Related Parties or
Charitable Transferees of one or more of such members, including, without
limitation, any such trust that is so controlled and (i) qualifies under the
Code as a so-
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called "charitable remainder trust," provided that the income beneficiaries
consist solely of one or more Related Parties of such member(s) and the
remainder interest reverts to one or more Charitable Transferees or (ii)
qualifies under the Code as a so-called "charitable lead trust," provided that
the income beneficiaries consist solely of one or more Charitable Transferees
and the remainder interest reverts to either such member(s) or one or more
Related Parties of such member(s).
"Registration Rights Agreement" has the meaning set forth in Section 2.2(e)
hereof.
"Registration Statement" has the meaning set forth in Section 3.2(a)
hereof.
"Related Party" means, with respect to any Member or Permitted Transferee:
(i) the spouse, siblings and lineal descendants (which shall
include a Person adopted before the age of 18) of such Person or any spouse
of any such sibling or lineal descendant;
(ii) any Qualified Trust;
(iii) a custodian under the Uniform Gifts to Minors Act or similar
fiduciary for the exclusive benefit of such Person's children during their
lives or a Charitable Transferee; or
(iv) a corporation, limited liability company, private foundation or
other entity organized under the laws of any state in the United States
which is Controlled by, and all equity, participation, beneficial or
similar interests (and rights to acquire any thereof, contingently or
otherwise) of which are beneficially owned solely by, such Person or such
Person and one or more Related Parties of such Person referred to in clause
(i), (ii) or (iii) of this definition,
provided that in any case under clause (i), (ii), (iii) or (iv) the requisite
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relationship with such Member or Permitted Transferee described in such clause
is maintained and if, as the result of any completed or proposed act,
transaction or event, any Person who previously was a Related Party of a Member
or a Permitted Transferee ceases to qualify as a Related Party of such Person or
if any shares of High Vote Stock beneficially owned by any such Related Party
are to be distributed or otherwise Disposed of to any Person not already a party
to this Agreement and bound by this Agreement as a Member of the Malone Group,
then simultaneously therewith such Person must become a party to this agreement
and the Stockholders Agreement and agree to be bound hereby and thereby with
respect to such shares as a Member of the Malone Group.
"Resale Stock" has the meaning set forth in Section 3.1(a) hereof.
"Sale of the Company" means any transaction which results in a Change in
Control of the Company, specifically excluding, however, any sale of any of the
Member Shares pursuant to the terms of this Agreement.
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"Sales" has the meaning set forth in Section 3.2(a) hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning set forth in Section 3.1(a) hereof.
"Series A Common Stock" means, collectively, the Series A TCI Group Common
Stock, Series A LMG Common Stock, and Series A Ventures Group Common Stock, into
which the Series B Common Stock of the corresponding series is convertible.
"Series A LMG Common Stock" means the Tele-Communications, Inc. Series A
Liberty Media Group Common Stock.
"Series A TCI Group Common Stock" means the Tele-Communications, Inc.
Series A TCI Group Common Stock.
"Series A Ventures Group Common Stock" means the Tele-Communications, Inc.
Series A TCI Ventures Group Common Stock.
"Series B Common Stock" means, collectively, the Series B TCI Group Common
Stock, Series B LMG Common Stock and Series B Ventures Group Common Stock set
forth in the recitals hereto.
"Series B TCI Group Common Stock" means the Tele-Communications, Inc.
Series B TCI Group Common Stock.
"Series B LMG Common Stock" means the Tele-Communications, Inc. Series B
Liberty Media Group Common Stock.
"Series B Ventures Group Common Stock" means the Tele-Communications, Inc.
Series B TCI Ventures Group Common Stock.
"Series Purchase Price" has the meaning set forth in Section 2.2(c) hereof.
"Series Stock Value" has the meaning set forth in Section 2.2(d) hereof.
"Settlement Agreement" has the meaning set forth in Section 7.3(b) hereof.
"Stockholders Agreement" means the Stockholders' Agreement, dated as of the
date hereof, by and among the Company, Malone, Leslie, Gary Magness, Kim
Magness, the Estate of Bob Magness and the Estate of Betsy Magness, as it may be
amended from time to time.
"Stock Proceeds Amount" has the meaning set forth in Section 3.1(b) hereof.
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"Subject Shares" has the meaning set forth in Section 2.2(a) hereof.
"Subsidiary", when used with respect to the Company, means any corporation,
partnership or other business entity of which an aggregate of 50% or more of the
outstanding capital stock or other securities have ordinary voting power to
elect a majority of the board of directors, managers, trustees or other
controlling persons, or an equivalent controlling interest therein, of such
Person (irrespective of whether, at the time, capital stock or other securities
of any other class or classes of such entity shall have or might have voting
power by reason of the happening of any contingency) is, or of which an
aggregate of 50% or more of the interests in which are, at the time, directly or
indirectly, owned by the Company and/or one or more Subsidiaries of the Company
(irrespective of whether any other Person, by reason of a pledge of capital
stock or other securities or otherwise, shall or might have ownership thereof or
voting power with respect thereto by reason of the happening of any
contingency).
"Tag-Along Shares" has the meaning set forth in Section 2.3(b)(ii) hereof.
"Third Appraiser" has the meaning set forth in Section 2.3(c)(iv) hereof.
"Transferor has the meaning set forth in Section 2.3(b)(i) hereof.
"Underwriters" has the meaning set forth in Section 3.2(a) hereof.
