<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
Tele-Communications, Inc.
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(NAME OF ISSUER)
1. Tele-Communications, Inc. Series A TCI Group Common Stock, par value $1.00
per share ("Series A TCI Group Common Stock")
2. Tele-Communications, Inc. Series B TCI Group Common Stock, par value $1.00
per share ("Series B TCI Group Common Stock")
3. Tele-Communications, Inc. Series A Liberty Media Group Common Stock, par
value $1.00 per share ("Series A Liberty Media Group Common Stock")
4. Tele-Communications, Inc. Series B Liberty Media Group Common Stock, par
value $1.00 per share ("Series B Liberty Media Group Common Stock")
5. Tele-Communications, Inc. Series A TCI Ventures Group Common Stock, par value
$1.00 per share ("Series A Ventures Group Common Stock")
6. Tele-Communications, Inc. Series B TCI Ventures Group Common Stock, par value
$1.00 per share ("Series B Ventures Group Common Stock")
7. Class B 6% Cumulative Redeemable Exchangeable Junior Preferred Stock, par
value $.01 per share ("Class B Preferred Stock")
- -------------------------------------------------------------------------------
(TITLE OF CLASS OF SECURITIES)
1. Series A TCI Group Common Stock: 87924V101
2. Series B TCI Group Common Stock: 87924V200
3. Series A Liberty Media Group Common Stock: 87924V507
4. Series B Liberty Media Group Common Stock: 87924V606
5. Series A Ventures Group Common Stock: 87924V887
6. Series B Ventures Group Common Stock: 87924V879
7. Class B Preferred Stock: 87924V309
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(CUSIP NUMBER)
Raymond L. Sutton, Jr.
Baker & Hostetler LLP
303 East 17th Avenue, Suite 1100
Denver, Colorado 80203
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS)
January 5, 1998
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(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 that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box. / /
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7(b) 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).
Exhibit Index on Page A-1
Page 1 of 12
<PAGE>
<TABLE>
<CAPTION>
CUSIP Nos.
<S> <C>
Series A TCI Group Common Stock: 87924V101
Series B TCI Group Common Stock: 87924V200
Series A Liberty Media Group Common Stock: 87924V507
Series B Liberty Media Group Common Stock: 87924V606
Series A Ventures Group Common Stock: 87924V887
Series B Ventures Group Common Stock: 87924V879
Class B Preferred Stock: 87924V309
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1) Names of Reporting Persons I.R.S. Identification Nos. of Above Persons (entities only)
Gary Magness
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2) Check the Appropriate Box if a Member of a Group (See Instructions)
(a) / /
(b) /x/
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3) SEC Use Only
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4) Source of Funds (See Instructions) BK
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5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) / /
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6) Citizenship or Place of Organization U.S.A.
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- ------------------ --------------------------------------------------------------------------------------------------
Number of Shares 7) Sole Voting Power Series A TCI Group Common Stock 593,147(1)
Beneficially Series B TCI Group Common Stock 575,824(2)
Owned by Each Series A Liberty Media Group Common Stock 438,583(1)
Reporting Person Series B Liberty Media Group Common Stock 281,197(2)
With Series A Ventures Group Common Stock 560,175(1)
Series B Ventures Group Common Stock 317,547(2)
Class B Preferred Stock 2,098(2)
- ------------------ --------------------------------------------------------------------------------------------------
- ------------------ --------------------------------------------------------------------------------------------------
8) Shared Voting Power Series A TCI Group Common Stock 14,206,616(1)
Series B TCI Group Common Stock 14,206,616(2)
Series A Liberty Media Group Common Stock 18,037,921(1)
Series B Liberty Media Group Common Stock 11,454,693(2)
Series A Ventures Group Common Stock 12,034,298(1)
Series B Ventures Group Common Stock 12,034,298(2)
Class B Preferred Stock 125,000(2)
- ------------------ --------------------------------------------------------------------------------------------------
- ------------------ --------------------------------------------------------------------------------------------------
9) Sole Dispositive Power Series A TCI Group Common Stock 593,147(1)
Series B TCI Group Common Stock 575,824(2)
Series A Liberty Media Group Common Stock 438,583(1)
Series B Liberty Media Group Common Stock 281,197(2)
Series A Ventures Group Common Stock 560,175(1)
Series B Ventures Group Common Stock 317,547(2)
Class B Preferred Stock 2,098(2)
- ------------------ --------------------------------------------------------------------------------------------------
- ------------------ --------------------------------------------------------------------------------------------------
10) Shared Dispositive Power Series A TCI Group Common Stock 14,206,616(1)
Series B TCI Group Common Stock 14,206,616(2)
Series A Liberty Media Group Common Stock 18,037,921(1)
Series B Liberty Media Group Common Stock 11,454,693(2)
Series A Ventures Group Common Stock 12,034,298(1)
Series B Ventures Group Common Stock 12,034,298(2)
Class B Preferred Stock 125,000(2)
- ------------------ --------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
11)Aggregate Amount Beneficially Owned by Each Reporting Person
Series A TCI Group Common Stock 14,799,763(1)
Series B TCI Group Common Stock 14,782,440(2)
Series A Liberty Media Group Common Stock 18,476,504(1)
Series B Liberty Media Group Common Stock 11,735,890(2)
Series A Ventures Group Common Stock 12,594,473(1)
Series B Ventures Group Common Stock 12,351,845(2)
Class B Preferred Stock 127,098(2)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / /
- ---------------------------------------------------------------------------------------------------------------------
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13) Percent of Class Represented by Amount in Row (11)
3.1% of Series A TCI Group Common Stock
30.7% of Series B TCI Group Common Stock
5.7% of Series A Liberty Media Group Common Stock
37.0% of Series B Liberty Media Group Common Stock
3.3% of Series A Ventures Group Common Stock
27.9% of Series B Ventures Group Common Stock
8.2% of Class B Preferred Stock
- ---------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions) IN
- --------------------------------------------------------------------------------------------------------------------
(1) Series B TCI Group Common Stock, Series B Liberty Media
Group Common Stock and Series B Ventures Group Common Stock are
convertible at any time on a one-for-one basis into Series A TCI
Group Common Stock, Series A Liberty Media Group Common Stock and
Series A Ventures Group Common Stock, respectively. SEE Item 5 below.
The numbers of shares of Series A TCI Group Common Stock, Series A
Liberty Media Group Common Stock and Series A Ventures Group Common
Stock shown in rows 7 through 11 above assume that the shares of
Series B TCI Group Common Stock, Series B Liberty Media Group Common
Stock and Series B Ventures Group Common Stock shown in rows 7
through 11 above have been converted into shares of Series A TCI
Group Common Stock, Series A Liberty Media Group Common Stock, and
Series A Ventures Group Common Stock, respectively.
(2) SEE Item 5.
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</TABLE>
Page 2 of 12
<PAGE>
ITEM 1. SECURITY AND ISSUER
The equity securities to which this Schedule 13D relates are as
follows:
1. Tele-Communications, Inc. Series A TCI Group, Common Stock, par
value $1.00 per share ("Series A TCI Group Common Stock");
2. Tele-Communications, Inc. Series B TCI Group, Common Stock, par
value $1.00 per share ("Series B TCI Group Common Stock");
3. Tele-Communications, Inc. Series A Liberty Media Group, Common
Stock, par value $1.00 per share ("Series A Liberty Media Group Common Stock");
4. Tele-Communications, Inc. Series B Liberty Media Group, par value
$1.00 per share ("Series B Liberty Media Group Common Stock");
5. Tele-Communications, Inc. Series A TCI Ventures Group, Common Stock,
par value $1.00 per share ("Series A Ventures Group Common Stock");
6. Tele-Communications, Inc. Series B TCI Ventures Group, Common Stock,
par value $1.00 per share ("Series B Ventures Group Common Stock"); and
7. Class B 6% Cumulative Redeemable Exchangeable Junior Preferred
Stock, par value $.01 per share ("Class B Preferred Stock").
The issuer of the Series A TCI Group Common Stock, the Series B TCI
Group Common Stock, the Series A Liberty Media Group Common Stock, the Series B
Liberty Media Group Common Stock, the Series A Ventures Group Common Stock, the
Series B Ventures Group Common Stock and the Class B Preferred Stock
(collectively, the "Company Securities") is Tele-Communications, Inc. (the
"Company") whose principal executive offices are located at Terrace Tower II,
5619 DTC Parkway, Englewood, Colorado 80111.
ITEM 2. IDENTITY AND BACKGROUND
(a) This Schedule 13D is filed by Gary Magness. On January 5, 1998, Kim
Magness and Gary Magness were appointed as co-personal representatives of the
Estate of Bob Magness (the "Bob Magness Estate"), the late founder and former
Chairman of the Board of the Company, which directly owns Company. Gary Magness
also owns Company Securities individually.
(b) The business address of Gary Magness is c/o Raymond L. Sutton, Jr.,
Baker & Hostetler LLP, 303 East 17th Avenue, Suite 1100, Denver, Colorado 80203.
(c) Gary Magness is the co-personal representative of the Bob Magness
Estate with a principal address of Estate of Bob Magness, c/o Raymond L. Sutton,
Jr., Baker & Hostetler LLP, 303 East 17th Avenue, Suite 1100, Denver, Colorado
80203.
(d) The filing person has not, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) The filing person has not been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceedings was or is
Page 3 of 12
<PAGE>
subject to a judgment, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or state
securities laws, or finding any violation with respect to such laws.
(f) The filing person is a citizen of the United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The source and amount of funds used to consummate the transactions
described in Item 4 below are as follows:
(1) $74,384,596 was provided by cash that the Bob Magness Estate had on
hand.
(2) $123,579,980 was provided by the cash paid to the Bob Magness
Estate pursuant to the Magness Call Agreement (as defined in Item 4 below).
(3) $29,900,000 was borrowed by the Bob Magness Estate under a credit
facility provided by Bankers Trust Company (the "Bank"). The maximum principal
amount of the promissory note evidencing this debt is $80,000,000. The note is
dated February 9, 1998. The promissory note contains several variables with
regard to interest rates and payment terms. In all events, the unpaid principal
balance, together with any unpaid accrued interest, must be paid on February 9,
1999, unless the note is extended with the Bank's consent as provided in the
note. A total of $29,900,000 has been advanced under the note and bears an
interest rate of .375% above the LIBOR rate in effect on the date of borrowing.
The promissory note is secured by various stock holdings of the Bob Magness
Estate. See Exhibit 99.3.
(4) $48,000,000 was borrowed by the Betsy Magness Estate under a credit
facility provided by the Bank. The proceeds of the loan were paid to the Bob
Magness Estate in repayment of money the Betsy Magness Estate owed to the Bob
Magness Estate. The maximum principal amount of the promissory note evidencing
this debt is $50,000,000. The note is dated February 9, 1998. The promissory
note contains several variables with regard to interest rates and payment terms.
In all events, the unpaid principal balance, together with any unpaid accrued
interest, must be paid on February 9, 1999, unless the note is extended with the
Bank's consent as provided in the note. A total of $48,000,000 has been advanced
under the note and bears an interest rate of .375% above the LIBOR rate in
effect on the date of the borrowing, as calculated under the terms of the note.
The promissory note is secured by various stock holdings of the Betsy Magness
Estate. See Exhibit 99.4.
ITEM 4. PURPOSE OF TRANSACTION
On June 16, 1997, the Company exchanged (the "Exchange") 30,545,864
shares of Series A TCI Group Common Stock for the same number of shares of
Series B TCI Group Common Stock owned by the Bob Magness Estate. Subsequent to
the Exchange, the Bob Magness Estate sold (the "Sale") the shares of Series A
TCI Group Common Stock received in the Exchange, together with approximately 1.5
million shares of Series A TCI Group Common Stock that the Bob Magness Estate
previously owned (collectively, the "Option Shares"), to two investment banking
firms (the "Investment Bankers") for approximately $530 million (the "Sale
Price"). Subsequent to the Sale, the Company entered into an agreement with the
Investment Bankers whereby the Company had the option, but not the obligation,
to purchase the Option Shares at any time within two years (the "Option Period")
from the date of the Sale. In connection with
Page 4 of 12
<PAGE>
the Exchange and Sale, Dr. John Malone, the Company's Chairman and Chief
Executive Officer ("Malone"), agreed to forgo the exercise of certain option
rights and in consideration, the Company granted to Malone the right (the
"Malone Right") to acquire, at any time and from time to time prior to June
30, 1999, up to 30,545,864 shares of Series B TCI Group Common Stock for
either (or a combination of): (i) Series A TCI Group Common Stock on a
one-for-one basis or (ii) cash based on the closing sales price of the Series
B TCI Group Common Stock on Nasdaq for a specified period prior to the
acquisition of such shares by Malone. In addition, subsequent to the sale the
Company gave holders of the Series A TCI Group Common Stock and Series B TCI
Group Common Stock the right to exchange a portion of such shares for the
then new Series A Ventures Group Common Stock or Series B Ventures Common
Stock (as the case may be) (the "Ventures Spin-Off").
Proceedings relating to the probate of the Bob Magness Estate were
commenced in the District Court for Arapahoe County, Colorado under the caption
In re Estate of Bob Magness, Case No. 96 PR944 (the "Proceedings"). In
connection with the Proceedings, one or more of Gary Magness and Kim Magness
(the sons of Bob Magness), Sharon Magness (the surviving wife of Bob Magness)
and the original personal representatives of the Bob Magness Estate advanced
various claims, causes of action, demands, complaints and requests against one
or more of the others. In addition, Kim Magness and Gary Magness, in a Complaint
And Request To Void Sale of TCI Stock And For Damages And Surcharge, filed in
the Proceedings on October 29, 1997, advanced various claims relating to the
Exchange and Sale against the Company, Malone and the original personal
representatives of the Magness Estate.
On January 5, 1998, the Company announced that a settlement (the
"Magness Settlement") had been reached in the Proceedings brought against it and
other parties in connection with the administration of the Bob Magness Estate.
In connection with the Magness Settlement, portions of the Exchange and Sale
were rescinded and unwound such that 10,201,041 shares of Series A TCI Group
Common Stock and 11,666,506 shares (which includes shares issued pursuant to a
stock dividend referred to in footnote 1 to Item 5(a) below) (the "Stock
Dividend") of Series A Ventures Group Common Stock were returned to the Company
as authorized but unissued shares. The Company then issued to the Bob Magness
Estate 10,017,145 shares of Series B TCI Group Common Stock and 12,034,298
shares of Series B Ventures Group Common Stock (including shares issued pursuant
to the Stock Dividend and fully reflecting the Ventures Spin-Off). The Bob
Magness Estate was permitted to participate in the Ventures Spin-Off as if it
had held such shares of Series B TCI Group Common Stock at the time of the
Ventures Spin-Off and such participation is reflected in the number of shares of
Series B TCI Group Common Stock and Series B Ventures Group Common Stock owned
by the Bob Magness Estate. The Bob Magness Estate returned to the Company (which
returned to the Investment Bankers) approximately $264 million to rescind and
unwind portions of the Exchange and Sale. In addition, in connection with the
Magness Settlement, the Betsy Magness Estate received the right to exchange its
1,339,415 shares of Series A TCI Group Common Stock and 1,531,834 shares of
Series A Ventures Group Common Stock for an equal number of Series B TCI Group
Common Stock and Series B Ventures Group Common Stock, respectively. Finally, on
January 6, 1998, the Bob Magness Estate received 154,200 shares of Series B TCI
Group Common Stock as part of a settlement of litigation between shareholders of
Liberty Media Corp. ("Liberty Media") and the Company arising in connection with
the merger of Liberty Media with the Company. Bob Magness had been a shareholder
of Liberty Media prior to such merger. In addition, Kim Magness and Gary Magness
were named as co-personal representatives of the Bob Magness Estate.
Page 5 of 12
<PAGE>
On February 9, 1998, in connection with the Magness Settlement, the
Company entered into a call agreement (the "Malone Call Agreement") with Malone
and Malone's wife (together with Malone, the "Malones"), under which the Malones
granted to the Company the right to acquire the Malones' high-voting shares,
currently consisting of an aggregate of approximately 60 million shares (which
includes shares issued pursuant to the Stock Dividend) of Series B TCI Group
Common Stock, Series B Liberty Media Group Common Stock and Series B Ventures
Group Common Stock (collectively, the "Series B Shares"), upon Malone's death or
upon a contemplated sale of the Series B Shares (other than a minimal amount) to
third persons. In either such event, the Company has the right to acquire the
shares at a maximum price equal to the then relevant market price of shares of
"low-voting" Series A TCI Group Common Stock, Series A Liberty Media Group
Common Stock and Series A Ventures Group Common Stock (the "Series A Stock")
plus a ten percent premium. The Malones also agreed that if the Company were
ever to be sold to another entity, then the maximum premium that the Malones
would receive on their Series B Shares would be no greater than a ten percent
premium over the price paid for the relevant shares of Series A Stock. The
Company paid approximately $150 million to the Malones for agreeing to the terms
of the Malone Call Agreement.
Also on February 9, 1998, in connection with the Magness Settlement,
the Betsy Magness Estate and the Bob Magness Estate, Kim Magness, Gary Magness
and certain others (collectively, the "Magness Group") also entered into a call
agreement with the Company (with substantially the same terms as the one entered
into by the Malones, including a call on the shares owned by the Magness Group
upon Malone's death (the "Magness Call Agreement")), on the Magness Group's
aggregate of approximately 49 million Series B Shares (which includes shares
issued pursuant to the Stock Dividend). The Magness Group was paid $123,579,980
by the Company for entering into the Magness Call Agreement. Additionally, on
February 9, 1998, the Magness Group entered into a Stockholders' Agreement (the
"Stockholders' Agreement") with the Malones and the Company under which (i) the
Magness Group and the Malones agree to consult with each other in connection
with matters to be brought to the vote of the Company's shareholders, subject to
the proviso that if they cannot mutually agree on how to vote the shares, Malone
has an irrevocable proxy to vote the Series B Shares owned by the Magness Group,
(ii) the Magness Group may designate a nominee for the Board and Malone has
agreed to vote his Series B Shares for such nominee and (iii) certain "tag along
rights" have been created in favor of the Magness Group with respect to any sale
by the Malones of Series B Shares and certain "drag along rights" have been
created in favor of the Malones with respect to the sale of all or substantially
all of the Series B Shares beneficially owned by Malone or of the business or
assets of the Company pursuant to which the Magness Group will consent to such
sale and, if the sale is of the Series B Shares, the Magness Group must either
convert their Series B Shares to the respective Series A Shares of the Company
or sell their Series B Shares pursuant to the terms of such sale. In addition,
the Malone Right granted by the Company to Malone to acquire 30,545,864 shares
of Series B TCI Group Common Stock has been reduced to an option to acquire
14,511,570 shares of Series B TCI Group Common Stock. Pursuant to the terms of
the Stockholders' Agreement, the Magness Group has the right to participate in
the reduced Malone Right on a proportionate basis with respect to 12,406,238
shares of the 14,511,570 shares subject to the Malone Right.
The filing person has no present plan or proposal that relates to or
would result in:
(a) the acquisition by any person of additional securities of the
Company, or the disposition of securities of the Company; except that, although
there is no present plan or proposal to dispose of the Company Securities, the
personal representatives intend to sell or otherwise dispose of the Company
Securities (i) as may be required to pay the expenses of
Page 6 of 12
<PAGE>
administration and other liabilities of the Bob Magness Estate, including the
Bob Magness Estate tax liabilities, (ii) as may be required of the personal
representatives in fulfillment of their fiduciary duties to the Bob Magness
Estate, and (iii) as may be required to effect the distribution of the assets
of the Bob Magness Estate to the beneficiaries of the Bob Magness Estate;
(b) an extraordinary corporate transaction, such as a merger,
reorganization, or liquidation, involving the Company or any of its
subsidiaries;
(c) a sale or transfer of a material amount of assets of the Company or
any of its subsidiaries;
(d) any change in the present board of directors of the Company or
management of the Company, including any plans or proposals to change the number
or term of directors or to fill any existing vacancies on the board;
(e) any material change in the present capitalization or dividend
policy of the Company;
(f) any other material change in the Company's business or corporate
structure;
(g) changes in the Company's certificate of incorporation or bylaws or
other actions which may impede the acquisition of control of the Company by any
person;
(h) causing a class of securities of the Company to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Act; or
(j) any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) The aggregate number and percentage of the Company Securities
beneficially owned by the filing persons are as follows:
Page 7 of 12
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF TOTAL
BENEFICIAL OWNERSHIP CLASS POWER(1) VOTING POWER(1)
TITLE OF CLASS
<S> <C> <C> <C>
16.5%
Series A TCI Group Common Stock 14,799,763(2)(3)(4)(5)(6) 3.1%
Series B TCI Group Common Stock 14,782,440(2)(3)(4)(5)(6) 30.7%
Series A Liberty Media Group Common Stock 18,476,504(2)(3)(4)(5)(6) 5.7%
Series B Liberty Media Group Common Stock 11,735,890(2)(3)(4)(6) 37.0%
Series A Ventures Group Common Stock 12,594,473(2)(3)(4)(5) 3.3%
Series B Ventures Group Common Stock 12,351,845(2)(3)(4)(5) 27.9%
Class B Preferred Stock 127,098(4) 8.2%
</TABLE>
(1) Based on 458,473,123 shares of Tele-Communications, Inc. Series A TCI
Group Common Stock, 48,230,923 shares of Series B TCI Group Common
Stock, 313,225,982 shares of Series A Liberty Media Group Common Stock,
31,681,124 shares of Series B Liberty Media Group Common Stock,
365,719,524 shares of Tele-Communications, Inc. Series A TCI Ventures
Group Common Stock, 44,228,902 shares of Series B Ventures Group Common
Stock, 1,552,490 shares of Class B Preferred Stock, 70,575 shares of
TCI Group Preferred Stock, Series C, 105,862 shares of Liberty Media
Group Preferred Stock, Series C, 6,567,344 shares of Redeemable
Convertible TCI Group Preferred Stock, Series G, and 6,567,894 shares
of Redeemable Convertible Liberty Media Group Preferred Stock, Series
H, outstanding on December 31, 1997, in each case after elimination of
shares then held by the Company and its majority owned subsidiaries.
