<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
Tele-Communications, Inc.
-------------------------
(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")
------------------------------
(TITLE OF CLASS OF SECURITIES)
<TABLE>
<S> <C>
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
</TABLE>
-------------------------
(CUSIP NUMBER)
Raymond L. Sutton, Jr.
Baker & Hostetler LLP
303 East 17th Avenue, Suite 1100
Denver, Colorado 80203
- --------------------------------------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS)
October 8, 1998
------------------------------------------------------
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition 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 9
<PAGE>
CUSIP Nos.
<TABLE>
<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
- -----------------------------------------------------------------------------------------------------------------------------------
1) Names of Reporting Persons I.R.S. Identification Nos. of Above Persons (entities only)
Magness Securities, LLC
- -----------------------------------------------------------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions)
(a) / /
(b) /X/
- -----------------------------------------------------------------------------------------------------------------------------------
3) SEC Use Only
- -----------------------------------------------------------------------------------------------------------------------------------
4) Source of Funds (See Instructions) N/A See Item 3 below.
- -----------------------------------------------------------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) / /
- -----------------------------------------------------------------------------------------------------------------------------------
6) Citizenship or Place of Organization Colorado
- -----------------------------------------------------------------------------------------------------------------------------------
7) Sole Voting Power Series A TCI Group Common Stock 6,849,156(1)
Series B TCI Group Common Stock 6,849,156(2)
Series A Liberty Media Group Common Stock 4,753,985(1)
Series B Liberty Media Group Common Stock 2,379,829(2)
Number of Series A Ventures Group Common Stock 5,823,452(1)
Series B Ventures Group Common Stock 5,823,452(2)
Shares ---------------------------------------------------------------------------------------------------------------
8) Shared Voting Power Series A TCI Group Common Stock 0
Beneficially Series B TCI Group Common Stock 0
Series A Liberty Media Group Common Stock 0
Owned by Series B Liberty Media Group Common Stock 0
Series A Ventures Group Common Stock 0
Each Reporting Series B Ventures Group Common Stock 0
---------------------------------------------------------------------------------------------------------------
Person With 9) Sole Dispositive Power Series A TCI Group Common Stock 6,849,156(1)
Series B TCI Group Common Stock 6,849,156(2)
Series A Liberty Media Group Common Stock 4,753,985(1)
Series B Liberty Media Group Common Stock 2,379,829(2)
Series A Ventures Group Common Stock 5,823,452(1)
Series B Ventures Group Common Stock 5,823,452(2)
---------------------------------------------------------------------------------------------------------------
10) Shared Dispositive Power Series A TCI Group Common Stock 0
Series B TCI Group Common Stock 0
Series A Liberty Media Group Common Stock 0
Series B Liberty Media Group Common Stock 0
Series A Ventures Group Common Stock 0
Series B Ventures Group Common Stock 0
---------------------------------------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person
Series A TCI Group Common Stock 6,849,156(1)
Series B TCI Group Common Stock 6,849,156(2)
Series A Liberty Media Group Common Stock 4,753,985(1)
Series B Liberty Media Group Common Stock 2,379,829(2)
Series A Ventures Group Common Stock 5,823,452(1)
Series B Ventures Group Common Stock 5,823,452(2)
- -----------------------------------------------------------------------------------------------------------------------------------
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / /
- -----------------------------------------------------------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11)
1.4% of Series A TCI Group Common Stock
13.7% of Series B TCI Group Common Stock
1.5% of Series A Liberty Media Group Common Stock
7.5% of Series B Liberty Media Group Common Stock
1.5% of Series A Ventures Group Common Stock
12.9% of Series B Ventures Group Common Stock
---------------------------------------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions) 00
---------------------------------------------------------------------------------------------------------------
(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.
</TABLE>
Page 2 of 9
<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
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
and the Series B Ventures Group Common 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 Magness Securities, LLC, a
Colorado limited liability company (the "Magness LLC"). The principal
business of the Magness LLC is to hold the Company Securities and other
securities. The Estate of Betsy Magness (the "Betsy Magness Estate") is the
sole member of the Magness LLC and Kim Magness, who is the personal
representative of the Betsy Magness Estate, is the manager of the Magness LLC.
(b) The business address of the Magness LLC is c/o Raymond L.
Sutton, Jr., Baker & Hostetler LLP, 303 East 17th Avenue, Suite 1100, Denver,
Colorado 80203.
(c) The filing person has no employment or occupation.
(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 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 Magness LLC is a Colorado limited liability company.