1.2 TERMS DEFINED IN THE STOCKHOLDERS AGREEMENT. Capitalized terms used
but not defined in this Agreement are intended to have the definitions assigned
to them in the Stockholders Agreement, and such definitions are hereby
incorporated by reference.
1.3 DEFINITIONS INCLUDE THE SINGULAR AND THE PLURAL. Terms defined in
the singular include the plural and vice versa.
2. GRANT OF CALL RIGHT.
2.1 GRANT. Subject to and on the terms and conditions set forth in this
Agreement, each Member, on behalf of himself, his Permitted Transferees and his
estate, heirs, administrators, executors, other legal representatives,
successors and assigns, hereby grants to the Company the call right, as provided
in Section 2.2 and Section 2.3 of this Agreement, and makes the covenants for
the benefit of the Company set forth herein. In consideration of the grant to
it of the call right and the making of such covenants, the Company shall pay to
the Malone Group, collectively, the aggregate sum of One Hundred Fifty Million
Dollars ($150,000,000), of which One Hundred Million Dollars ($100,000,000)
shall be for the grant of such call right, Twenty-Five Million Dollars
($25,000,000) shall be for the grant of the acceleration feature of such call
right and Twenty-Five Million Dollars ($25,000,000) shall be for the making of
such covenants. Such payment shall be made on or prior to February 9, 1998 in
cash by wire transfer of next day funds to an account designated by Malone.
Such payment shall be allocated among the Members
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in any manner in which they agree among themselves. The Company shall be
entitled to rely exclusively and conclusively on information provided by the
Malone or the Estate as to any such allocation or other matters in connection
with the exercise of the rights of the Malone Group and each of its Members
under this Agreement and shall not, in any event, have any liability to any
Member as a result of such reliance.
2.2 CALL RIGHT. (a) Subject to the last sentence upon Malone's death,
the Company shall have the right (the "Call Right"), exercisable by action of
the Independent Committee, to purchase all but not less than all of the shares
of High Vote Stock beneficially owned by each Member at the time of Malone's
death and all but not less than all of the shares of High Vote Stock that are
then beneficially owned by any Permitted Transferee of any Member and which
shares were acquired directly or indirectly from a Member or another Permitted
Transferee of Member Shares in any Exempt Transfer or other transaction except a
sale to a prospective Purchaser in accordance with Section 2.3(b) hereof
(collectively for all Members and Permitted Transferees, the "Subject Shares").
The Company may not exercise its Call Right under this Section 2.2 unless it
concurrently exercises its corresponding call right under the corresponding
provisions of the Magness Call Agreement.
(b) The Company may exercise the Call Right, by giving written notice
of such exercise (the "Company Notice") to each Member and each such Permitted
Transferee, if any (collectively, the "Holder"), at any time during the period
commencing on and including the date of Malone's death and ending at the Close
of Business on the 50th day after the date, following Malone's death, on which
any legal action that may be required to confirm the appointment of the personal
representative(s) for the Estate or for the Estate to act through its personal
representative(s) has been completed (such period, the "Call Period"). The date
the Company Notice is given to the Holder is referred to as the "Exercise Date."
(c) The total consideration payable to the members of the Malone Group
collectively for all of the Subject Shares (the "Gross Purchase Price") will be
an amount equal to the sum of the amounts determined in accordance with the
following formula for each series of High Vote Stock included in the Subject
Shares: 110% of the product of the Per Share Value for such series as of the
date of Malone's death, multiplied by the number of shares of such series
included in the Subject Shares (such amount, as to each series, the "Series
Purchase Price"). In calculating any Series Purchase Price or the Gross
Purchase Price, the number of Subject Shares and the number of shares of any
series included in the Subject Shares shall be calculated without duplication
for any shares that may, by virtue of the definition of "beneficially owned," be
deemed to be beneficially owned by more than one Member.
(d) The Gross Purchase Price will be payable in cash or, as to any
series of High Vote Stock included in the Subject Shares, in fully paid and
nonassessable shares of Low Vote Stock of the corresponding series, or any
combination of the foregoing, as the Holder may elect, subject to the rights of
the Company pursuant to Section 3.1, by written notice given to the Company at
least 60 days prior to the Closing Date (the "Holder Election Notice"). The
Holder
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Election Notice shall specify as to each series of High Vote Stock included in
the Subject Shares, the portion of the Series Purchase Price to be paid in Low
Vote Stock of the corresponding series (such portion, as to each series of High
Vote Stock, being the "Series Stock Value" and as to all series for which
payment in Low Vote Stock has been elected being, in the aggregate, the "Gross
Stock Value"). The Gross Purchase Price less the Gross Stock Value is herein
referred to as the "Closing Date Amount". Subject to the Company's right to
elect to require a public sale in accordance with Section 3, the Closing Date
Amount shall be delivered to the Estate, on behalf of all Members and Permitted
Transferees who held any of the Subject Shares purchased in cash on the Closing
Date.