The aforementioned share numbers reflect a stock dividend announced by
the Company in January 1998, and distributed effective February 6,
1998, in which the Company issued to the record holders at the close of
business on January 30, 1998: (a) one share of Series A Liberty Media
Group Common Stock for every two shares of Series A Liberty Media Group
Common Stock held and one share of Series B Liberty Media Group Common
Stock for every two shares of Series B Liberty Media Group Common Stock
held; and (b) one share of Series A Ventures Group Common Stock for
every share of Series A Ventures Group Common Stock held and one share
of Series B Ventures Group Common Stock for every share of Series B
Ventures Group Common Stock held. As a result of the transactions
described in Item 4 hereof, the following adjustments to the December
31, 1997 outstanding share numbers were made: (i) a reduction of
10,201,040 shares in the outstanding number of Series A TCI Group
Common Stock, (ii) an increase of 10,017,145 shares in the outstanding
number of Series B TCI Group Common Stock, (iii) a reduction of
11,666,508 shares in the outstanding number of Series A Ventures Group
Common Stock, (iv) an increase of 12,034,298 shares in the outstanding
number of Series B Ventures Group Common Stock.
(2) Series B TCI Group Common Stock, Series B Liberty Media Group Common
Stock and Series B Ventures Group Common Stock ("Series B Shares") are
convertible at any time on a one-for-one basis into Series A TCI Group
Common Stock, Series A Liberty Media Group Common Stock and Series A
Ventures Group Common Stock ("Series A Shares"), respectively. The
numbers of shares of Series A TCI Group Common Stock, Series A Liberty
Media Group Common Stock and Series A Ventures Group Common Stock shown
in this Item 5 assume that the shares of Series B TCI Group Common
Stock, Series B Liberty Media Group
Page 8 of 12
<PAGE>
Common Stock, and Series B Ventures Group Common Stock have been fully
converted into shares of Series A TCI Group Common Stock, Series A
Liberty Media Group Common Stock, and Series A Ventures Group Common
Stock, respectively.
In addition, each share of Series B TCI Group Common Stock, Series B
Liberty Media Group Common Stock and Series B Ventures Group Common
Stock is entitled to 10 votes per share and each share of Series A
TCI Group Common Stock, Series A Liberty Media Group Common Stock
and Series A Ventures Group Common Stock is entitled to one vote per
share. Holders of Class B Preferred Stock vote with the holders of
the Series A TCI Group Common Stock, Series B TCI Group Common Stock,
Series A Liberty Media Group Common Stock, Series B Liberty Media
Group Common Stock, Series A Ventures Group Common Stock, Series B
Ventures Group Common Stock, and certain classes/series of the
Company preferred stock on the election of directors. Accordingly,
when these series and classes of stock are aggregated, Gary Magness
may be deemed to currently beneficially own voting equity
securities representing approximately 16.5% of the voting power
with respect to a general election of directors of the Company.
(3) Pursuant to a letter agreement dated June 17, 1988 (the "1988
Agreement"), the late Bob Magness and Kearns-Tribune Corporation, a
newspaper publishing concern ("Kearns"), each granted Malone certain
rights with respect to the then Class B Common Stock of TCI owned by
them. Malone agreed with the Company to forego the exercise of such
rights in connection with the June 16, 1997 sale described in Item 4
above whereby the Bob Magness Estate exchanged with the Company
30,545,864 shares of Series B TCI Group Common Stock for an equal
number of shares of Series A TCI Group Common Stock (the "Exchange").
In consideration thereof, the Company granted Malone the right to
acquire, at any time and from time to time prior to June 30, 1999 (the
"Malone Right"), up to 30,545,864 shares of Series B TCI Group Common
Stock for either (or a combination of): (i) Series A TCI Group Common
Stock on a one-for-one basis or (ii) cash based on the closing sale
price of the Series B TCI Group Common Stock on Nasdaq for a specified
period prior to the acquisition of such shares by Malone. Effective
February 9, 1998, however, a portion of the Malone Right has been
rescinded and unwound leaving 14,511,570 shares of Series B TCI Group
Common Stock subject to the Malone Right. The Stockholders' Agreement
gives the Magness Group and Malone the right to exercise the Malone
Right on a proportionate basis as to 12,406,238 shares of the
14,511,570 shares subject to the Malone Right. Of this Malone Right,
the Bob Magness Estate has a proportionate right to purchase 4,035,271
shares, the Betsy Magness Estate has a proportionate right to purchase
1,309,338 shares, Malone has a proportionate right to purchase
6,809,537 shares, Kim Magness has a proportionate right to purchase
5,460,148 shares (4,035,271 shares by means of his role as co-personal
representative of the Bob Magness Estate, 1,309,338 shares as personal
representative of the Betsy Magness Estate and 115,539 shares
individually), and Gary Magness has a proportionate right to purchase
4,171,825 shares (4,035,271 shares by means of his role as co-personal
representative of the Bob Magness Estate and 136,554 shares
individually). If the Magness Group or any member thereof declines to
participate in the Malone Right, Malone may acquire all such shares.
In connection with the foregoing, on February 9, 1998, Malone and his
spouse (the "Malone Group") and the Magness Group entered into the
Stockholders' Agreement (as described in Item 4 above) pursuant to
which the parties agreed, among other things, to consult with each
other on any matter coming to a vote of the Company's stockholders
provided, however, that in the event of a disagreement, the shares of
Series B TCI Group Common Stock, Series B Liberty Media Group Common
Stock and Series B Ventures Group Common Stock held by the Malone Group
and the Magness Group will be voted in the manner directed by Malone
pursuant to an irrevocable proxy given by the Magness Group. See Item 4
above for more information on the Stockholders' Agreement.
In addition, shares of Series B TCI Group Common Stock, Series B
Liberty Media Group Common Stock, and Series B Ventures Group Common
Stock held by Kim Magness, Gary Magness, the Bob Magness Estate and the
Betsy Magness Estate are subject to the terms of the Magness Call
Agreement. SEE Item 4.
(4) Effective January 5, 1998, Kim Magness and Gary Magness were appointed
co-personal representatives of the Bob Magness Estate. Accordingly, the
following shares beneficially owned by the Bob Magness Estate are
reflected in full in Kim Magness' and Gary Magness' share information
(i) 14,206,616 shares of Series A TCI Group Common Stock, (ii)
14,206,616 shares of Series B TCI Group Common Stock (which number
includes 4,035,271 shares of Series B TCI Group Common Stock
representing the Bob Magness Estate's proportional share of the Malone
Right), (iii) 18,037,921 shares of Series A Liberty Media Group Common
Stock, (iv) 11,454,693 shares of Series B Liberty Media Group Common
Stock, (v) 12,034,298 shares of Series A Ventures Group Common Stock,
(vi) 12,034,298 shares of Series B Ventures Group Common Stock, and
(vii) 125,000 shares of Class B Preferred Stock. The foregoing share
numbers assume
Page 9 of 12
<PAGE>
the conversion in full of all Series B Shares into Series A Shares. SEE
footnote 2 to this Item 5(a) for an explanation of the convertibility
of Series B Shares into Series A Shares.
(5) Includes, as applicable, 8,313 shares of Series A TCI Group Common
Stock, 102 shares of Series B TCI Group Common Stock, 6,300 shares of
Series A Liberty Media Group Common Stock, 17,402 shares of Series A
Ventures Group Common Stock, and 5,796 shares of Series B Ventures
Group Common Stock beneficially owned by Mr. Magness' spouse, as to
which Mr. Magness disclaims any beneficial ownership thereof. The
foregoing share numbers assume the conversion in full of all Series B
Shares into Series A Shares. SEE footnote 2 to this Item 5(a) for an
explanation of the convertibility of Series B Shares into Series A
Shares.
(6) Includes, as applicable, 3,850 shares of Series A TCI Group Common
Stock, 1,100 shares of Series B TCI Group Common Stock, 920 shares of
Series A Liberty Media Group Common Stock and 500 shares of Series B
Liberty Media Group Common Stock beneficially owned by Mr. Magness'
daughter, as to which Mr. Magness holds such shares as custodian and
disclaims any beneficial ownership thereof. The foregoing share numbers
assume the conversion in full of all Series B Shares into Series A
Shares. SEE footnote 2 to this Item 5(a) for an explanation of the
convertibility of Series B Shares into Series A Shares.
(b) The following indicates for the filing person the number of
shares of Company Securities as to which there is sole or
shared power (as a co-personal representative of the Bob
Magness Estate) to vote or dispose of the shares:
<TABLE>
<CAPTION>
Class of Security Sole Power Shared Power
----------------- ---------- ------------
<S> <C> <C>
Series A TCI Group Common Stock 593,147 14,206,616
Series B TCI Group Common Stock 575,824 14,206,616
Series A Liberty Media Group Common Stock 438,583 18,037,921
Series B Liberty Media Group Common Stock 281,197 11,454,693
Series A Ventures Group Common Stock 560,175 12,034,298
Series B Ventures Group Common Stock 317,547 12,034,298
Class B Preferred Stock 2,098 125,000
</TABLE>
(c) The transactions described in Item 4 are the only transactions
effected during the last sixty days by the person named in
Item 5(a) above.
(d) No person is known by the filing person to have the right to
receive or the power to direct the receipt of dividends from,
or the proceeds from the sale of, the Company Securities
identified in this Item 5.
(e) Not Applicable
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
The Company, the Malone Group and the Magness Group are parties to the
Stockholders' Agreement and the Company and the Magness Group are parties to the
Magness Call Agreement, both as described in Item 4 above.
The Stockholders' Agreement and the Magness Call Agreement are attached
to this Statement as Exhibits 99.1 and 99.2, respectively, and are incorporated
herein by reference.
Page 10 of 12
<PAGE>
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
EXHIBIT DESCRIPTION
99.1. Stockholders' Agreement dated as of February 9, 1998, among the
Company, the Malone Group and the Magness Group
99.2. Call Agreement dated as of February 9, 1998, between the Company and
the Magness Group
99.3. Secured Promissory Note in the principal sum of $80,000,000 payable by
the Estate of Bob J. Magness to Bankers Trust Company
99.4. Borrower Security and Pledge Agreement made by the Estate of Bob
Magness to Bankers Trust Company
99.5. Restated Secured Promissory Note in the principal sum of $50,000,000
payable by the Estate of Betsy Ruth Magness to Bankers Trust Company
99.6. Restated Borrower Security and Pledge Agreement made by the Estate of
Betsy Ruth Magness to Bankers Trust Company
Page 11 of 12
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
Dated: October 8, 1998
/s/ Gary Magness
- -------------------------
Gary Magness
Page 12 of 12
<PAGE>
INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
99.1 Stockholders' Agreement dated as of February 9, 1998, among the
Company, the Malone Group and the Magness Group
99.2 Call Agreement dated as of February 9, 1998, between the Company and
the Magness Group
99.3 Secured Promissory Note in the principal sum of $80,000,000 payable
by the Estate of Bob J. Magness to Bankers Trust Company
99.4 Borrower Security and Pledge Agreement made by the Estate of Bob
Magness to Bankers Trust Company
99.5 Restated Secured Promissory Note in the principal sum of $50,000,000
payable by the Estate of Betsy Ruth Magness to Bankers Trust Company
99.6 Restated Borrower Security and Pledge Agreement made by the Estate of
Betsy Ruth Magness to Bankers Trust Company
A-1
<PAGE>
EXHIBIT 99.1
<PAGE>
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT, dated as of February 9, 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.
<PAGE>
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 any Company. JCM or such Company shall give the Magness
Group Representative prompt written notice of any
2
<PAGE>
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 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
3
<PAGE>
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,
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
4
<PAGE>
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 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.
5
<PAGE>
(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
before 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 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
6
<PAGE>
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 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.
7
<PAGE>
(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 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
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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
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- 9
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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 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
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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.
(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.
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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.
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
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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.
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
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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.
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.
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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") thedefinition of which is based on a 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
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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 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
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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 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.
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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 BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS
AND CONDITIONS OF A CERTAIN STOCKHOLDERS' AGREEMENT AND/OR CALL
AGREEMENT, EACH DATED AS OF FEBRUARY __, 1998 BY AND AMONG
TELE-COMMUNICATIONS, INC., A DELAWARE CORPORATION, AND CERTAIN OF ITS
STOCKHOLDERS. A COPY OF EACH SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICE OF THE ISSUER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE.
THE SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE OR ANY INTEREST THEREIN IS RESTRICTED BY
SUCH AGREEMENT(S) AND ANY SUCH SALE, PLEDGE, TRANSFER OR OTHER
DISPOSITION MAY BE MADE ONLY UPON COMPLIANCE THEREWITH. SUCH
AGREEMENT(S) ALSO CONTAIN(S) PROVISIONS RELATING TO THE EXERCISE OF
CERTAIN VOTING AND CONSENT RIGHTS, IF ANY, OF THE HOLDER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE AND MAY GRANT THE ISSUER OR
OTHERS THE RIGHT TO PURCHASE SUCH SHARES UNDER CERTAIN CIRCUMSTANCES."
(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
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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 of the holders of shares of that class or series
shall be taken) in the manner directed or recommended bythe 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
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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 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
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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 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
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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 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
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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 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.
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(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 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,
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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.
/s/Kim Magness
-----------------------------------------
Kim Magness, individually and as Trustee
of the Magness Family Irrevocable Trusts
and the Magness Issue GST Trusts
/s/ Gary Magness
------------------------------------------
Gary Magness, individually and as Trustee
of the Magness Family Irrevocable Trusts
and the Magness Issue GST Trusts
ESTATE OF BETSY MAGNESS
By:
/s/ Kim Magness
------------------------------
Kim Magness, Personal
Representative
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ESTATE OF BOB MAGNESS
By:
/s/ Kim Magness
-------------------------------
Kim Magness, Personal
Representative
By:
/s/ Gary Magness
-------------------------------
Gary Magness, Personal
Representative
<PAGE>
TELE-COMMUNICATIONS, INC.
By:
/s/ Tele-Communications, Inc.
-----------------------------
Its:
-----------------------------
/s/ Dr. John C. Malone
----------------------------------
DR. JOHN C. MALONE
/s/ Leslie Malone
---------------------------------
LESLIE MALONE
<PAGE>
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
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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 as it (A) has Common Stock registered under Section 12(b) or
12(g) of the Exchange Act and (B) a
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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.
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"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 the
Magness Group had the opportunity to participate in accordance with
Article III;
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(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;
(v) a Disposition to another member of the Malone Group or the
Magness Group or any Controlled Affiliate of a member of either Group;
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(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.
"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.
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"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 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.
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"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,
(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;
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(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.
"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).
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"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.
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EXHIBIT 99.2
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CALL AGREEMENT
AGREEMENT, dated as of February 9, 1998, between
Tele-Communications, Inc., a Delaware corporation ("TCI"), and Gary Magness,
a resident of Colorado, both in any Representative Capacity (as defined
below) and individually ("Gary"), Kim Magness, a resident of Colorado, both
in any Representative Capacity 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.
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.
"Betsy Estate" has the meaning given to it in the introductory paragraph
of this Agreement.
<PAGE>
"Board of Directors" means the Board of Directors of the Company, or any
authorized committee thereof.
"Bob Estate" has the meaning given to it in the introductory paragraph
of this Agreement.
"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.
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.
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"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations from time to time promulgated thereunder.
"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 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) hereof.
"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.
"Election Notice" has the meaning set forth in Section 2.3(b)(iii).
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"Excepted Shares" means, subject to the last two sentences of this
definition, that number 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
collectively 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 o 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) that is a Permitted Pledge;
(ii) that is an exchange of Low Vote Stock of any class or series for
High Vote Stock of the corresponding class or series on a one-for-one basis
(but such High Vote Stock will continue to be Member Shares);
(iii) of Tag-Along Shares (as defined in the Malone Call Agreement)
pursuant to the Malone Call Agreement and Section 4.1 of the Stockholders
Agreement;
(iv) pursuant to Section 2.2 hereof;
(v) to another Member;
(vi) to a member of the Malone Group;
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(vii) 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 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;
(viii) to a Prospective Purchaser in compliance with subsections (a)
through (e), inclusive, of Section 2.3 hereof;
(ix) pursuant to Section 2.3(f) hereof;
(x) 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;
(xi) 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;
(xii) subject to subsections (a) through (e), inclusive, of Section
2.3 hereof, pursuant to 4.2 of the Stockholders Agreement; or
(xiii) in the case of a pledge that when made qualified, and that
continues to qualify, as a Permitted Pledge, a bona fide transfer to the
pledgee or its nominee upon the bona fide exercise of such pledgee's
rights and remedies under such pledge, but not any further transfer by
such assignee except in an Exempt Transfer (including a transfer
permitted by Section 2.3 hereof); provided, however, that no Disposition
pursuant to clause (v), (x), (xi) or (xiii) 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(b)(v) hereof.
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"Gary" has the meaning assigned to such term in the introductory paragraph
of this Agreement.
"Grant Consideration Amount" has the meaning set forth in Section 2.1
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 Magness Group or the Malone Group (as defined in
the Stockholders Agreement), 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 any such Permitted Transferee.
"Kim" has the meaning assigned to 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 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 become 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 Stock in a transaction or a chain of transactions
initiated by another member of the Magness Group that satisfy all applicable
provisions of this Agreement (including, in the case of a Permitted Pledge, the
provisions of the definition of such term), except for acquisitions in Exempt
Transfers other than those described in clauses (v), (x), or (xi) or (xiii) of
the definition of "Exempt Transfer" in Section 1.1 hereof 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
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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 Malone Group shall
be a member of the Magness Group or a Related Party of any Member.
"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 initial Magness Group
Representative is Kim. The Magness Group may, at any time by a written notice
delivered to the Company and the members of the Malone Group, remove and replace
the Person then serving as Magness Group Representative, provided that such
representative shall at all times be a natural person and a member of the
Magness Group.
"Malone" means John C. Malone, a resident of Colorado.
"Malone Call Agreement" means the Call Agreement, dated as of the date
hereof, between the Company, Malone and Leslie Malone, as it may be amended from
time to time.
"Member" means any member of the Magness 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.
"Permitted Pledge" means, with respect to any Member Shares, a bona fide
pledge of such Member Shares by the Member who beneficially owns them to an
unaffiliated commercial bank or financial institution to secure bona fide
borrowings by such Member permitted by applicable law; provided that such bank
or financial institution (for itself and its successors, assigns and
transferees) agrees with the Company in writing at the time of such pledge that
all such Member Shares shall continue to be subject to all of the provisions of
this Agreement and the Stockholders Agreement to the same extent and with the
same effect as if they continued to be beneficially owned solely by such Member,
other than those Member Shares, if any, as to which such bank or other financial
institution commences an action to foreclose or takes any other action to
enforce the security interest represented by such pledge, irrevocably commits to
the Company in writing (for itself and its successors, assigns and transferees)
to convert into shares of Low Vote Stock on a share-for-share
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basis and (provided the Company cooperates as set forth in Section 2.3(g)
hereof) thereafter cooperates with the Company to consummate such conversion.
Nothing in this provision shall require any such bank or financial
institution to elect to convert any pledged Member Shares into Low Vote
Stock, but unless such election is made as provided above in this definition,
such Member Shares shall continue to be subject to this Agreement and the
Stockholders Agreement as provided above. Unless and at all times until the
time of the actual conversion of all Member Shares, if any, as to which such
an election is made by such bank or financial institution, the pledged Member
Shares shall continue to be subject to all of the provisions of this
Agreement to the same extent and with the same effect as if they continued to
be beneficially owned solely by such Member; provided, that if such an
election is made but the actual conversion of the Member Shares is not
completed within five Business Days after notice of that election is given to
the Company for any reason other than as a result of the failure of such bank
or financial institution to substantially comply with the requirements of
this definition or the entry of a court order enjoining such conversion, such
bank or financial institution may revoke such conversion election, whereupon
the number and kind of Member Shares as to which such election was made (but
not any Member Shares as to which such election was not made) shall cease to
be subject to this Agreement or the Stockholders Agreement unless
subsequently acquired by a Person who then is (or is required to be) a Member
of the Magness Group.
In the case of a pledge that when made qualified and that continues
to qualify as a Permitted Pledge, if the lender, simultaneously with a bona
fide assignment of the loan secured by such pledge (or of a participation
interest therein), assigns to the assignee a proportionate part of such
lender's rights under such pledge, such assignment shall be an Exempt
Transfer and a Permitted Pledge provided that (i) the assignee is a
commercial bank or other financial institution that is not an Affiliate or
Related Party of any of the members of the Magness Group or any of their
respective Related Parties, and (ii) prior to such assignment, such bank or
financial institution (for itself and its successors, assigns and
transferees) enters into a written agreement with the Company to the effect
stated in the proviso of the first sentence of this definition.
"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
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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 or Related Party 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-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 members(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;
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(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
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 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 Magness 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 Magness
Group.
"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, 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 Stock or Rights to acquire any
High Vote Stock issued by any Company or any other shares of capital stock,
Rights or other securities subject to any provisions of this Agreement.
"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 or any Member Shares or
other securities pursuant to the terms of the Malone Call Agreement.
"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.
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"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 Malone, Gary, Kim,
the Bob Estate and the Betsy Estate, as it may be amended from time to time.
"Stock Proceeds Amount" has the meaning set forth in Section 3.1(b)
hereof.
"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,
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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).
"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. Subject to the
penultimate sentence of this Section 2.1, in consideration of the grant to it
of the call right and the making of such covenants, on or prior to February
9, 1998 (or on such earlier or later date as the parties to numbered
paragraph 4 of the Settlement Agreement may agree), the Company shall pay the
Magness Group, collectively, the aggregate sum equal to the Grant
Consideration Amount. The "Grant Consideration Amount" shall be the sum,
determined after giving effect to all transfers of High Vote Stock of any
class or series required by the Settlement Agreement on or before such date,
of the respective products obtained by multiplying the aggregate number of
shares of High Vote Stock of each class or series beneficially owned (without
duplication) by the Magness Group as of the date of payment by the same per
share dollar amount, if any, paid by the Company to the members of the Malone
Group for each share of High Vote Stock of that class or series beneficially
owned by them pursuant to Section 2.1 of the Malone Call Agreement. Based on
information available to the Company, the parties estimate that the Grant
Consideration Amount will be approximately One Hundred and Twenty-Four
Million Dollars ($124,000,000), but the actual Grant Consideration Amount
will be the amount determined as provided above in this Section 2.1. The
Grant Consideration Amount shall be
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allocated among the grant of the call right hereunder, the grant of the
acceleration feature of such call right contained herein and the making of the
other covenants contained herein in the same proportions (subject to rounding
differences) as the amount of the payment to Malone under Section 2.1 of the
Malone Call Agreement is allocated among the comparable items of the Malone Call
Agreement. Such payment shall be made when due in cash by wire transfer of next
day funds to an account designated by the Magness Group Representative. Such
payment shall be allocated among the Members in any manner in which they agree
among themselves. Without limiting the generality of Section 7.1, the Company
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 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. The Company shall not be obligated
to make such payment unless or until the actions contemplated by numbered
paragraph 4 of the Settlement Agreement are duly taken on a timely basis or if
this Agreement, the Malone Call Agreement or the Stockholders Agreement is
terminated or subject to termination under Section 6.20(d) or 6.20(e) of the
Stockholders Agreement. Each member of the Magness Group shall provide such
information and otherwise cooperate with the Company in such manner as the
Company shall reasonably request in order to determine and verify the number of
shares of High Vote Stock of each class or series beneficially owned by the
Magness Group on the date of the payment provided for in this Section.