Page 3 of 9
<PAGE>
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On October 8, 1998, the Betsy Magness Estate transferred, among
other securities, the following Company Securities (representing all the
Company Securities held by the Betsy Magness Estate) to Magness Securities,
LLC (the "Magness LLC") in exchange for a 100% membership interest in the
Magness LLC:
<TABLE>
<CAPTION>
SHARES CLASS
------ -----
<S> <C>
5,539,818 Series B TCI Group Common Stock
2,374,156 Series A Liberty Media Group Common Stock
2,379,829 Series B Liberty Media Common Stock
5,823,452 Series B Ventures Group Common Stock
</TABLE>
ITEM 4. PURPOSE OF TRANSACTION
The Betsy Magness Estate and the Estate of Bob Magness (the "Bob
Magness Estate"), Kim Magness, Gary Magness and certain others (which now
includes the Magness LLC) (collectively, the "Magness Group") have entered
into a call agreement with the Company (the "Magness Call Agreement") under
which the Magness Group granted to the Company the right to acquire the
Magness Group's high-voting shares, currently consisting of an aggregate of
approximately 49 million shares 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 the death of Dr. John Malone, the
Company's Chairman and Chief Executive Officer 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 Magness Group agreed that if the Company
were ever to be sold to another entity, then the maximum premium that the
Magness Group 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.
Additionally, the Magness Group has entered into a Stockholders'
Agreement (the "Stockholders' Agreement") with Dr. John Malone and his wife
(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, a right granted by the Company to John Malone to
acquire 30,545,864 shares of Series B TCI Group Common Stock (the "Malone
Right") has been reduced to an option to
Page 4 of 9
<PAGE>
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.
On October 8, 1998, the Betsy Magness Estate transferred, among
other securities, the following Company Securities (representing all the
Company Securities held by the Betsy Magness Estate) to the Magness LLC in
exchange for a 100% membership interest in the Magness LLC:
<TABLE>
<CAPTION>
SHARES CLASS
------ -----
<S> <C>
5,539,818 Series B TCI Group Common Stock
2,374,156 Series A Liberty Media Group Common Stock
2,379,829 Series B Liberty Media Common Stock
5,823,452 Series B Ventures Group Common Stock
</TABLE>
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;
(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.
Page 5 of 9
<PAGE>
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) The aggregate number and percentage of the Company Securities
beneficially owned by the filing person are as follows:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF TOTAL VOTING
TITLE OF CLASS BENEFICIAL OWNERSHIP CLASS POWER(1) POWER(1)
- -------------- -------------------- -------------- -----------
<S> <C> <C> <C>
6.2%
Series A TCI Group Common Stock 6,849,156(2)(3) 1.4%
Series B TCI Group Common Stock 6,849,156(2)(3) 13.7%
Series A Liberty Media Group Common Stock 4,753,985(2)(3) 1.5%
Series B Liberty Media Group Common Stock 2,379,829(2)(3) 7.5%
Series A Ventures Group Common Stock 5,823,452(2)(3) 1.5%
Series B Ventures Group Common Stock 5,823,452(2)(3) 12.9%
</TABLE>
(1) Based on 473,416,687 shares of Series A TCI Group Common Stock,
49,932,623 shares of Series B TCI Group Common Stock, 325,532,126
shares of Series A Liberty Media Group Common Stock, 31,699,575 shares
of Series B Liberty Media Group Common Stock, 377,065,516 shares of
Series A Ventures Group Common Stock, 45,334,022 shares of Series B
Ventures Group Common Stock, 1,552,490 shares of Class B 6% Cumulative
Redeemable Exchangeable Junior Preferred Stock, 44,575 shares of TCI
Group Preferred Stock, Series C, 70,575 shares of Liberty Media Group
Preferred Stock, Series C, 6,444,244 shares of Redeemable Convertible
TCI Group Preferred Stock, Series G, and 6,564,794 shares of
Redeemable Convertible Liberty Media Group Preferred Stock, Series H,
outstanding on September 30, 1998 in each case after elimination of
shares then held by the Company and its majority owned subsidiaries.
(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 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, the Magness LLC may be deemed to
currently beneficially own voting equity securities representing
approximately 6.2% 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
Page 6 of 9
<PAGE>
4 above whereby the Bob Magness Estate exchanged 30,545,864 shares of
Series B TCI Group Common Stock to the Company in exchange 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 Magness LLC has a proportionate right
to purchase 1,309,338 shares, the Betsy Magness Estate has a
proportionate right to purchase 1,309,338 shares (as the sole member
of the Magness LLC), 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 (the sole member of the
Magness LLC) and manager of the Magness LLC 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, dated as of February 9, 1998, among the Magness Group and
the Company. SEE Item 4.