(e) If the Holder has timely elected in accordance with Section 2.2(d)
to receive any portion of the Gross Purchase Price in shares of Low Vote Stock,
the number of shares of any series of Low Vote Stock to be delivered to the
Holder on the Closing Date shall be equal to the quotient obtained by dividing
(i) the Series Stock Value for the corresponding series of High Vote Stock by
(ii) the Per Share Value of such corresponding series of High Vote Stock. The
shares to be so delivered on the Closing Date will not have been registered for
sale under the Securities Act and may not be sold except pursuant to an
effective registration statement or an exemption from the registration
requirements of the Securities Act. The Company will be under no obligation to
register such shares for resale except as otherwise provided in a Registration
Rights Agreement to be entered into by the Company and the Holder on or prior to
the Closing Date pursuant to which the Company shall grant to the Holder
registration rights with respect to such Shares not less favorable to the Holder
than any registration rights heretofore or hereafter granted by the Company to
any Person and otherwise on terms customary for similar agreements (the
"Registration Rights Agreement"). The certificates for the shares of Low Vote
Stock to be delivered to the Holder on the Closing Date shall bear a customary
legend to the foregoing effect, but shall be free of any rights of the Company
hereunder.
(f) Amounts payable pursuant to this Agreement in cash shall, unless
otherwise agreed by the Company and the Holder, be paid by wire transfer of next
day funds on or prior to the Closing Date to an account designated in writing by
the Holder at least two (2) Business Days before the Closing Date.
(g) In the event that there are multiple Holders at the commencement
of the Call Period, then the provisions of this Section 2.2 and of Section 3
shall be applied to each Holder separately, with the applicable shares of High
Vote Stock beneficially owned by a Holder being the Subject Shares with respect
to such Holder and each Holder being entitled to make an election pursuant to
Section 2.2(d), and to have an election made by the Company with respect to it
pursuant to Section 3.1, without regard to the elections made pursuant to said
Sections by or with respect to the other Holders.
2.3 ACCELERATION OF CALL RIGHT. (a) During the term of this Agreement,
neither any Member nor any Permitted Transferee shall dispose of any Member
Shares, except in an Exempt Transfer. If any Related Party of any Member to whom
such Member transfers any
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Member Shares in an Exempt Transfer ceases to be a Related Party of its
transferor and is not then a Related Party of any other Permitted Transferee,
then unless such Person shall either transfer the Member Shares held by it to a
Member, a Permitted Transferee or a Related Party of either or otherwise agrees
to be bound by this Agreement with respect to such Member Shares such occurrence
shall be deemed to be a Disposition of the Member Shares then held by such
Person giving rise to the Company's purchase right unless the requirements of
the proviso in the definition of "Related Party" in Section 1.1 hereof are
satisfied.
(b) (i) If any Member or any Permitted Transferee (as applicable,
the "Transferor") receives a bona fide written offer (a "Bona Fide Offer")
from a Person who is not an Affiliate of any Member or any Permitted
Transferor (a "Prospective Purchaser") to purchase all or any of the Member
Shares beneficially owned by the Transferor and the Transferor desires to
accept the Bona Fide Offer, then prior to the acceptance of the Bona Fide
Offer by the Transferor, the Call Right shall accelerate as to the Member
Shares that are the subject of the Bona Fide Offer (the "Offered Shares")
and the Company may exercise the Call Right in the manner and to the extent
set forth in this Section 2.3(b).
(ii) The Transferor shall give written notice (the "Offer
Notice") to the Company of its receipt of the Bona Fide Offer and desire to
accept the same, which notice shall (A) state the identity of the
Prospective Purchaser and, if the Prospective Purchaser is not its own
ultimate parent within the meaning of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, the identity of its ultimate
parent(s) and (B) set forth all material terms of the Bona Fide Offer
(including the purchase price and the method of payment thereof). If one
or more members of the Magness Group exercise their right pursuant to the
Stockholders Agreement to tag-along on the Bona Fide Offer, the Transferor
shall set forth in the Offer Notice or in a separate written notice given
at any time prior to the Closing Date the names of such exercising
member(s) and the number of shares of High Vote Stock beneficially owned by
each such member that such member has elected to include in the sale to the
Prospective Purchaser pursuant to the Stockholders Agreement (such member's
"Tag-Along Shares"). The Company shall then have the option to exercise
the Call Right as to all but not less than all of the Offered Shares and
the Tag-Along Shares (collectively, the "Combined Offered Shares") at the
applicable price determined in accordance with the following sentence and,
subject to the remaining provisions of this Section 2.3, on the terms of
the Bona Fide Offer (as disclosed in the Offer Notice). The price at which
the Combined Offered Shares may be purchased by the Company shall be the
lesser of (x) the price offered in the Bona Fide Offer and (y) an amount
equal to the Gross Purchase Price, as determined in accordance with Section
2.2, that would be payable if the Combined Offered Shares were the Subject
Shares (such lesser amount being, the "Company Price"). The Transferor
shall enclose with the Offer Notice a true and complete copy of the Bona
Fide Offer and all documents related thereto. In determining the Company
Price, (i) if any portion of the price offered in the Bona Fide Offer
consisted of consideration other than cash, the fair market value of such
non-cash consideration shall be deemed to be equal to the amount determined
by
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agreement of the Transferor and the Company or, failing such agreement,
as determined in accordance with the procedures as set forth in Section
2.3(c); and the number of Subject Shares and the number of shares of any
series included in the Subject Shares shall be calculated without
duplication for any shares that may, by virtue of the definition of
"beneficially owned," be deemed to be beneficially owned by more than one
Member.