2.2 Call Right. (a) Subject to the last sentence of this subsection
(a), 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 Malone 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 Malone's estate or for Malone's 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 Magness
Group collectively for all of the Subject Shares (the "Gross Purchase Price")
will be an amount equal to the
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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 Magness Group Representative, on behalf
of 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 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 Magness Group Representative, 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 granted by the
Company to Malone pursuant to the Malone Call Agreement (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 Magness Group Representative,
be paid by wire transfer of next day
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funds on or prior to the Closing Date to an account designated in writing by
the Magness Group Representative at least two (2) Business Days before the
Closing Date.
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 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
Member or Permitted Transferee, then 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 Transferee (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). The
Company shall then have the option to exercise the Call Right as to all
but not less than all of the 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
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 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 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 (ii) the number of Subject Shares and the
number of shares of any series included in the Subject Shares shall
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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 Offered Shares and to
purchase all but not less than all of the Offered Shares. If the
Company duly delivers an Election Notice for the 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 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 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 the Transferor shall have the right to sell
all but not less than all of the Offered Shares to the Prospective
Purchaser at the price (or a greater price) and upon the terms (or terms
no more favorable to the Prospective Purchaser) specified in the Offer
Notice and, in connection with any such sale the Transferor shall not be
required to convert any of the Offered Shares into shares of Low Vote
Stock prior to the sale to such Prospective Purchaser. The Transferor's
right to sell the 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
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Purchaser has not purchased such 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
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
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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:
(A) 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; (B) assume that
the applicable asset would be sold for cash; and (C) 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
(i) to the Company pursuant to the Call Right or (ii) in the case of any pre-
existing Permitted Pledge that continues to qualify as a Permitted Pledge, a
transfer of the pledged Member Shares to the pledgee (or its nominee) as a
result of the bona fide exercise by such pledgee of its rights and remedies as
contemplated by the definition of "Permitted Pledge" in Section 1.1 hereof, but
not any further transfer by such assignee (it being understood that a conversion
by the pledgee of the pledged Member Shares into shares of Low Vote Stock in the
manner and on the terms set forth in the definition of "Permitted Pledge" in
Section 1.1 hereof shall be permitted). 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 or by the Magness Group Representative on their behalf, 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, provided that each such sale is exempt from the registration
requirements of the Securities Act and is effected through unsolicited broker
transactions within the meaning of paragraph (g) and the first sentence of
paragraph (f) of Rule 144 of the General Rules and Regulations under the
Securities Act, as in effect on the date of this Agreement. 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
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Member Shares pursuant to this Section 2.3(f), the Magness Group Representative
shall deliver to the Company a written notice stating the number of Member
Shares so disposed of, identifying the Member or Members selling such Member
Shares and the number sold by each, and the aggregate number of Excepted Shares
which the Members of the Magness Group continues to beneficially own.
(g) The Company agrees that if a Permitted Pledge of any Member Shares
is made and the lender forecloses or takes any other action to enforce the
security interest represented by such pledge and makes an irrevocable
commitment, in accordance with the definition of "Permitted Pledge" in Section
1.1 hereof, to convert such Member Shares into shares of Low Vote Stock on a
share-for-share basis, the Company shall permit such conversion and shall
reasonably cooperate with such lender in effecting such conversion as promptly
as reasonably practicable and shall comply with Section 6.4(b) of the
Stockholders Agreement.
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 Magness Group
Representative, on behalf of 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) and Permitted
Transferee(s), 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.
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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 "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 the Net Proceeds to the Magness Group
Representative, as agent for the Member(s) and Permitted Transferee(s), if any,
comprising the Seller, 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 the Magness Group Representative, as such agent. 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 the 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 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
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offices of the Company or at such other place as the Magness Group
Representative and the Company may agree.
4.2 Closing Deliveries. At the Closing, the Company shall pay to the
Magness Group Representative, as agent for 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) 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
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 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
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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
(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. The grant by the Members of the Magness Group
of the voting rights and proxy provided for in Article II of the Stockholders
Agreement and the exercise of such rights and by this use of such proxy
agreement is not intended to be prohibited or otherwise affected.
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
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<PAGE>
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 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
or the Magness Group Representative 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.
7. Miscellaneous.
7.1 Actions by Magness Group. (a) Any notice, consent, approval or other
decision by or on behalf of the Magness Group or any Member or Members required
or permitted by this Agreement shall be effective if expressed in a writing
which is either executed by the Magness Group Representative or by all such
Member(s), and in either such case the parties to this Agreement may assume that
such the Magness Group Representative or such Member(s), as the case may be, has
or have the power and authority to do so and may rely conclusively on such
writing as expressing the action of the Magness Group or such Member or Members,
as the case may be.
(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 the
Company and Malone. 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 shares of
High Vote Stock.
7.2 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.
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7.3 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.
7.4 Amendments and Waivers. Subject to Section 7.13 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 the Magness Group Representative.
7.5 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.
7.6 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.
7.7 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
24
<PAGE>
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.
7.8 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.
7.9. 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.
7.10. 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 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.
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7.11. 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.
7.12. 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.
7.13. 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
hereof 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.
7.14. 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, 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
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<PAGE>
ANY MEANS, MANNER OR METHOD OTHER THAN IN THE MANNER PROVIDED FOR THE GIVING OF
NOTICES TO SUCH PARTY IN SECTION 7.7, 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.
7.15. Facsimile Signatures. This Agreement and any other instrument
executed and delivered by any party pursuant to this Agreement may be executed
by facsimile signatures.
[Rest of Page Intentionally Left Blank]
27
<PAGE>
7.16. 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.
7.17. 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.
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:
/s/ Tele-Communications, Inc.
----------------------------------
Name:
Title:
/s/ Kim Magness
----------------------------------
Kim Magness, individually and as Trustee
of the Magness Family Irrevocable Trusts
and the Magness Issue GST Trusts
/s/ Gary Magness
----------------------------------
Gary Magness, individually and as Trustee
of the Magness Family Irrevocable Trusts
and the Magness Issue GST Trusts
ESTATE OF BETSY MAGNESS
By:
/s/ Kim Magness
----------------------------------
Kim Magness, Personal
Representative
<PAGE>
ESTATE OF BOB MAGNESS
By:
/s/ Kim Magness
----------------------------------
Kim Magness, Personal
Representative
By:
/s/ Gary Magness
----------------------------------
Gary Magness, Personal
Representative
<PAGE>
EXHIBIT 99.3
BANKERS TRUST COMPANY
SECURED
PROMISSORY NOTE
US $80,000,000 February 7, 1998
FOR VALUE RECEIVED, the Estate of Bob J. Magness (the "Borrower") hereby
promises to pay to the order of Bankers Trust Company (the "Bank") at its
office located at 280 Park Avenue, New York, NY 10017 or such other office
as Bank shall notify Borrower the principal sum of Eighty Million U.S.
Dollars (the "Maximum Amount") or, if less, the then outstanding and unpaid
principal amount of the Loan on February 9, 1999 (as such date may be
extended pursuant to Section 2.1 (b) hereof, the "Maturity Date) subject,
however to the provisions of Section 11 hereof. Borrower further promises
to pay interest on the unpaid principal amount of the Loan from time to
time outstanding until paid in full at the interest rates, at the times and
in the manner provided for below.
SECTION 1. DEFINITIONS. As used herein, the following terms shall have the
following meanings:
"AFFILIATE" means, as to any entity, any other entity that, directly or
indirectly, controls, is controlled by or is under common control with such
entity or is a general partner, director or executive officer of such entity.
Without limiting the foregoing, the term "control" (including the term
"controlling," "controlled by" and "under common control with") of an entity
includes the possession, direct or indirect, of the power (whether or not
exercised) (i) to vote 25% or more of the securities or other interests having
ordinary voting power, or (ii) to direct or cause the direction of the
management and policies of such entity, whether through the ownership of voting
securities or other interests, by contract or otherwise.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close, and with respect to Libor Rate Loans, a day on which the Eurodollar
market is open.
"COLLATERAL" has the meaning given such term in the Pledge Agreement.
"CONVERSION LIMIT" has the meaning given such term in Section 11 (a) hereof.
"DEFAULT" means any event or condition which, with the passage of time,
giving of notice, or both, would become an Event of Default.
"DOWNGRADE DATE" has the meaning given such term in Section 11 (b) hereof.
"EVENT OF DEFAULT" has the meaning given such term in Section 10 hereof.
"INTEREST PERIOD" means the number of days specified by Borrower in a Notice
of Rate Election for which all or a portion of the Loan shall bear interest
based on the Libor Rate, as specified in such Notice.
"LENDING OFFICE" means Bank's office at 280 Park Avenue, New York, New York
10017, Attention: The Private Bank, Ned Kane, Principal, or such other domestic
or foreign office as Bank may designate in writing from time to time to
Borrower.
"LIBOR RATE" shall mean, with respect to each Interest Period pertaining to a
Libor Rate Loan, the rate of interest determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest Period commencing on the
first day of such Interest Period appearing on Page 3750 of the Telerate screen
as of 11:00 A.M. London time, two Business Days prior to the beginning of such
Interest Period. In the event that such rate does not appear on Page 3750 of the
Telerate Service (or otherwise on such service), the "Libor Rate" for the
-1-
<PAGE>
purposes hereof shall be determined by reference to such other publicly
available service for displaying eurodollar rates as may be agreed upon by Bank
and Borrower or, in the absence of such agreement, the "Libor Rate" for purposes
hereof shall instead be the rate per annum equal to the rate at which Bank is
offered Dollar deposits at or about 10:00 A.M., Now York time, two Business Days
prior to the beginning of such Interest Period in the interbank eurodollar
market where the Eurodollar and foreign currency and exchange operations in
respect of its Libor Rate Loans are then being conducted for delivery on the
first day of such Interest Period for the number of days comprised therein and
in an amount comparable to the amount of its Libor Rate Loan to be outstanding
during such Interest Period.
"LIBOR RATE LOAN" means that portion of the outstanding principal balance of
the Loan bearing interest based on the LIBOR Rate.
"LOAN" means the aggregate amount of all advances outstanding at any one
time, made by Bank to Borrower pursuant to and evidenced by this Note, which
shall not, at any time, exceed the Maximum Amount.
"MAGNESS CALL AGREEMENT" has the meaning set forth in Section 2.5(a)(x).
"MARKET VALUE" means the fair market value calculated on the basis of the
closing price per share or other unit of the asset being valued as reported in
The Wall Street Journal or on the last sale price as reported on the securities
exchange or other market where the asset being valued is primarily traded.
Market Value shall be determined and marked to marked on a daily basis.
"MATURITY DATE" has the meaning set forth in the introduction of this Note.
"NOTICE OF BORROWING" has the meaning set forth in Section 2.2.
"NOTICE OF RATE ELECTION" has the meaning set forth in Section 3.
"PLEDGE AGREEMENT" has the meaning set forth in Section 2.5(a)(vii).
"PRIME RATE" means the Prime lending rate as announced by Bank from time to
time at its principal office as its Prime Lending Rate for domestic commercial
loans which rate is a reference rate and does not necessarily represent the
lowest or best rate actually charged to any customer. Any change in the interest
rate resulting from a change in the Prime Rate shall be effective on the
effective date of each change in the Prime Lending Rate announced by Bank at its
principal office.
"PRIME RATE LOAN" means that portion of the outstanding principal balance of
the Loan bearing interest based on the Prime Rate.
"SETTLEMENT AGREEMENT" has the meaning set forth in Section 2.6.
"SETTLEMENT DOCUMENTS" means the Settlement Agreement and all other documents
and agreements executed on or about the date thereof by Borrower in connection
with the Settlement Agreement.
"STOCKHOLDERS' AGREEMENT" has the meaning set forth in Section 2.5(a)(ix).
33 ACT" means the Securities Act of 1933, as amended.
"TCI" has the meaning set forth in Section 2.5(a)(ix) and shall include any
successor.
SECTION 2.1 THE LOAN
(a) This Note evidences advances that Bank shall make to Borrower from time to
time pursuant to the terms hereof. Borrower may borrow and prepay (subject to
Sections 4.6 and 5 hereof) all or any part of the Loan, and reborn same.
(b) Provided no Default or Event of Default has occurred and is continuing and
provided further that Borrower requests, in writing, on a date not less than
ninety (90) days prior to the Maturity Date, that the Maturity Date be extended
for an additional 364-day period,
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then Bank agrees to consider in good faith the request for such extension and
to advise Borrower, in writing, of Bank's decision. If Bank agrees to such
extension, then the Maturity Date shall be extended for one (1) additional
364-day period subject to all of the other terms and conditions contained
herein plus such terms and conditions as Bank may reasonably require. If Bank
does not agree to such extension, Bank shall give written notice thereof to
Borrower not less than sixty (60) days prior to the then-current Maturity
Date, which shall nevertheless be extended for a period equal to ninety (90)
days after the then-current Maturity Date, subject, however, to acceleration
upon the occurrence of an Event of Default and to the provisions of Section
11 hereof.
SECTION 2.2 NOTICE OF BORROWING. Borrower shall give Bank, prior to 11:00
A.M. (New York City time), at least 3 Business Days prior written notice of each
borrowing hereunder in the form of EXHIBIT A attached hereto (a "Notice of
Borrowing"). Each Notice of Borrowing shall be irrevocable by Borrower, and
shall specify the aggregate principal amount of the advances to be made (which
shall not, when taken together with all then outstanding advances of the Loan,
exceed the Maximum Amount, nor shall any single borrowing be less than $100,000
or, if greater, be other than in integral multiples of $100,000), the interest
rate(s) applicable thereto, the date of borrowing (which shall be a Business
Day), and the first Interest Period therefor.
SECTION 2.3 PAYMENTS. All payments hereunder for principal, interest and
other amounts shall be made in U. S. dollars and in immediately available funds,
to the Lending Office no later than 12:00 noon New York City time on the date
when due. Borrower's obligation to pay all amounts due hereunder in U.S. dollars
shall not be discharged or satisfied by any tender or recovery pursuant to a
judgment, which is expressed in or converted into any currency other than U.S.
dollars, except to the extent that such tender or recovery shall result in the
actual receipt by Bank at the Lending Office of the full amount of U.S. dollars
payable in respect of such amounts. Borrower agrees that its obligation to make
payments in U.S. dollars shall be enforceable as a separate cause of action if
the amount received by Bank shall fall short of the full amount of U.S. dollars
expressed to be payable hereunder, and shall not be affected by judgment being
obtained for other sums due hereunder. The provisions of this Section 2.2 shall
survive repayment of the Loan and cancellation of this Note. Without otherwise
limiting Borrower's obligations under this Note, Borrower authorizes Bank to
deduct all interest payments due hereunder by automatic debit on the due date
from any account established with Bank in the name of Borrower.
SECTION 2.4 NOTATIONS. At the time of the making of each advance, and upon
each payment of principal and interest on the Loan. Bank is authorized to note
on the Schedule attached hereto or on any internal records of Bank, the amount
of the advance or payment, as the case may be, PROVIDED that the failure to make
any such notation shall not limit or affect Borrower's obligations hereunder to
pay all amounts owing hereunder as and when same become due.
SECTION 2.5 CONDITIONS OF LOAN.
(a) Prior to the initial drawing of the Loan hereunder, Borrower shall deliver
to Bank: (I) financial statements of Borrower, including a balance sheet and
statement of earnings for the immediately preceding fiscal year compiled by a
public accountant of recognized standing; (ii) Borrower's tax returns for the
most recent tax year and/or other information with respect to Borrower's tax
liability as may reasonably be requested by Bank; (iii) a Notice of Borrowing;
(iv) an opinion of Baker & Hostetler, in form and substance reasonably
satisfactory to Bank and its counsel; (v) Form U-1 properly executed and
completed; (vi) stock certificates representing the shares pledged to Bank under
the Pledge Agreement, properly endorsed in blank and accompanied by the
appropriate stock power and/or power of attorney; (vii) Borrower Pledge and
Security Agreement dated as of even date herewith, whereby Borrower pledges as
collateral certain marketable securities it holds in an account specified
therein with Bank (as it
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may be amended, the "Pledge Agreement'); (viii) properly completed and
executed Form UCC-1's ready for filing in the appropriate governmental
offices in New York and Colorado; (ix) copy of the Stockholders' Agreement,
dated on or about the date hereof, by and among Borrower, John Malone, Leslie
Malone, Tele-Communications, Inc. ("TCI"), Gary Magness, Kim Magness and the
Estate of Betsy Magness (the "Stockholders' Agreement"); (x) A copy of the
Magness Call Agreement, dated on or about the date hereof, by and among TCI,
Borrower, Kim Magness, Gary Magness and the Estate of Betsy Magness (the
"Magness Call Agreement"); (xi) the letter agreement, dated on or about the
date hereof, by and among Bank and all the parties to the Stockholder's
Agreement; (xii) a copy of the voiding order that shall have been filed in
the District Court, County of Arapaho, State of Colorado, relating to the
June 16, 1997 transactions referred to therein; (xiii) copies of the
Settlement Documents; (xiv) copies of the Letters Testamentary or appropriate
court orders evidencing the current successor personal representatives of
Borrower, duly certified by the court or other appropriate person, as Bank
shall reasonably require; and (xv) such other information, notice letters and
documents as Bank shall reasonably request, all in form and scope
satisfactory to Bank.
(b) On the last day of each calendar quarter during the term hereof, Borrower
shall deliver to Bank the financial statements described in Section 2.5(a)(i)
above, accompanied by a certificate of the personal representative of Borrower
certifying that Borrower is in compliance with all provisions of this Note and
the Pledge Agreement.
(c) Thirty days after any tax return of Borrower is filed during the term hereof
and at such other times as information may be available, Borrower shall deliver
to Bank the tax returns and information specified in Sections 2.5(a)(ii) above.
(d) Prior to the initial or any additional advances of the Loan, Borrower shall
deliver to Bank a Notice of Borrowing, and (ii) Borrower shall be in compliance
with the collateral maintenance requirements set forth in Schedule C of the
Pledge Agreement both before and after giving effect to the requested advance of
the Loan.
SECTION 2.6 PURPOSE OF LOAN. The initial advance shall be used to fund
payments required under order voiding portion of sale of TCI Stock executed
February 6, 1998 issued as contemplated by the terms of that certain Settlement
Agreement dated January 5, 1998 (the "Settlement Agreement"), relating to the
Settlement of the Estate of Bob Magness in the proceeding known as "In re:
Estate Of Bob Magness, Case No. 96 PR 944, pending in the District Court in
Arapaho County, Colorado. Each subsequent advance shall be used to refinance
Borrower's existing indebtedness and/or for general business purposes but in no
event shall any advance of the Loan be used to purchase or carry a margin
stock", as such term is defined in Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect.
SECTION 3. RATE ELECTION. Any portion of the Loan may bear interest, at
Borrower's option, based on the Prime Rate or the LIBOR Rate, provided that the
portion of the Loan which bears interest based on a Libor Rate shall be at least
$1,000,000. In no event shall there be more than ten (10) Libor Rate Loans
outstanding at any one time. To make an interest rate election, Borrower shall
give Bank, prior to 11:00 A.M. (Now York City time), at least 3 Business Days
prior to the expiration of each Interest Period, written notice of a rate
election (a "Notice of Rate Election"), which shall be irrevocable, shall
specify which portion of the Loan for the next succeeding Interest Period shall
be a Prime Rate Loan, or a LIBOR Rate Loan, as the case may be, and shall
specify the length of the next succeeding Interest Period applicable thereto,
subject to a minimum of $1,000,000 for any Libor Rate Loan. If Borrower fails to
give a Notice of Rate Election when required, that portion of the Loan for which
no Notice of Rate Election was given shall bear interest, from and after the
expiry date of the then current Interest
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Period, based on the LIBOR Rate, for successive periods of three months (or,
if unavailable for any reason, based on the Prime Rate), until such time as
Borrower shall give Bank a timely Notice of Rate Election therefor, and such
interest shall be payable on the last Business Day of each three month
Interest Period (or last Business Day of each calendar month, if based on the
Prime Rate), and, subject to Section 4.6, on each date of repayment or
prepayment of all or part of the LIBOR Rate Loan.
SECTION 4.1 INTEREST AND FEES.
(a) Borrower agrees to pay interest in respect of the unpaid principal balance
of any Prime Rate Loan outstanding from time to time, from the date of borrowing
or conversion until the earlier of maturity (whether due to acceleration upon an
Event of Default or otherwise) or payment in full, at a rate per annum
(calculated on the basis of a 360-day year) equal to .50% below the Prime Rate.
Interest shall be payable on the last Business Day of each calendar month, and
on each date of repayment or prepayment of all or part of a Prime Rate Loan.
(b) Borrower agrees to pay interest in respect of the unpaid principal balance
of any LIBOR Rate Loan outstanding from time to time, from the date of borrowing
or conversion until the earlier of maturity (whether due to acceleration upon an
Event of Default or otherwise) or payment in full, at a rate per annum
(calculated on the basis of a 360-day year) equal to (i) .50% above the LIBOR
Rate when the aggregate outstanding principal of the Loan is less than
$5,000,000, and (ii) .375% above the Libor Rate when the aggregate outstanding
principal of the Loan is equal to or greater than $5,000,000. Interest shall be
payable on the last Business Day of each Interest Period, PROVIDED, that if any
Interest Period exceeds 3 months, interest shall be payable on the last Business
Day of each succeeding 3-month period from the commencement of such Interest
Period and on each date of repayment or prepayment of all or part of any LIBOR
Rate Loan.
(c) Following maturity (whether due to acceleration upon an Event of Default or
otherwise), interest shall accrue on the Loan in its entirety at the rate of
1.00% in excess of the Prime Rate, and shall be payable on demand.
(d) Borrower agrees to pay Bank a break-up fee of US $25,000 on demand in the
event that the initial advance under this Note has not been made on or before
March 2, 1998.