On October 8, 1998, the Betsy Magness Estate transferred, among other
securities, the following Company Securities (representing all the
Company Securities held by the Betsy Magness Estate) to the Magness
LLC in exchange for a 100% membership interest in the Magness LLC:
<TABLE>
<CAPTION>
SHARES CLASS
------ -----
<S> <C>
5,539,818 Series B TCI Group Common Stock
2,374,156 Series A Liberty Media Group Common Stock
2,379,829 Series B Liberty Media Common Stock
5,823,452 Series B Ventures Group Common Stock
</TABLE>
(b) The following indicates for the filing person the number of
shares of Company Securities as to which there is sole or shared
power to vote or dispose of the shares:
<TABLE>
<CAPTION>
Shared
Class of Security Sole Power Power
----------------- ---------- ------
<S> <C> <C>
Series A TCI Group Common Stock 6,849,156 0
Page 7 of 9
<PAGE>
Series B TCI Group Common Stock 6,849,156 0
Series A Liberty Media Group Common Stock 4,753,985 0
Series B Liberty Media Group Common Stock 2,379,829 0
Series A Ventures Group Common Stock 5,823,452 0
Series B Ventures Group Common Stock 5,823,452 0
</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.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
<S> <C>
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
</TABLE>
Page 8 of 9
<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
MAGNESS SECURITIES, LLC
/s/ Kim Magness
- -------------------------------
By: Kim Magness, Manager
Page 9 of 9
<PAGE>
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
<S> <C>
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
</TABLE>
A-1
<PAGE>
EXHIBIT 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
8
<PAGE>
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
<PAGE>
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
10
<PAGE>
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.
11
<PAGE>
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
12
<PAGE>
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
13
<PAGE>
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.
14
<PAGE>
ARTICLE VI
MISCELLANEOUS
Section 6.1. TERMS GENERALLY; CERTAIN RULES OF CONSTRUCTION.
(a) The definitions in Exhibit A shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The word "or" is not exclusive and means "and/or." The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation". The words "herein", "hereof" and "hereunder" and
words of similar import refer to this Agreement in its entirety and not to
any part hereof unless the context shall otherwise require. All references
herein to Sections, subsections, Exhibits and Schedules shall be deemed
references to and Sections or subsections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Unless otherwise
expressly provided herein or unless the context shall otherwise require, any
references as of any time to any agreement (including this Agreement) or
other agreement, instrument or document or to any statute or regulation or
any specific section or other provision thereof are to it as amended and
supplemented through such time (and, in the case of a statute or regulation
or specific section or other provision thereof, to any successor of such
statute, regulation, section or other provision). Any reference in this
Agreement to a "day" or number of "days" (without the explicit qualification
of "Business") shall be interpreted as a reference to a calendar day or
number of calendar days. If any action or notice is to be taken or given on
or by a particular calendar day, and such calendar day is not a Business Day,
then such action or notice shall be deferred until, or may be taken or given
on, the next Business Day. Unless otherwise expressly provided herein or
unless the context shall otherwise require, any provision of this Agreement
using a term (by way of example and without limitation, such as "members of
the Magness Group," "members of the Malone Group," "Affiliate" or Controlled
Affiliate") the definition of which is based on a 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
15
<PAGE>
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
16
<PAGE>
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.
17
<PAGE>
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
18
<PAGE>
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 by the Board of
Directors of that Company and (y) unless TCI shall elect, on or before the
latest date permitted by the Magness Call Agreement, to exercise its Call
Right under Section 2.2 of the Magness Call Agreement, or if having made that
election the closing under such Call
19
<PAGE>
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
20
<PAGE>
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
21
<PAGE>
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
22
<PAGE>
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.
23
<PAGE>
(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,
24
<PAGE>
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
25
<PAGE>
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
1-A
<PAGE>
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
2-A
<PAGE>
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.
3-A
<PAGE>
"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;
4-A
<PAGE>
(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;
5-A
<PAGE>
(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.
6-A
<PAGE>
"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.
7-A
<PAGE>
"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;
8-A
<PAGE>
(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).
9-A
<PAGE>
"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.
10-A
<PAGE>
EXHIBIT 2
<PAGE>
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.
2
<PAGE>
"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).
3
<PAGE>
"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 of such event.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exempt Transfer" means, with respect to any Member Shares of any
Member, any Disposition:
(i) 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;
4
<PAGE>
(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.
5
<PAGE>
"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
6
<PAGE>
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
7
<PAGE>
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
8
<PAGE>
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;
9
<PAGE>
(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.
10
<PAGE>
"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,
11
<PAGE>
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
12
<PAGE>
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
13
<PAGE>
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
14
<PAGE>
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
15
<PAGE>
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
16
<PAGE>
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
17
<PAGE>
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
18
<PAGE>
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.
19
<PAGE>
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
20
<PAGE>
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
21
<PAGE>
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
22
<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.
23
<PAGE>
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.
25
<PAGE>
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
26
<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