(iii) The Company shall have the right, exercisable (if so
determined by the Independent Committee) by the written notice (an
"Election Notice") given to the Transferor on or before the Close of
Business on the tenth (10th) Business Day after receipt of the Offer
Notice, to exercise the Call Right as to the Combined Offered Shares and to
purchase all but not less than all of the Combined Offered Shares. If the
Company duly delivers an Election Notice for the Combined Offered Shares in
accordance with the foregoing procedure, it shall (subject to the Company's
right to elect to pay a portion of the Company Price in debt securities in
accordance with Section 2.3(b)(iv) and subject to the Company's right to
elect to require a public sale in accordance with Section 3.1), purchase
the Combined Offered Shares for cash, paid by wire transfer of next day
funds on or prior to the Closing Date to an account designated by the
Transferor in writing at least two (2) Business Days before such date.
Notwithstanding the date fixed as the Closing Date in Section 4.1, the
Closing Date for the purchase and sale of the Combined Offered Shares
pursuant to this Section 2.3 shall be subject to extension in accordance
with Section 2.3(c).
(iv) In the event that the Company Price is the price offered in
the Bona Fide Offer and any part of the price specified in the Bona Fide
Offer is proposed to be paid in debt securities, the Company may, in its
discretion, elect to pay the equivalent portion of the Company Price
through the issuance of debt securities with substantially similar terms in
an amount the fair market value of which is equal to the fair market value
of the equivalent portion of the debt securities specified in the Offer
Notice, in each case as agreed by the Company and the Transferor or,
failing such agreement, as determined in accordance with the procedures
specified in Section 2.3(c), taking into consideration relevant credit
factors relating to the Prospective Purchaser and the Company and the
marketability and liquidity of such debt securities.
(v) In the event that (A) no Election Notice has been given by
the tenth (10th) Business Day after receipt of the Offer Notice, or (B) if
an Election Notice is given, the Closing has not occurred by the 61st day
after the Election Notice is given (or such later date as the parties may
have scheduled for the Closing or to which the Closing may have been
extended pursuant to Section 2.3(c), for any reason other than a breach by
the Transferor or another Member or Permitted Transferee of its obligations
hereunder (the first to occur of such events being the "Free to Sell
Date"), then each Person included within the Transferor shall have the
right to sell all but not less than all of the Combined Offered Shares of
such Person to the Prospective Purchaser at the price (or a greater price)
and upon the terms (or terms no more favorable to the Prospective
Purchaser)
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specified in the Offer Notice and, in connection with any such sale such
Person shall not be required to convert any of such Offered Shares into
shares of Low Vote Stock prior to the sale to such Prospective Purchaser.
The right to sell Combined Offered Shares to the Prospective Purchaser
pursuant to this Section 2.3(b)(v) shall expire and the provisions of this
Section 2.3(b) shall be reinstated in the event that the Prospective
Purchaser has not purchased such Combined Offered Shares within ten (10)
Business Days after the Free to Sell Date.
(c) (i) If a Bona Fide Offer proposes to pay a portion of the price
for the Offered Shares in consideration other than cash and the Company and
the Transferor have not agreed upon the value thereof (or, in the case of
debt securities, if the Company has elected to pay a portion of the Company
Price in equivalent securities and the Company and the Transferor have not
agreed upon the value of the debt securities the Company proposes to issue)
by the Close of Business on the fifth (5th) Business Day prior to the date
otherwise fixed for the Closing (the "Commencement Date") then the
procedures set forth in this Section 2.3(c) shall be commenced and the
Closing Date shall be extended to the fifth (5th) Business Day following
the date on which the fair market value of the noncash consideration (or
Company issued debt securities) has been finally determined pursuant to
this Section 2.3(c).
(ii) The Company and the Transferor shall each retain a Qualified
Appraiser and notify the other party of its selection within five (5)
Business Days of the Commencement Date to render the determination required
by this Section 2.3(c). If either party fails to timely select its
Qualified Appraiser then the Qualified Appraiser selected by the other
party shall render such determination. The Company and the Transferor
shall each be responsible for the fees and expenses of the Qualified
Appraiser selected by it, unless only one Qualified Appraiser is selected
in which case the Company and the Transferor shall each bear 50% of such
fees and expenses. If a Third Appraiser is selected pursuant to this
Section 2.3(c) the fees and expenses of the Third Appraiser will be shared
equally by the Company and the Transferor.
(iii) The Qualified Appraisers selected by the parties shall
submit their respective independent determinations of the fair market value
of the noncash consideration (and, if applicable, Company issued debt
securities), within 15 Business Days after the Commencement Date. If the
respective determinations of such Qualified Appraisers vary by less than
ten percent (10%), the fair market value of the noncash consideration (and,
if applicable, Company issued debt securities) shall be the average of the
two determinations.
(iv) If such respective determinations vary by ten percent (10%)
or more, the two Appraisers shall promptly designate a third Qualified
Appraiser (the "Third Appraiser"). No party to this Agreement or any
Affiliate of any party to this Agreement or Qualified Appraiser shall,
provide any information to the Third Appraiser as to the
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determinations of the initial Qualified Appraisers or otherwise influence
the Third Appraiser's determination in any way. The Third Appraiser shall
submit its determination of the fair market value of the noncash
consideration (and, if applicable, Company issued debt securities), within
ten (10) Business Days after the date on which the Third Appraiser is
retained. If a Third Appraiser is retained, the fair market value of the
noncash consideration (and, if applicable, Company issued debt securities)
shall equal the average of the two closest of the three determinations,
except that, if the difference between the highest and middle
determinations is no more than 105% and no less than 95% of the difference
between the middle and lowest determinations, then the fair market value
shall equal the middle determination.