SECTION 4.2 INTEREST PERIODS. Borrower shall elect an Interest Period to be
applicable to each LIBOR Rate Loan, which Interest Period shall be, subject to
availability, for a period of 1, 3, 6 or 12 months. Notwithstanding that this
Note is payable on the Maturity Date, Borrower understands and agrees that Bank
continues to have the absolute and unconditional right to demand payment upon
the occurrence of an Event of Default or pursuant to the provisions of Section
11. If Bank so demands payment, the Loan shall be immediately due and payable
and Borrower shall also be obligated to compensate Bank for any funding losses
as provided in Section 4.6 resulting therefrom. Any Interest Period which would
otherwise expire on a day which is not a Business Day, shall expire on the, next
succeeding Business Day, PROVIDED, that any Interest Period in respect of a
LIBOR Rate Loan which would otherwise expire on a day which is not a Business
Day, and after which no further Business Day occurs in such month, shall expire
on the next preceding Business Day. Without limiting or being limited by the
other provisions hereof, if a Libor Rate Loan becomes due (whether due to
acceleration upon an Event of Default or otherwise) on a day which is not the
last day of an Interest Period therefor, such Loan, together with interest
thereon, shall nonetheless become due and payable by Borrower, together with all
funding losses incurred by Bank as provided in Section 4.6 by virtue of such
payment occurring on a day which is not the last day of the then current
Interest Period.
SECTION 4.3 INTEREST RATE NOT ASCERTAINABLE, ETC. In the event that Bank
shall have determined (which determination shall, absent manifest error, be
final, conclusive and binding on Borrower) that on any date for determining the
Libor Rate, by
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reason of changes affecting the London interbank market, or Bank's position
therein, adequate and fair means do not exist for ascertaining the Libor
Rate, then in such event, Bank shall give telephonic notice to Borrower of
such determination. Until Bank notifies Borrower that the circumstances
giving rise to the suspension described herein no longer exist, Bank shall
not be required to make or maintain a LIBOR Rate Loan.
SECTION 4.4 ILLEGALITY. In the event that Bank shall have determined (which
determination shall, absent manifest error, be final, conclusive and binding on
Borrower) at any time that the making or continuance of any Libor Rate Loan has
become unlawful by compliance by Bank in good faith with any applicable law,
governmental rule, regulation, guideline or order (whether or not having the
force of law and whether or not failure to comply therewith would be unlawful),
then, in any such event, Bank shall give prompt telephonic notice to Borrower of
such determination, whereupon: (i) Borrower's right to request a Libor Rate Loan
shall be immediately suspended, and (ii) that portion of the Libor Rate Loan
shall automatically and immediately convert to a Prime Rate Loan.
SECTION 4.5 INCREASED COSTS. If, by reason of the introduction of or any
change in or in the interpretation of any law or regulation, or the compliance
with any guideline or request from any central bank or other governmental or
quasi-governmental authority exercising control over Bank (whether or not having
the force of law), Bank or its Lending Office shall be subject to: (i) any
reserve (including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System); (ii) special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, Bank or
its Lending Office; or (iii) any other condition affecting any portion of the
Loan which shall be imposed on Bank or its Lending Office or the secondary
eurodollar market; and, as a result of any of the foregoing, there shall be any
increase in the cost to Bank of making, funding or maintaining any portion of
the Loan (except to the extent already included in the LIBOR Rate), or there
shall be a reduction in the amount received or receivable by Bank or its Lending
Office, or in the rate of return to Bank or its Lending Office, THEN, Borrower
shall from time to time, upon written notice from and demand by Bank pay to Bank
within five Business Days after the date specified in such notice and demand,
additional amounts sufficient to compensate Bank against such increased cost or
diminished return. A certificate as to the amount required to compensate Bank,
submitted to Borrower by Bank, shall, except for manifest error, be final,
conclusive and binding for all purposes. The provisions of this Section 4.5
shall survive repayment of the Loan and cancellation of this Note.
SECTION 4.6 FUNDING LOSSES. Borrower shall compensate Bank, upon its written
request (which request shall, absent manifest error, be final, conclusive and
binding upon Borrower), for all losses, expenses and liabilities (including,
without limitation, any interest paid by Bank on funds borrowed by it to make or
carry a Libor Rate Loan to the extent not recovered by Bank in connection with
the re-employment of such funds and including low of anticipated profits), which
Bank may sustain: (i) if for any reason resulting from or related to an action
or omission of Borrower, a conversion to, or a borrowing of, a Libor Rate Loan
does not occur on the date specified therefor in the relevant Notice of Rate
Election or the relevant Notice of Borrowing as the case may be, or (ii) if any
repayment (or conversion) of a Libor Rate Loan occurs on a date which is not the
last day of the then-current Interest Period whether, in the case of repayment,
such repayment is voluntary or occurs for any other reason including
acceleration upon the occurrence of an Event of Default or by reason of the
exercise of Bank's rights under Section 11. The provisions of this Section 4.6
shall survive repayment of the Loan and the cancellation of this Note.
SECTION 5. PREPAYMENT OF THE NOTE. Borrower may prepay the outstanding
principal of this Note, in whole or in part, without penalty or premium,
PROVIDED that if there is a prepayment of a Libor Rate Loan an a day other than
the last day of the then
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current Interest Period applicable thereto, Borrower shall compensate Bank
therefor in accordance with Section 4.6. Borrower shall give Bank at least
two Business Days' irrevocable written or telephonic notice of any such
payment, specifying the date and amount of such payment which shall not be
less than $50,000. The payment amount specified in such notice shall be due
and Payable on the date specified, together with accrued interest to such
date on the amount so paid, and all other amounts then due.
SECTION 6. RELIANCE. Bank may rely on, and act without liability upon the
basis of, any written notice believed by Bank in good faith to be given to, or
received from Borrower (including telephonic Notice of Rate Election or Notice
of Borrowing), whether or not Bank subsequently receives from Borrower
confirmation thereof.
SECTION 7. COLLATERAL. The Loan and all other amounts due and owing under
this Note from time to time shall be secured by the Collateral specified in the
Pledge Agreement held in a custody account with Bank pursuant to the terms of
the Pledge Agreement.
SECTION 8. REPRESENTATIONS AND WARRANTIES Borrower represents and warrants
to Bank that:
(a) the individuals signing this Note and the Pledge Agreement on behalf of
Borrower have been duly appointed as personal representatives of Borrower by the
Court having jurisdiction over Borrower and have the power to engage in the
transactions contemplated by, and to execute and deliver, this Note and the
Pledge Agreement and other documents executed in connection herewith and
therewith on behalf of Borrower;
(b) the execution, delivery and performance by Borrower of this Note, the Pledge
Agreement, and any other agreement executed in connection herewith or therewith
do not and will not violate or conflict with any law, rule, regulation, judgment
or order binding on Borrower or its assets (including the Collateral), or any
agreement or instrument (including the Settlement Documents, Magness Call
Agreement and Stockholders' Agreement) to which Borrower is a party or by which
Borrower or its assets are bound (including the Collateral);
(c) this Note, the Pledge Agreement, and any other agreement executed in
connection herewith or therewith have been duly executed by Borrower and
constitute legal, valid and binding obligations of Borrower, enforceable against
Borrower in accordance with their respective terms;
(d) no authorization, consent, approval or license from, or filing or
registration with, any court, governmental agency, fiscal authority or public
office is necessary in connection with the execution, delivery or performance by
Borrower of this Note, the Pledge Agreement, or any other agreement executed in
connection herewith or therewith, except such as have been taken or obtained;
(e) to Borrower's knowledge, there are no pending or threatened actions, suits
or proceedings against or affecting Borrower or the Collateral before any court,
commission, bureau or other governmental agency or instrumentality, which,
individually or in the aggregate, would have a material adverse effect an the
business, properties or condition (financial or otherwise), or prospects of
Borrower or in any way adversely affect the Collateral or Bank's lien thereon;
(f) true, correct and complete copies of all relevant documents related to the
Collateral have been delivered to Bank and are referenced in Section 2.5 hereof,
and Borrower knows of no other document, agreement, instrument or understanding
of any sort affecting the Collateral;
(g) all Collateral identified on Schedule B to the Pledge Agreement have been
held (within the meaning of Rule 144 under the 33 Act) by Borrower (or such
other person whose holding period thereof would be tacked to Borrower) for more
than two years and are eligible for sale by Bank as pledgee under Rule 144(k) of
the 33 Act so long as Bank is not an Affiliate of TCI;
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(h) Borrower acknowledges that upon foreclosure of the Collateral identified on
Schedule 8 to the Pledge Agreement certain preferential voting rights will be
lost and certain adverse estate tax consequences may result, and Borrower hereby
releases and holds Bank harmless from any loss, cost, expense, claim or damage
suffered by Borrower as a result thereof.
SECTION 9. COVENANTS. Borrower covenants and agrees with Bank that so long as
the Loan is outstanding or this Note is effective, Borrower shall:
(a) maintain a minimum net worth of US $500,000,000; * (see PAGE 8)
(b) maintain cash and marketable securities or other assets acceptable to Bank
(excluding the Collateral and other securities issued by TO or its Affiliates,
but including Westmark Series C Preferred Shares currently owned by Borrower) at
all times having a Market Value equal to or greater than 5% of the Maximum
Amount;
(c) maintain marketable securities (excluding the Collateral but including other
securities issued by TO or its Affiliate) having a Market Value of not less than
US$100,000,000;
(d) not incur, create, or suffer to exist indebtedness (other than that created
by this Note) in an aggregate amount at any time in excess of US $75,000,000 (as
used herein, the term "indebtedness" means any obligation (i) for borrowed
money, whether direct, indirect or contingent, whether evidenced by notes, bonds
or other similar instruments; (ii) in respect of letters of credit or banker's
acceptance; (ii) as a lessee under leases which, in accordance with generally
accepted accounting principles, would be treated as capitalized leases; (iv) to
pay the deferred price of property or services; and (v) any other item which, in
accordance with GAAP, would be properly included as a liability); ** (see Page
8)
(e) not distribute to the beneficiaries under the Last Will and Testament of Bob
Magness, dated March 29, 1996, or any successor beneficiaries, assets or
property of any type having a cumulative aggregate value in excess of US
$100,000,000;
(f) not amend, supplement, restate or otherwise modify or agree to the
termination of any provision of the Magness Call Agreement, the Stockholders'
Agreement or the Settlement Documents or enter into any agreement or
understanding with respect to such documents or the Collateral without the prior
written consent of Bank;
(g) within 10 days of the date hereof, notify the other parties to the Magness
Call Agreement and the Stockholders' Agreement to copy Bank on all notices
issued to Borrower thereunder;
(h) forward to Bank, immediately upon receipt copies of all written notices
received in connection with the Magness Call Agreement and the Stockholders'
Agreement; and
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* For the purpose of establishing net worth under this subsection, the value
of any security held by Borrower shall be calculated without discount on the
basis of the latest sale price per share (where available) reported on the
securities exchange or other market where such security is primarily traded and
without consideration of any potential tax liability that might accrue on the
disposition of such security.
** but such term shall not include up to $100,000,000 of indebtedness that may
be owed by Borrower from time to time to Kim Magness, Gary Magness, the Estate
of Betsy Ruth Magness, or any trust created by Bob Magness during his life or in
relation to his death, and any amount of such indebtedness in excess of
$100,000,000 to the extent that payment of the same is expressly made
subordinate to the payment of the indebtedness described in the Note.
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(i) notify the Bank, in writing, immediately upon becoming aware of any
litigation involving Borrower or the Collateral including any obligation under
the Stockholders' Agreement, the Magness Call Agreement, the voiding order,
Settlement Documents or any of the transactions related to any of the foregoing.
SECTION 10. EVENTS OF DEFAULT. Upon the occurrence of any of the following
(each an "Event of Default") with respect to Borrower or any endorser, guarantor
or other Person liable for any of the Loans: (i) failure to pay any principal,
interest or other amount owed hereunder or under the Pledge Agreement when due
and such failure shall continue for five calendar days, (ii) death (in the case
of an individual or dissolution, liquidation or suspension of its business,
(iii) default in the payment of any indebtedness in excess of $1,000,000, (iv)
any representation made to Bank have been false or misleading in any material
respect when made, (v) default in the performance or observance of any covenant,
agreement or obligation under this Note, the Pledge Agreement or any other
contract, instrument or agreement relating hereto or thereto including, without
limitation, the failure to comply with the collateral maintenance requirements
set forth on Schedule C to the Pledge Agreement in accordance with the terms
thereof, (vi) any modification or termination of any of the Magness Call
Agreement, Stockholders' Agreement or Settlement Documents which has an adverse
effect on the Collateral or Bank's lien thereon including any reassertion by
John Malone of his rights under the June 17, 1988 letter agreement, (vii)
insolvency (howsoever determined), (viii) the commencement of any proceedings by
or against any of them under any bankruptcy, reorganization, arrangement of
debt, insolvency, receivership, liquidation, dissolution or similar laws
relating to the relief of debtors, or the making of an assignment for the
benefit of creditors; THEN and in any such event or (ix) without limiting or
being limited by any of the foregoing, if, as a result litigation or otherwise,
the Collateral or Bank's lien thereon shall be adversely affected: (a) Bank may
declare the Loans and all other amounts due in respect of interest, fees and
other expenses due and owing under this Note and the Pledge Agreement to be
immediately due and payable, whereupon same shall become immediately due and
payable, without demand, PROVIDED, that if an event set forth in clause (viii)
occurs, such amounts shall automatically become due and payable without
declaration by Bank; (b) Bank's obligation to give or continue Loans hereunder
shall automatically terminate, and (c) Bank shall have such additional rights
and benefits specified in paragraphs 8 and 9 of the Pledge Agreement including
those under applicable law.
SECTION 11. SPECIAL PROVISIONS.
(a) CONVERSION LIMIT. If TCI shall exercise its right to call all or any
portion of the Collateral pursuant to the Magness Call Agreement or if Borrower
exercises its "Tag Along" right under Section 4.1 of the Stockholders' Agreement
or if any party entitled thereto exercises its "Drag Along" right under Section
4.2 of the Stockholders' Agreement then, notwithstanding anything to the
contrary contained in this Note, the amount of the Loan outstanding hereunder
shall not exceed the Conversion Limit and Borrower, within five Business Days,
shall prepay such portion of the Loan as shall be necessary to reduce the amount
of the Loan to the Conversion Limit (including any amounts owed under Section
4.6 hereof), and no further advances shall be made under this Note in excess of
the Conversion Limit. For purposes of this Section 11, the term "Conversion
Limit" means a dollar amount equal to the product of: (i) the aggregate Market
Value of all Collateral pledged and acceptable to Bank under the Pledge
Agreement that is exempt from the provisions of both the Magness Call Agreement
and the Stockholders' Agreement (which may include additional Collateral pledged
and acceptable to Bank within such five Business Days and which is otherwise
qualified and pledged in accordance with the Pledge Agreement) and (ii) 50%.
(b) MINOR DOWNGRADE. In the event that the senior unsecured debt rating of any
issuer of shares pledged to Bank as Collateral under the Pledge Agreement falls
below BBB-, or Bal, as determined by Standard & Poors and Moody's rating
services, respectively, (such date being the "Downgrade Date"), then
notwithstanding anything to the contrary
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contained herein or in the Pledge Agreement: (i) the outstanding principal
amount of the Loan shall not exceed 50% of the Market Value of the Collateral
from the Downgrade Date until this Note matures; (ii) the interest rate
applicable to any Libor Rate Loan outstanding during such period shall be
.50% above the applicable Libor Rate notwithstanding the fact that the amount
of the Libor Rate Loan equals or exceeds $5,000,000; (iii) no additional
advances of the Loan shall be made from and after the Downgrade Date; and
(iv) the Loan and all other amounts in respect of interest, fees and costs
due and owing hereunder and under the Pledge Agreement shall be due and
payable in full on the earlier of the ninetieth day following demand by Bank
or the Maturity Date (subject to acceleration upon the occurrence of an Event
of Default) and the right of the Borrower to borrow hereunder shall be in
Bank's sole discretion.
(c) MAJOR DOWNGRADE. In the event that the senior unsecured debt rating of any
issuer of shares pledged to Bank as Collateral under the Pledge Agreement falls
below B + and BI, as determined by Standard & Poors and Moody's rating services,
respectively, then notwithstanding anything contained herein or in the Pledge
Agreement, the Loan and all other amounts in respect of interest, fees and costs
due and owing hereunder and under the Pledge Agreement shall be immediately due
and payable without notice or demand of any kind and the right of the Borrower
to borrow hereunder shall terminate.
(d) For purposes of clauses (b) and (c) of this Section 12, while the debt of
any issuer of Collateral which is an Affiliate of TCI is not rated, the debt
rating of TCI shall govern but at such time as any such Affiliate's debt shall
become rated, that rating shall govern.
SECTION 12. MISCELLANEOUS.
(a) This Note shall be binding on Borrower and its successors, heirs, executors
and assigns and shall inure to the benefit of Bank and its successors and
assigns. Borrower may not assign or delegate any of its obligations or
agreements hereunder. No amendment, modification or waiver of any Provision of
this Note shall be effective unless it is in writing and signed by Bank and
Borrower.
(b) Unless otherwise indicated, all notices and other communications In
connection with this Note shall be in writing and shall be effective, If mailed,
five days after deposit in the mails, postage prepaid, if sent by telefax, when
sent with a confirmation received, or if by courier or messenger, when delivered
against a receipt, in each case, to Borrowees address set forth below, or to
Bank at its Lending Office. Either party may change its address for notices by
written notice to the other.
(c) EACH OF BORROWER AND BANK, BY ITS ACCEPTANCE HEREOF, HEREBY IRREVO-CABLY
WAIVES. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW. ANY RIGHT TO A JURY
TRIAL IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE. In
any action or proceeding arising out of or relating to this Note, Borrower
hereby irrevocably submits to the non-exclusive jurisdiction of the courts of
the State of New York and the federal courts in New York City, and agrees that
effective service of process may be made on Borrower by mailing same to
Borrowees address set forth below. Bank may serve process in any other manner
permitted by applicable law. Borrower hereby irrevocably waives any objection to
the laying of venue in the aforesaid courts, and any claim of an inconvenient
forum. To the extent that Borrower or its property may have or hereafter acquire
immunity, on the grounds of sovereignty or otherwise, from any judicial process
in connection with this Note, Borrower hereby irrevocably waives, to the fullest
extent permitted by applicable low, any such immunity and agrees not to claim
same. Borrower agrees that a final judgment in any such action or proceeding
shall be conclusive, and may be enforced in any other jurisdiction or in any
other permitted manner.
(d) BORROWER WAIVES ANY AND ALL REQUIREMENTS OF DEMAND, PRESENTMENT, PROTEST,
NOTICE OF DISHONOR OR FURTHER NOTICE OF ANY KIND IN CONNECTION WITH THIS NOTE.
(e) Borrower will indemnify and hold Bank harmless for, and pay on demand in
U.S.
-11-
<PAGE>
dollars, all losses, claims, taxes, costs, fees and expenses of any nature
related to this Note and the transactions contemplated hereby, including
attorneys' fees, incurred by Bank in connection with the preparation,
execution, delivery, amendment, modification or supplement of this Note and
the enforcement of this Note, and any related documents, including the Pledge
Agreement. This provision shall survive repayment of the Loan and
cancellation of this Note.
(f) All payments hereunder shall be made without setoff or counterclaim, and
free and clear of, and without deduction for or on account of, any present or
future income, stamp or other taxes, levies, imposts, dudes, charges, fees,
deductions or withholdings, and all interest, penalties and other liabilities
with respect thereto (collectively, "Taxes"), now or hereafter imposed, levied,
collected, withhold or assessed by any jurisdiction, or any department, agency,
state, political subdivision or taxing authority thereof or therein. If any
Taxes are so levied or imposed, Borrower agrees to pay the full amount thereof,
and such additional amounts as may be necessary so that each not payment
received by Bank will not be less than the amount provided for herein. Borrower
will furnish to Bank within 30 days after each payment of Taxes is due,
originals or certified copies of tax receipts evidencing such payment by
Borrower. This provision shall survive repayment of the Loan and cancellation of
this Note.
(g) If, for the purpose of obtaining a judgment in any court with respect to
any obligation of Borrower under this Note, it becomes necessary to convert into
any other currency any amount in United States dollars due under this Note, then
that conversion shall be made at the average of the buying spot rates of
exchange in effect at the Lending Office for freely transferable United States
dollars at the close of business on the day before the day on which judgment is
rendered. If there is a change in such rate of exchange prevailing between the
day before the day on which judgment is rendered and the date of payment of the
judgment, then Borrower shall pay such additional amount as may be necessary to
ensure that the amount paid on the date of payment is the amount in such
currency which, when converted at such rate of exchange in effect on the date of
payment, is the amount in United States dollars then due under this Note. Any
additional amount owing by Borrower hereunder shall be due as a separate debt
and shall not be affected by or merged into any judgment obtained for any other
amounts due under or in respect to this Note. This provision shall survive
repayment of the Loan and cancellation of this Note.
(h) If one or more security and pledge agreements and/or guaranties shall have
been executed and delivered to Bank as security for Borrower's obligations
hereunder including, but not limited to, the Pledge Agreement, this Note shall
be entitled to the benefits of same.
(i) Section headings are for convenience of reference and shall not be
construed as part of this Note.
(j) This Note shall be construed in accordance with and be governed by the laws
of the State of New York, without regard to conflict of laws principles.
(k) In the event the principal balance of the Loan, interest thereon and any
other amount owed hereunder is not paid when due (whether upon demand or
otherwise), Bank shall have all the rights and remedies provided under law or
equity including those of a secured party under the Uniform Commercial Code as
in effect from time to time in New York.
-12-
<PAGE>
ESTATE OF BOB J. MAGNESS
By /s/ Kim Magness
--------------------------------------
Kim Magness
Successor Personal Representative
By /s/ Gary Magness
--------------------------------------
Gary Magness
Successor Personal Representative
Address:
Estate of Bob J. Magness
c/o Hanegan & Pillow, L.L.P.
370 Seventeenth Street, Suite 3650
Denver, CO 80202
Telefax: (212) 454-4740
Attn: James D. Hanegan
cc: Kim Robert Magness
Telefax: (303) 220-5191
-13-
<PAGE>
STATE OF COLORADO )
) ss.:
COUNTY OF _____________ )
On the day of February, 1998, before me personally came KIM
MAGNESS, to me known to be the individual who executed the foregoing
instrument and, who, being duly sworn by me did depose and say that he is a
successor personal representative of the Estate of Bob J. Magness and that he
executed the foregoing instrument in the name the Estate of Bob J. Magness
and that he had authority to sign the same, and acknowledged that he executed
the same as the act and deed of said estate.
___________________________________________
Notary Public
Name:
(SEAL)
STATE OF COLORADO )
) ss.:
COUNTY OF ______________ )
On the day of February, 1998, before me personally came GARY
MAGNESS, to me known to be the individual who executed the foregoing
instrument and, who, being duly sworn by me did depose and say that he is a
successor personal representative of the Estate of Bob J. Magness and that he
executed the foregoing instrument in the name the Estate of Bob J. Magness
and that he had authority to sign the same, and acknowledged that he executed
the same as the act and deed of said estate.