(v) In determining the fair market value of the noncash
consideration (and, if applicable, the Company issued debt securities),
each Qualified Appraiser retained pursuant to this Section 2.3(c) shall:
(i) assume that the fair market value of the applicable asset is the price
at which the asset would change hands between a willing buyer and a willing
seller, neither being under any compulsion to buy or sell and each having
reasonable knowledge of all relevant facts; (ii) assume that the applicable
asset would be sold for cash; and (iii) use valuation techniques then
prevailing in the relevant industry.
(d) No voluntary transfers of Member Shares may be made by any Holder
during the Call Period and if the Call Right is exercised, thereafter, except to
the Company pursuant to the Call Right. Accordingly, without limiting the
generality of the foregoing, no voluntary transfer may be made during such
period pursuant to a Bona Fide Offer, notwithstanding the Transferor's
compliance with this Section 2.3 prior to Malone's death.
(e) If there shall be more than one Transferor in any transaction or
series of related transactions covered by an Offer Notice, and if, to the extent
permitted by this Agreement, the Company pays the Company Price with more than
one form of consideration, then unless otherwise agreed in writing by the
Transferors, each Transferor shall receive on a per share basis substantially
the same combination of consideration.
(f) Notwithstanding anything in this Agreement to the contrary, one
or more Members may, at any time and from time to time, sell a number of Member
Shares that in the aggregate for all transfers made pursuant to this subsection
by any or all of the Members is equal to or less than the number of Excepted
Shares. Prior to the consummation of a disposition of any Member Shares in
accordance with this Section 2.3(f), such Member Shares must be converted into
shares of Low Vote Stock of the corresponding series. The number of any Member
Shares disposed of pursuant to this Section 2.3(f) shall be subtracted from the
number of Excepted Shares. Upon the consummation of a disposition of Member
Shares pursuant to this Section 2.3(f), the Member disposing of such Member
Shares shall deliver to the Company a written notice stating the number of
Member Shares so disposed of by such Member and the aggregate number of Excepted
Shares which such Member continues to beneficially own.
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3. PUBLIC SALE ELECTION.
3.1 COMPANY ELECTION. (a) Notwithstanding anything in Section 2.2(d) or
Section 2.3(b)(iii) to the contrary, but subject to Section 2.3(e), the Company
shall have the right to pay all or any portion of the Closing Date Amount or
Company Price, as applicable, in shares of Low Vote Stock in accordance with the
following procedures. At least five (5) Business Days prior to the Closing Date,
the Company shall notify (the "Public Sale Notice") the Holder or each
Transferor, as the case may be, as to the portion of the Closing Date Amount or
Company Price, as applicable, to be paid in shares of Low Vote Stock (the
"Public Sale Dollar Amount"). The number of shares of Low Vote Stock (the
"Resale Stock") deliverable to the Underwriters pursuant to Section 3.2 shall be
that number of shares which when sold in accordance with Section 3.2 will
reasonably be expected to yield aggregate net proceeds collectively to all the
Member(s), Permitted Transferee(s), Members of the Magness Group and other
Persons, if any, participating in the sale (collectively, the "Seller") (after
deduction of underwriting discounts and commissions and assuming the payment by
the Company of all other expenses of registration and sale of the Resale Stock)
of an aggregate amount equal to the Stock Proceeds Amount.
(b) The term "Stock Proceeds Amount" shall mean the sum of (i) Public
Sale Dollar Amount, plus (ii) interest on the Public Sale Dollar Amount,
accruing from and including the Closing Date to the date of payment pursuant to
Section 3.2, at a rate equal to the weighted average interest rate applicable as
of the Closing Date to that portion of the consolidated indebtedness of the
Company that bears interest at a floating interest rate.
(c) Subject to the foregoing, the decision as to which series of Low
Vote Stock and the number of shares of each such series that will comprise the
Resale Stock shall be made by the Company at its discretion. Such shares shall
be held by the Company on behalf of the Seller pending the Sales, and the
Company shall be authorized to deliver such shares to the Underwriters on such
Seller's behalf prior to the closing of the Sales.
3.2 PUBLIC SALE. (a) On the Closing Date, the Company shall provide
an effective registration statement (the "Registration Statement") registering
under the Securities Act resales of the Resale Stock deliverable pursuant to
Section 3.1 having a maximum aggregate offering price (net of underwriting fee
and commissions) equal to the Stock Proceeds Amount. Such Resale Stock shall be
sold (at the Company's discretion but in the form of one or more secondary
offerings on behalf of each Seller) under the Registration Statement during the
period of not more than 45 days following the Closing Date as specified by the
Company (the "Offering Period"). The Company may by notice to each Seller at any
time shorten the Offering Period, and in such event, the Offering Period as
referred to herein shall mean such shorter period. All sales (the "Sales") of
the Resale Stock shall be made on behalf of each Seller by underwriters selected
by the Company (the "Underwriters") pursuant to one or more block trades,
underwritten offerings or otherwise, in each case as determined by the Company.
The actual net proceeds from the Sales (after deduction of underwriting
discounts and commissions) are referred to as the
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"Net Proceeds". The Company shall pay all expenses of registration and sale of
the Resale Stock.
(b) On the fifth Business Day following the termination of the
Offering Period, the Company shall deliver to each Seller such Seller's pro rata
--- ----
portion of the Net Proceeds and if the Net Proceeds are less than the Stock
Proceeds Amount, the difference (the "Difference") shall be paid by the Company
in cash on such date to Sellers on a pro rata basis. The Company may elect to
--- ----
pay some or all of the Difference prior to such date and in such event the
interest component of the portion of the Difference so paid early shall be
calculated with respect to such earlier payment date. If the Net Proceeds
exceed the Stock Proceeds Amount, the Company may retain the excess.
(c) The Company shall indemnify each Seller and the Underwriters in
respect of the Sales to the same extent as the Company would indemnify the
Holder and the Underwriters as provided in the Registration Rights Agreement,
but the Sales shall not be deemed to have been made pursuant to the Registration
Rights Agreement.
(d) Each Seller shall be required to cooperate with the Company in
connection with the Registration Statement and the Sales (including, without
limitation, by executing and delivering underwriting and other documents and
instruments, taking actions and providing information) as shall be reasonably
requested by the Company in connection therewith.
4. CLOSING MATTERS.
4.1 CLOSING DATE. The consummation of the purchase and sale of (i) the
Subject Shares following the exercise of the Call Right pursuant to Section 2.2
or (ii) the Combined Offered Shares following the exercise of the Call Right
pursuant to Section 2.3 (in each case, a "Closing") shall be held at 10:00 a.m.
local time on, respectively, (x) the 155th day following the Exercise Date, or
(y) the 60th day following the date the Election Notice is given or (z) such
other date and at such other time as the Holder or the Transferor and the
Company may agree (the date on which any such Closing occurs is referred to
herein as the "Closing Date"). The Closing shall take place at the principal
offices of the Company or at such other place as the Malone or the Estate (as
the case may be) and the Company may agree.
4.2 CLOSING DELIVERIES. At the Closing, the Company shall pay to the
Member(s) and Permitted
Transferee(s), if any, comprising the Seller (i) any portion of the Closing Date
Amount or Company Price, as applicable, that was required to be paid in cash in
the manner provided in Section 2.2(f) or Section 2.3(b)(iii), as and if
applicable, (ii) deliver certificate(s) registered in the name of each Seller
for the number of shares of Low Vote Stock required to be delivered in payment
of the Gross Stock Value portion of the Gross Purchase Price, and (iii) if the
Company has elected to pay any or all of the Closing Date Amount or Company
Price, as applicable, in shares of Low Vote Stock pursuant to Section 3.1,
deliver the Registration Statement conforming to the requirements of Section
3.2. At the Closing, each of the Member(s)
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and Permitted Transferee(s), if any, participating in the sale shall be
required, as a condition to receiving payment, to deliver to the Company (i) a
stock certificate or certificates, duly endorsed for transfer or in blank,
representing such Person's Subject Shares or Combined Offered Shares, as
applicable, (ii) if applicable, copies of Letters Testamentary or other
documentation evidencing the authority of such Person to transfer any of the
Subject Shares that are evidenced by certificates registered in the name of a
Person other than such Seller, (iii) a certificate, executed by or on behalf of
such Person, in which such Person represents and warrants to the Company that
such Person has good title to the Subject Shares or Combined Offered Shares, as
applicable, being sold by him, free and clear of any liens, claims, charges or
encumbrances and has the legal authority to consummate such sale and (iv) such
other certificates and documents as the Company may reasonably request.
5. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS.
5.1 REPRESENTATIONS AND WARRANTIES. Each party hereto hereby represents
and warrants to the other parties as follows (with such representations and
warranties surviving the execution, delivery and performance of this Agreement):
(a) Such party has the legal right and all requisite power and
authority to make and enter into this Agreement and to perform his or its
obligations hereunder and comply with the provisions hereof. If such party
is the Company, the execution, delivery and performance of this Agreement
by the Company has been duly authorized by all necessary action on its
part. This Agreement has been duly executed and delivered by such party
and constitutes the valid and binding obligation of such party enforceable
against him or it in accordance with its terms except as enforcement may be
limited by bankruptcy, insolvency, moratorium or other similar laws
affecting the rights of creditors generally and except that the
availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding therefor
may be brought;
(b) The execution, delivery and performance of this Agreement by such
party, and the compliance by such party with the provisions hereof, do not
and will not (with or without notice or lapse of time, or both) conflict
with, or result in any violation of, or default under, or give rise to any
right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to such party or any of his or its
properties or assets, other than any such conflicts, violations, defaults,
or other effects which individually or in the aggregate do not and will not
prevent, restrict or impede such party's performance of his or its
obligations under and compliance with the provisions of this Agreement. If
such party is the Company, the execution, delivery and performance of and
compliance with this Agreement by it do not and will not contravene its
charter, by-laws or other organizational document; and
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(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental or regulatory authority or any
other person is required by such party in connection with the execution,
delivery or performance of this Agreement by such party, except, with
respect to the exercise of certain rights granted hereunder, in connection
with Federal and state securities laws.
5.2 GENERAL COVENANTS. (a) In the event that any sale of shares
pursuant to this Agreement would violate any rules or regulations of any
governmental or regulatory agency having jurisdiction or any other material law,
rule, regulation, order, judgment or decree applicable to the parties hereto
(including, with respect to the Company, its subsidiaries or any of the
Company's or such subsidiary's respective properties and assets), then each
party hereto hereby agrees (i) to cooperate with and assist the other in filing
such applications and giving such notices, (ii) to use reasonable efforts to
obtain, and to assist the other in obtaining, such consents, approvals and
waivers, and (iii) to take such other actions, including supplying all
information necessary for any filing, as any affected party may reasonably
request, all as and to the extent necessary or advisable so that the
consummation of such sale will not constitute or result in such a violation.