___________________________________________
Notary Public
Name:
(SEAL)
-14-
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL AND INTEREST
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-15-
<PAGE>
EXHIBIT A
NOTICE OF BORROWING
-------------------
Reference is made to that certain Secured Promissory Note, dated February
__, 1998 (the "Note") made by the Estate of Bob Magness to Bankers Trust Company
("BANK"). Any capitalized term used herein without definition shall have the
meaning set forth in the Note.
This is the notice of borrowing being delivered in accordance with Section
2.2 of the Note. The undersigned hereby requests that Bank make a Loan under
the Note in the amount of $_______ [minimum of $100,000 with increased
increments of $100,000] by depositing such amount in i) the account of the
undersigned at Bank on , 19__ [not earlier than 3 Business Days
after receipt by Bank of this Certificate] or, (ii) the account specified in the
attached Payment instructions Annex, if any, by , 19__ [not earlier than
3 Business Days after receipt by Bank of this Certificate.]
The undersigned requests that the interest on the advance be based on the
Libor Rate [subject to minimum of $1,000,000] with an interest period of [1, 3,
6 or 12] or based on the Prime Rate [select interest option].
The funds requested hereunder are being used solely for the purposes set
forth in Section 2.6 of the Note.
The total amount of Loans to date, after disbursement of the Loan requested
hereby, equals $____________.
No Default or Event of Default currently exists under the Note and all
representations and warranties made thereunder are true and correct in all
material respects as of the date hereof.
ESTATE OF BOB J. MAGNESS
By_______________________________________
Kim Magness
Successor Personal Representative
or
BY
By_______________________________________
Gary Magness
Successor Personal Representative
<PAGE>
PAYMENT INSTRUCTIONS
ANNEX
--------------------
Bank:__________________________________________
ABA Routing No.:_______________________________
Account Title:_________________________________
Account No.:___________________________________
Reference:_____________________________________
Comments; Instructions:________________________
<PAGE>
EXHIBIT 99.4
<PAGE>
BANKERS TRUST COMPANY
BORROWER SECURITY AND PLEDGE AGREEMENT
In consideration of loans, advances, overdrafts, letters of credit, acceptances,
swaps, securities transactions, forward contracts, foreign currency transactions
and all other credit transactions and financial accommodations given or to be
given or to be continued from time to time to the Estate of Bob J. Magness
("Debtor") by BANKERS TRUST COMPANY or any of its Affiliates listed on SCHEDULE
A hereto (Bankers Trust Company and all such Affiliates being referred to herein
collectively as "Bank" including those due under that certain Secured Promissory
Note of even date herewith made by Debtor to Bank evidencing the principal sum
of up to $80,000,000 (as it may be amended, the "Note")), Debtor hereby agrees
with Bank as follows:
1. As collateral security for the due and punctual payment and performance of
all present and future liabilities and obligations, direct or indirect,
liquidated or contingent, joint or several of Debtor to Bank, (including those
due under the Note) whether now existing or hereafter incurred, whether now or
hereafter due, whether for principal, interest, fees, costs, attorneys' fees,
taxes, damages, expenses, indemnities, or otherwise, and howsoever evidenced
(collectively, the "Obligations"), Debtor hereby assigns, pledges and grants to
Bank a continuing security interest in and lien upon all right, title and
interest of Debtor in and to (i) all cash, securities, shares, certificates,
notes, instruments, rights, receivables and all other property of Debtor now or
hereafter in the possession, custody or control of Bank, including, without
limitation, any of the foregoing from time to time deposited in, credited to or
payable to that certain /__/ investment /X/ custody /__/ deposit or /__/ other
account with the Now York office of Bankers Trust Company, account no. 280335,
(ii) in addition to, and not in derogation of clause (i) above, those certain
securities and other property, if any, listed on Schedule B hereto, (iii) all
cash, securities, shares, certificates, notes, instruments, rights, receivables;
and all other property now or hereafter received or receivable in connection
with any sale, exchange, redemption or other disposition of any of the
foregoing, (iv) all dividends, interest and other distributions, whether in
cash, securities or other property on any of the foregoing (specifically
excepting cash dividends), (v) all additions to and substitutions for any of the
foregoing, (vi) all present and future rights, claims, remedies and privileges
of Debtor pertaining to any of the foregoing, (vii) all general intangibles of
Debtor and all contract rights of Debtor relating to any of the Obligations and
(viii) all proceeds of the foregoing, in each case whether now existing or
hereafter arising or acquired (collectively, the "Collateral").
2. Debtor represents and warrants to Bank that: (a) Debtor is the legal and
beneficial owner of the Collateral, free and clear of any mortgage, pledge,
lien, charge, encumbrance, claim, adverse interest or security interest
(collectively "Liens"), (b) Debtor has all necessary right, power and authority
to grant to Bank a security interest in the Collateral, and has taken all
necessary action to authorize Debtor's execution, delivery and performance of
this Agreement, including all necessary actions by directors and shareholders
and all filings and recordations, (c) there are no filings or recordations
against the Collateral which grant or purport to grant a Lien in any Collateral
to any other person, (d) Debtor, if a corporation, partnership or other legal
entity, is duly organized and validly existing in good standing under the laws
of its jurisdiction of formation, and is duly qualified in all such foreign
jurisdictions where its business or property so requires, (e) all Collateral
which consists of equity interests will have been validly issued and are <PAGE>
fully paid and non-assessable and are subject to no restrictions on transfer by
Bank as pledgee or otherwise except, with respect to the Series B Common Stock
identified on Schedule B hereto, as set forth in the Magness Call Agreement and
the Stockholders' Agreement (as such terms are defined in the Note), (f) all
Collateral identified on Schedule B hereto in freely saleable by Bank as pledgee
under Rule 144(k) of the Securities Act of 1933, as amended so long as Bank is
not an Affiliate of TCI (as such terms are defined in the Note), (g) the
execution, delivery and performance by Debtor of this Agreement do not violate,
breach or conflict with (i) Debtor's constituent documents, if Debtor is a
corporation, partnership or other legal entity, (ii) any agreement, contract or
instrument to which Debtor is a party or by which Debtor or its properties are
bound (including the Magness Call Agreement and the Stockholders' Agreement), or
(iii) any applicable law, regulation, decree, order or the like, (h) after
giving effect to the transactions contemplated by this Agreement, Debtor is not
insolvent, and (i) this Agreement is the legal, valid and binding obligation of
Debtor, enforceable against Debtor in accordance with its terms.
3. Debtor covenants and agrees with Bank that: (a) Bank's sole duty with respect
to the Collateral is to use such care as it uses for similar property for its
own account, and Bank shall not be obligated to preserve rights in the
Collateral against prior parties, (b) Debtor will (i) be solely responsible for
all matters relating to the Collateral, including ascertaining maturities,
calls, conversions, exchanges and tenders, (ii) not, and will not purport to,
grant or suffer Liens against, or sell, transfer or dispose of any Collateral,
(iii) from time to time take all actions, and make all filings and recordations
requested by Bank in connection with Bank's security interest in the Collateral,
(iv) promptly notify Bank of the occurrence of an Event of Default (as defined
in the Note), and (v) hold in trust for, and forthwith pay over to Bank in the
form received (except for any necessary endorsements) all property, proceeds or
distributions received by Debtor on account of any Collateral (specifically
excepting ordinary course cash dividends), (c) Bank is authorized to file
financing statements and give notice to third parties regarding the Collateral
without Debtor's signature to the extent permitted by applicable law, at any
time and from time to time after an Event of Default, transfer all or any part
of the Collateral to Bank's name or that of its nominee, and exercise all rights
as if the absolute owner thereof, and file a proof of claim for. receive
payments or distributions on, and exchange or release Collateral in any
bankruptcy, insolvency or similar proceeding, and (d) Debtor's true legal name
and chief executive office (if a corporation, partnership or other legal
entity), or principal residence (if an individual), are set forth on the
signature page hereof, and Debtor will not change its name or such address
without the prior written consent of Bank.
4. Debtor further covenants and agrees to comply with the Collateral Maintenance
Requirements set forth in SCHEDULE C hereto. If Debtor fails to comply with the
Collateral Maintenance Requirements for the period specified in SCHEDULE C, Bank
shall have all the rights and
1
<PAGE>
remedies of a secured party under the New York Uniform Commercial Code as
then in effect (the "UCC"), and may, without notice to or consent by Debtor,
sell, liquidate or redeem so much of the Collateral as is necessary to reduce
the outstanding Obligations so as to comply with the Collateral Maintenance
Requirements then in effect.
5. (a) Debtor hereby irrevocably, unconditionally and expressly waives, to the
fullest extent permitted by applicable law, all defenses, counterclaims, rights
of setoff, any requirement that Bank first proceed against any guarantor or any
other security, all requirements for notice of any kind, demand, protest,
presentment, notice of non-payment, default or dishonor of any Obligation,
notice of acceptance hereof, marshalling of assets and the like, including
without limitation, any right to notice or judicial hearing in connection with
Bank's taking possession of or disposition of any Collateral, any notice of any
sale, transfer or other disposition by Bank of any Obligation, any requirement
that Bank first proceed against Debtor, any other collateral or any other person
liable for any of the Obligations, and all damages occasioned by any of the
foregoing (except as finally determined by a competent court to have been the
direct result of Bank's gross negligence or willful misconduct). No invalidity,
irregularity or unenforceability of any Obligations shall affect, impair or be a
defense to any of Debtor's obligations or agreements or any of Bank's rights or
remedies hereunder. Bank may, upon the occurrence of an Event of Default,
without notice to or consent by Debtor, and without affecting or impairing
Debtor's obligations or agreements or Bank's rights and remedies hereunder, (i)
sell, release, exchange, settle, compromise or otherwise dispose of any
Collateral, or other security for any of the Obligations, and (ii) exercise (in
such order as Bank may choose) or refrain from exercising any rights against
Debtor or any other person liable for any Obligations.
(b) Debtor hereby appoints Bank the attorney-in-fact of Debtor for the purpose
of carrying out the provisions of this Agreement and taking any action and
executing any instrument which Bank may deem necessary or advisable to
accomplish the purposes hereof, which appointment is irrevocable and coupled
with an interest and any proxy or proxies heretofore given by Debtor to any
other person am hereby revoked. Without limiting the generality of the
foregoing, Bank shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
Bank's name or in the name of Debtor, to ask for, demand, sue for, collect,
receive, receipt and give acquittance for any and all moneys due or to become
due under and by virtue of any of the Collateral, to endorse checks, drafts,
orders and other instruments for the payment of money payable to Debtor
representing any dividend or other distribution payable in respect of the
Collateral or any part thereof or on account thereof and to give full discharge
for the same, to settle, compromise, prosecute or defend any action, claim or
proceeding with respect thereto, and to sell, assign, endorse, pledge, transfer
and make any agreement respecting, or otherwise deal with, the same; provided,
however, that nothing herein contained shall be construed as requiring or
obligating Bank to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by Bank, or to present or file any claim
or notice, or to take any action with respect to the Collateral or any part
thereof or the moneys due or to become due in respect thereof or any property
covered thereby, and no action taken by Bank or omitted to be taken with respect
to the Collateral or any part thereof shall give rise to any defense,
counterclaim or offset in favor of Debtor or to any claim or action against Bank
in the absence of the gross negligence or willful misconduct of Bank as shall
have been proven in a final, nonappealable judgment of a court of competent
jurisdiction. This power of atorney is irrevocable and coupled with an interest.
6. (a) At any time, after Event of Default has occurred and is continuing, Bank
shall have the right (in its sole and absolute discretion and without notice to
Debtor) to transfer to or to register any securities (including the pledged
securities) constituting Collateral in its own name or the name of its nominee.
(b) As Bank, as of the date hereof, has not registered the pledged securities
in its name or that of its nominee but without derogation of its right to do so
in accordance herewith, Debtor agrees to cause the transfer agent and registrar
of the pledged securities to identify on its books and records that the address
of record for the holder of the pledged securities and the address for delivery
of any dividends (other than ordinary course cash dividends) thereon or other
distributions related thereto that are payable to Bank hereunder shall be the
office of Bank at:
Bankers Trust Company
One Bankers Trust Plaza, 14th Floor
Loan Center Mail Stop 2144
New York, New York 10006
Attn: Errol Harris, Vice President
Failure to cause such change of address within sixty (60) days of the date
hereof or if Debtor shall thereafter change such instructions shall be an Event
of Default. Debtor acknowledges that by changing the address of the record
holder of the pledged securities as contemplated in this clause (b), information
as to the issuer thereof and the rights of, and payments to be received by, the
holder of the pledged securities (including information as to performance of the
issuer, votes to be taken and conversations, tenders and other offers and
matters relating thereto) shall be delivered to Bank. Bank shall use reasonable
efforts to forward such information to Debtor. However, in addition to and not
in limitation of the release from liability of Bank otherwise set forth in this
Agreement, Debtor releases Bank from any loss, damage or injury suffered by
Debtor arising from the change of address of the record holder of the pledged
securities.
(c) Bank shall. during the continuance of any Event of Default, have the right
to exchange the certificates representing any such securities for certificates
of smaller or larger denominations for any purpose consistent with this
Agreement.
7. (a) Unless and until an Event of Default shall have occurred and be
continuing, Debtor shall be entitled to (i) exercise any and all voting and/or
consensual rights and powers accruing to an owner of the pledged securities or
any part thereof for any purpose consistent with the terms of this Agreement and
the Note, provided that such action would not impair the security for the
Obligations or adversely affect the position of Bank under this Agreement or the
Note, and (ii) receive all ordinary course cash dividends paid or payable on the
pledged securities.
(b) Upon the occurrence and during the continuance of an Event of Default, (i)
all rights of Debtor to exercise the voting and consensual rights and powers
which Debtor is entitled to exercise pursuant hereto shall, unless otherwise
notified by Bank in writing at its option, cease, and all such rights shall
thereupon become vested in Bank, which shall have the sole and exclusive right
and authority to exercise such voting, and (ii) all ordinary course cash
dividends, in
2
<PAGE>
addition to all stock and other noncash dividends, paid or payable in respect
of the pledged securities shall be delivered to Bank.
8. For purposes of this Agreement, the term Event of Default shall have the
meaning set forth in the Note. Upon the occurrence of any Event of Default; THEN
and in any such event: (a) Bank may declare all of the Obligations to be
immediately due and payable, whereupon same shall become immediately due and
payable, without demand, PROVIDED, that if an event set forth in Section
10(viii) of the Note occurs, the Obligations shall automatically become due and
payable without declaration by Bank; (b) Bank's obligation, if any, to give or
continue credit facilities to Debtor shall automatically terminate; (c) Bank
shall have the right from time to time to take possession of, and sell, redeem,
assign, liquidate, transfer and deliver all or any part of the Collateral, at
any brokers' board or exchange, or at public or private sale or otherwise, at
the option of Bank, for cash or on credit for future delivery, in such parcel or
parcels and at such times and places, and upon such terms and conditions as Bank
may deem proper, and in connection therewith may grant options and impose
reasonable conditions, all without (except as same am required by applicable law
and cannot be waived) advertisement or demand upon or notice to Debtor or right
of redemption of Debtor, all of which are hereby expressly waived to the fullest
extent permitted by applicable law; (d) upon each such sale, Bank may purchase
all or any of the Collateral, free and clear of all claims, rights of redemption
and equities of Debtor; and (e) in addition, Bank shall have all of the rights
and remedies of a secured party under the UCC.
9. To the extent required by applicable law, Bank will give Debtor notice of the
time and place of any public sale or of the time after which any private sale or
other disposition of Collateral is to be made, by sending notice at least 5 days
before the time of sale or disposition, which Debtor agrees is reasonable. Bank
need not give such notice if not required by the UCC. Debtor agrees that at any
private sale Collateral may be sold at a price that is less than the price which
might have been obtained at a public sale or that is less than the aggregate
outstanding amount of the Obligations; Bank may accept the first offer received
and need not offer such Collateral to more than one offeree. Bank may convert
any proceeds in foreign currency to U.S. dollars at the then prevailing rates of
exchange. After deducting its costs and expenses from the proceeds of sale,
apply any residue to pay the Obligations in such order as it elects and Debtor
will remain liable for any deficiency with interest. All foreign exchanges
losses incurred in connection with the conversion of any Collateral denominated
in a foreign currency to U.S. dollars shall be borne by Debtor. Without Bank's
prior written consent, in no event shall Debtor sell, or permit any other person
whose sales of securities would be aggregated with those of Debtor under
applicable securities laws to sell, any securities of the same type as the
Collateral at any time that the sale by Bank of such Collateral is subject to
any restriction under any securities laws including those as to manner or volume
of sale.
10. In the event and to the extent that any provision of this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions, or of such provision in any
other jurisdiction, shall not in any way be affected or impaired thereby.
11. This Agreement may not be modified, changed, waived or discharged orally,
but only by a writing signed by the parties hereto. This Agreement shall inure
to the benefit of and be enforceable by Bank and its successors, transferees and
assigns, and shall be binding upon Debtor and its heirs, executors, successors
and assigns, PROVIDED, that Debtor may not transfer, assign or delegate any of
its rights or obligations hereunder, and any such purported transfer, assignment
or delegation shall be void. This Agreement shall terminate upon final payment
in full to Bank of all of the Obligations and termination of any obligation of
the Bank to make advances, and shall continue to be effective or be reinstated,
as the case may be, if at any time payment of or on account of any of the
Obligations is rescinded or must otherwise be restored or returned by Bank upon
the insolvency, bankruptcy or reorganization of Debtor or any other person or
otherwise, all as though such payment had not been made.
12. No failure or delay by Bank in exercising any right or remedy and no course
of dealing between Bank and Debtor shall operate as a waiver thereof, nor shall
any single or partial exercise of any right preclude any other or future
exercise thereof. All rights and remedies of Bank shall be cumulative and may be
exercised singly or concurrently. No notice to or demand on Debtor shall entitle
Debtor to any other or further notice or demand, or constitute a waiver of
Bank's rights.
13. If for the purpose of obtaining a judgment in any court with respect to any
of Debtor's obligations under this Agreement, it becomes necessary to convert
into any other currency any amount in U.S. dollars due hereunder, then that
conversion shall be made at the average of the buying spot rates of exchange in
effect at Bank's lending office for freely transferable U.S. dollars at the
close of business on the day before the day on which judgment is rendered. If
there is a change in such rate of exchange prevailing between the day before the
day on which judgment is rendered and the date of payment of the judgment, then
Debtor shall pay such additional amount as may be necessary to ensure that the
amount paid on the date of payment is the amount in such currency which, when
converted at such rate of exchange in effect on the date of payment, is the
amount in U.S. dollars then due under this Agreement. Any additional amount
owing by Debtor hereunder shall be due as a separate debt, and shall not be
affected by or merged into any judgment obtained for any other amounts due
hereunder. This paragraph 13 shall survive repayment of the Obligations and
termination of this Agreement.
14. Debtor will indemnify and hold Bank harmless for, and pay in U.S. dollars
all losses, claims, taxes, costs, fees and expenses, including attorneys' fees,
incurred by Bank in connection with the custody, care, preservation, sale or
disposition of any Collateral, and the enforcement of Bank's rights hereunder.
The provisions of this paragraph 14 shall survive repayment of the Obligations
and termination of this Agreement.
15. Any notice to Bank or Debtor shall be effective 3 days after deposit in the
mails, airmail postage prepaid. if sent by facsimile, when sent, if delivered by
hand or courier, when delivered, or in the case of paragraph 4, when given by
telephone, in each case to the address below. Each party may change its address
for notices by written notice to the other.
16. DEBTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERNIITTED BY
APPLICABLE LAW, ANY RIGHT TO A JURY TRIAL IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. In
any action or proceeding &rising out of or relating to this Agreement, Debtor
hereby accepts, for itself and its property, the non-exclusive
3
<PAGE>
jurisdiction of the courts of the State of New York, and the federal courts
in New York City, and agrees that effective service of process may be made on
Debtor by mailing same to Debtor's address set forth below. Bank may proceed
against Debtor in any other applicable jurisdiction, and may serve process in
any other manner permitted by applicable law. Debtor hereby irrevocably
waives any objection to the laying of venue in the aforesaid courts, and any
claim of an inconvenient forum. To the extent that Debtor or its property may
have or hereafter acquire immunity, on the grounds of sovereignty or
otherwise, from any judicial process in connection with this Agreement,
Debtor hereby irrevocably waives, to the fullest extent permitted by law, any
such immunity and agrees not to claim same. Debtor agrees that a final
judgment in any such action or proceeding shall be conclusive, and may be
enforced in any other jurisdiction by suit on the judgment or in any other
permitted manner.
17. If this Agreement is signed by two or more parties as Debtors, they shall be
jointly and severally liable hereunder, and the term "Debtor" as used herein
shall mean the debtor parties hereto, and each of them.
18. If the Obligations under this Agreement shall be owing to an Affiliate of
Bankers Trust Company, Bankers Trust Company is hereby appointed to hold the
Collateral as agent for the benefit of such Affiliate. Such Affiliate hereby
irrevocably authorizes and directs Bankers Trust Company to act solely on the
instructions of such Affiliate, unless such Affiliate otherwise consents in
writing, and Debtor hereby irrevocably acknowledges and agrees that Bankers
Trust Company shall take all such instructions solely from Affiliate, and
neither Affiliate nor Bankers Trust Company shall be obligated to, or liable for
any failure to, act in accordance with any instructions given by Debtor, so long
as this Agreement shall remain in effect.
19. This Agreement shall be construed in accordance with and be governed by the
law of the State of New York.
20. All notices required herein shall be by telefax, nationally-recognized
overnight courier, or certified U. S. mail, and sent to the parties at the
addresses below:
If to Bank:
Bankers Trust Company
280 Park Avenue - 6 Middle
New York, New York 10017
Telefax: (212) 454-4740
Attn: The Private Bank
Edward F. Kane, Principal
and if to Borrower:
Estate of Bob J. Magness
c/o Hanegan & Pillow, L.L.P.
370 Seventeenth Street Suite 3650
Denver, CO 80202
Telefax: (303) 572-1603
Attn: James D. Hanegan
cc: Kim Robert Magness
Telefax: (303) 220-5191
and shall be deemed effective upon receipt of confirmation of delivery, in the
case of telefax transmission, one Business Day after sending, if sent by a
nationally-recognized overnight courier, and three Business Days after sending,
if sent by certified U.S. mail.
4
<PAGE>
IN WITNESS WHEREOF, Debtor has executed and delivered this Agreement, in the
case of a corporation, by its duly authorized officer(s) or representatives, as
of the ______ day of February, 1998.