(b) Each party hereto hereby further agrees that he or it shall not
take any action or enter into any agreement or arrangement restricting or
limiting his or its ability timely and fully to perform all his or its
obligations under this Agreement.
6. STOCKHOLDER'S COVENANT RELATING TO A SALE OF COMPANY.
6.1 LIMITATION ON SIZE OF PREMIUM. (a) In connection with any proposed
Sale of the Company, each Member agrees not to negotiate for or require as a
term of such transaction or as a condition to his agreement to vote therefor
that either (i) the holders of High Vote Stock receive for such High Vote Stock
or (ii) any Member or any Related Party or Affiliate of any Member receives for
the shares of High Vote Stock or Common Stock beneficially owned by any of them,
consideration the value of which on a per share basis exceeds the value per
share payable to (x) holders of shares of Low Vote Stock into which such High
Vote Stock is convertible or (y) holders of Common Stock other than any Member
or any Related Party or Affiliate of any Member, in either case by more than ten
percent (10%) (a "Prohibited Premium"). For the purposes of computing the
existence of a Prohibited Premium, if any noncash consideration to be received
by any holders of Common Stock in any proposed Sale of the Company is the same
for both (A) (i) the holders of High Vote Stock or (ii) any Member or any
Related Party or Affiliate of any Member, as applicable, and (B) (x) holders of
shares of Low Vote Stock into which such High Vote Stock is convertible or (y)
holders of Common Stock other than any Member or any Related Party or Affiliate
of any Member, as applicable, a Prohibited Premium shall be deemed to exist if
the ratio of such noncash consideration given to the Persons listed in (A) above
exceeds the amount of such noncash consideration given to the Persons listed in
(B) above by more than ten percent (10%). If different forms of noncash
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consideration are to be given to the Persons listed in (A) above than to the
Persons listed in (B) above, and there is any disagreement between the
Independent Committee and any such Person as to the value of any such
consideration for the purposes of determining if there is a Prohibited Premium,
then the noncash consideration shall be valued by using the appraisal procedures
set forth in Section 2.3(c).
(b) If a proposed Sale of the Company containing a Prohibited Premium
is submitted to the stockholders of the Company for a vote, each Member agrees
that he will vote all of his Member Shares, and any other shares of voting stock
entitled to vote on such proposal beneficially owned by him, against such
proposal.
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7. MISCELLANEOUS.
7.1 TERM. This Agreement shall continue in full force and effect until
the first to occur of the following: (i) all of the Member Shares have been
purchased by the Company, (ii) all of the Member Shares have been sold to one or
more Prospective Purchasers in compliance with Section 2.3(b) and (ii) the Call
Right under Section 2.2 has expired unexercised.
7.2 BINDING EFFECT; ASSIGNABILITY; ENTIRE AGREEMENT; LEGENDS. (a)
Except as expressly provided herein, no party hereto may assign its rights or
delegate its obligations hereunder without the prior written consent of the
other parties hereto, except that the Company may assign its rights and delegate
its obligations without such consent to any successor corporation by operation
of law. Any assignment or delegation in contravention of this Agreement shall be
void and shall not relieve the assigning or delegating party of any obligation
hereunder. This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
(b) This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter hereof and merges and supersedes
all prior discussions, agreements and understandings of any and every nature
among them with respect to such subject matter. For the sake of certainty, the
parties specifically acknowledge that this Agreement is not intended to merge,
supersede or alter the provisions of (i) the Stockholders Agreement or (ii) any
provision of the Agreement, effective as of January 5, 1998 and titled
"AGREEMENT RE: SETTLEMENT OF MAGNESS ESTATE LITIGATION" among certain parties to
such Stockholders' Agreement and certain other Persons, as it may be amended
from time to time (the "Settlement Agreement"), other than numbered paragraph 10
thereof, or (iii) any separate agreement, release or instrument granted, entered
into or delivered pursuant to such Settlement Agreement.
(c) Except as expressly set forth herein, none of the provisions of
this Agreement shall inure to the benefit of or be enforceable by any Person not
a party hereto.
(d) The provisions of Section 6.4 of the Stockholders Agreement are
hereby incorporated by reference, with the same force and effect as if set forth
at this place.
7.3 AMENDMENTS AND WAIVERS. Subject to Section 7.12 hereof, the
provisions of this Agreement, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers of or consents to departures
from the provisions hereof may not be given unless approved in writing by the
Company and Malone or the Estate.
7.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, regardless of the
laws that might be applicable under principles of conflicts of law.
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7.5 INTERPRETATION. The headings of the sections contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not affect the meaning or interpretation of this
Agreement.
7.6 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, sent by facsimile transmission (with acknowledgment received),
or by reliable overnight courier service, with acknowledgment of receipt
requested to the intended recipient at: (i) in the case of Malone or any other
member of the Malone Group, to Malone or such member at such address as he may
from time to time specify by written notice to the Company and the Magness Group
Representative, (ii) in the case of the Magness Group Representative or any
member of the Magness Group, to the Magness Group Representative at such address
as he may from time to time specify by written notice to the Company and Malone
(or his estate, heirs or personal representative) and (iii) in the case of the
Company, to it at its principal executive offices or at such changed address as
it may from time to time specify in writing to the Magness Group Representative,
the Company and Malone (or his estate, heirs or personal representative).
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) on the date when delivered by hand,
(iii) on the date sent by facsimile transmission (with acknowledgment received)
unless such day is not a Business Day in which case, the next Business Day
following such day or (iv) 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.
7.7 NO IMPLIED WAIVERS. No action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained herein or made pursuant hereto. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any preceding or succeeding breach and no failure by any party to
exercise any right or privilege hereunder shall be deemed a waiver of such
party's rights or privileges hereunder or shall be deemed a waiver of such
party's rights to exercise the same at any subsequent time or times hereunder.
7.8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to constitute one and the same agreement.
7.9. FURTHER ASSURANCES. Each party shall cooperate and take such
actions as may be reasonably requested by another party in order to carry out
the provisions and purposes of this
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Agreement and the transactions contemplated hereby. If, as a result of any
recapitalization, reorganization, merger, consolidation, share exchange or other
transaction or event shares of any substitute, different or new class or series
of High Vote Stock is issued or is issuable (upon exercise of warrants, options,
convertible securities or otherwise) to any Member, then if and to the extent
requested in writing by the Company, such shares shall be subject to terms as
nearly as equivalent as practicable to the provisions of this Agreement and the
Stockholders' Agreement applicable to such Member.
7.10. REMEDIES. In the event of a breach or a threatened breach by one
party to this Agreement of its obligations under this Agreement, each other
party, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, shall be deemed to have suffered or be about to
suffer irreparable harm and will be entitled to specific performance of its
rights under this Agreement. The parties agree that the provisions of this
Agreement shall be specifically enforceable, it being agreed by the parties that
the remedy at law, including monetary damages, for breach of such provision will
be inadequate compensation for any loss and that any defense in any action for
specific performance that a remedy at law would be adequate is waived.
7.11 USE OF CERTAIN WORDS. The use of the words "hereof", "herein",
"hereunder", and words of similar import shall refer to this entire Agreement,
and not to any particular article, section, subsection, clause, or paragraph of
this Agreement, unless the context clearly indicates otherwise. The use in this
Agreement of the masculine, feminine or neither shall be deemed to include a
reference to the others.
7.12. SEVERABILITY. If any provision of this Agreement or the
application thereof to any Person or circumstance is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, provided, that if any provision
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hereof or the application thereof shall be so held to be invalid, void or
unenforceable by a court of competent jurisdiction, then such court may
substitute therefor a suitable and equitable provision in order to carry out, so
far as may be valid and enforceable, the intent and purpose of the invalid, void
or unenforceable provision and, if such court shall fail or decline to do so,
the parties shall negotiate in good faith in an effort to agree upon such a
suitable and equitable provision.
7.13. CONSENT TO JURISDICTION; SERVICE OF PROCESS; WAIVER OF JURY TRIAL.
(a) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY (I) SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN WILMINGTON,
DELAWARE (AND OF ANY APPELLATE COURT TO WHICH AN APPEAL OF ANY JUDGMENT, ORDER,
DECREE OR DECISION OF ANY SUCH COURT MAY BE TAKEN) IN ANY SUIT,
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ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR EITHER CALL
AGREEMENT OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RENDERED IN ANY SUCH
SUIT, ACTION OR PROCEEDING, (II) WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY SUCH COURT, INCLUDING ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM, (III) WAIVES ALL RIGHTS TO A TRIAL BY
JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING AND (IV) WAIVES PERSONAL SERVICE OF
ANY SUMMONS, COMPLAINT OR OTHER PROCESS BY ANY MEANS, MANNER OR METHOD OTHER
THAN IN THE MANNER PROVIDED FOR THE GIVING OF NOTICES TO SUCH PARTY IN SECTION
7.6, AND AGREES THAT ANY PROCESS SERVED UPON SUCH PARTY IN SUCH MANNER SHALL
HAVE THE SAME VALIDITY AND LEGAL FORCE AND EFFECT AS IF SERVED UPON SUCH PARTY
PERSONALLY WITHIN WILMINGTON, DELAWARE.
(b) Nothing in this Section shall affect the right of any party to serve
legal process in any other manner permitted by law or affect the right of any
party to bring any action or proceeding against any other party or its property
in the courts of any other jurisdiction. The consents to jurisdiction set forth
in this Section shall not constitute general consents to service of process in
the State of Delaware, shall have no effect for any purpose except as provided
in this Section and shall not be deemed to confer rights on any Person other
than the parties to this Agreement.
7.14. FACSIMILE SIGNATURES. This Agreement and any other instrument
executed and delivered by any party pursuant to this Agreement may be executed
by facsimile signatures.
7.15. ATTORNEYS' FEES. In any action or proceeding brought to enforce any
provision of this Agreement, and in any action or proceeding otherwise arising
under or with respect to this Agreement, the prevailing party shall be entitled
to recover reasonable attorneys' fees in addition to any other available remedy.
7.16. EXPENSES. Except as otherwise expressly provided in this Agreement,
each party will pay its own costs and expenses in connection with the
negotiation, preparation, execution, delivery and performance of this Agreement,
any amendment or supplement to or modification of this Agreement and any and all
other agreements, instruments, certificates and other documents
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furnished pursuant hereto or in connection herewith.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
TELE-COMMUNICATIONS, INC.
By:
---------------------------------
Name:
Title:
---------------------------------
JOHN C. MALONE
---------------------------------
LESLIE MALONE
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