Estate of Bob J. Magness
Debtor (Full Legal Name)
By: /s/ Kim Magness
-----------------------------------
Kim Magness
Successor Personal Representative
By: /s/ Gary Magness
-----------------------------------
Gary Magness
Successor Personal Representative
Bankers Trust Company
Secured Party
By /s/ Edward F. Kane
-----------------------------------
Name: Edward F. Kane
Title: Principal
5
<PAGE>
Schedule A
Affiliates of Bankers Trust Company
[NONE]
Schedule B
Listed Securities
One or more certificates representing ownership of the following securities
of the Borrower delivered to and held by Bank in the Custody Account specified
in Section I of this Agreement, accompanied by a duly executed stock power for
each such certificate:
<TABLE>
<CAPTION>
Issuer Type of Security Registered Owner
------ ---------------- ----------------
<S> <C> <C>
Tele-Communications, Inc./ Series A Series A Common Stock Estate of Bob J. Magness
Liberty Media Group
Tele-Communications, Inc./Series B Series B Common Stock Estate of Bob J. Magness
Liberty Media Group
Tele-Communications, Inc./Series A TCI Series A Common Stock Estate of Bob J. Magness
Group Common Stock
Tele-Communications, Inc./Series B TCI Series B Common Stock Estate of Bob J. Magness
Group Common Stock
Tele-Communications, Inc./Series A TCl Series A Common Stock Estate of Bob J. Magness
Ventures Group Common Stock
Tele-Communications, Inc./Series B TCI Series B Common Stock Estate of Bob J. Magness
Ventures Group Common Stock
TCI Satellite Entertainment, Inc. Series Series A Common Stock Estate of Bob J. Magness
A Common Stock Common Stock
TCI Satellite Entertainment, Inc. Series Series B Common Stock Estate of Bob J. Magness
B Common Stock Common Stock
</TABLE>
<PAGE>
Schedule C
COLLATERAL MAINTENANCE REQUMEMENTS
1. On the date hereof and on the date of any advance under the Note the
Obligations as a percentage of market value of the Collateral shall be no
greater than 50%. If at any time after the date hereof the Obligations as a
percentage of market value of the Collateral are greater than 65%, or the
Collateral otherwise fails to meet the Collateral Maintenance Requirements
then in effect, Debtor will, within 5 business days after written notice from
Bank, pledge to Bank such additional collateral as the Bank may require, to
be satisfactory to Bank in its discretion both as to advance rate and
otherwise, and/or repay such portion of the Loan, such that the Obligations
as a percentage of market value of the Collateral shall be no greater than
60%. All Collateral consisting of securities in a managed account shall be
valued at fair market value, marked to market an a daily basis. Market value
shall be calculated on the basis of the closing price per share or other unit
of the Collateral being valued as reported in The Wall Street Journal or on
the last sale price as reported on the securities exchange or other market
where the unit of Collateral being valued is primarily traded. Each share of
the Series B securities identified on Schedule B shall be valued at the per
share market value of the corresponding Series A security issued by the same
issuer. At such time as TCI (as defined in the Note) has exercised its call
right, or is entitled to exercise its call right, under the Magness Call
Agreement (as defined in the Note) with respect to any unit of Collateral,
the market value for such unit of Collateral shall be determined at the
lesser of (x) the market value thereof as determined above and (y) the price
per unit of Collateral that TCI is Obligated to pay under the Magness Call
Agreement.
2. Notwithstanding any other provision of this Agreement, so long as
(i) (x) no Event of Default has occurred and is continuing or (y) Debtor is
not in default under the terms of any of its Obligations, and (ii) the Bank
shall have received three (3) days written notice from Debtor, Bank shall
deliver to Debtor at Debtor's address specified, herein, free from the
encumbrance created by this Agreement, such portions of the Collateral as may
be requested by Debtor, PROVIDED THAT, the remaining Collateral continues to
satisfy the Collateral Maintenance Requirements described in paragraph 1
above and provided further that, such delivery by Bank shall be at the sole
cost of Debtor.
3. Section 11 of the Note modifies the collateral maintenance
requirements set forth herein during the Demand Period and after any
Downgrade Date (as such terms are defined therein).
* if the Collateral consists of securities issued by different companies
and/or securities of more than one series issued by the same company, the
proportion that the collateralized shares of each such security or series
of securities bears to the value of all securities held by the Bank as
Collateral under this Pledge Agreement shall be the same prior to and after
the withdrawal of any such securities under this paragraph.
<PAGE>
STATE OF COLORADO )
) ss.:
COUNTY OF )
On the day of February, 1998, before me personally came Kim
Magness, to me known to be the individual who executed the foregoing instrument
and, who, being duly sworn by me did depose and say that he is the successor
personal representative of the Estate of Bob J. Magness and that he executed the
foregoing instrument in the name of die Estate of Bob J. Magness and that he had
authority to sign the same, and acknowledged that he executed the same as the
act and deed of said estate.
________
_______________________________
Notary Public
Name:
[Seal]
STATE OF COLORADO )
) ss.:
COUNTY OF )
On the day of February, 1998, before me personally came Gary
Magness, to me known to be the individual who executed the foregoing instrument
and, who, being duly sworn by me did depose and say that he is the successor
personal representative of the Estate of Bob J. Magness and that he executed the
foregoing instrument in the name of die Estate of Bob J. Magness and that he had
authority to sign the same, and acknowledged that he executed the same as the
act and deed of said estate.
________
_______________________________
Notary Public
Name:
[Seal]
<PAGE>
EXHIBIT 99.5
<PAGE>
BANKERS TRUST COMPANY
RESTATED SECURED
PROMISSORY NOTE
US $50,000,000 February 9, 1998
FOR VALUE RECEIVED, the Estate of Betsy Ruth Magness (the "Borrower")
hereby promises to pay to the order of Bankers Trust Company (the
"Bank") at its office located at 280 Park Avenue, New York, NY 10017
or such other office as Bank shall notify Borrower the principal sum
of Fifty Million U.S. Dollars (the "Maximum Amount") or, if less, the
then outstanding and unpaid principal amount of the Loan on February
9, 1999 (as such date may be extended pursuant to Section 2.1(b)
hereof, the "Maturity Date") subject, however to the provisions of
Section 11 hereof. Borrower further promises to pay interest on the
unpaid principal amount of the Loan from time to time outstanding
until paid in full at the interest rates, at the times and in the
manner provided for below.
SECTION 1. DEFINITIONS. As used herein, the following terms shall have
the following meanings:
"AFFILIATE" means, as to any entity, any other entity that, directly or
indirectly, controls, is controlled by or is under common control with such
entity or is a general partner, director or executive officer of such entity.
Without limiting the foregoing, the term "control" (including the term
"controlling", "controlled by" and "under common control with") of an entity
includes the possession, direct or indirect, of the power (whether or not
exercised) (i) to vote 25% or more of the securities or other interests
having ordinary voting power, or (ii) to direct or cause the direction of the
management and policies of such entity, whether through the ownership of
voting securities or other interests, by contract or otherwise.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close, and with respect to Libor Rate Loans, a day on which the Eurodollar
market is open.
"COLLATERAL" has the meaning given such term in the Pledge Agreement.
"CONVERSION LIMIT" has the meaning given such term in Section 11 (a)
hereof.
"DEFAULT" means any event or condition which, with the passage of time,
giving of notice, or both, would become an Event of Default.
"DOWNGRADE DATE" has the meaning given such term in Section 11(b) hereof.
"EVENT OF DEFAULT" has the meaning given such term in Section 10 hereof.
"INTEREST PERIOD" means the number of days specified by Borrower in a
Notice of Rate Election for which all or a portion of the Loan shall bear
interest based on the Libor Rate, as specified in such Notice.
"LENDING OFFICE" means Bank's office at 280 Park Avenue, New York, New
York 10017, Attention: The Private Bank, Ned Kane, Principal, or such other
domestic or foreign office as Bank may designate in writing from time to time
to Borrower.
"LIBOR RATE" shall mean, with respect to each Interest Period pertaining
to a Libor Rate Loan, the rate of interest determined on the basis of the
rate for deposits in Dollars for a period equal to such Interest Period
commencing on the first day of such Interest Period appearing on Page 3750 of
the Telerate screen as of 11:00 A.M. London time, two Business Days prior to
the beginning of such Interest Period. In the event that such rate does not
appear on Page 3750 of the Telerate Service (or otherwise on such service),
the "Libor Rate" for the purposes hereof shall be determined by reference to
such other publicly available service for displaying
<PAGE>
eurodollar rates as may be agreed upon by Bank and Borrower or, in the
absence of such agreement, the "Libor Rate" for purposes hereof shall instead
be the rate per annum equal to the rate at which Bank is offered Dollar
deposits at or about 10:00 A.M., New York time, two Business Days prior to
the beginning of such Interest Period in the interbank eurodollar market
where the Eurodollar and foreign currency and exchange operations in respect
of its Libor Rate Loans are then being conducted for delivery on the first
day of such Interest Period for the number of days comprised therein and in
an amount comparable to the amount of its Libor Rate Loan to be outstanding
during such Interest Period.
"LIBOR RATE LOAN" means that portion of the outstanding principal
balance of the Loan bearing interest based on the LIBOR Rate.
"LOAN" means the aggregate amount of all advances outstanding at any one
time, made by Bank to Borrower pursuant to and evidenced by this Note, which
shall not, at any time, exceed the Maximum Amount.
"MAGNESS CALL AGREEMENT" has the meaning set forth in Section 2.5(a)(x).
"MARKET VALUE" means the fair market value calculated on the basis of
the closing price per share or other unit of the asset being valued as
reported in The Wall Street Journal or on the last sale price as reported on
the securities exchange or other market where the asset being valued is
primarily traded. Market Value shall be determined and marked to marked on a
daily basis.
"MATURITY DATE" has the meaning set forth in the introduction of this
Note.
"NOTICE OF BORROWING" has the meaning set forth in Section 2.2.
"NOTICE OF RATE ELECTION" has the meaning set forth in Section 3.
"PLEDGE AGREEMENT'" has the meaning set forth in Section 2.5(a)(vii).
"PRIME RATE" means the prime lending rate as announced by Bank from time
to time at its principal office as its Prime Lending Rate for domestic
commercial loans which rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer. Any
change in the interest rate resulting from a change in the Prime Rate shall
be effective on the effective date of each change in the Prime Lending Rate
announced by Bank at its principal office.
"PRIME RATE LOAN" means that portion of the outstanding principal
balance of the Loan bearing interest based on the Prime Rate.
"PRIOR NOTE" has the meaning set forth in Section 12(l) hereof.
"STOCKHOLDERS' AGREEMENT" has the meaning set forth in Section
2.5(a)(ix).
"33 ACT" means the Securities Act of 1933, as amended.
"TCI" has the meaning set forth in Section 2.5(a)(ix) and shall include
any successor.
SECTION 2.1 THE LOAN.
(a) This Note evidences advances that Bank shall make to Borrower from time
to time pursuant to the terms hereof. Borrower may borrow and prepay (subject
to Sections 4.6 and 5 hereof) all or any part of the Loan, and reborrow same.
(b) Provided no Default or Event of Default has occurred and is continuing
and provided further that Borrower requests, in writing, on a date not less
than ninety (90) days prior to the Maturity Date, that the Maturity Date be
extended for an additional 364-day period, then Bank agrees to consider in
good faith the request for such extension and to advise Borrower, in writing,
of Bank's decision. If Bank agrees to such extension, then the Maturity Date
shall be extended for one (1) additional 364-day period subject to all of the
other terms and conditions
- 2 -
<PAGE>
contained herein plus such terms and conditions as Bank may reasonably
require. If Bank does not agree to such extension, Bank shall give written
notice thereof to Borrower not less than sixty (60) days prior to the
then-current Maturity Date, which shall nevertheless be extended for a period
equal to ninety (90) days after the then-current Maturity Date, subject,
however, to acceleration upon the occurrence of an Event of Default and to
the provisions of Section 11 hereof.
SECTION 2.2 NOTICE OF BORROWING. Borrower shall give Bank, prior to
11:00 A.M. (New York City time), at least 3 Business Days prior written
notice of each borrowing hereunder in the form of EXHIBIT A attached hereto
(a "Notice of Borrowing"). Each Notice of Borrowing shall be irrevocable by
Borrower, and shall specify the aggregate principal amount of the advances to
be made (which shall not, when taken together with all then outstanding
advances of the Loan, exceed the Maximum Amount, nor shall any single
borrowing be less than $100,000 or, if greater, be other than in integral
multiples of $100,000), the interest rate(s) applicable thereto, the date of
borrowing (which shall be a Business Day), and the first Interest Period
therefor.
SECTION 2.3 PAYMENTS. All payments hereunder for principal, interest
and other amounts shall be made in U.S. dollars and in immediately available
funds, to the Lending Office no later than 12:00 noon New York City time on
the date when due. Borrower's obligation to pay all amounts due hereunder in
U.S. dollars shall not be discharged or satisfied by any tender or recovery
pursuant to a judgment, which is expressed in or converted into any currency
other than U.S. dollars, except to the extent that such tender or recovery
shall result in the actual receipt by Bank at the Lending Office of the full
amount of U.S. dollars payable in respect of such amounts. Borrower agrees
that its obligation to make payments in U.S. dollars shall be enforceable as
a separate cause of action if the amount received by Bank shall fall short of
the full amount of U.S. dollars expressed to be payable hereunder, and shall
not be affected by judgment being obtained for other sums due hereunder. The
provisions of this Section 2.2 shall survive repayment of the Loan and
cancellation of this Note. Without otherwise limiting Borrower's obligations
under this Note, Borrower authorizes Bank to deduct all interest payments due
hereunder by automatic debit on the due date from any account established
with Bank in the name of Borrower.
SECTION 2.4 NOTATIONS. At the time of the making of each advance, and
upon each payment of principal and interest on the Loan, Bank is authorized
to note on the Schedule attached hereto or on any internal records of Bank,
the amount of the advance or payment, as the case may be, PROVIDED that the
failure to make any such notation shall not limit or affect Borrower's
obligations hereunder to pay all amounts owing hereunder as and when same
become due.
- 3 -
<PAGE>
SECTION 2.5 CONDITIONS OF LOAN.
(a) Prior to the initial drawing of the Loan hereunder, Borrower shall
deliver to Bank: (i) a Notice of Borrowing; (ii) an opinion of Baker &
Hostetler, in form and substance reasonably satisfactory to Bank and its
counsel; (iii) Form U-1 properly executed and completed; (vi) stock
certificates representing the shares pledged to Bank under the Pledge
Agreement, properly endorsed in blank and accompanied by the appropriate
stock power and/or power of attorney; (iv) Restated Borrower Pledge and
Security Agreement dated as of even date herewith, whereby Borrower pledges
as collateral certain marketable securities it holds in an account specified
therein with Bank (as it may be amended, the "Pledge Agreement"); (v)
properly completed and executed Form UCC-1's ready for filing in the
appropriate governmental offices in New York and Colorado; (vi) copy of the
Stockholders' Agreement, dated on or about the date hereof, by and among
Borrower, John Malone, Leslie Malone, Tele-Communications, Inc. ("TCI"), Gary
Magness, Kim Magness and the Estate of Bob Magness (the "Stockholders'
Agreement"); (vii) copy of the Magness Call Agreement, dated on or about the
date hereof, by and among TCI, Borrower, Kim Magness, Gary Magness and the
Estate of Bob Magness (the "Magness Call Agreement"); (viii) the letter
agreement, dated on or about the date hereof, by and among Bank and all the
parties to the Stockholder's Agreement; (ix) copies of the Letters
Testamentary or appropriate court orders evidencing the current personal
representative of Borrower, duly certified by the court or other appropriate
person, as Bank shall reasonably require; and (x) such other information,
notice letters and documents as Bank shall reasonably request, all in form
and scope satisfactory to Bank.
(b) Prior to the initial or any additional advances of the Loan,
Borrower shall deliver to Bank a Notice of Borrowing, and (ii) Borrower shall
be in compliance with the collateral maintenance requirements set forth in
Schedule C of the Pledge Agreement both before and after giving effect to the
requested advance of the Loan.
SECTION 2.6 PURPOSE OF LOAN. Each advance of the Loan shall be used to
refinance the Prior Note, to repay notes payable to the Estate of Bob J.
Magness in the amount of $20,700,000, to repay amounts owed to the Estate of
Bob J. Magness for payments made by the Estate of Bob J. Magness on account
of estate taxes owed by Borrower and/or for general business purposes but in
no event shall any advance of the Loan be used to purchase or carry "margin
stock", as such term is defined in Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect.
SECTION 3. RATE ELECTION. Any portion of the Loan may bear interest, at
Borrower's option, based on the Prime Rate or the LIBOR Rate, provided that
the portion of the Loan which bears interest based on a Libor Rate shall be
at least $1,000,000. In no event shall there be more than ten (10) Libor Rate
Loans outstanding at any one time. To make an interest rate election,
Borrower shall give Bank, prior to 11:00 A.M. (New York City time), at least
3 Business Days prior to the expiration of each Interest Period, written
notice of a rate election (a "Notice of Rate Election"), which shall be
irrevocable, shall specify which portion of the Loan for the next succeeding
Interest Period shall be a Prime Rate Loan, or a LIBOR Rate Loan, as the case
may be, and shall specify the length of the next succeeding Interest Period
applicable thereto, subject to a minimum of $1,000,000 for any Libor Rate
Loan. If Borrower fails to give a Notice of Rate Election when required, that
portion of the Loan for which no Notice of the Election was given shall bear
interest, from and after the expiry date of the then current Interest Period,
based on the LIBOR Rate, for successive periods of three months for, if
unavailable for any reason, based on the Prime Rate), until such time as
Borrower shall give Bank a timely Notice of Rate Election therefor, and such
interest shall be payable on the last Business Day of each three month
Interest Period (or fast Business Day of each calendar month, if based on the
Prime Rate), and, subject to Section 4.6, on each date of repayment or
prepayment of all or part of the LIBOR Rate Loan.
- 4 -
<PAGE>
SECTION 4.1 INTEREST AND FEES.
(a) Borrower agrees to pay interest in respect of the unpaid principal
balance of any Prime Rate Loan outstanding from time to time, from the date
of borrowing or conversion until the earlier of maturity (whether due to
acceleration upon an Event of Default or otherwise) or payment in full, at a
rate per annum (calculated on the basis of a 360-day year) equal to .50%
below the Prime Rate. Interest shall be payable on the last Business Day of
each calendar month, and on each date of repayment or prepayment of all or
part of a Prime Rate Loan.
(b) Borrower agrees to pay interest in respect of the unpaid principal
balance of any LIBOR Rate Loan outstanding from time to time, from the date
of borrowing or conversion until the earlier of maturity (whether due to
acceleration upon an Event of Default or otherwise) or payment in full, at a
rate per annum (calculated on the basis of a 360-day year) equal to (i) .50%
above the LIBOR Rate when the aggregate outstanding principal of the Loan is
less than $5,000,000, and (ii) .375% above the Libor Rate when the aggregate
outstanding principal of the Loan is equal to or greater than $5,000,000.
Interest shall be payable on the last Business Day of each Interest Period,
PROVIDED, that if any Interest Period exceeds 3 months, interest shall be
payable on the last Business Day of each succeeding 3-month period from the
commencement of such Interest Period and on each date of repayment or
prepayment of all or part of any LIBOR Rate Loan.
(c) Following maturity (whether due to acceleration upon an Event of Default
or otherwise), interest shall accrue on the Loan in its entirety at the rate
of 1.00% in excess of the Prime Rate, and shall be payable on demand.
SECTION 4.2 INTEREST PERIODS. Borrower shall elect an Interest Period
to be applicable to each LIBOR Rate Loan, which Interest Period shall be,
subject to availability, for a period of 1, 3, 6 or 12 months.
Notwithstanding that this Note is payable on the Maturity Date, Borrower
understands and agrees that Bank continues to have the absolute and
unconditional right to demand payment upon the occurrence of an Event of
Default or pursuant to the provisions of Section 11. If Bank so demands
payment, the Loan shall be immediately due and payable and Borrower shall
also be obligated to compensate Bank for any funding losses as provided in
Section 4.6 resulting therefrom. Any Interest Period which would otherwise
expire on a day which is not a Business Day, shall expire on the next
succeeding Business Day, PROVIDED, that any Interest Period in respect of a
LIBOR Rate Loan which would otherwise expire on a day which is not a Business
Day, and after which no further Business Day occurs in such month, shall
expire on the next preceding Business Day. Without limiting or being limited
by the other provisions hereof, if a Libor Rate Loan becomes due (whether due
to acceleration upon an Event of Default or otherwise) on a day which is not
the last day of an Interest Period therefor, such Loan, together with
interest thereon, shall nonetheless become due and payable by Borrower,
together with all funding losses incurred by Bank as provided in Section 4.6
by virtue of such payment occurring on a day which is not the last day of the
then current Interest Period.
SECTION 4.3 INTEREST RATE NOT ASCERTAINABLE, ETC. In the event that
Bank shall have determined (which determination shall, absent manifest error,
be final, conclusive and binding on Borrower) that on any date for
determining the Libor Rate, by reason of changes affecting the London
interbank market, or Bank's position therein, adequate and fair means do not
exist for ascertaining the Libor Rate, then in such event, Bank shall give
telephonic notice to Borrower of such determination. Until Bank notifies
Borrower that the circumstances giving rise to the suspension described
herein no longer exist, Bank shall not be required to make or maintain a
LIBOR Rate Loan.
SECTION 4.4 ILLEGALITY. In the event that Bank shall have determined
(which determination shall, absent manifest error, be final, conclusive and
binding on Borrower) at any time that the making or continuance of any Libor
Rate Loan has become unlawful by
- 5 -
<PAGE>
compliance by Bank in good faith with any applicable law, governmental rule,
regulation, guideline or order (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful). then, in any
such event, Bank shall give prompt telephonic notice to Borrower of such
determination, whereupon: (i) Borrower's right to request a Libor Rate Loan
shall be immediately suspended, and (ii) that portion of the Libor Rate Loan
shall automatically and immediately convert to a Prime Rate Loan.
SECTION 4.5 INCREASED COSTS. If, by reason of the introduction of or
any change in or in the interpretation of any law or regulation, or the
compliance with any guideline or request from any central bank or other
governmental or quasi-governmental authority exercising control over Bank
(whether or not having the force of law), Bank or its Lending Office shall be
subject to: (i) any reserve (including, without limitation, any imposed by
the Board of Governors of the Federal Reserve System); (ii) special deposit
or similar requirement against assets of, deposits with or for the account
of, or credit extended by, Bank or its Lending Office; or (iii) any other
condition affecting any portion of the Loan which shall be imposed on Bank or
its Lending Office or the secondary eurodollar market; and, as a result of
any of the foregoing, there shall be any increase in the cost to Bank of
making, funding or maintaining any portion of the Loan (except to the extent
already included in the LIBOR Rate), or there shall be a reduction in the
amount received or receivable by Bank or its Lending Office, or in the rate
of return to Bank or its Lending Office, THEN, Borrower shall from time to
time, upon written notice from and demand by Bank pay to Bank within five
Business Days after the date specified in such notice and demand, additional
amounts sufficient to compensate Bank against such increased cost or
diminished return. A certificate as to the amount required to compensate
Bank, submitted to Borrower by Bank, shall, except for manifest error, be
final, conclusive and binding for all purposes. The provisions of this
Section 4.5 shall survive repayment of the Loan and cancellation of this Note.
SECTION 4.6 FUNDING LOSSES. Borrower shall compensate Bank, upon its
written request (which request shall, absent manifest error, be final,
conclusive and binding upon Borrower), for all losses, expenses and
liabilities (including, without limitation, any interest paid by Bank on
funds borrowed by it to make or carry a Libor Rate Loan to the extent not
recovered by Bank in connection with the re-employment of such funds and
including loss of anticipated profits), which Bank may sustain: (i) if for
any reason resulting from or related to an action or omission of Borrower, a
conversion to, or a borrowing of, a Libor Rate Loan does not occur on the
date specified therefor in the relevant Notice of Rate Election or the
relevant Notice of Borrowing, as the case may be, or (ii) if any repayment
(or conversion) of a Libor Rate Loan occurs on a date which is not the last
day of the then current Interest Period whether, in the case of repayment,
such repayment is voluntary or occurs for any other reason including
acceleration upon the occurrence of an Event of Default or by reason of the
exercise of Bank's rights under Section 11. The provisions of this Section
4.6 shall survive repayment of the Loan and the cancellation of this Note.
SECTION 5. PREPAYMENT OF THE NOTE. Borrower may prepay the outstanding
principal of this Note, in whole or in part, without penalty or premium,
PROVIDED that if there is a prepayment of a Libor Rate Loan on a day other
than the last day of the then current Interest Period applicable thereto,
Borrower shall compensate Bank therefor in accordance with Section 4.6.
Borrower shall give Bank at least two Business Days' irrevocable written or
telephonic notice of any such payment, specifying the date and amount of such
payment which shall not be less than $50,000. The payment amount specified in
such notice shall be due and payable on the date specified, together with
accrued interest to such date on the amount so paid, and all other amounts
then due.
SECTION 6. RELIANCE. Bank may rely on, and act without liability upon
the basis of, any written notice believed by Bank in good faith to be given
to, or received from Borrower (including telephonic Notice of Rate Election
or
- 6 -
<PAGE>
Notice of Borrowing), whether or not Bank subsequently receives from Borrower
confirmation thereof.
SECTION 7. COLLATERAL. The Loan and all other amounts due and owing
under this Note from time to time shall be secured by the Collateral
specified in the Pledge Agreement held in a custody account with Bank
pursuant to the terms of the Pledge Agreement.
SECTION 8. REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Bank that:
(a) the individual signing this Note and the Pledge Agreement on behalf of
Borrower has been duly appointed as personal representative of Borrower by
the Court having jurisdiction over Borrower and has the power to engage in
the transactions contemplated by, and to execute and deliver, this Note and
the Pledge Agreement and other documents executed in connection herewith and
therewith on behalf of Borrower;
(b) the execution, delivery and performance by Borrower of this Note, the
Pledge Agreement, and any other agreement executed in connection herewith or
therewith do not and will not violate or conflict with any law, rule,
regulation, judgment or order binding on Borrower or its assets (including
the Collateral), or any agreement or instrument (including the Magness Call
Agreement and Stockholders' Agreement) to which Borrower is a party or by
which Borrower or its assets are bound (including the Collateral);
(c) this Note, the Pledge Agreement, and any other agreement executed in
connection herewith or therewith have been duly executed by Borrower and
constitute legal, valid and binding obligations of Borrower, enforceable
against Borrower in accordance with their respective terms;
(d) no authorization, consent, approval or license from, or filing or
registration with, any court, governmental agency, fiscal authority or public
office is necessary in connection with the execution, delivery or performance
by Borrower of this Note, the Pledge Agreement, or any other agreement
executed in connection herewith or therewith, except such as have been taken
or obtained;
(e) to Borrower's knowledge, there are no pending or threatened actions,
suits or proceedings against or affecting Borrower or the Collateral before
any court, commission, bureau or other governmental agency or
instrumentality, which, individually or in the aggregate, would have a
material adverse effect on the business, properties or condition (financial
or otherwise), or prospects of Borrower or in any way adversely affect the
Collateral or bank's lien thereon;
(f) true, correct and complete copies of all relevant documents related to
the Collateral have been delivered to Bank and are referenced in Section 2.5
hereof, and Borrower knows of no other document, agreement, instrument or
understanding of any sort affecting the Collateral;
(g) all Collateral identified on Schedule B to the Pledge Agreement have
been held (within the meaning of Rule 144 under the 33 Act) by Borrower for
more than two years and are eligible for sale by Bank as pledges under Rule
144(k) of the 33 Act so long as Bank is not an Affiliate of TCI;
(h) Borrower acknowledges that upon foreclosure of the Collateral identified
on Schedule B to the Pledge Agreement certain preferential voting rights will
be lost and certain adverse estate tax consequences may result; and Borrower
hereby releases and holds Bank harmless from any loss, cost, expense, claim
or damage suffered by Borrower as a result thereof.
SECTION 9. COVENANTS. Borrower covenants and agrees with Bank that
so long as the Loan is outstanding or this Note is effective, Borrower shall:
(a) not amend, supplement, restate or otherwise modify or agree to the
termination of any provision of the Magness Call Agreement or the
Stockholders' Agreement or enter into any
- 7 -
<PAGE>
agreement or understanding with respect to such documents or the Collateral
without the prior written consent of Bank;
(b) within 10 days of the date hereof, notify the other parties to the
Magness Call Agreement and the Stockholders' Agreement to copy Bank on all
notices issued to Borrower thereunder;
(c) forward to Bank, immediately upon receipt copies of all written notices
received in connection with the Magness Call Agreement and the Stockholders'
Agreement; and
(d) notify the Bank, in writing, immediately upon becoming aware of any
litigation involving Borrower or the Collateral including any litigation
under the Stockholders' Agreement or the Magness Call Agreement, or any of
the transactions related to any of the foregoing.
SECTION 10. EVENTS OF DEFAULT. Upon the occurrence of any of the
following (each an "Event of Default") with respect to Borrower or any
endorser, guarantor or other person liable for any of the Loans: (i) failure
to pay any principal, interest or other amount owed hereunder or under the
Pledge Agreement when due and such failure shall continue for five calendar
days, (ii) death (in the case of an individual) or dissolution, liquidation
or suspension of its business, (iii) default in the payment of any
indebtedness in excess of $1,000,000, (iv) any representation made to Bank
having been false or misleading in any material respect when made, (v)
default in the performance or observance of any covenant, agreement or
obligation under this Note, the Pledge Agreement or any other contract,
instrument or agreement relating hereto or thereto including, without
limitation, the failure to comply with the collateral maintenance
requirements set forth on Schedule C to the Pledge Agreement in accordance
with the terms thereof, (vi) any modification or termination of any of the
Magness Call Agreement or Stockholders' Agreement which has an adverse effect
on the Collateral or Bank's lien thereon including any reassertion by John
Malone of his rights under the June 17, 1988 letter agreement, (vii)
insolvency (howsoever determined), (viii) the commencement of any proceedings
by or against any of them under any bankruptcy, reorganization, arrangement
of debt, insolvency, receivership, liquidation, dissolution or similar laws
relating to the relief of debtors, or the making of an assignment for the
benefit of creditors; (ix) and in any such event or (x) without limiting or
being limited by any of the foregoing, if, as a result of litigation or
otherwise, the Collateral or Bank's lien thereon shall be adversely affected:
(a) Bank may declare the Loans and all other amounts due in respect of
interest, fees and other expenses due and owing under this Note and the
Pledge Agreement to be immediately due and payable, whereupon same shall
become immediately due and payable, without demand, PROVIDED, that if an
event set forth in clause (viii) occurs, such amounts shall automatically
become due and payable without declaration by Bank; (b) Bank's obligation to
give or continue Loans hereunder shall automatically terminate, and (c) Bank
shall have such additional rights and benefits specified in paragraphs 8 and
9 of the Pledge Agreement including those under applicable law.
SECTION 11. SPECIAL PROVISIONS.
(a) CONVERSION LIMIT. If TCI shall exercise its right to call all or any
portion of the Collateral pursuant to the Magness Call Agreement or if
Borrower exercises its "Tag Along" right under Section 4.1 of the
Stockholders' Agreement or if any party entitled thereto exercises its "Drag
Along" right under Section 4.2 of the Stockholders' Agreement then,
notwithstanding anything to the contrary contained in this Note, the amount
of the Loan outstanding hereunder shall not exceed the Conversion Limit and
Borrower, within five Business Days, shall prepay such portion of the Loan as
shall be necessary to reduce the amount of the Loan to the Conversion Limit
(including any amounts owed under Section 4.6 hereof), and no further
advances shall be made under this Note in excess of the Conversion Limit. For
purposes of this Section 11, the term "Conversion Limit" means a dollar
amount equal to the product of: (i) the aggregate Market Value of all
Collateral pledged to Bank under the Pledge Agreement
- 8 -
<PAGE>
that is exempt from the provisions of both the Magness Call Agreement and the
Stockholders' Agreement (which may include additional Collateral pledged and
acceptable to Bank within such five Business Days and which is otherwise
qualified and pledged in accordance with the Pledge Agreement) and (ii) 50%.
(b) MINOR DOWNGRADE. In the event that the senior unsecured debt rating of
any issuer of shares pledged to Bank as Collateral under the Pledge Agreement
falls below BBB-, or Bal, as determined by Standard & Poors and Moody's
rating services, respectively, (such date being the "Downgrade Date"), then
notwithstanding anything to the contrary contained herein or in the Pledge
Agreement: (i) the outstanding principal amount of the Loan shall not exceed
50% of the Market Value of the Collateral from the Downgrade Date until this
Note matures; (ii) the interest rate applicable to any Libor Rate Loan
outstanding during such period shall be .50% above the applicable Libor Rate
notwithstanding the fact that the amount of the Libor Rate Loan equals or
exceeds $5,000,000; (iii) no additional advances of the Loan shall be made
from and after the Downgrade Date; and (iv) the Loan and all other amounts in
respect of interest, fees and costs due and owing hereunder and under the
Pledge Agreement shall be due and payable in full on the earlier of the
ninetieth day following demand by Bank or the Maturity Date (subject to
acceleration upon the occurrence of an Event of Default) and the right of the
Borrower to borrow hereunder shall be in Bank's sole discretion.
(c) MAJOR DOWNGRADE. In the event that the senior unsecured debt rating of
any issuer of shares pledged to Bank as Collateral under the Pledge Agreement
falls below B+ and B1, as determined by Standard & Poors, and Moody's rating
services, respectively, then notwithstand-ing anything contained herein or in
the Pledge Agreement, the Loan and all other amounts in respect of interest,
fees and costs due and owing hereunder and under the Pledge Agreement shall
be immediately due and payable without notice or demand of any kind and the
right of the Borrower to borrow hereunder shall terminate.
(d) For purposes of clauses (b) and (c) of this Section 12, while the debt
of any issuer of Collateral which is an Affiliate of TCI is not rated, the
debt rating of TCI shall govern but at such time as any such Affiliate's debt
shall become rated, that rating shall govern.
SECTION 12. MISCELLANEOUS.
(a) This Note shall be binding on Borrower and its successors, heirs,
executors and assigns and shall inure to the benefit of Bank and its
successors and assigns. Borrower may not assign or delegate any of its
obligations or agreements hereunder. No amendment, modification or waiver of
any provision of this Note shall be effective unless it is in writing and
signed by Bank and Borrower.
(b) Unless otherwise indicated, all notices and other communications in
connection with this Note shall be in writing and shall be effective, if
mailed, five days after deposit in the mails, postage prepaid, if sent by
telefax, when sent with a confirmation received, or if by courier or
messenger, when delivered against a receipt, in each case, to Borrower's
address set forth below, or to Bank at its Lending Office. Either party may
change its address for notices by written notice to the other.
(c) EACH OF BORROWER AND BANK, BY ITS ACCEPTANCE HEREOF, HEREBY IRREVO-CABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW. ANY RIGHT TO A
JURY TRIAL IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
NOTE. In any action or proceeding arising out of or relating to this Note,
Borrower hereby irrevocably submits to the non-exclusive jurisdiction of the
courts of the State of New York and the federal courts in New York City, and
agrees that effective service of process may be made on Borrower by mailing
same to Borrower's address set forth below. Bank may serve process in any
other manner permitted by applicable law. Borrower hereby irrevocably waives
any objection to the laying of venue in the aforesaid courts, and any claim
of an inconvenient forum. To the extent that
- 9 -
<PAGE>
Borrower or its property may have or hereafter acquire immunity, on the
grounds of sovereignty or otherwise, from any judicial process in connection
with this Note, Borrower hereby irrevocably waives, to the fullest extent
permitted by applicable law, any such immunity and agrees not to claim same.
Borrower agrees that a final judgment in any such action or proceeding shall
be conclusive, and may be enforced in any other jurisdiction or in any other
permitted manner.
(d) BORROWER WAIVES ANY AND ALL REQUIREMENTS OF DEMAND, PRESENTMENT,
PROTEST, NOTICE OF DISHONOR OR FURTHER NOTICE OF ANY KIND IN CONNECTION WITH
THIS NOTE.
(e) Borrower will indemnify and hold Bank harmless for, and pay on demand in
U.S. dollars, all losses, claims, taxes, costs, fees and expenses of any
nature related to this Note and the transactions contemplated hereby,
including attorneys' fees, incurred by Bank in connection with the
preparation, execution, delivery, amendment, modification or supplement of
this Note and the enforcement of this Note, and any related documents,
including the Pledge Agreement. This provision shall survive repayment of the
Loan and cancellation of this Note.
(f) All payments hereunder shall be made without setoff or counterclaim, and
free and clear of, and without deduction for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, and all interest, penalties and other liabilities
with respect thereto (collectively, "Taxes"), now or hereafter imposed,
levied, collected, withheld or assessed by any jurisdiction, or any
department, agency, state, political subdivision or taxing authority thereof
or therein. If any Taxes are so levied or imposed, Borrower agrees to pay the
full amount thereof, and such additional amounts as may be necessary so that
each net payment received by Bank will not be less than the amount provided
for herein. Borrower will furnish to Bank within 30 days after each payment
of Taxes is due, originals or certified copies of tax receipts evidencing
such payment by Borrower. This provision shall survive repayment of the Loan
and cancellation of this Note.
(g) If, for the purpose of obtaining a judgment in any court with respect to
any obligation of Borrower under this Note, it becomes necessary to convert
into any other currency any amount in United States dollars due under this
Note, then that conversion shall be made at the average of the buying spot
rates of exchange in effect at the Lending Office for freely transferable
United States dollars at the close of business on the day before the day on
which judgment is rendered. If there is a change in such rate of exchange
prevailing between the day before the day on which judgment is rendered and
the date of payment of the judgment, then Borrower shall pay such additional
amount as may be necessary to ensure that the amount paid on the date of
payment is the amount in such currency which, when converted at such rate of
exchange in effect on the date of payment, is the amount in United States
dollars then due under this Note. Any additional amount owing by Borrower
hereunder shall be due as a separate debt and shall not be affected by or
merged into any judgment obtained for any other amounts due under or in
respect to this Note. This provision shall survive repayment of the Loan and
cancellation of this Note.
(h) If one or more security and pledge agreements and/or guaranties shall
have been executed and delivered to Bank as security for Borrower's
obligations hereunder including, but not limited to, the Pledge Agreement,
this Note shall be entitled to the benefits of same.
(i) Section headings are for convenience of reference and shall not be
construed as part of this Note.
(j) This Note shall be construed in accordance with and be governed by the
laws of the State of New York, without regard to conflict of laws principles.
(k) In the event the principal balance of the Loan, interest thereon and any
other amount
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<PAGE>
owed hereunder is not paid when due (whether upon demand or otherwise), Bank
shall have all the rights and remedies provided under law or equity including
those of a secured party under the Uniform Commercial Code as in effect from
time to time in New York.
(l) This Note amends, restates and replaces in its entirety the Secured
Promissory Note dated June 25, 1997 made by Borrower to Bank evidencing the
principal amount of up to $50,000,000 (the "Prior Note"), it being agreed
that the replacement of the Prior Note hereby shall not require any exchange
of funds and that the lion granted to Bank on the collateral securing the
Prior Note shall be a continuing one under the Pledge Agreement.
- 11 -
<PAGE>
ESTATE OF BETSY RUTH MAGNESS Address:
Estate of Betsy Ruth Magness
c/o Hanegan & Pillow, L.L.P.
By /s Kim Robert Magness 370 Seventeenth Street, Suite 3650
--------------------- Denver, CO 80202
Kim Robert Magness Telefax: (212) 454-4740 Attn: James
Successor Personal Representative D. Hanegan
cc: Kim Robert Magness
Telefax: (303) 220-5191
<PAGE>
STATE OF COLORADO )
) ss.:
COUNTY OF DENVER )
On the 9TH day of February, 1998, before me personally came KIM ROBERT
MAGNESS, to me known to be the individual who executed the foregoing
instrument and, who, being duly sworn by me did depose and say that he is a
successor personal representative of the Estate of Betsy Ruth Magness and
that he executed the foregoing instrument in the name the Estate of Betsy
Ruth Magness and that he had authority to sign the same, and acknowledged
that he executed the same as the act and deed of said estate.
______________________________
Notary Public
Name:
[SEAL]
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL AND INTEREST
<TABLE>
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Payments
Amount of ------------------------- Notation
Date Advance Principal Interest Balance made by
<S> <C> <C> <C> <C> <C>
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</TABLE>
<PAGE>
EXHIBIT A
NOTICE OF BORROWING
Reference is made to that certain Secured Promissory Note, dated
February __, 1998 (the "NOTE"), made by the Estate of Betsy Ruth Magness to
Bankers Trust Company ("BANK"). Any capitalized term used herein without
definition shall have the meaning set forth in the Note.
This is the notice of borrowing being delivered in accordance with
Section 2.2 of the Note. The undersigned hereby requests that Bank make a
Loan under the Note in the amount of $__________ [minimum of $100,000 with
increased increments of $100,000] by depositing such amount in (i) the
account of the undersigned at Bank on _______________, 19___
[not earlier than 3 Business Days after receipt by Bank of this Certificate]
or, (ii) the account specified in the attached Payment Instructions Annex, if
any, by _______________, 19___ [not earlier than 3 Business Days after
receipt by Bank of this Certificate].
The undersigned requests that the interest on the advance be based on
the Libor Rate (subject to minimum of $1,000,000) with an Interest period of
[1, 3, 6 or 12] or based on the Prime Rate [select interest option].
The funds requested hereunder are being used solely for the purposes set
forth in Section 2.6 of the Note.
The total amount of Loans to date, after disbursement of the Loan
requested hereby, equals $__________.
No Default or Event of Default currently exists under the Note and all
representations and warranties made thereunder are true and correct in all
material respects as of the date hereof.
ESTATE OF BETSY RUTH MAGNESS
By ____________________________
Kim Robert Magness
Personal Representative
<PAGE>
PAYMENT INSTRUCTIONS
ANNEX
--------------------
Bank: ----------------------------------------------
ABA Routing No.: ----------------------------------
Account Title: -------------------------------------
Account No.: ---------------------------------------
Reference: -----------------------------------------
Comments; Instructions: ----------------------------
<PAGE>
EXHIBIT 99.6
<PAGE>
BANKERS TRUST COMPANY
RESTATED
BORROWER SECURITY AND PLEDGE AGREEMENT
In consideration of loans, advances, overdrafts, letters of credit, acceptances,
swaps, securities transactions, forward contracts, foreign currency transactions
and all other credit transactions and financial accommodations given or to be
given or to be continued from time to time to the Estate of Betsy Ruth Magness
("Debtor") by BANKERS TRUST COMPANY or any of its Affiliates listed on SCHEDULE
A hereto (Bankers Trust Company and all such Affiliates being referred to herein
collectively as "Bank" including those due under that certain Restated Secured
Promissory Note of even date herewith made by Debtor to Back evidencing the
principal sum of up to $50,000,000 (as it may be amended, the "Note")), Debtor
hereby agrees with Bank as follows:
1. As collateral security for the due and punctual payment and performance of
all present and future liabilities and obligations, direct or indirect,
liquidated or contingent, joint or several of Debtor to Bank, (including those
due under the Note) whether now existing or hereafter incurred, whether now or
hereafter due, whether for principal, interest, fees, costs, attorneys' fees,
taxes, damages, expenses, indemnities, or otherwise, and howsoever evidenced
(collectively, the "Obligations"), Debtor hereby assigns, pledges and grants to
Bank a continuing security interest in and lien upon all right, title and
interest of Debtor in and to (i) all cash, securities, shares, certificates,
notes, instruments, rights, receivables and all other property of Debtor now or
hereafter in the Possession, custody or control of Bank, including, without
limitation, any of the foregoing from time to time deposited in, credited to or
payable to that certain /_/ investment /X/ custody /_/ deposit or /_/ other
account with the New York office of Bankers Trust Company, account no. 280683,
(ii) in addition to, and not in derogation of clause (i) above, those certain
securities and other property, if any, listed on SCHEDULE B hereto, (iii) all
cash, securities, shares, certificates, notes, instruments, rights, receivables
and all other property now or hereafter received or receivable in connection
with any sale, exchange, redemption or other disposition of any of the
foregoing, (iv) all dividends, interest and other distributions, whether in
cash, securities or other property on any of the foregoing (specifically
excepting cash dividends), (v) all additions to and substitutions for any of the
foregoing, (vi) all present and future rights, claims, remedies and privileges
of Debtor pertaining to any of the foregoing, (vii) all general intangibles of
Debtor and all contract rights of Debtor relating to any of the Obligations and
(viii) all proceeds of the foregoing, in each case whether now existing or
hereafter arising or acquired (collectively, the "Collateral").
2 Debtor represents and warrants to Bank that: (a) Debtor is the legal and
beneficial owner of the Collateral, free and clear of any mortgage, pledge,
lien, charge, encumbrance, claim, adverse interest or security interest
(collectively "Liens"), (b) Debtor has all necessary right, power and authority
to grant to Bank a security interest in the Collateral, and has taken all
necessary action to authorize Debtor's execution, delivery and performance of
this Agreement, including all necessary actions by directors and shareholders
and all filings and recordations, (c) there are no filings or recordations
against the Collateral which grant or purport to grant a Lien in any Collateral
to any other person, (d) Debtor, if a corporation, partnership or other legal
entity, is duly organized and validly existing in good standing under the laws
of its jurisdiction of formation, and is duly qualified in all such foreign
jurisdictions where its business or property so requires, (e) all Collateral
which consists of equity interests will have been validly issued and are fully
paid and non-assessable and are subject to no restrictions on transfer by Bank
as pledgee or otherwise except, with respect to the Series B Common Stock
identified on Schedule B hereto, as set forth in the Magness Call Agreement and
the Stockholders' Agreement (as such terms are defined in the Note), (f) all
Collateral identified on Schedule B hereto is freely saleable by Bank as pledgee
under Rule 144(k) of the Securities Act of 1933, as amended so long as Bank is
not an Affiliate of TCI (as such terms are defined in the Note), (g) the
execution, delivery and performance by Debtor of this Agreement do not violate,
breach or conflict with (i) Debtor's constituent documents, if Debtor is a
corporation, partnership or other legal entity, (ii) any agreement, contract or
instrument to which Debtor is a party or by which Debtor or its properties are
bound (including the Magness Call Agreement and the Stockholders' Agreement), or
(iii) any applicable law, regulation, decree, order or the like, (h) after
giving effect to the transactions contemplated by this Agreement, Debtor is not
insolvent, and (i) this Agreement is the legal, valid and binding obligation of
Debtor, enforceable against Debtor in accordance with its terms.
3. Debtor covenants and agrees with Bank that: (a) Bank's sole duty with
respect to the Collateral is to use such care as it uses for similar property
for its own account, and Bank shall not be obligated to preserve rights in the
Collateral against prior parties, (b) Debtor will (i) be solely responsible for
all matters relating to the Collateral, including ascertaining maturities,
calls, conversions, exchanges and tenders, (ii) not, and will not purport to,
grant or suffer Liens against, or sell, transfer or dispose of any Collateral,
(iii) from time to time take all actions, and make all filings and recordations
requested by Bank in connection with Bank's security interest in the Collateral,
(iv) promptly notify Bank of the occurrence of an Event of Default (as defined
in the Note), and (v) hold in trust for, and forthwith pay over to Bank in the
form received (except for any necessary endorsements) all property, proceeds or
distributions received by Debtor on account of any Collateral (specifically
excepting ordinary course cash dividends), (c) Bank is authorized to file
financing statements and give notice to third parties regarding the Collateral
without Debtor's signature to the extent permitted by applicable law, at any
time and from time to time after an Event of Default, transfer all or any part
of the Collateral to Bank's name or that of its nominee, and exercise all rights
as if the absolute owner thereof, and file a proof of claim for, receive
payments or distributions on, and exchange or release Collateral in any
bankruptcy, insolvency or similar proceeding, and (d) Debtor's true legal name
and chief executive office (if a corporation, partnership or other legal
entity), or principal residence (if an individual), are set forth on the
signature page hereof, and Debtor will not change its name or such address
without the prior written consent of Bank.
4. Debtor further covenants and agrees to comply with the Collateral
Maintenance Requirements set forth in SCHEDULE C
<PAGE>
hereto. If Debtor fails to comply with the Collateral Maintenance
Requirements for the period specified in SCHEDULE C, Bank shall have all the
rights and remedies of a secured party under the New York Uniform Commercial
Code as then in effect (the "UCC"), and may, without notice to or consent by
Debtor, sell, liquidate or redeem so much of the Collateral as is necessary
to reduce the outstanding Obligations so as to comply with the Collateral
Maintenance Requirements then in effect.
5. (a) Debtor hereby irrevocably, unconditionally and expressly waives, to the
fullest extent permitted by applicable law, all defenses, counterclaims, rights
of setoff, any requirement that Bank first proceed against any guarantor or any
other security, all requirements for notice of any kind, demand, protest,
presentment, notice of non-payment, default or dishonor of any Obligation,
notice of acceptance hereof, marshalling of assets and the like, including
without limitation, any right to notice or judicial hearing in connection with
Bank's taking Possession of or disposition of any Collateral, any notice of any
sale, transfer or other disposition by Bank of any Obligation, any requirement
that Bank first proceed against Debtor, any other collateral or any other person
liable for any of the Obligations, and all damages occasioned by any of the
foregoing (except as finally determined by a competent court to have been the
direct result of Bank's gross negligence or willful misconduct). No invalidity,
irregularity or unenforceability of any Obligations shall affect, impair or be a
defense to any of Debtor's obligations or agreements or any of Bank's rights or
remedies hereunder. Bank may, upon the occurrence of an Event of Default,
without notice to or consent by Debtor, and without affecting or impairing
Debtor's obligations or agreements or Bank's rights and remedies hereunder, (i)
sell, release, exchange, settle, compromise or otherwise dispose of any
Collateral, or other security for any of the Obligations, and (ii) exercise (in
such order as Bank may choose) or refrain from exercising any rights against
Debtor or any other person liable for any Obligations.
(b) Debtor hereby appoints Bank the attorney-in-fact of Debtor for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing any instrument which Bank may deem necessary or advisable to
accomplish the purposes hereof, which appointment is irrevocable and coupled
with an interest and any proxy or proxies heretofore given by Debtor to any
other person are hereby revoked. Without limiting the generality of the
foregoing, Bank shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
Bank's name or in the name of Debtor, to ask for, demand, sue for, collect,
receive, receipt and give acquittance for any and all moneys due or to become
due under and by virtue of any of the Collateral, to endorse checks, drafts,
orders and other instruments for the payment of money payable to Debtor
representing any dividend or other distribution payable in respect of the
Collateral or any part thereof or on account thereof and to give full discharge
for the same, to settle, compromise, prosecute or defend any action, claim or
proceeding with respect thereto, and to sell, assign, endorse, pledge, transfer
and make any agreement respecting, or otherwise deal with, the same; provided,
however, that nothing herein contained shall be construed as requiring or
obligating Bank to make any commitment or to make my inquiry as to the nature or
sufficiency of any payment received by Bank, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered
thereby, and no action taken by Bank or omitted to be taken with respect to the
Collateral or any part thereof shall give rise to any defense, counterclaim or
offset in favor of Debtor or to any claim or action against Bank in the absence
of the gross negligence or willful misconduct of Bank as shall have been proven
in a final, nonappealable judgment of a court of competent jurisdiction. This
power of atorney is irrevocable and coupled with an interest.
6. (a) At any time, after Event of Default has occurred and is continuing,
Bank shall have the right (in its sole and absolute discretion and without
notice to Debtor) to transfer to or to register any securities (including the
pledged securities) constituting Collateral in its own name or the name of its
nominee.
(b) As Bank, as of the date hereof, has not registered the pledged
securities in its name or that of its nominee but without derogation of the
right to do so in accordance herewith, Debtor agrees to cause the transfer agent
and registrar of the pledged securities to identify on its books and records
that the address of record for the holder of the pledged securities and the
address for delivery of my dividends (other than ordinary course cash dividends)
thereon or other distributions related thereto that are payable to Bank
hereunder shall be the office of Bank at:
Bankers Trust Company
One Bankers Trust Plaza, 14th Floor
Loan Center Mail Stop 2144
New York, New York 10006
Attn: Errol Harris, Vice President
Failure to cause such change of address within sixty (60) days of the date
hereof or if Debtor shall thereafter change such instructions shall be an Event
of Default. Debtor acknowledges that by changing the address of the record
holder of the pledged securities as contemplated in this clause (b), information
as to the issuer thereof and the rights of, and payments to be received by, the
holder of the pledged securities (including information as to performance of the
issuer, votes to be taken and conversations, tenders and other offers and
matters relating thereto) shall be delivered to Bank. Bank shall use reasonable
efforts to forward such information to Debtor. However, in addition to and not
in limitation of the release from liability of Bank otherwise set forth in this
Agreement, Debtor releases Bank from any loss, damage or injury suffered by
Debtor arising from the change of address of the record holder of the pledged
securities.
(c) Bank shall, during the continuance of any Event of Default, have the
right to exchange the certificates representing any such securities for
certificates of smaller or larger denominations for any purpose consistent with
this Agreement.
7. (a) Unless and until an Event of Default shall have occurred and be
continuing, Debtor shall be entitled to (i) exercise any and all voting and/or
consensual rights and powers accruing to an owner of the pledged securities or
any part thereof for any purpose consistent with the terms of this Agreement and
the Note, provided that such action would not impair the security for the
Obligations or adversely affect the position of Bank under this Agreement or the
Note, and (ii) receive all ordinary course cash dividends paid or payable on the
pledged securities.
(b) Upon the occurrence and during the continuance of an Event of Default,
(i) all rights of Debtor to exercise the voting and consensual rights and powers
which Debtor is entitled to exercise pursuant hereto shall, unless otherwise
notified by Bank in writing at its option, cease, and all such rights shall
thereupon
<PAGE>
become vested in Bank, which shall have the sole and exclusive right and
authority to exercise such voting, and (ii) all ordinary course cash
dividends, in addition to all stock and other noncash dividends, paid or
payable in respect of the pledged securities shall be delivered to Bank.
8. For purposes of this Agreement, the term Event of Default shall have the
meaning set forth in the Note. Upon the occurrence of any Event of Default; THEN
and in any such event: (a) Bank may declare all of the Obligations to be
immediately due and payable, whereupon same shall become immediately due and
payable, without demand, PROVIDED, that if an event set forth in Section
10(viii) of the Note occurs, the Obligations shall automatically become due and
payable without declaration by Bank; (b) Bank's obligation, if any, to give or
continue credit facilities to Debtor shall automatically terminate, (c) Bank
shall have the right from time to time to take possession of, and sell, redeem,
assign, liquidate, transfer and deliver all or any part of the Collateral, at
any brokers' board or exchange, or at public or private sale or otherwise, at
the option of Bank, for cash or on credit for future delivery, in such parcel or
parcels and at such times and places, and upon such terms and conditions as Bank
may deem proper, and in connection therewith may grant options and impose
reasonable conditions, all without (except as same am required by applicable law
and cannot be waived) advertisement or demand upon or notice to Debtor or right
of redemption of Debtor, all of which are hereby expressly waived to the fullest
extent permitted by applicable law, (d) upon each such sale, Bank may purchase
all or any of the Collateral, free and clear of all claims, rights of redemption
and equities of Debtor; and (e) in addition, Bank shall have all of the rights
and remedies of a secured party under the UCC.
9. To the extent required by applicable law, Bank will give Debtor notice of
the time and place of any public sale or of the time after which any private
sale or other disposition of Collateral is to be made, by sending notice at
least 5 days before the time of sale or disposition, which Debtor agrees is
reasonable. Bank need not give such notice if not required by the UCC. Debtor
agrees that at any private sale Collateral may be sold at a price that is less
than the price which might have been obtained at a public sale or that is less
than the aggregate outstanding amount of the Obligations; Bank may accept the
first offer received and need not offer such Collateral to more than one
offeree. Bank may convert any proceeds in foreign currency to U.S. dollars at
the then prevailing rates of exchange. After deducting its costs and expenses
from the proceeds of sale, apply any residue to pay the Obligations in such
order as it elects and Debtor will remain liable for any deficiency with
interest. All foreign exchanges losses incurred in connection with the
conversion of any Collateral denominated in a foreign currency to U.S. dollars
shall be borne by Debtor. Without Bank's prior written consent, in no event
shall Debtor sell, or permit any other person whose sales of securities would be
aggregated with those of Debtor under applicable securities laws to sell, any
securities of the same type as the Collateral at any time that the sale by Bank
of such Collateral is subject to any restriction under any securities Ian
including those as to manner or volume of sale.
10. In the event and to the extent that any provision of this Agreement shall
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions, or of such provision in any
other jurisdiction, shall not in any way be affected or impaired thereby.
11. The Agreement may not be modified, changed, waived or discharged orally,
but only by a writing signed by the parties hereto. This Agreement shall inure
to the benefit of and be enforceable by Bank and its successors, transferees and
assigns, and shall be binding upon Debtor and its heirs, executors, successors
and assigns, PROVIDED, that Debtor may not transfer, assign or delegate any of
its rights or obligations hereunder, and any such purported transfer, assignment
or delegation shall be void. This Agreement shall terminate upon final payment
in full to Bank of all of the Obligations and termination of any obligation of
the Bank to make advances, and shall continue to be effective or be reinstated,
as the case may be, if at any time payment of or on account of any of the
Obligations is rescinded or must otherwise be restored or returned by Bank upon
the insolvency, bankruptcy or reorganization of Debtor or any other person or
otherwise, all as though such payment had not been made.
12. No failure or delay by Bank in exercising any right or remedy and no course
of dealing between Bank and Debtor shall operate as a waiver thereof, nor shall
any single or partial exercise of any right preclude any other or future
exercise thereof. All rights and remedies of Bank shall be cumulative and may be
exercised singly or concurrently. No notice to or demand on Debtor shall entitle
Debtor to any other or further notice or demand, or constitute a waiver of
Bank's rights.
13. If for the purpose of obtaining a judgment in any court with respect to
any of Debtor's obligations under this Agreement, it becomes necessary to
convert into any other currency any amount in U.S. dollars due hereunder, then
that conversion shall be made at the average of the buying spot rates of
exchange in effect at Bank's lending office for freely transferable U.S. dollars
at the close of business on the day before the day on which judgment is
rendered. If there is a change in such rate of exchange prevailing between the
day before the day on which judgment is rendered and the date of payment of the
judgment, then Debtor shall pay such additional amount as may be necessary to
ensure that the amount paid on the date of payment is the amount in such
currency which, when converted at such rate of exchange in effect on the date of
payment, is the amount in U.S. dollars then due under this Agreement. Any
additional amount owing by Debtor hereunder shall be due as a separate debt, and
shall not be affected by or merged into any judgment obtained for any other
amounts due hereunder. This paragraph 13 shall survive repayment of the
Obligations and termination of this Agreement.
14. Debtor will indemnify and hold Bank harmless for, and pay in U.S. dollars
all losses, claims, taxes, costs, fees and expenses, including attorneys' fees,
incurred by Bank in connection with the custody, care, preservation, sale or
disposition of any Collateral, and the enforcement of Bank's rights hereunder.
The provisions of this paragraph 14 shall survive repayment of the Obligations
and termination of this Agreement.
15. Any notice to Bank or Debtor shall be effective 3 days after deposit in the
mails, airmail postage prepaid, if sent by facsimile, when sent, if delivered by
hand or courier, when delivered, or in the case of paragraph 4, when given by
telephone, in each case to the address below. Each party may change its address
for notices by written notice to the other.
16. DEBTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE
<PAGE>
LAW, ANY RIGHT TO A JURY TRIAL IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. In any
action or proceeding arising out of or relating to this Agreement, Debtor
hereby accepts, for itself and its property, the non-exclusive jurisdiction
of the courts of the State of New York, and the federal courts in New York
City, and agrees that effective service of process may be made on Debtor by
mailing same to Debtor's address set forth below. Bank may proceed against
Debtor in any other applicable jurisdiction, and may serve process in any
other manner permitted by applicable law. Debtor hereby irrevocably waives
any objection to the laying of venue in the aforesaid courts, and any claim
of an inconvenient forum. To the extent that Debtor or its property may have
or hereafter acquire immunity, on the grounds of sovereignty or otherwise,
from any judicial process in connection with this Agreement, Debtor hereby
irrevocably waives, to the fullest extent permitted by law, any such immunity
and agrees not to claim same. Debtor agrees that a final judgment in any such
action or proceeding shall be conclusive, and may be enforced in any other
jurisdiction by suit on the judgment or in any other permitted manner.
17. If this Agreement is signed by two or more parties as Debtors, they shall
be jointly and severally liable hereunder, and the term "Debtor" as used herein
shall mean the debtor parties hereto, and each of them.
18. If the Obligations under this Agreement shall be owing to an Affiliate of
Bankers Trust Company, Bankers Trust Company is hereby appointed to hold the
Collateral as agent for the benefit of such Affiliate. Such Affiliate hereby
irrevocably authorizes and directs Bankers Trust Company to act solely on the
instructions of such Affiliate, unless such Affiliate otherwise consents in
writing, and Debtor hereby irrevocably acknowledges and agrees that Bankers
Trust Company shall take all such instructions solely from Affiliate, and
neither Affiliate nor Bankers Trust Company shall be obligated to, or liable for
any failure to, act in accordance with any instructions given by Debtor, so long
as this Agreement shall remain in effect.
19. This Agreement shall be construed in accordance with and be governed by the
law of the State of New York.
20. All notices required herein shall be by telefax, nationally-recognized
overnight courier, or certified U. S. mail, and sent to the parties at the
addresses below:
If to Bank:
Bankers Trust Company
280 Park Avenue - 6 Middle
New York, New York 10017
Telefax: (212) 454-4740
Attn: The Private Bank
Edward F. Kane, Principal
and if to Borrower.
Estate of Betsy Ruth Magness
c/o Hanegan & Pillow, L.L.P.
370 Seventeenth Street Suite 3650
Denver, CO 80202
Telefax: (303) 572-1603
cc: Kim Robert Magness
Telefax: (303) 220-5191
and shall be deemed effective upon receipt of confirmation of delivery, in the
case of telefax transmission, one Business Day after sending, if sent by a
nationally-recognized overnight courier, and three Business Days after sending,
if sent by certified U.S. mail.
21. This Agreement amends, restates and replaces in its entirety the Borrower
Security Pledge Agreement dated June 25, 1997 (the "Prior Pledge") but the lien
granted on the "Collateral" securing the "Obligations" as defined and provided
under the Prior Pledge shall be a continuing one on the Collateral securing the
Obligations hereunder.
<PAGE>
IN WITNESS WHEREOF, Debtor has executed and delivered this Agreement, in the
case of a corporation, by its duly authorized officer(s) or representatives, as
of the 9TH day of February, 1998.
Estate of Betsy Ruth Magness
Debtor (Full Legal Name)
By /s/ Kim Robert Magness
--------------------------------
Kim Robert Magness
Personal Representative
Bankers Trust Company
Secured Party
By /s/ Edward F. Kane
--------------------------------
Name: Edward F. Kane
Title: Principal
<PAGE>
Schedule A
AFFILIATES OF BANKERS TRUST COMPANY
[NONE]
Schedule B
Listed Securities
One or more certificates representing ownership of the following securities
of the Borrower delivered to and held by Bank in the Custody Account specified
in Section 1 of this Agreement, accompanied by a duly executed stock power for
each such certificate:
<TABLE>
<CAPTION>
Issuer Type of Security Registered Owner
------ ---------------- ----------------
<S> <C> <C>
Tele-Communications, Inc./ Series A Common Stock Estate of Betsy Ruth Magness
Series A. Liberty Media Group
Tele-Communications, Inc./ Series B Common Stock Estate of Betsy Ruth Magness
Series B Liberty Media Group
Tele-Communications, Inc./ Series A Common Stock Estate of Betsy Ruth Magness
Series A TCI Group Common Stock
Tele-Communications, Inc./ Series B Common Stock Estate of Betsy Ruth Magness
Series B TCI Group Common Stock
Tele-Communications, Inc./ Series A Common Stock Estate of Betsy Ruth Magness
Series A TCI Ventures Group Common Stock
Tele-Communications, Inc./ Series B Common Stock Estate of Betsy Ruth Magness
Series B TCI Ventures Group Common Stock
TCI Satellite Entertainment, Inc. Common Stock Series A Common Stock Estate of Betsy Ruth Magness
TCI Satellite Entertainment, Inc. Common Stock Series B Common Stock Estate of Betsy Ruth Magness
</TABLE>
<PAGE>
SCHEDULE C
COLLATERAL MAINTENANCE REQUIREMENTS
1. On the date hereof and on the date of any advance under the Note the
Obligations as a percentage of market value of the Collateral shall be no
greater than 50%. If at any time after the date hereafter the Obligations as a
percentage of market value of the Collateral are greater than 65%, or the
Collateral otherwise fails to meet the Collateral Maintenance Requirements then
in effect, Debtor will, within 5 business days after written notice from Bank,
pledge to Bank such additional collateral as the Bank may require, to be
satisfactory to Bank in its discretion both as to advance rate and otherwise,
and/or repay such portion of the Loan, such that the Obligations as a Percentage
of market value of the Collateral shall be no greater than 60%. All Collateral
consisting of securities in a managed account shall be valued at fair market
value, marked to market on a daily basis. Market value shall be calculated on
the basis of the closing price per share or other unit of the Collateral being
valued as reported in The Wall Street Journal or on the last sale price as
reported on the securities exchange or other market where the unit of Collateral
being valued is primarily traded. Each share of the Series B securities
identified on Schedule B shall be valued at the per share market value of the
corresponding Series A security issued by the same issuer. At such time as TCI
(as defined in the Note) has exercised its call right, or is entitled to
exercise its call right, under the Magness Call Agreement (as defined in the
Note) with respect to any unit of Collateral, the market value for such unit of
Collateral shall be determined at the lesser of (x) the market value thereof as
determined above and (y) the price per unit of Collateral that TCI is obligated
to pay under the Magness Call Agreement.
2. Notwithstanding any other provision of this Agreement so long as (i)
(x) no Event of Default has occurred and is continuing or (y) Debtor is not in
default under the terms of any of its Obligations, and (ii) the Bank shall have
received three (3) days written notice from Debtor, Bank shall deliver to Debtor
at Debtor's address specified herein, free from the encumbrance created by this
Agreement. such portions of the Collateral as may be requested by Debtor,
PROVIDED THAT the remaining Collateral continues to satisfy the Collateral
Maintenance Requirements described in paragraph 1 above and provided further
that, such delivery by Bank shall be at the sole cost of Debtor.
3. Section 11 of the Note modifies the collateral maintenance
requirements set forth herein during the Demand Period and after any Downgrade
Date (as such terms am defined therein).
* if the Collateral consists of securities issued by different companies
and/or securities of more than one series issued by the same company, the
proportion that the collateralized shares of each such security or series
of securities bears to the value of all securities held by the Bank as
Collateral under this Pledge Agreement shall be the same prior to and after
the withdrawal of any such securities under this paragraph.
<PAGE>
STATE OF COLORADO )
) ss.:
COUNTY OF DENVER )
On the 9TH day of February, 1998, before me personally came Kim Robert
Magness, to me known to be the individual who executed the foregoing instrument
and, who, being duly sworn by me did depose and say that he is the personal
representative of the Estate of Betsy Ruth Magness and that he executed the
foregoing instrument in the name of the Estate of Betsy Ruth Magness and that he
had authority to sip the same, and acknowledged that he executed the same an the
act and deed of said estate.
----------------------------------------------
Notary Public
Name:
[Seal]
